Part II.
Public Utility Commission of Texas
Chapter 25.
Substantive Rules Applicable to Electric Service Providers
The Public Utility Commission of Texas (commission) proposes an amendment
to §25.84, relating to Annual Reporting of Affiliate Transactions for
Electric Utilities, new §25.272, relating to Code of Conduct for Electric
Utilities and Their Affiliates, and new §25.273, relating to Contracts
Between Electric Utilities and Their Competitive Affiliates. Section 25.84
establishes the annual reporting requirements for utilities for transactions
with affiliates. Section 25.272 establishes broad safeguards to govern the
interaction between utilities and their affiliates, including competitive
affiliates. Section 25.273 establishes the fair, competitive bidding process
that utilities must use to sell certain assets to and obtain certain products
and services from a competitive affiliate or other third party, and establishes
requirements for any contracts with competitive affiliates that may result
from this competitive bidding process. Project number 20936 has been assigned
to this proceeding.
Project Number 17549,
Rulemaking to Address Affiliate
Activities,
was established June 25, 1997, with a request from commission
staff for all parties to file lists of issues to be included in a rulemaking
on affiliate relationships. At the outset, the rulemaking encompassed both
industries that the commission regulates, electric and telecommunications.
On February 13, 1998, the telecommunications portion was severed into a separate
rulemaking, and the electric rulemaking was restyled as
Code of Conduct for Electric Utilities and Their Affiliates
and retained
Project Number 17549. In Project Number 17549, new rule §§25.84,
and 25.271-25.274 were published for comment in the
Texas Register
on May 22, 1998 (23 TexReg 5294). A public hearing was
held on July 13, 1998, pursuant to the Administrative Procedure Act §2001.029,
Texas Government Code Annotated (Vernon 1999) (APA) to solicit oral comments
from interested parties. On August 20, 1998, the commission withdrew the proposed
new rule sections. A new §25.84, relating to Annual Reporting of Affiliate
Transactions for Electric Utilities, was published in the
Texas Register
on September 25, 1998 (23 TexReg 9680), and the commission
voted to adopt §25.84 at its December 14, 1998, open meeting. Also on
December 14, 1998, the commission voted to republish for comment the broader
code of conduct provisions contained in §§25.272-275 (formerly numbered
as §§25.271-274 in the May 1998 proposal).
The commission's decision to withdraw the proposal in August 1998 was based,
in part, on the premise that affiliate activities were likely to be addressed
in the 1999 Legislative Session in the context of an electric industry restructuring
bill. However, after the commission withdrew the proposed rule sections, it
became aware of several instances in which improper behavior relating to affiliates
may have been occurring. Most notable were Docket Number 17880,
Complaint of Texas Utilities Electric Company Against Hill County Electric
Cooperative, Inc., Brazos Power Marketing Cooperative, Inc., and Brazos Electric
Power Cooperative, Inc.
and Project Number 19529,
Informal Dispute Resolution for Transmission Access in the Rio Grande Valley.
The commission decided in December 1998 to republish the proposed
rule sections because it was concerned that to wait to promulgate rules on
utilities' conduct relating to affiliates would be imprudent.
In January 1999, after the start of the 76th Legislative Session, Senate
Bill 7, which addressed electric industry restructuring and included provisions
for a code of conduct, was filed. The Senate passed Senate Bill 7 on March
17, 1999. Accordingly, on April 8, 1999, after comments were filed by interested
parties on the republished code of conduct contained in §§25.272-275,
the commission decided to wait for legislative guidance on code of conduct
provisions. Senate Bill 7 passed the House of Representatives on May 21, 1999,
with amendments. The Senate concurred with House amendments, and the Governor
signed Senate Bill 7 into law on June 18, 1999. Senate Bill 7 amends several
sections of the Public Utility Regulatory Act (Vernon 1999) (PURA) and is
effective September 1, 1999.
The Legislature determined that the production and sale of electricity
is not a monopoly warranting regulation of rates, operations, and services
and that the public interest in competitive electric markets requires that,
except for transmission and distribution services and for the recovery of
stranded costs, electric services and their prices should be determined by
customer choices and the normal forces of competition. The Legislature enacted
Chapter 39 of PURA to protect the public interest during the transition to
and in the establishment of a fully competitive electric power industry. PURA
§39.157,
Commission Authority to Address Market
Power,
directs the commission to adopt rules and enforcement procedures
by January 10, 2000, to govern transactions or activities between a transmission
and distribution utility and its affiliates to avoid potential market power
abuses and cross-subsidization between regulated and competitive activities.
