Bill Text: TX SB1782 | 2021-2022 | 87th Legislature | Introduced
Bill Title: Relating to the response and resilience of certain utilities to major weather-related events or natural disasters.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2021-04-06 - Left pending in committee [SB1782 Detail]
Download: Texas-2021-SB1782-Introduced.html
By: Creighton | S.B. No. 1782 | |
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relating to the response and resilience of certain utilities to | ||
major weather-related events or natural disasters. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 36.402(a), Utilities Code, is amended to | ||
read as follows: | ||
(a) In this subchapter, "system restoration costs" means | ||
reasonable and necessary costs, including costs expensed, charged | ||
to self-insurance reserves, deferred, capitalized, or otherwise | ||
financed, that are incurred by an electric utility due to any | ||
activity or activities conducted by or on behalf of the electric | ||
utility in connection with the restoration of service and | ||
infrastructure associated with electric power outages affecting | ||
customers of the electric utility as the result of any tropical | ||
storm or hurricane, ice or snow storm, flood, or other | ||
weather-related event or natural disaster that occurred in calendar | ||
year 2008 or thereafter. System restoration costs include | ||
mobilization, staging, and construction, reconstruction, | ||
replacement, or repair of electric generation, transmission, | ||
distribution, or general plant facilities. System restoration | ||
costs shall include reasonable estimates of the costs of an | ||
activity or activities conducted or expected to be conducted by or | ||
on behalf of the electric utility in connection with the | ||
restoration of service or infrastructure associated with electric | ||
power outages, but such estimates shall be subject to true-up and | ||
reconciliation after the actual costs are known. System | ||
restoration costs also include reasonable and necessary | ||
weatherization and storm-hardening costs incurred, as well as | ||
reasonable estimates of costs to be incurred by the electric | ||
utility, but such estimates shall be subject to true-up and | ||
reconciliation after the actual costs are known. | ||
SECTION 2. Chapter 36, Utilities Code, is amended by adding | ||
Subchapter J to read as follows: | ||
SUBCHAPTER J. LOWER COST FINANCING MECHANISM FOR | ||
SECURITIZATION FOR RECOVERY OF SYSTEM RESTORATION COSTS | ||
Sec. 36.407. LOWER COST FINANCING MECHANISM FOR | ||
SECURITIZATION FOR RECOVERY OF SYSTEM RESTORATION COSTS; PURPOSE | ||
AND DEFINITIONS. | ||
(a) Except as otherwise specifically provided in this | ||
subchapter, the same procedures, standards, and protections for | ||
securitization authorized in Subchapter I and, to the extent made | ||
applicable to Subchapter I, Subchapter G, Chapter 39, apply to the | ||
lower cost financing mechanism for securitization of transition | ||
costs (or "system restoration costs") as set forth in Subchapter I. | ||
To the extent any conflict exists between the provisions of this | ||
subchapter and Subchapter I or, to the extent made applicable by | ||
Subchapter I, Subchapter G, Chapter 39, in cases involving the | ||
securitization of system restoration costs under this subchapter, | ||
the provisions of this subchapter control. | ||
(b) The purpose of this subchapter is to make available a | ||
lower cost and supplemental financing mechanism to allow an | ||
electric utility to obtain timely recovery of system restoration | ||
costs under Subchapter I through securitization and the issuance of | ||
transition bonds (or "system restoration bonds") by an issuer other | ||
than the electric utility or an affiliated special purpose entity. | ||
Financing of system restoration costs pursuant to this subchapter | ||
is hereby recognized to be a valid and essential public purpose. | ||
(c) The Texas Electric Utility System Restoration | ||
Corporation shall be created pursuant to this subchapter as a | ||
special purpose public corporation and instrumentality of the state | ||
for the essential public purpose of providing a lower cost | ||
financing mechanism available to the commission and an electric | ||
utility to attract low-cost capital to finance system restoration | ||
costs. | ||
(d) System restoration bonds issued consistent with this | ||
subchapter will be solely the obligation of the issuer and the | ||
corporation (as borrower, if applicable) and will not be a debt of | ||
or a pledge of the faith and credit of the state. | ||
(e) System restoration bonds issued consistent with this | ||
subchapter shall be nonrecourse to the credit or any assets of the | ||
state and the commission. | ||
(f) This subchapter does not in any way limit or impair the | ||
commission's jurisdiction under this title to regulate the rates | ||
charged and the services rendered by electric utilities in this | ||
state. | ||
(g) An electric utility receiving the proceeds of | ||
securitization financing under this subchapter shall not be | ||
required to provide utility services to the corporation or the | ||
state as a result of receiving such proceeds except in their role as | ||
customers of the electric utility, nor shall this subchapter create | ||
any obligation of the corporation or any issuer to provide any | ||
electric services to the electric utility or its customers. | ||
(h) As used in this subchapter: | ||
