Bill Text: TX HB2555 | 2023-2024 | 88th Legislature | Engrossed
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to transmission and distribution system resiliency planning by and cost recovery for electric utilities.
Spectrum: Moderate Partisan Bill (Republican 4-1)
Status: (Passed) 2023-06-13 - Effective immediately [HB2555 Detail]
Download: Texas-2023-HB2555-Engrossed.html
Bill Title: Relating to transmission and distribution system resiliency planning by and cost recovery for electric utilities.
Spectrum: Moderate Partisan Bill (Republican 4-1)
Status: (Passed) 2023-06-13 - Effective immediately [HB2555 Detail]
Download: Texas-2023-HB2555-Engrossed.html
By: Metcalf, Raymond, et al. | H.B. No. 2555 |
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relating to transmission and distribution system resiliency | ||
planning by and cost recovery for electric utilities. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. The legislature finds that: | ||
(1) extreme weather conditions, including high winds, | ||
lightning, flooding, and freezes, can cause extraordinary damage to | ||
electrical transmission and distribution facilities, resulting in | ||
power outages; | ||
(2) it is in the state's interest to promote the use of | ||
resiliency measures to enable electrical transmission and | ||
distribution infrastructure to withstand extreme weather | ||
conditions, including hardening electrical transmission and | ||
distribution facilities, undergrounding certain electrical | ||
distribution lines, lightning mitigation measures, flood | ||
mitigation measures, information technology, cybersecurity | ||
measures, physical security measures, vegetation management, and | ||
wildfire mitigation and response; | ||
(3) protecting electrical transmission and | ||
distribution infrastructure from extreme weather conditions can | ||
effectively reduce system restoration costs to and outage times for | ||
customers and improve system resiliency and overall service | ||
reliability for customers; | ||
(4) it is in the state's interest for each electric | ||
utility to seek to mitigate system restoration costs to and outage | ||
times for customers when developing plans to enhance electrical | ||
transmission and distribution infrastructure storm resiliency; and | ||
(5) all customers benefit from reduced system | ||
restoration costs. | ||
SECTION 2. Subchapter D, Chapter 38, Utilities Code, is | ||
amended by adding Section 38.078 to read as follows: | ||
Sec. 38.078. TRANSMISSION AND DISTRIBUTION SYSTEM | ||
RESILIENCY PLAN AND COST RECOVERY. (a) In this section, "plan" | ||
means a transmission and distribution system resiliency plan | ||
described by Subsection (b). | ||
(b) An electric utility may file, in a manner authorized by | ||
commission rule, a plan to enhance the resiliency of the utility's | ||
transmission and distribution system through at least one of the | ||
following methods: | ||
(1) hardening electrical transmission and | ||
distribution facilities; | ||
(2) modernizing electrical transmission and | ||
distribution facilities; | ||
(3) undergrounding certain electrical distribution | ||
lines; | ||
(4) lightning mitigation measures; | ||
(5) flood mitigation measures; | ||
(6) information technology; | ||
(7) cybersecurity measures; | ||
(8) physical security measures; | ||
(9) vegetation management; or | ||
(10) wildfire mitigation and response. | ||
(c) A plan must explain the systematic approach the electric | ||
utility will use to carry out the plan during at least a three-year | ||
period. | ||
(d) In determining whether to approve a plan filed under | ||
this section, the commission shall consider: | ||
(1) the extent to which the plan is expected to enhance | ||
system resiliency, including whether the plan prioritizes areas of | ||
lower performance; and | ||
(2) the estimated costs of implementing the measures | ||
proposed in the plan. | ||
(e) The commission shall issue an order to approve, modify, | ||
or deny a plan filed under Subsection (b) and any associated rider | ||
described by Subsection (i) not later than the 180th day after the | ||
plan is filed with the commission. The commission may not approve a | ||
plan if the commission determines that approving the plan is not in | ||
the public interest. | ||
(f) For a plan approved by the commission, with or without | ||
modification, an electric utility may request a good cause | ||
exception on implementing all or some of the measures or incurring | ||
all or some of the estimated costs in the plan if operational needs, | ||
business needs, financial conditions, or supply chain or labor | ||
conditions dictate the exception. The commission's denial of a | ||
plan is not considered to be a finding of the prudence or imprudence | ||
of a measure or cost in the plan for the purposes of Chapter 36 or | ||
this chapter. | ||
(g) An electric utility for which the commission has | ||
approved a plan under this section may request that the commission | ||
review an updated plan submitted by the electric utility. The | ||
updated plan must comply with any applicable commission rules and | ||
take effect on a date that is not earlier than the third anniversary | ||
of the approval date of the utility's most recently approved plan. | ||
The commission shall review and approve, modify, or deny the | ||
updated plan in the manner provided by Subsections (d), (e), and | ||
(f). | ||
(h) An electric utility's implementation of a plan approved | ||
under this section may not be considered imprudent for the purposes | ||
of Chapter 36 or this chapter. If the commission determines that | ||
the costs to implement an approved plan were prudently incurred and | ||
otherwise reasonable, those costs are not subject to disallowance | ||
for exceeding the estimates in the plan. | ||
(i) Notwithstanding any other law, an electric utility may | ||
file with a plan an application for a rider to recover all or a | ||
portion of the estimated costs relating to the electric utility's | ||
implementation of the plan, other than transmission-related costs. | ||
If the commission approves the plan, the commission shall determine | ||
the appropriate terms of the rider in the approval order. A rider | ||
approved under this subsection must allow the electric utility to | ||
begin recovering the levelized cost of implementing the approved | ||
plan, other than transmission-related costs, at the time the plan | ||
is first implemented. The commission shall adopt a procedure for | ||
reconciliation of an electric utility's distribution-related | ||
expenses to implement an approved plan. | ||
(j) As part of a review described by Subsection (g), the | ||
commission shall reconcile the rider authorized under Subsection | ||
(i) to determine the electric utility's reasonably and prudently | ||
incurred plan costs. | ||
(k) If an electric utility that files a plan with the | ||
commission does not apply for a rider under Subsection (i), the | ||
utility may defer all or a portion of the distribution-related | ||
costs relating to the implementation of the plan for future | ||
recovery as a regulatory asset, including depreciation expense and | ||
carrying costs 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, and use commission authorized cost | ||
recovery alternatives under Sections 36.209 and 36.210 or another | ||
general rate proceeding. | ||
(l) Plan costs considered by the commission to be reasonable | ||
and prudent may include only incremental costs that are not already | ||
being recovered through the electric utility's base rates or any | ||
other rate rider and must be allocated to customer classes pursuant | ||
to the rate design most recently approved by the commission. If a | ||
capital investment is recoverable as a plan cost, the electric | ||
utility may recover all reasonable and prudent costs associated | ||
with the investment, including the annual depreciation expense | ||
related to the investment calculated at the utility's currently | ||
approved depreciation rates, the after-tax return on the | ||
undepreciated balance of the investment calculated using the rate | ||
of return approved by the commission in the utility's last | ||
comprehensive base rate proceeding, and federal income tax and | ||
other taxes related to the investment. | ||
SECTION 3. The Public Utility Commission of Texas shall | ||
adopt rules to implement Section 38.078, Utilities Code, as added | ||
by this Act, not later than the 180th day after the effective date | ||
of this Act. | ||
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, 2023. |