The electric industry will be in a period of transition to competition
until January 1, 2002, when each electric utility is required by PURA §39.051
to separate its business activities from one another into the following units:
a power generation company, a retail electric provider, and a transmission
and distribution company. This separation may be accomplished through the
creation of separate nonaffiliated companies or separate affiliated companies
owned by a common holding company, or through the sale of assets to a third
party. On or before September 1, 2000, each electric utility shall separate
from its regulated utility activities its customer energy services business
activities that are already widely available in the competitive market. By
January 10, 2000, utilities are required to file with the commission plans
describing how they intend to unbundle their business activities in a manner
that provides for a separation of personnel, information flow, functions,
and operations, consistent with the provisions of PURA §39.157(d), which
are the code of conduct provisions.
On June 3, 1999, the commission closed Project Number 17549 and opened
Project Number 20936,
Code of Conduct for Electric
Utilities Pursuant to PURA §39.157(d),
to revise the formerly
proposed code of conduct to conform with the new statutory provisions of PURA
§39.157. This rulemaking addresses affiliate activities, and the broader
issue of utility unbundling is addressed in Project Number 21083. Initial
compliance plans for the code of conduct will be addressed in the context
of the commission's review of utility unbundling plans filed pursuant to PURA
§39.051(e).
In proposing these rules relating to affiliate activities, the commission
has two objectives both during the transition to and after the introduction
of competition: avoiding potential market power abuses and preventing cross-subsidization
between regulated and competitive activities. The commission seeks to prohibit
practices between regulated and competitive activities that may unreasonably
restrict, impair, or reduce the level of competition during the transitional
separation of personnel, information flow, functions, and operations, and
after a competitive market is established. Based on recent experience conducting
periodic electric utility rate reviews and on other regulators' recent experiences
with the motor carrier, telephone, and natural gas industries, the commission
finds that there is a strong incentive for regulated utilities or their holding
companies to subsidize their competitive activities with revenues or intangible
benefits derived from their regulated monopoly businesses. The commission
concludes that it is in the public interest to prevent or limit the opportunities
for improper tying, predatory pricing, withholding of production, precluding
entry, and collusion. In addition, the commission concludes that articulating
new rules that reflect the state of current and future competition in the
electric power industry will help prevent anti-competitive behavior, provide
regulatory certainty, facilitate more efficient competition to the benefit
of customers, and fairly balance the equities among competing service providers.
The commission seeks any comments on the proposed rule that interested
parties believe are appropriate. Parties should organize their comments in
a manner consistent with the organization of the proposed rules. Furthermore,
when commenting on specific subsections of the proposed rules, parties are
encouraged to describe "best practice" examples of regulatory policies, and
their rationale, that have been proposed or implemented successfully in other
states already undergoing electric industry restructuring, if the parties
believe that Texas would benefit from application of the same policies. The
commission is only interested in receiving "leading edge" examples which are
specifically related and directly applicable to the Texas statute, rather
than broad citations to other state restructuring efforts.
In addition, the commission requests that interested parties specifically
address the issue of how the code of conduct should apply during the transition
to competition. PURA §39.157(d) clearly states that the code of conduct
should apply not only after retail competition begins, but also during the
transition to competition. Because utilities are not required to fully separate
their regulated and competitive business activities pursuant to PURA §39.051
until January 1, 2002, utilities may not have "competitive affiliates" to
which certain provisions in the code of conduct would apply during the transition
period. Until such unbundling occurs, activities that eventually will be performed
by a competitive affiliate, such as retail service marketing, may still reside
within the integrated utility. The commission tentatively concludes that it
is in the public interest to require each utility to implement an internal
code of conduct that will ensure functional separation of regulated and competitive
activities during the transition period, before transmission and distribution
utilities are required to be entities that are separate and operating independently
from their competitive affiliates. The commission seeks comment on its tentative
conclusion and seeks input regarding how the rules should be modified, if
necessary, during the transition to competition to address this issue.
A related dilemma is that faced by those utilities subject to the Public
Utility Holding Company Act (PUHCA), in which several regulated utilities
operate under a single holding company. Under a plain reading of the definition
of "competitive affiliate" in PURA §39.157(i)(1), certain regulated utilities
operating in Texas under such a structure would be competitive affiliates
of each other, until such time as their competitive activities are separated
from the transmission and distribution portion of the business pursuant to
PURA §39.051. In some cases, certain shared functions, such as transmission
planning, may be consolidated currently under a single service company affiliate
that serves multiple regulated operating utilities; since such services are
not permissible corporate support services which can be shared among utilities
and their competitive affiliates, the classification of these regulated utilities
as "competitive affiliates" during the transition period may pose a significant
difficulty for implementation of the code of conduct. In the proposed rules,
the commission modifies the definition of "corporate support services" to
allow sharing of certain activities exclusively among regulated utility affiliates.