(1) "corporation" means the Texas Electric | ||
Utility System Restoration Corporation. | ||
(2) "issuer" means the corporation or any other | ||
Texas corporation, public trust, public instrumentality, or other | ||
entity that issues system restoration bonds approved by a financing | ||
order. | ||
(3) For purposes of this subchapter, "qualified | ||
costs," as defined by Section 39.302 and as used in Subchapter G, | ||
Chapter 39, also includes all costs of establishing, maintaining, | ||
and operating the corporation and all costs of the corporation and | ||
any issuer in connection with the issuance and servicing of the | ||
system restoration bonds, all as approved in the financing order. | ||
(4) Except as otherwise specifically provided in this | ||
subchapter, the defined terms provided in Subchapter I and, if made | ||
applicable by Subchapter I, Subchapter G, Chapter 39, have the same | ||
meaning in this subchapter. | ||
Sec. 36.408. CREATION OF THE CORPORATION. (a) The | ||
corporation shall be incorporated as a nonprofit corporation and | ||
instrumentality of the state, and shall perform the essential | ||
governmental function of financing system restoration costs in | ||
accordance with this subchapter. The corporation shall perform | ||
only those functions consistent with this subchapter, shall | ||
exercise its powers through a governing board, and shall be subject | ||
to the regulation of the commission. The corporation shall have a | ||
legal existence as a public corporate body and instrumentality of | ||
the state separate and distinct from the state. | ||
(b) Assets of the corporation shall not be considered part | ||
of any state fund. The state shall not budget for or provide any | ||
general fund appropriations to the corporation, and the debts, | ||
claims, obligations, and liabilities of the corporation shall not | ||
be considered to be a debt of the state or a pledge of its credit. | ||
The corporation shall be self-funded. Prior to the imposition of | ||
transition charges (or "system restoration charges"), the | ||
corporation may accept and expend for its operating expenses such | ||
funds as may be received from any source, including financing | ||
agreements with the state, a commercial bank, or another entity to | ||
finance the corporation's obligations until the corporation | ||
receives sufficient transition property to cover its operating | ||
expenses as financing costs, and to repay any short-term borrowing | ||
under any such financing agreement. | ||
(c) The corporation shall have the powers, rights, and | ||
privileges provided for a corporation organized under Chapter 22, | ||
Business Organizations Code, subject to the express exceptions and | ||
limitations set forth in this subchapter. | ||
(d) An incorporator selected by the executive director of | ||
the commission shall prepare the articles of incorporation of the | ||
corporation under Chapter 22, Business Organizations Code, which | ||
articles shall be consistent with the provisions of this | ||
subchapter. | ||
(e) State officers, departments, and agencies are | ||
authorized to render services to the corporation within their | ||
respective functions, as may be requested by the commission or the | ||
corporation. | ||
(f) The corporation and any issuer may retain such | ||
professionals, financial advisors, and accountants as it may deem | ||
necessary to fulfill its duties under this subchapter and may | ||
determine their duties and compensation, subject to approval of the | ||
commission. | ||
(g) The governing body of the corporation shall be a board | ||
of directors that shall consist of five members appointed by the | ||
commission. All official action of the governing body shall | ||
require the favorable vote of a majority of the board members | ||
present and voting at any meeting of the board of directors. | ||
Sec. 36.409. POWERS AND DUTIES OF THE CORPORATION. (a) The | ||
corporation shall, in each instance subject to the prior | ||
authorization of the commission, participate in the financial | ||
transactions contemplated by this subchapter. The corporation | ||
shall engage in no other business activities except those | ||
activities provided for in this subchapter and those ancillary and | ||
incidental thereto. Neither the corporation nor any issuer shall | ||
apply any proceeds of system restoration bonds or system | ||
restoration charges to any purpose not specified in a financing | ||
order, or to any purpose in excess of the amount allowed for such | ||
purpose in the order, or to any purpose in contravention of the | ||
order. | ||
(b) The governing board of the corporation shall, pursuant | ||
to the provisions of this subchapter, have the power to employ or | ||
retain such persons as are necessary to perform the duties of the | ||
corporation. | ||
(c) The corporation may: | ||
(1) Acquire, sell, pledge, and transfer transition | ||
property as necessary to effect the purposes of this subchapter. In | ||
connection therewith, the corporation may agree to such terms and | ||
conditions as it deems necessary and proper, consistent with the | ||
terms of a financing order, (i) to acquire transition property and | ||
to pledge such transition property, and any other collateral, (a) | ||
to secure payment of system restoration bonds issued by the | ||
corporation, together with payment of any other qualified costs, or | ||
(b) to secure repayment of any borrowing from any other issuer of | ||
