HB2868 - Relating to the consideration of the proportion of long-term debt and equity capitalization in establishing the rates of certain electric utilities.

  89R21665 SCR-F     By: Metcalf, Anchía H.B. No. 2868       A BILL TO BE ENTITLED   AN ACT   relating to the consideration of the proportion of long-term debt   and equity capitalization in establishing the rates of certain   electric utilities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter B, Chapter 36, Utilities Code, is   amended by adding Section 36.068 to read as follows:           Sec.   36.068.     CONSIDERATION OF PROPORTION OF LONG-TERM DEBT   AND EQUITY CAPITALIZATION.   (a)   This section applies only to an   electric utility that operates solely within ERCOT.           (b)     Except as provided by Subsection (c), in considering an   electric utility's capitalization ratio when establishing the   utility's rates, the regulatory authority shall presume the   proportion of debt and equity proposed by the utility is reasonable   if calculated:                 (1)     using the utility's actual proportion of long-term   debt and equity capitalization as recorded in the utility's books   and records for the most recent available financial quarter before   the initiation of the applicable rate proceeding; and                 (2)     in a manner consistent with the methodology   included in earnings monitoring reports.           (c)     If the regulatory authority finds that the   capitalization ratio calculated in Subsection (b) is unreasonable,   the regulatory authority shall use an equity capitalization ratio   equal to the national average for electric utility operating   companies.          SECTION 2.  (a) Section 36.068, Utilities Code, as added by   this Act, applies only to a proceeding for the establishment of   rates for which the regulatory authority has not issued a final   order or decision before the effective date of this Act.          (b)  A proceeding for which the regulatory authority has   issued a final order or decision before the effective date of this   Act is governed by the law in effect immediately before that date,   and that law is continued in effect for that purpose.          SECTION 3.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution.  If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect September 1, 2025.