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(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
(E) A duty to investigate any other factors which may
bear on whether the investment manager is suitable.
(5) The PGC shall execute an agreement with the institutional
trustee. The agreement shall be consistent with this section and may
include additional restrictions on the trustee. A PGC shall not grant
the trustee powers that are greater than those provided to trustees
under the Texas Trust Code or that are inconsistent with the limitations
of this section. The agreement shall include the restrictions set
forth in this section and may include additional restrictions on the
trustee.
(A) The interest or other earnings of the trust become
part of the trust corpus.
(B) A trustee owes the same duties with regard to the
interest and other earnings of the trust as are owed with regard to
the corpus of the trust.
(C) A trustee shall have a continuing duty to review
the trust portfolio for compliance with investment guidelines and
governing regulations.
(D) A trustee shall not lend funds from the PGC decommissioning
trust to itself, its officers, or its directors.
(E) A trustee shall not invest or reinvest PGC decommissioning
trusts in instruments issued by the trustee, except for time deposits,
demand deposits, or money market accounts of the trustee. However,
investments of a PGC decommissioning trust may include mutual funds
that contain securities issued by the trustee if the securities of
the trustee constitute no more than 5% of the fair market value of
the assets of such mutual funds at the time of the investment.
(F) The agreement shall comply with all applicable
requirements of the federal Nuclear Regulatory Commission.
(6) The PGC shall execute an agreement with the investment
manager. If the trustee performs investment management functions,
the contractual provisions governing those functions must be included
in either the trust agreement or a separate investment management
agreement. A PGC shall not grant the manager powers that are greater
than those provided to trustees under the Texas Trust Code or that
are inconsistent with the limitations of this section. The agreement
shall include the restrictions set forth in this section and may include
additional restrictions on the manager.
(A) An investment manager shall, in investing and reinvesting
the funds in the trust, comply with this section.
(B) The interest and other earnings of the trust become
part of the trust corpus.
(C) An investment manager owes the same duties with
regard to the interest and other earnings of the trust as are owed
with regard to the corpus of the trust.
(D) An investment manager shall have a continuing duty
to review the trust portfolio to determine the appropriateness of
the investments.
(E) An investment manager shall not invest funds from
the PGC decommissioning trust with itself, its officers, or its directors.
(F) The agreement shall comply with all applicable
requirements of the federal Nuclear Regulatory Commission.
(7) Prior to executing an amended agreement with the
institutional trustee or investment managers, the proposed amended
agreement shall be filed at the commission for review along with a
redlined version showing all changes made since the document was reviewed
by the commission, and copies shall be provided to the commission's
Legal Division and Rate Regulation Division or successor divisions.
(8) A copy of the trust agreement, any investment management
agreement, and any amendments shall be filed with the commission within
30 days after the execution or modification of the agreement, and
copies shall be provided to appropriate commission staff and the Office
of Public Utility Counsel.
(o) Trust investments.
(1) The funds in a PGC decommissioning trust should
be invested consistent with the following goals. The PGC may apply
additional prudent investment goals to the funds so long as they are
not inconsistent with the stated goals of this subsection.
(A) The funds should be invested with a goal of earning
a reasonable return commensurate with the need to preserve the value
of the assets of the trusts.
(B) In keeping with prudent investment practices, the
portfolio of securities held in the PGC decommissioning trust shall
be diversified to the extent reasonably feasible given the size of
the trust.
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