| (a) Purpose. The provisions of this section establish
safeguards to govern the interaction between utilities and their affiliates,
both during the transition to and after the introduction of competition,
to avoid potential market-power abuses and cross-subsidization between
regulated and unregulated activities.
(b) Application.
(1) General application. This section applies to:
(A) electric utilities operating in the State of Texas
as defined in the Public Utility Regulatory Act (PURA) §31.002(6),
and transactions or activities between electric utilities and their
affiliates, as defined in PURA §11.003(2); and
(B) transmission and distribution utilities operating
in a qualifying power region in the State of Texas as defined in PURA §31.002(19)
upon commission certification of a qualifying power region pursuant
to PURA §39.152, and transactions or activities between transmission
and distribution utilities and their affiliates, as defined in PURA §11.003(2).
(2) No circumvention of the code of conduct. An electric
utility, transmission and distribution utility, or competitive affiliate
shall not circumvent the provisions or the intent of PURA §39.157
or any rules implementing that section by using any affiliate to provide
information, services, products, or subsidies between a competitive
affiliate and an electric utility or a transmission and distribution
utility.
(3) Notice of conflict and/or petition for waiver.
Nothing in this section is intended to affect or modify the obligation
or duties relating to any rules or standards of conduct that may apply
to a utility or the utility's affiliates under orders or regulations
of the Federal Energy Regulatory Commission (FERC) or the Securities
and Exchange Commission (SEC). A utility shall file with the commission
a notice of any provision in this section that conflict with FERC
or SEC orders or regulations. A utility that is subject to statutes
or regulations in any state that conflict with a provision of this
section may petition the commission for a waiver of the conflicting
provision on a showing of good cause.
(c) Definitions. The following words and terms when
used in this section shall have the following meaning unless the context
clearly indicates otherwise:
(1) Arm's length transaction--The standard of conduct
under which unrelated parties, each acting in its own best interest,
would carry out a particular transaction. Applied to related parties,
a transaction is at arm's length if the transaction could have been
made on the same terms to a disinterested third party in a bargained
transaction.
(2) Competitive affiliate--An affiliate of a utility
that provides services or sells products in a competitive energy-related
market in this state, including telecommunications services, to the
extent those services are energy-related.
(3) Confidential information--Any information not intended
for public disclosure and considered to be confidential or proprietary
by persons privy to such information. Confidential information includes
but is not limited to information relating to the interconnection
of customers to a utility's transmission or distribution systems,
proprietary customer information, trade secrets, competitive information
relating to internal manufacturing processes, and information about
a utility's transmission or distribution system, operations, or plans
for expansion.
(4) Corporate support services--Services shared by
a utility, its parent holding company, or a separate affiliate created
to perform corporate support services, with its affiliates of joint
corporate oversight, governance, support systems, and personnel. Examples
of services that may be shared, to the extent the services comply
with the requirements prescribed by PURA §39.157(d) and (g) and
rules implementing those requirements, include human resources, procurement,
information technology, regulatory services, administrative services,
real estate services, legal services, accounting, environmental services,
research and development unrelated to marketing activity and/or business
development for the competitive affiliate regarding its services and
products, internal audit, community relations, corporate communications,
financial services, financial planning and management support, corporate
services, corporate secretary, lobbying, and corporate planning. Examples
of services that may not be shared include engineering, purchasing
of electric transmission facilities and service, transmission and
distribution system operations, and marketing, unless such services
are provided by a utility, or a separate affiliate created to perform
such services, exclusively to affiliated regulated utilities and only
for provision of regulated utility services.
(5) Proprietary customer information--Any information
compiled by an electric utility on a customer in the normal course
of providing electric service that makes possible the identification
of any individual customer by matching such information with the customer's
name, address, account number, type or classification of service,
historical electricity usage, expected patterns of use, types of facilities
used in providing service, individual contract terms and conditions,
price, current charges, billing records, or any other information
that the customer has expressly requested not be disclosed. Information
that is redacted or organized in such a way as to make it impossible
to identify the customer to whom the information relates does not
constitute proprietary customer information.
(6) Similarly situated--The standard for determining
whether a non-affiliate is entitled to the same benefit a utility
offers, or grants upon request, to its competitive affiliate for any
product or service. For purposes of this section, all non-affiliates
serving or proposing to serve the same market as a utility's competitive
affiliate are similarly situated to the utility's competitive affiliate.
(7) Transaction--Any interaction between a utility
and its affiliate in which a service, good, asset, product, property,
right, or other item is transferred or received by either a utility
or its affiliate.
(8) Utility--An electric utility as defined in PURA §31.002(6)
or a transmission and distribution utility as defined in PURA §31.002(19).
For purposes of this section, a utility does not include a river authority
operating a steam generating plant on or before January 1, 1999, or
a corporation authorized by Chapter 245, Acts of the 67th Legislature,
Regular Session, 1981 (Article 717 p, Vernon's Texas Civil Statutes).
In addition, with respect to a holding company exempt under the Public
Utility Holding Company Act (PUHCA) §3(a)(2), the term "utility,"
as used in this section, means the division or business unit through
which the holding company conducts utility operations and not the
holding company as a legal entity.
