(a) Purpose. To protect against anticompetitive practices,
consistent with the provisions of the Public Utility Regulatory Act (PURA) §39.157(e)
and Chapters 40 and 41, the provisions of this section establish safeguards
to govern the interaction between the transmission and distribution business
unit (TDBU), as defined in subsection (c) of this section, of a municipally
owned utility (MOU) or electric cooperative (COOP) and its competitive affiliates,
and establish specific anticompetitive standards to apply to the activities
of Bundled MOU/COOPS, as defined in subsection (c) of this section. It is
intended by this section that no MOU/COOP subject to this section shall engage
in the following anticompetitive practices:
(1) Subsidize competitive activities directly or indirectly
through rates charged for the provision of electric service;
(2) Allow discriminatory access to transmission and distribution
products and services;
(3) Allow preferential access to transmission and distribution-related
information;
(4) Allow unauthorized access to confidential customer information;
and
(5) Allow employees performing transmission and distribution
functions to provide leads to or promote the products of competitive affiliates
or any persons providing competitive energy-related activities on behalf of
a Bundled MOU/COOP.
(b) Application.
(1) General application. This section applies to the TDBU of
a municipally owned utility or an electric cooperative (collectively referred
to as MOU/COOP) operating in the State of Texas, and the transactions or activities
between the TDBU and its competitive affiliates, and to an MOU/COOP that is
conducting the activities of a TDBU and of a competitive affiliate on a bundled
basis, provided that each of the following conditions is met:
(A) The MOU/COOP has chosen to participate in customer choice
pursuant to PURA §40.051(b) or PURA §41.051(b).
(B) The competitive affiliate of an MOU/COOP or a Bundled MOU/COOP
is providing electric energy at retail to consumers in Texas outside its certificated
retail service area. For the purposes of this section, an MOU/COOP shall not
be considered to be providing electric energy to retail consumers outside
its certificated retail service area if:
(i) the MOU/COOP was serving the area prior to the date of
customer choice;
(ii) after receiving notice that the MOU/COOP or its affiliate
is selling electric energy at retail outside its retail service area, which
identifies the service location, the MOU/COOP or its affiliate promptly investigates
and thereafter takes reasonable steps to cease the provision of service outside
its service area as soon as reasonably practicable; or
(iii) there is a dispute concerning the service area boundary
and no commission order resolving the dispute has become final or the commission's
order is subject to appeal.
(2) Effect of unbundling on application. Pursuant to PURA §40.055
and §41.055 it is the discretion of the governing body of the MOU/COOP
to determine whether to unbundle any energy-related activities, and whether
to do so structurally or functionally. The MOU/COOP shall file with the commission,
in conjunction with the filing required by subsections (n)(1)(A) or (o)(3)(A)
of this section, a written declaration of whether it chooses to structurally
or functionally unbundle or whether it will provide services in a competitive
market on a bundled basis. The written declaration may be amended from time
to time but no amendment shall be effective before it is filed with the commission.
The MOU/COOP shall comply with this section as follows:
(A) A structurally or functionally unbundled MOU/COOP shall
comply with the provisions of this subsection, as applicable to entities of
its size. Subsection (o) of this section is not applicable to a functionally
or structurally unbundled MOU/COOP.
(B) A Bundled MOU/COOP shall comply with the requirements of
paragraphs (5) and (7)-(9) of this subsection, subsection (n)(2)-(10), and
subsection (o) of this section.
(3) Small TDBU. A small unbundled TDBU is subject to the following
provisions of this section only:
(A) paragraphs (1) and (5)-(9) of this subsection, application;
(B) subsection (i)(4) of this section, separate books and records;
(C) subsection (j)(1) of this section, transactions with competitive
affiliates; however, transactions provided for under subsection (j)(1) of
this section shall be conducted at pricing levels that are fair and reasonable
to the customers of the small TDBU and that reflect not less than the book
value of the assets and the cost of employee time determined on the basis
of aggregate percentage of time devoted by the employee to the competitive
function or transmission and distribution function and do not include any
discounts, rebates, fee waivers or alternative tariff terms and conditions;
(D) subsection (k)(1) of this section, tying arrangements prohibited;
(E) subsection (k)(2) of this section, products and services
available on a non-discriminatory basis; and
(F) subsection (n) of this section, remedies and enforcement.
(4) Mid-size TDBU. A mid-size unbundled TDBU is subject to
the following provisions of this section only:
(A) paragraphs (1) and (5)-(9) of this subsection, application;
(B) subsection (d) of this section, annual report of code-related
activities; however, a mid-size TDBU shall report only with respect to the
activities for which it is subject to regulation under this section;
(C) subsection (e) of this section, copies of contracts or
agreements;
(D) subsection (f) of this section, tracking migration and
sharing of employees;
(E) subsection (g) of this section, reporting deviations from
the code of conduct; however, a mid-sized TDBU shall only report deviations
with respect to the activities for which it is subject to regulation under
this section;
(F) subsection (h) of this section, ensuring compliance for
new competitive affiliates;
(G) subsection (i) of this section, separation of a TDBU from
its competitive affiliates; however, sharing of employees, facilities, or
other resources with competitive affiliates shall be allowed, and the safeguards
shall be deemed achieved through compliance with the transactional, information
transfer, and marketing and advertising standards applicable to a mid-size
TDBU under subsections (j), (k), and (l) of this section;
(H) subsection (j)(1) of this section, transactions with competitive
affiliates; however, transactions provided for under subsection (j)(1) of
this section shall be conducted at pricing levels that are fair and reasonable
to the customers of the mid-size TDBU and that reflect not less than the book
value of the assets and the cost of employee time determined on the basis
of aggregate percentage of time devoted by the employee to the competitive
function or transmission and distribution function and do not include any
discounts, rebates, fee waivers or alternative tariff terms and conditions;
(I) subsection (j)(2) of this section, records of transactions;
(J) subsection (j)(3) of this section, provision of corporate
support services, except to the extent that sharing of confidential information
may not practicably be avoided due to cross-functional responsibilities of
employees;
(K) subsection (k)(1) of this section, tying arrangements prohibited;
(L) subsection (k)(2) of this section, products and services
available on a non-discriminatory basis;
(M) subsection (l)(1) of this section, proprietary customer
information;
(N) subsection (1)(2) of this section, nondiscriminatory availability
of aggregate customer information. A mid-size TDBU shall make aggregate customer
information available to all non-affiliates under the same terms and conditions
and at the same price or fully allocated cost that it is made available to
any of its competitive affiliates, but is not otherwise subject to the reporting
requirements in subsection (l)(2) of this section.
(O) subsection (l)(3) of this section, no preferential access
to transmission and distribution information. A mid-size TDBU shall comply
with this paragraph except to the extent preferential access may not practicably
be avoided due to cross-functional responsibilities of employees or other
operating constraints as reasonably determined by the mid-size TDBU;
(P) instead of the restrictions in subsection (m)(2) of this
section, a mid-sized TDBU may participate in joint marketing, advertising,
and promotional activities with a competitive affiliate, provided that the
mid-size TDBU informs the customer that the competitive energy services to
which the promotional activities are directed are available from other providers
as well as the mid-size TDBU and makes available to the customer upon request
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