The commission requests comment on this proposed solution, and solicits suggestions
for other alternative solutions, to address the issue of transition for such
PUHCA jurisdictional utilities.
Suzanne L. Bertin, assistant director, Office of Policy Development, has
determined that for the first five-year period the sections are in effect
there will be no fiscal implications for state or local government as a result
of the enforcing or administering the sections.
Ms. Bertin also has determined that for each year of the first five years
the proposed sections are in effect, the public benefit anticipated as a result
of enforcing these sections will be improved regulatory oversight of electric
utilities and enhanced competition in the provision of energy-related services.
There will be no effect on small businesses or micro-businesses as a result
of enforcing these sections.
It is anticipated that there will be economic costs incurred by persons
who are required to comply with the new sections as proposed. The costs incurred
are likely to vary from utility to utility, and are difficult to ascertain.
The benefits accruing from implementation of these rules, however, are expected
to outweigh these costs.
Ms. Bertin also has determined that for each year of the first five years
the proposed sections are in effect, there should be no effect on a local
economy; therefore, no local employment impact statement is required under
the Administrative Procedure Act §2001.022.
The commission staff will conduct a public hearing on this rulemaking under
Government Code §2001.029 at the commission's offices, located in the
William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701,
on Monday, October 18, 1999, at 1:00 p.m.
Comments on the proposed new and amended rules (16 copies) may be submitted
to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress
Avenue, PO Box 13326, Austin, Texas 78711-3326, within 30 days after publication.
Reply comments may be submitted within 45 days after publication. The commission
invites specific comments regarding the costs associated with, and benefits
that will be gained by, implementation of the proposed section. The commission
will consider the costs and benefits in deciding whether to adopt the section.
All comments should refer to Project Number 20936.
Subchapter D. Records, Reports, and Other Required Information
16 TAC §25.84
This amendment is proposed under the Public Utility Regulatory
Act, Texas Utilities Code Annotated (Vernon 1999) (PURA), and Act of May 27,
1999, 76th Legislature, Regular Session, Senate Bill 7 (SB), §39 (to
be codified at Texas Utilities Code Annotated §§39.251-39.265) (SB
7) §§11.002(a), 14.001, 14.002, 14.003, 14.151, 14.154, 15.023,
31.001(c), 32.101(c), 35.003(b), 35.034, 35.035, 36.003, 36.058, 38.021, 38.022,
39.001, 39.051, 39.101(2), 39.157, 39.356, 39.357, 51.001, 52.001, and 55.006.
Section 11.002(a) requires establishment of a comprehensive and adequate regulatory
system by the commission to ensure just and reasonable rates, operations,
and services. Section 14.001 grants the commission the general power to regulate
and supervise the business of each utility within its jurisdiction. Section
14.002 provides the commission with the authority to make and enforce rules
reasonably required in the exercise of its powers and jurisdiction. Section
14.003 grants the commission the authority to require submission of information
by the utility regarding its affiliate activities. Section 14.151 grants the
commission authority to prescribe the manner of accounting for all business
transacted by the utility. Section 14.154 grants the commission limited authority
over the utility's affiliates, with respect to their transactions with the
utility. Section 15.023 grants the commission authority to impose an administrative
penalty against a regulated entity for violation of a rule adopted under this
title. Section 31.001(c) requires that the commission formulate and apply
rules, policies, and principles to protect the public interest in a more competitive
electric market place. Section 32.101(c) requires that customer proprietary
information be treated as highly sensitive trade secrets. Section 35.003(b)
prohibits electric utilities from granting undue preference to a person in
connection with the purchase or sale of energy or other services. Section
35.034 grants the commission authority to approve transfers of certain assets
between utilities and affiliates. Section 35.035 governs the valuation of
assets transferred by a utility to or from an affiliate. Section 36.003 requires
the commission to ensure that a utility's rates are just and reasonable, sufficient,
equitable, and consistent in application to each class of consumer, and not
unreasonably preferential, prejudicial, or discriminatory. Section 36.058
sets forth the circumstances under which the commission may allow payments
by a utility to an affiliate. Section 38.021 requires that utilities not grant
an unreasonable preference to or impose an unreasonable disadvantage on different
persons in the same classification. Section 38.022 requires that utilities
not discriminate against competitors or engage in practices that restrict
or impair competition in the electric market. Section 39.001 states that it
is in the public interest to protect the competitive process in a manner that
ensures the confidentiality of competitively sensitive information during
the transition to a competitive market and after the commencement of customer
choice. Section 39.051 requires that each electric utility unbundle personnel,
information flow, functions, and operations, consistent with the code of conduct.
