HB5247 - Relating to an alternative capital recovery process for certain utilities.

      H.B. No. 5247         AN ACT   relating to an alternative capital recovery process for certain   utilities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter E, Chapter 36, Utilities Code, is   amended by adding Section 36.216 to read as follows:           Sec.   36.216.     SINGLE CAPITAL INVESTMENT PROCEDURE FOR   CERTAIN UTILITIES. (a) This section applies only to an electric   utility, other than a river authority, that:                 (1)  operates solely inside ERCOT; and                 (2)     was identified by the commission as responsible   for constructing transmission as part of the reliability plan for   the Permian Basin approved by the commission under Section 39.167,   as added by Chapter 892 (H.B. 5066), Acts of the 88th Legislature,   Regular Session, 2023.           (b)     An electric utility that makes total capital   expenditures that exceed 300 percent of annual depreciation in a   calendar year may elect in the following calendar year to file a   single annual proceeding to adjust nonfuel rates on a system-wide   basis to reflect changes in transmission and distribution invested   capital in lieu of adjustments to retail and wholesale transmission   and distribution rates authorized under Section 36.210, Section   38.078, as added by Chapter 836 (H.B. 2555), Acts of the 88th   Legislature, Regular Session, 2023, and commission rules adopted   under Section 35.004.           (c)     An electric utility seeking to make an election under   this section shall:                 (1)     except as provided by Subsection (d), use the   filing requirements adopted by the commission for the adjustment   proceedings described by Subsection (b);                 (2)     file a notice with the commission of the utility's   intent to make the election and supporting documentation of the   capital expenditures described by Subsection (b) at least 60 days   before the date the utility makes a filing under Subsection (b);                 (3)     provide evidence of the utility's ongoing   eligibility in the annual proceeding under Subsection (b); and                 (4)     notify the commission if the utility determines   that the utility no longer qualifies for continued use of the   adjustment under this section.           (d)     An electric utility that makes an election under this   section:                 (1)     may defer all or a portion of the costs, including   depreciation expense and carrying costs, associated with the   transmission and distribution invested capital at the utility's   weighted average cost of capital established in the commission's   final order in the utility's most recent base rate proceeding for   invested capital, as described by Section 36.053, not currently   reflected in the utility's rates for recovery as a regulatory   asset; and                 (2)  shall:                       (A)     update the allocation of costs among customer   classes to reflect customer growth; and                       (B)     take into account changes in the number of   the utility's customers and the effects, on a weather-normalized   basis, that energy consumption and energy demand have on the amount   of revenue recovered through the utility's base rates.           (e)     Unless otherwise agreed to by an electric utility that   makes an election under this section, the commission shall:                 (1)     include the regulatory asset in rates set under   this section; and                 (2)     authorize amortization of the regulatory asset   over:                       (A)  a period not to exceed 18 months; or                       (B)     if a recovery period described by Paragraph   (A) would cause the utility to earn more than the utility's allowed   return on investment as normalized for weather, a longer recovery   period.           (f)     During a period when an electric utility that makes an   election under this section earns more than the utility's allowed   return on investment, on a weather-adjusted basis, the utility   shall apply the over-earnings to the balance of the regulatory   asset under Subsections (d) and (e).           (g)     The commission shall approve an adjustment under this   section not later than the 120th day after the date an electric   utility files a request for the adjustment.           (h)     The electric utility shall provide notice to retail   electric providers of rates approved under this section not later   than the 45th day before the date the rates take effect.           (i)     If the commission does not issue a final order in the   period described by Subsection (g) and the electric utility   complies with Subsection (h), the utility may place the requested   rates into effect on a temporary basis not earlier than the 165th   day after filing the request. The utility shall refund or credit   against future bills any difference between the temporary rate and   the final rate along with interest at the current interest rate as   determined by the commission.           (j)     An electric utility that makes an election under this   section may not petition for another adjustment under this section,   Section 36.210, Section 38.078, as added by Chapter 836 (H.B.   2555), Acts of the 88th Legislature, Regular Session, 2023, or   commission rules adopted under Section 35.004 before the first   anniversary of the date the utility files a request under   Subsection (b).           (k)     Notwithstanding any other law, in setting the rate of   return in a comprehensive base rate proceeding for an electric   utility receiving a rate adjustment under this section, the   commission may expressly consider the effect of the adjustment on   the utility's financial risk and rate of return.           (l)     An electric utility's use of this section terminates   when the utility no longer qualifies for an adjustment under this   section, except that the utility's rates in effect on the date the   utility no longer qualifies remain in effect until modified in a   future proceeding.           (m)  Nothing in this section is intended to:                 (1)     conflict with a provision of a financing order   issued under Subchapter I;                 (2)     affect the limitation on the commission's   jurisdiction under Section 32.002;                 (3)     limit the jurisdiction of a municipality over the   rates, operations, and services of an electric utility under   Section 33.001 or limit the ability of a municipality to obtain a   reimbursement under Section 33.023;                 (4)     prevent an electric utility, including a river   authority, from requesting cost recovery or rate relief under a   mechanism authorized under Chapter 36 or other provisions of this   title if the utility or authority is ineligible or becomes   ineligible to make an election under this section; or                 (5)  prevent the commission from:                       (A)     reviewing the investment costs included in an   adjustment under this section in the electric utility's next   comprehensive base rate proceeding to determine whether the costs   were prudent, reasonable, and necessary;                       (B)     refunding to customers any amount improperly   recovered through an adjustment under this section, with   appropriate carrying costs; or                       (C)     if applicable, refunding to customers the   realized equity portion of carrying costs deferred under Subsection   (d)(1) on a transmission project associated with the reliability   plan described by Subsection (a) if the in-service date is   unreasonably delayed beyond December 31, 2030, due to the utility's   actions, unless the utility demonstrates through contemporaneous   documentation of the utility's analysis and decision-making that   the delay is necessary to maximize the load serving capability of   other transmission projects.           (n)  This section expires December 31, 2035.          SECTION 2.  As soon as practicable after the effective date   of this Act, the Public Utility Commission of Texas shall adopt   rules necessary to implement Section 36.216, Utilities Code, as   added by this Act.          SECTION 3.  It is the intent of the 89th Legislature, Regular   Session, 2025, that the amendments made by this Act be harmonized   with another Act of the 89th Legislature, Regular Session, 2025,   relating to nonsubstantive additions to and corrections in enacted   codes.          SECTION 4.  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.       ______________________________ ______________________________      President of the Senate Speaker of the House                   I certify that H.B. No. 5247 was passed by the House on May 8,   2025, by the following vote:  Yeas 137, Nays 8, 2 present, not   voting; and that the House concurred in Senate amendments to H.B.   No. 5247 on May 28, 2025, by the following vote:  Yeas 110, Nays 28,   1 present, not voting.     ______________________________   Chief Clerk of the House               I certify that H.B. No. 5247 was passed by the Senate, with   amendments, on May 25, 2025, by the following vote:  Yeas 31, Nays   0.     ______________________________   Secretary of the Senate      APPROVED: __________________                   Date                       __________________                 Governor