system restoration bonds, or (ii) to sell the transition property | ||
to another issuer, which may in turn pledge such transition | ||
property, together with any other collateral, to the repayment of | ||
system restoration bonds issued by the issuer together with any | ||
other qualified costs; | ||
(2) Issue system restoration bonds on terms and | ||
conditions consistent with a financing order; | ||
(3) Borrow funds from an issuer of system restoration | ||
bonds to acquire transition property, and pledge such transition | ||
property to the repayment of any borrowing from an issuer, together | ||
with any related qualified costs, all on terms and conditions | ||
consistent with a financing order. The corporation may also borrow | ||
funds for initial operating expenses as specified in Section | ||
36.408; | ||
(4) Sue or be sued in its corporate name. The | ||
corporation has the authority to intervene as a party before the | ||
commission or any court in this state in any matter involving the | ||
corporation's powers and duties; | ||
(5) Negotiate and become a party to such contracts as | ||
necessary, convenient, or desirable to carry out the purposes of | ||
this subchapter; and | ||
(6) Engage in corporate actions or undertakings that | ||
are permitted for nonprofit corporations in this state and that are | ||
not prohibited by, or contrary to, the provisions of this | ||
subchapter. | ||
(d) The corporation shall maintain separate accounts and | ||
records relating to each electric utility that is collecting system | ||
restoration charges for all charges, revenues, assets, | ||
liabilities, and expenses relating to that utility's related system | ||
restoration bond issuances. | ||
(e) The governing board of the corporation shall be | ||
prohibited from authorizing any rehabilitation, liquidation, or | ||
dissolution of the corporation, and no such rehabilitation, | ||
liquidation, or dissolution of the corporation shall take effect as | ||
long as any system restoration bonds are outstanding unless | ||
adequate protection and provision has been made for the payment of | ||
the bonds pursuant to the documents authorizing the issuance of the | ||
bonds. In the event of any rehabilitation, liquidation, or | ||
dissolution, the assets of the corporation shall be applied first | ||
to pay all debts, liabilities, and obligations of the corporation, | ||
including the establishment of reasonable reserves for any | ||
contingent liabilities or obligations, and all remaining funds of | ||
the corporation shall be applied and distributed as provided by an | ||
order of the commission. | ||
(f) Prior to the date that is two years and one day after | ||
which the corporation no longer has any payment obligation with | ||
respect to any system restoration bonds, including any obligation | ||
to any issuer of any system restoration bonds outstanding, the | ||
corporation is prohibited from filing and shall have no authority | ||
to file a voluntary petition under the Federal Bankruptcy Code, as | ||
it may, from time to time, be in effect, and neither any public | ||
official nor any organization, entity, or other person shall | ||
authorize the corporation to be or to become a debtor under the | ||
Federal Bankruptcy Code during such period. The state covenants | ||
that it will not limit or alter the denial of authority under this | ||
subsection or subsection (e), and the provisions of such | ||
subsections are hereby made a part of the contractual obligation | ||
that is subject to the state pledge set forth in Section 39.310. | ||
(g) The corporation shall prepare an operating budget | ||
annually that shall be submitted for approval to the commission. If | ||
requested by the commission, the corporation shall prepare and | ||
submit an annual report containing, among other appropriate | ||
matters, the annual operating and financial statements of the | ||
corporation. | ||
Sec. 36.410. COMMISSION REGULATION OF THE CORPORATION. The | ||
commission shall regulate the corporation as provided for in this | ||
subchapter. Such regulation shall be concomitant with the | ||
commission's regulation of public utilities. Notwithstanding such | ||
regulation, the corporation is not a public utility. | ||
Sec. 36.411. FINANCING ORDER. (a) This section applies to | ||
the commission's issuance of a financing order under this | ||
subchapter. | ||
(b) Except as otherwise specifically provided in this | ||
subchapter, the provisions in Subchapter I and, to the extent made | ||
applicable to Subchapter I, Subchapter G, Chapter 39, addressing | ||
the commission's issuance of a financing order apply to the | ||
commission's issuance of a financing order under this subchapter. | ||
(c) The corporation and any issuer shall be a party to the | ||
commission's proceedings addressing the issuance of a financing | ||
order along with the pertinent electric utility. | ||
(d) A financing order issued under this subchapter shall, in | ||
addition to the requirements of Subchapter I (as applicable): | ||
(1) Require the sale, assignment, or other transfer of | ||
certain specified transition property created by the financing | ||
order to the corporation (in the manner contemplated by Section | ||
39.308), and following such sale, assignment, or transfer, system | ||
restoration charges paid under any financing order shall be | ||
created, assessed, and collected as the property of the | ||