Section 39.101(2) grants the commission authority to ensure that retail customer
protections are established to entitle a customer to privacy of customer consumption
and credit information. Section 39.157 grants the commission authority to
take actions to address market power and adopt rules and enforcement procedures
to govern transactions or activities between utilities and their affiliates.
Section 39.356 grants the commission authority to suspend, revoke, or amend
a retail electric provider's certificate, a power generation company's registration,
or an aggregator's registration for significant violations of the rules adopted
under this title. Section 39.357 grants the commission authority to impose
an administrative penalty as necessary to eliminate or to remedy market power
abuses.
Cross Reference to Statutes: Public Utility Regulatory Act §§11.002(a),
14.001, 14.002, 14.003, 14.151, 14.154, 15.023, 31.001(c), 32.101(c), 35.003(b),
35.034, 35.035, 36.003, 36.058, 38.021, 38.022, 39.001, 39.051, 39.101(2),
30.157, 39.356, and 39.357.
§25.84. Annual Reporting of Affiliate Transactions for Electric Utilities.
(a)
Purpose. This section establishes annual reporting requirements
for transactions between [
(b)
Application. This section applies to
:
[
(1)
electric utilities operating
in the State of Texas as defined in the Public Utility Regulatory Act (PURA)
§31.002 (6), and transactions or activities between electric utilities
and their affiliates, as defined in PURA §11.003(2); and
(2)
transmission and distribution
utilities operating in a qualifying power region in the State of Texas as
defined in PURA §31.002(19) upon commission certification of a qualifying
power region pursuant to PURA §39.152, and transactions or activities
between transmission and distribution utilities and their affiliates, as defined
in PURA §11.003(2).
(c)
Definitions. Any terms defined
in §25.272 of this title (relating to Code of Conduct for Electric Utilities
and Their Affiliates) have the same meanings herein.
(d)
[
(e)
[
(f)
Tracking migration of employees.
A utility shall track and document the movement of all employees engaged in
transmission and distribution system operations, including persons employed
by a service company affiliated with the utility who are engaged in day-to-day
transmission and distribution system operations or have knowledge of information
that is intended to be protected under PURA §39.157(d), between the utility
and its competitive affiliates. Employee migration information shall be made
available to the commission on an annual basis in the utility's "Report of
Affiliate Activities." The tracking information shall include an identification
code for the migrating employee, the respective titles held while employed
at each entity, and the effective dates of the migration.
(g)
Annual reporting of informal
complaint resolution. A utility shall report to the commission information
regarding the resolution of informal complaints in accordance with the utility's
procedures developed pursuant to §25.272(i)(4) of this title (relating
to Code of Conduct for Electric Utilities and Their Affiliates). The information
reported shall include the name of the complainant and a summary report of
the complaint, including all relevant dates, companies involved, employees
involved, and any actions taken to address the complaint. Such information
shall be made available to the commission on an annual basis in the utility's
"Report of Affiliate Activities".
(h)
Reporting of deviations from
the code of conduct. A utility shall report to the commission information
regarding the instances in which deviations from the code of conduct were
necessary to ensure public safety and system reliability. The information
reported shall include the nature of the circumstances requiring the deviation,
the action taken by the utility and the parties involved, and the date of
the deviation. Such information shall be made available to the commission
on an annual basis in the utility's "Report of Affiliate Activities."
(i)
Annual update of compliance
plans. Initial plans for compliance with §25.272 of this title (relating
to Code of Conduct for Electric Utilities and Their Affiliates), shall be
supplied as a part of the utility's unbundling plan filed pursuant to PURA
§39.051. Additionally, the utility shall file as a part of its annual
"Report of Affiliate Activities" any updates to its compliance plans, reflecting
any creation of new affiliates or any other changes to the compliance plan.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
August 9, 1999.
