<<Prev Rule

Texas Administrative Code

Next Rule>>
TITLE 16ECONOMIC REGULATION
PART 2PUBLIC UTILITY COMMISSION OF TEXAS
CHAPTER 25SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS
SUBCHAPTER LNUCLEAR DECOMMISSIONING
RULE §25.303Nuclear Decommissioning Following the Transfer of Texas Jurisdictional Nuclear Generating Plant Assets

(a) Purpose. The purpose of this rule is to:

  (1) delineate the rights and obligations of the transferor and the Transferee Companies involved in a transfer of Texas jurisdictional nuclear generating plant assets for which decommissioning funds will continue to be collected from retail customers pursuant to Public Utility Regulatory Act (PURA) §39.205, as well as the obligations of the utility responsible for collecting the decommissioning funds;

  (2) prescribe a utility's continuing responsibility for collecting funds through its rates for nuclear decommissioning trust funds for the benefit of the Transferee Company;

  (3) protect the nuclear decommissioning trust funds so that the funds collected from customers through the Collecting Utility's nonbypassable charge, plus the amounts earned from investment of the funds, will be available for decommissioning, in the event of a transfer of the nuclear decommissioning trust funds;

  (4) minimize the amounts collected from customers for nuclear decommissioning by maximizing net earnings on the nuclear decommissioning trust funds through prudent investment of such funds, in accordance with the guidelines set out in subsection (e)(3)(A)(iii) of this section, and achieving optimum tax efficiency, in accordance with subsection (e)(3)(B)(iii) of this section.

(b) Application. This rule supersedes §25.231(b)(1)(F) of this title (relating to Cost of Service) and §25.301 of this title (relating to Nuclear Decommissioning Trusts) for electric utilities that have completed their business separation pursuant to PURA §39.051 or that otherwise transfer Texas jurisdictional nuclear generating plant assets, including the associated nuclear decommissioning trust funds, to another entity. This rule applies to:

  (1) an electric utility or a power generation company that transfers its Texas jurisdictional nuclear generating plant assets, including any associated nuclear decommissioning trust funds, to another entity;

  (2) a utility that is responsible for collecting revenue for the decommissioning of Texas jurisdictional nuclear generating plant assets that have been transferred to another entity; and

  (3) a Transferee Company.

(c) Definitions.

  (1) Transferor Company--An electric utility, its successor in interest, or any power generation company that transfers Texas jurisdictional nuclear generating plant assets, including any associated nuclear decommissioning trust funds collected from customers.

  (2) Transferee Company--An entity or its successor in interest to which Texas jurisdictional nuclear decommissioning generating plant assets, including the associated nuclear decommissioning trust funds, are transferred from a Transferor Company. For purposes of this section, a municipality or an electric cooperative may be a Transferee Company.

  (3) Collecting Utility--The electric utility or transmission and distribution utility responsible for collecting the decommissioning funds from customers and depositing them into the nuclear decommissioning trust funds. The Collecting Utility may or may not be the Transferor Company.

  (4) Nuclear Decommissioning Trust Funds--Funds that are contained in one or more external and irrevocable trusts created for the purpose of protecting and holding revenue collected under cost-of-service rate regulation to cover the costs of decommissioning a Texas jurisdictional nuclear generating plant at the end of its useful life.

  (5) Decommissioning Funds Collection Agreement--An agreement between or agreements among the Collecting Utility, the Transferor Company (if different from the Collecting Utility), and the Transferee Company that govern the transfer of responsibility for administration of the nuclear decommissioning trust funds, the collection of decommissioning revenues from utility customers, and the remittance of the funds to the nuclear decommissioning trust.

(d) Transfer of Nuclear Decommissioning Trust Funds.

  (1) Prior to the closing of any transaction involving the transfer of nuclear decommissioning trust funds:

    (A) The Collecting Utility, the Transferor Company (if different from the Collecting Utility), and the Transferee Company shall jointly submit for the commission's review the proposed decommissioning funds collection agreement(s) and the proposed agreements with the institutional trustee and investment manager(s) of the decommissioning trust, and copies shall be provided to the commission's Legal and Enforcement Division and Financial Review Division. The Collecting Utility or Transferee Company may request the transfer of responsibility for administration of the nuclear decommissioning trust funds to the Transferee Company in a contested case proceeding pursuant to subsection (d)(6)(E) of this section at the time of submission of such agreements or anytime thereafter.

    (B) In connection with the submission required in subparagraph (A) of this paragraph, the Transferee Company shall submit an affidavit, signed under oath by an authorized officer of the Transferee Company, certifying that once the transfer of administration of the Nuclear Decommissioning Trust Funds is ordered by the commission, the transferred funds and the future contributions to the funds will be administered in accordance with subsection (e) of this section and that the company will not challenge the authority of the commission to enforce its rules that shall be adopted from time to time relating to the collection, investment and use of the funds provided by Collecting Utility customers for nuclear decommissioning.

  (2) For transfers of Nuclear Decommissioning Trust Funds that occurred before this rule took effect, the executed decommissioning funds collection agreement(s) and agreements with the institutional trustee and investment manager(s) shall be filed at the commission within 15 days of the effective date of this rule, unless such agreements have previously been filed with the commission. If such agreements must be amended to comply with this section, the amended agreements must take effect on or before the Collecting Utility's next general rate proceeding or a rate proceeding under subsection (g) of this section, whichever occurs first.

  (3) Prior to executing an amended decommissioning funds collection agreement or 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 and Enforcement Division and Financial Review Division.

