(A) The parent or supporting corporation, or PGC must
have:
(i) Tangible net worth of at least 10 times the state
assurance amount, excluding the net book value of the nuclear units
subject to the state assurance obligation;
(ii) Tangible net worth of at least $500 million;
(iii) Net working capital of at least 10 times the
annual decommissioning funding amount; and
(iv) Assets located in the United States amounting
to at least 90% of the total assets or at least 10 times the state
assurance amount.
(B) The parent or supporting corporation, or PGC must
be otherwise financially qualified, based upon a finding by the commission
that there is reasonable assurance that the parent or supporting corporation
will be able to meet its obligations under the guarantee or other
agreement.
(3) A PGC may satisfy the state assurance obligation
by providing an adequate surety, insurance, or other guarantee method
that meets the following minimum requirements:
(A) A guarantee that the state assurance obligation
will be paid to the PGC decommissioning trust upon any default by
the PGC in satisfying its annual funding obligation.
(B) A surety method may be in the form of a surety
bond, letter of credit, or line of credit. Any surety method or insurance
used to satisfy the state assurance obligation must contain the following
conditions:
(i) The surety method or insurance must be open-ended,
or, if written for a specified term, such as five years, must be renewed
automatically, unless 90 days or more prior to the renewal day the
issuer notifies the commission and the PGC of its intention not to
renew. The surety or insurance must also provide that the full face
amount will be paid to the PGC decommissioning trust automatically
prior to the expiration without proof of forfeiture if the PGC fails
to provide a replacement acceptable to the commission within 30 days
after receipt of notification of cancellation.
(ii) The issuer must have a minimum rating of A- by
Standard and Poor's Corporation, A3 by Moody's Investor's Service
or the equivalent rating from A.M. Best.
(iii) The surety or insurance must be payable to the
PGC decommissioning trust.
(4) A PGC may satisfy the state assurance obligation
using any other method acceptable to the commission considering the
relative risk factors and creditworthiness attributes of the applicant's
financial characteristics to minimize exposure of retail electric
customers to default by power generation companies.
(5) A PGC shall notify the commission within 10 days
of the date of any material change in its ability to meet its state
assurance obligation and provide a plan to cure any deficiency if
the material change results in a PGC's inability to meet the state
assurance obligation. Upon receipt of such notice, the commission
may initiate a formal proceeding to review the PGC's ability to meet
the state assurance obligation, or take any other action it deems
appropriate. The PGC shall provide any information required to conduct
the review in accordance with the commission's procedural rules.
(l) Annual Funding Obligation. A PGC using a PGC decommissioning
trust shall remit annually to the fund the most recent annual decommissioning
funding amount required by the commission. A PGC shall make periodic
payments according to a schedule submitted to the commission and shall
notify the trustee of the decommissioning trust and the commission
within 10 days of the date of any failure to make a scheduled payment.
The commission shall not consider a PGC to be in default of its annual
funding obligation unless it fails to remit the necessary amounts
within 60 days of notice of potential default. If a PGC is in default
of its annual funding obligation, it shall notify the trustee of the
decommissioning trust and the commission within 10 days of the date
of the default. If the PGC fails to cure its failure to make scheduled
payment within 60 days of the commission notice, the commission may
direct the trustee to request that any entity providing state assurance
remit annually to the fund the most recent annual decommissioning
funding amount required by the commission in accordance with the schedule
approved by the commission, including any payments that the PGC has
failed to make, until the PGC is not in default or until the assurance
is depleted.
(m) Funding Shortfall and Unspent Funds.
(1) If the PGC fails to meet its annual funding requirements
and if the state assurance obligations are insufficient to meet the
annual funding obligations or are otherwise not honored, the commission
shall determine the manner in which any shortfall in the cost of decommissioning
a nuclear generating unit shall be recovered from retail electric
customers in the state. For retail electric customers of a municipally-owned
utility or an electric cooperative that has an agreement to purchase
power from a nuclear generating unit, the amount of the shortfall
in the cost of decommissioning the nuclear generating unit that the
customers are responsible for is limited to a portion of that shortfall
that bears the same proportion to the total shortfall as the amount
of electric power generated by the nuclear generating unit and purchased
by the municipally-owned utility or electric cooperative bears to
the total amount of power generated by the nuclear generating unit.
(2) Decommissioning funds that remain unspent after
decommissioning of the nuclear generating unit is complete shall be
returned to the PGC and the retail electric customers based on the
proportionate amount, in real terms, that the PGC and retail electric
customers paid into the fund.
(3) While the nuclear generating unit is operational,
as a condition of operating the generating unit, the PGC or any new
owner shall repay the costs the electric customers incurred in a manner
determined by the commission. The PGC shall be responsible for accounting
for the need for repayment of any decommissioning shortfall amounts
paid by customers and shall report such amounts pursuant to subsection
(g) of this section. The PGC shall submit a proposal to repay shortfall
amounts paid by customers pursuant to subsection (h) of this section.
The commission shall review this information using the procedure described
in subsection (e) of this section.
(n) Administration of the PGC Decommissioning Trust
Funds.
(1) The PGC shall assure that the PGC decommissioning
trust is managed so that the funds are secure and earn a reasonable
return; and that the funds provided from the PGC's operating revenues,
plus the amounts earned from investment of the funds, will be available
at the time of decommissioning.
(2) The PGC shall appoint an institutional trustee
and may appoint one or more investment managers. Unless otherwise
specified in this section, the Texas Trust Code controls the administration
and management of the PGC decommissioning trusts, except that the
appointed trustees need not be qualified to exercise trust powers
in Texas.
(3) The PGC shall retain the right to replace the trustee
with or without cause. In appointing a trustee, the PGC shall have
the following duties, which will be of a continuing nature:
(A) A duty to determine whether the trustee's fee schedule
for administering the trust is reasonable, when compared to other
institutional trustees rendering similar services, and meets the requirement
of this section;
(B) A duty to investigate and determine whether the
past administration of trusts by the trustee has been reasonable;
(C) A duty to investigate and determine whether the
financial stability and strength of the trustee is adequate;
(D) A duty to investigate and determine whether the
trustee has complied with the trust agreement and this section as
it relates to trustees; and
(E) A duty to investigate any other factors that may
bear on whether the trustee is suitable.
(4) The PGC shall retain the right to replace the investment
manager with or without cause. In appointing an investment manager,
the PGC shall have the following duties, which will be of a continuing
nature:
(A) A duty to determine whether the investment manager's
fee schedule for investment management services is reasonable, when
compared to other such managers, and meets the requirement of this
section;
(B) A duty to investigate and determine whether the
past performance of the investment manager in managing investments
has been reasonable;
(C) A duty to investigate and determine whether the
financial stability and strength of the investment manager is adequate
for purposes of liability;
(D) A duty to investigate and determine whether the
investment manager has complied with the investment management agreement
and this section as it relates to investments; and
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