TRD-9904887
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: September 19, 1999
For further information, please call: (512) 936-7308
16 TAC §25.272, §25.273
These new sections are proposed under the Public Utility Regulatory
Act, Texas Utilities Code Annotated (Vernon 1999) (PURA), and Act of May 27,
1999, 76th Legislature, Regular Session, Senate Bill 7, §39 (to be codified
at Texas Utilities Code Annotated §§39.251- 39.265) (SB 7) §§11.002(a),
14.001, 14.002, 14.003, 14.151, 14.154, 15.023, 31.001(c), 32.101(c), 35.003(b),
35.034, 35.035, 36.003, 36.058, 38.021, 38.022, 39.001, 39.051, 39.101(2),
39.157, 39.356, 39.357, 51.001, 52.001, and 55.006. Section 11.002(a) requires
establishment of a comprehensive and adequate regulatory system by the commission
to ensure just and reasonable rates, operations, and services. Section 14.001
grants the commission the general power to regulate and supervise the business
of each utility within its jurisdiction. Section 14.002 provides the commission
with the authority to make and enforce rules reasonably required in the exercise
of its powers and jurisdiction. Section 14.003 grants the commission the authority
to require submission of information by the utility regarding its affiliate
activities. Section 14.151 grants the commission authority to prescribe the
manner of accounting for all business transacted by the utility. Section 14.154
grants the commission limited authority over the utility's affiliates, with
respect to their transactions with the utility. Section 15.023 grants the
commission authority to impose an administrative penalty against a regulated
entity for violation of a rule adopted under this title. Section 31.001(c)
requires that the commission formulate and apply rules, policies, and principles
to protect the public interest in a more competitive electric market place.
Section 32.101(c) requires that customer proprietary information be treated
as highly sensitive trade secrets. Section 35.003(b) prohibits electric utilities
from granting undue preference to a person in connection with the purchase
or sale of energy or other services. Section 35.034 grants the commission
authority to approve transfers of certain assets between utilities and affiliates.
Section 35.035 governs the valuation of assets transferred by a utility to
or from an affiliate. Section 36.003 requires the commission to ensure that
a utility's rates are just and reasonable, sufficient, equitable, and consistent
in application to each class of consumer, and not unreasonably preferential,
prejudicial, or discriminatory. Section 36.058 sets forth the circumstances
under which the commission may allow payments by a utility to an affiliate.
Section 38.021 requires that utilities not grant an unreasonable preference
to or impose an unreasonable disadvantage on different persons in the same
classification. Section 38.022 requires that utilities not discriminate against
competitors or engage in practices that restrict or impair competition in
the electric market. Section 39.001 states that it is in the public interest
to protect the competitive process in a manner that ensures the confidentiality
of competitively sensitive information during the transition to a competitive
market and after the commencement of customer choice. Section 39.051 requires
that each electric utility unbundle personnel, information flow, functions,
and operations, consistent with the code of conduct. Section 39.101(2) grants
the commission authority to ensure that retail customer protections are established
to entitle a customer to privacy of customer consumption and credit information.
Section 39.157 grants the commission authority to take actions to address
market power and adopt rules and enforcement procedures to govern transactions
or activities between utilities and their affiliates. Section 39.356 grants
the commission authority to suspend, revoke, or amend a retail electric provider's
certificate, a power generation company's registration, or an aggregator's
registration for significant violations of the rules adopted under this title.
Section 39.357 grants the commission authority to impose an administrative
penalty as necessary to eliminate or to remedy market power abuses.
Cross Reference to Statutes: Public Utility Regulatory Act §§11.002(a),
14.001, 14.002, 14.003, 14.151, 14.154, 15.023, 31.001(c), 32.101(c), 35.003(b),
35.034, 35.035, 36.003, 36.058, 38.021, 38.022, 39.001, 39.051, 39.101(2),
30.157, 39.356, and 39.357.
§25.272. Code of Conduct for Electric Utilities and Their Affiliates.
(a)
Purpose. The provisions of this section establish safeguards
to govern the interaction between utilities and their affiliates, both during
the transition to and after the introduction of competition, to avoid potential
market power abuses and cross- subsidization between regulated and unregulated
activities.
(b)
Application.
(1)
General application. This section applies to:
(A)
electric utilities operating in the State of Texas as
defined in the Public Utility Regulatory Act (PURA) §31.002(6), and transactions
or activities between electric utilities and their affiliates, as defined
in PURA §11.003(2); and
(B)
transmission and distribution utilities operating in a
qualifying power region in the State of Texas as defined in PURA §31.002(19)
upon commission certification of a qualifying power region pursuant to PURA
§39.152, and transactions or activities between transmission and distribution
utilities and their affiliates, as defined in PURA §11.003(2).