corporation, subject to subsequent sale, assignment, or transfer by | ||
the corporation as authorized under this subchapter. | ||
(2) Authorize either: | ||
(A) the issuance of system restoration bonds by | ||
the corporation secured by a pledge of such specified transition | ||
property, and the application of the proceeds of such system | ||
restoration bonds (net of issuance costs) to the acquisition of the | ||
transition property from the electric utility; or | ||
(B) the acquisition of specified transition | ||
property from the electric utility by the corporation, financed (i) | ||
by a loan by an issuer to the corporation of the proceeds of system | ||
restoration bonds (net of issuance costs), or (ii) by the | ||
acquisition by an issuer from the corporation of such transition | ||
property, and in each case, the pledge of such transition property | ||
to the repayment of such loan or system restoration bonds, as | ||
applicable; | ||
(3) Authorize the electric utility to serve as | ||
collection agent to collect the system restoration charges and | ||
transfer those collected charges to the corporation, the issuer, or | ||
a financing party, as appropriate. | ||
(e) After issuance of the financing order, the corporation | ||
shall arrange for the issuance of system restoration bonds as | ||
specified in the financing order by it or another issuer selected by | ||
the corporation and approved by the commission. | ||
(f) System restoration bonds issued pursuant to a financing | ||
order under this section are secured only by the related transition | ||
property and any other funds pledged under the bond documents, and | ||
no assets of the state or electric utility shall be subject to | ||
claims by such bondholders. Notwithstanding the provisions in | ||
Subchapter G, Chapter 39, following assignment of the transition | ||
property, the electric utility shall not have any beneficial | ||
interest or claim of right in such system restoration charges or in | ||
any transition property. | ||
Sec. 36.412. SEVERABILITY. Effective on the date the first | ||
system restoration bonds associated with system restoration costs | ||
are issued under this subchapter, if any provision in this title or | ||
portion of this title is held to be invalid or is invalidated, | ||
superseded, replaced, repealed, or expires for any reason, that | ||
occurrence does not affect the validity or continuation of this | ||
subchapter, Subchapter I, as it applies to this subchapter, | ||
Subchapter G, Chapter 39, as it applies to this subchapter, or any | ||
part of those provisions, or any other provision of this title that | ||
is relevant to the issuance, administration, payment, retirement, | ||
or refunding of system restoration bonds or to any actions of the | ||
electric utility, its successors, an assignee, a collection agent, | ||
the corporation, an issuer, or a financing party, and those | ||
provisions shall remain in full force and effect. | ||
SECTION 3. Section 37.051, Utilities Code, is amended by | ||
adding Subsection (d) to read as follows: | ||
(d) Notwithstanding any other provision of this title, an | ||
electric utility may, but shall not be required to, obtain a | ||
certificate to install, own, or operate a generation facility with | ||
a capacity of ten megawatts or less. | ||
SECTION 4. Section 37.056(c)(4)(E), Utilities Code, is | ||
amended to read as follows: | ||
(E) the probable improvement of service or | ||
lowering of cost to consumers in the area if the certificate is | ||
granted, including any potential economic or reliability benefits | ||
associated with dual fuel and fuel storage capabilities; and | ||
SECTION 5. Subchapter F, Chapter 104, Utilities Code, is | ||
amended by adding Section 104.259 to read as follows: | ||
Sec. 104.259. PRIORITIES DURING NATURAL GAS CURTAILMENT. | ||
(a) If the curtailment of natural gas is necessary during a state | ||
of disaster as declared by the governor or an extreme weather | ||
emergency as defined in Section 104.258, a gas utility shall | ||
observe the following priorities for the continued delivery of gas | ||
in descending order: | ||
(1) deliveries of natural gas by gas utilities to | ||
residences, hospitals, schools, churches, and other human needs | ||
customers, and deliveries to local distribution companies that | ||
serve human needs customers. | ||
(2) deliveries of natural gas by gas utilities to | ||
electric generation facilities that serve human needs customers. | ||
(3) deliveries of natural gas by gas utilities to | ||
small industrial and regular commercial loads, defined as those | ||
customers using less than 3,000,000 cubic feet of gas per day, and | ||
delivery of gas for use as pilot lights or in accessory or auxiliary | ||
equipment essential to avoid serious damage to industrial plants; | ||
(4) deliveries of natural gas by gas utilities to | ||
large users of gas for fuel as raw material where an alternate fuel | ||
source cannot be used and operation and plant production would be | ||
curtailed or completely cease when gas is curtailed; | ||
(5) deliveries of natural gas by gas utilities to | ||
large users of gas for boiler fuel or other fuel users where an | ||
alternate fuel source can be used. This category is not to be | ||
determined by whether or not a user has actually installed | ||
alternate fuel facilities, but whether or not an alternate fuel | ||
could be used. | ||
SECTION 6. 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, 2021. |