(d) Separation of a utility from its affiliates.
(1) Separate and independent entities. A utility shall
be a separate, independent entity from any competitive affiliate.
(2) Sharing of employees, facilities, or other resources.
Except as otherwise allowed in paragraph (3), (4), (5), or (7) of
this subsection, a utility shall not share employees, facilities,
or other resources with its competitive affiliates unless the utility
can prove to the commission prior to such sharing that the sharing
will not compromise the public interest. Such sharing may be allowed
if the utility implements adequate safeguards precluding employees
of a competitive affiliate from gaining access to information in a
manner that would allow or provide a means to transfer confidential
information from a utility to an affiliate, create an opportunity
for preferential treatment or unfair competitive advantage, lead to
customer confusion, or create significant opportunities for cross-subsidization
of affiliates.
(3) Sharing officers and directors, property, equipment,
computer systems, information systems, and corporate services. A utility
and a competitive affiliate may share common officers and directors,
property, equipment, computer systems, information systems and corporate
support services, if the utility implements safeguards that the commission
determines are adequate to preclude employees of a competitive affiliate
from gaining access to information in a manner that would allow or
provide a means to transfer confidential information from a utility
to an affiliate, create an opportunity for preferential treatment
or unfair competitive advantage, lead to customer confusion, or create
significant opportunities for cross-subsidization of affiliates
(4) Employee transfers and temporary assignments. A
utility shall not assign, for less than one year, utility employees
engaged in transmission or distribution system operations to a competitive
affiliate unless the employee does not have knowledge of confidential
information. Utility employees engaged in transmission or distribution
system operations, including persons employed by a service company
affiliated with the utility who are engaged in transmission system
operations on a day-to-day basis or have knowledge of transmission
or distribution system operations and are transferred to a competitive
affiliate, shall not remove or otherwise provide or use confidential
property or information gained from the utility or affiliated service
company in a discriminatory or exclusive fashion, to the benefit of
the competitive affiliate or to the detriment of non-affiliated electric
suppliers. Movement of an employee engaged in transmission or distribution
system operations, including a person employed by a service company
affiliated with the utility who is engaged in transmission or distribution
system operations on a day-to-day basis or has knowledge of transmission
or distribution system operations from a utility to a competitive
affiliate or vice versa, may be accomplished through either the employee's
termination of employment with one company and acceptance of employment
with the other, or a transfer to another company, as long as the transfer
of an employee from the utility to an affiliate results in the utility
bearing no ongoing costs associated with that employee. Transferring
employees shall sign a statement indicating that they are aware of
and understand the restrictions and penalties set forth in this section.
The utility also shall post a conspicuous notice of such a transfer
on its Internet site or other public electronic bulletin board within
24 hours and for at least 30 consecutive calendar days. The exception
to this provision is that employees may be temporarily assigned to
an affiliate or non-affiliated utility to assist in restoring power
in the event of a major service interruption or assist in resolving
emergency situations affecting system reliability. Consistent with §25.84(h)
of this title (relating to Reporting of Affiliate Transactions for
Electric Utilities), however, within 30 days of such a deviation from
the code of conduct, the utility shall report this information to
the commission and shall conspicuously post the information on its
Internet site or other public electronic bulletin board for 30 consecutive
calendar days.
(5) Sharing of office space. A utility's office space
shall be physically separate from that of its competitive affiliates,
where physical separation is accomplished by having office space in
separate buildings or, if within the same building, by a method such
as having offices on separate floors or with separate access, unless
otherwise approved by the commission.
(6) Separate books and records. A utility and its affiliates
shall keep separate books of accounts and records, and the commission
may review records relating to a transaction between a utility and
an affiliate.
(A) In accordance with generally accepted accounting
principles or state and federal guidelines, as appropriate, a utility
shall record all transactions with its affiliates, whether they involve
direct or indirect expenses.
(B) A utility shall prepare financial statements that
are not consolidated with those of its affiliates.
(C) A utility and its affiliates shall maintain sufficient
records to allow for an audit of the transactions between the utility
and its affiliates. At any time, the commission may, at its discretion,
require a utility to initiate, at the utility's expense, an audit
of transactions between the utility and its affiliates performed by
an independent third party.
(7) Limited credit support by a utility. A utility
may share credit, investment, or financing arrangements with its competitive
affiliates if it complies with subparagraphs (A) and (B) of this paragraph.
(A) The utility shall implement adequate safeguards
precluding employees of a competitive affiliate from gaining access
to information in a manner that would allow or provide a means to
transfer confidential information from a utility to an affiliate,
create an opportunity for preferential treatment or unfair competitive
advantage, lead to customer confusion, or create significant opportunities
for cross-subsidization of affiliates.
(B) The utility shall not allow an affiliate to obtain
credit under any arrangement that would include a specific pledge
of any assets in the rate base of the utility or a pledge of cash
reasonably necessary for utility operations. This subsection does
not affect a utility's obligations under other law or regulations,
such as the obligations of a public utility holding company under §25.271(c)(2)
of this title (relating to Foreign Utility Company Ownership by Exempt
Holding Companies).
(e) Transactions between a utility and its affiliates.
Cont'd... |