  (4) A Transferee Company shall maintain one or more irrevocable trusts external to the Transferee Company for the purpose of receiving the nuclear decommissioning revenues collected under cost-of-service rate regulation. The Transferee Company shall be named as beneficiary of each such trust. If the Transferee Company has an existing trust for the same generating unit in which an interest is being transferred that is funded by a set of ratepayers entirely distinct from that of the Collecting Utility's ratepayers, or funded by other sources, a separate trust or separate subaccount shall be maintained that will segregate the decommissioning funds received from the Collecting Utility, and any earnings thereon, from the nuclear decommissioning trust funds received from other sources. There shall be no commingling of any decommissioning funds received from the Collecting Utility with any other trust or subaccount containing nuclear decommissioning trust funds received from any other set of ratepayers or other sources. If a single trust with subaccounts is utilized to hold the decommissioning funds, the Transferee Company shall cause to be performed an independent audit of all said subaccounts and shall otherwise act to recognize the interests of different sets of ratepayers as may reasonably be requested by the commission.

  (5) The Collecting Utility, the Transferor Company (if different from the Collecting Utility) and the Transferee Company shall execute a decommissioning funds collection agreement. The agreement shall provide that the Transferor Company's rights to accumulated and future decommissioning funds and the responsibilities for decommissioning of the nuclear plant shall be transferred to the Transferee Company upon closing of the transaction. The decommissioning funds collection agreement may provide for the remittance by the Collecting Utility of levelized periodic payments based on the most recent annual decommissioning funding amount approved by the commission or the actual amounts of nonbypassable decommissioning charges collected by the Collecting Utility during each applicable remittance period, or for such other remittance arrangement as the commission concludes is reasonable and consistent with the purposes of this section. In the selection of a remittance arrangement, the parties to the decommissioning funds collection agreement shall consider the impact on optimum tax efficiency pursuant to subsection (e)(3)(B)(iii).

  (6) After the Collecting Utility, the Transferor Company (if different from the Collecting Utility), and Transferee Company have filed a request for a commission review of the agreements filed pursuant to subsection (d)(1)(A) or (d)(3) of this section:

    (A) The commission staff will recommend approval, amendment, or disapproval of the agreements within 60 days of receipt of the request.

    (B) If the commission staff recommends approval, and no motions for intervention have been filed, the commission shall promptly approve the request;

    (C) If the commission staff recommends amendment, within 14 days after staff's recommendation the filing parties shall either file amended agreements incorporating the amendments, request review of alternative language, or request a hearing.

    (D) If the applicants file amended agreements incorporating the staff recommendations, and there is no motion to intervene filed, the commission shall promptly approve the amended request.

    (E) If the commission staff recommends denial, if the applicants request a hearing, or if the applicants do not file amended agreements incorporating staff's recommendations within 14 days pursuant to subsection (d)(6)(C), the request shall be docketed as a contested case proceeding to approve, modify, or reject the agreements. The commission will issue an order within 120 days of the initiation of a contested case proceeding. In considering whether or not to approve the decommissioning funds collection agreement, the commission may consider the impact on customers including any impact on federal income taxes related to the nuclear decommissioning trust funds, the ability of the Transferee Company to administer the trust, any investment restrictions on the Transferee Company, the ability of the commission to enforce its rules over the administrator of the funds, and any other relevant factors.

    (F) An agreement filed pursuant to subsection (d)(1)(A) and (d)(3) of this section shall be filed at the commission within 15 days of the execution of the agreement.

  (7) Absent a commission order to the contrary, the Collecting Utility shall be the administrator of the nuclear decommissioning trust funds established or maintained by the Transferee Company and shall be responsible for administering the funds in accordance with subsection (e) of this section.

  (8) Upon the issuance of an order from the commission releasing the Collecting Utility from the obligation to administer the nuclear decommissioning trust funds, the Transferee Company that owns the nuclear decommissioning trust funds shall become the administrator of such funds in accordance with subsection (e) of this section.

(e) Administration of the Nuclear Decommissioning Trust Funds.

  (1) Duties of funds administrator.

    (A) Each funds administrator of Nuclear Decommissioning Trust Funds shall assure that the Nuclear Decommissioning Trust Funds are managed so that the funds are secure and are invested consistent with the goals in this subsection; and so that the funds provided from the Collecting Utility's nonbypassable charge, plus the amounts earned from investment of the funds, will be available at the time of decommissioning.

    (B) The funds administrator shall appoint one or more institutional trustees and may appoint one or more investment managers. Unless otherwise specified in paragraph (2) of this subsection, the Texas Trust Code controls the administration and management of the Nuclear Decommissioning Trust Funds, except that the appointed trustees need not be qualified to exercise trust powers in Texas. If the Collecting Utility is the acting funds administrator, the selection or replacement of such trustees and investment managers shall be made in consultation with the Transferee Company. The agreements with such trustees and investment managers shall require that any reports regarding the trust funds given to the fund administrator shall also be given to the Transferee Company, if different from the fund administrator.

    (C) The funds administrator shall retain the right to replace the trustees with or without cause. In appointing a trustee, the funds administrator shall have the following duties, which will be of a continuing nature:

      (i) 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 paragraph (3)(B)(i) of this subsection;

      (ii) A duty to investigate and determine whether the past administration of trusts by the trustee has been reasonable;

      (iii) A duty to investigate and determine whether the financial stability and strength of the trustee is adequate;

Cont'd...

Next Page

Link to Texas Secretary of State Home Page | link to Texas Register home page | link to Texas Administrative Code home page | link to Open Meetings home page