(2)
No circumvention of the code of conduct. An
electric utility, transmission and distribution utility, or competitive affiliate
shall not circumvent the provisions or the intent of PURA §39.157 or
any rules implementing those requirements by using any affiliate to provide
information, services, products, or subsidies between a competitive affiliate
and an electric utility or a transmission and distribution utility.
(3)
Petition for waiver. Nothing in this section is intended
to affect or modify the obligation or duties relating to any rules or standards
of conduct that may apply to a utility or the utility's affiliates under orders
or regulations of the Federal Energy Regulatory Commission (FERC) or the Securities
and Exchange Commission (SEC). A utility shall file with the commission a
notice of any provision in this section conflicting with FERC or SEC orders
or regulations. A utility that is subject to statutes or regulations in any
state that conflict with a provision of this section may petition the commission
for a waiver of the conflicting provision on a showing of good cause.
(c)
Definitions. The following words and terms when used in
this section shall have the following meaning unless the context clearly indicates
otherwise:
(1)
Arm's length transaction - The standard of conduct under
which unrelated parties, each acting in its own best interest, would carry
out a particular transaction. Applied to related parties, a transaction is
at arm's length if the transaction could have been made on the same terms
to a disinterested third party in a bargained transaction.
(2)
Competitive affiliate - An affiliate of a utility
that provides services or sells products in a competitive energy-related market
in this state, including telecommunications services, to the extent those
services are energy-related.
(3)
Confidential information - Any information not intended
for public disclosure and considered to be confidential or proprietary by
persons privy to such information. Confidential information includes but is
not limited to information relating to the interconnection of customers to
a utility's transmission or distribution systems, proprietary customer information,
trade secrets, competitive information relating to internal manufacturing
processes, and information about a utility's transmission or distribution
system, operations, or plans for expansion.
(4)
Corporate support services - Services shared by a
utility, its parent holding company, or a separate affiliate created to perform
corporate support services, with its affiliates of joint corporate oversight,
governance, support systems, and personnel. Examples of services that may
be shared, to the extent the services comply with the requirements prescribed
by PURA §39.157(d) and (g) and rules implementing those requirements,
include human resources, procurement, information technology, regulatory services,
administrative services, real estate services, legal services, accounting,
environmental services, research and development unrelated to marketing activity
and/or business development for the competitive affiliate regarding its services
and products, internal audit, community relations, corporate communications,
financial services, financial planning and management support, corporate services,
corporate secretary, lobbying, and corporate planning. Examples of services
that may not be shared include engineering, purchasing of electric transmission,
transmission and distribution system operations, and marketing, unless such
services are provided by a utility, or a separate affiliate created to perform
such services, exclusively to affiliated regulated utilities and only for
provision of regulated utility services.
(5)
Proprietary customer information - Any information
compiled by an electric utility on a customer in the normal course of providing
electric service which makes possible the identification of any individual
customer by matching such information with the customer's name, address, account
number, type or classification of service, historical electricity usage, expected
patterns of use, types of facilities used in providing service, individual
contract terms and conditions, price, current charges, billing records, or
any other information that the customer has expressly requested not be disclosed.
Information that is redacted or organized in such a way as to make it impossible
to identify the customer to whom the information relates does not constitute
proprietary customer information.
(6)
Similarly situated - The standard for determining
whether a non-affiliate is entitled to the same benefit(s) a utility offers,
or grants upon request, to its competitive affiliate for any product or service.
For purposes of this section, all non-affiliates serving or proposing to serve
the same market as a utility's competitive affiliate are similarly situated
to the utility's competitive affiliate.
(7)
Transaction - Any interaction between a utility and
its affiliate in which a service, good, asset, product, property, right, or
other item is transferred or received by either a utility or its affiliate.
(8)
Utility - An electric utility as defined in PURA
§31.002(6) or a transmission and distribution utility as defined in PURA
§31.002(19). For purposes of this section, a utility does not include
a river authority operating a steam generating plant on or before January
1, 1999, or a corporation authorized by Chapter 245, Acts of the 67th Legislature,
Regular Session, 1981 (Article 717p, Vernon's Texas Civil Statutes). In addition,
with respect to a holding company exempt under the Public Utility Holding
Company Act (PUHCA) §3(a)(2), the term "utility," as used in this section,
means the division or business unit through which the holding company conducts
utility operations and not the holding company as a legal entity.
(d)
Separation of a utility from its affiliates.
(1)
Separate and independent entities. A utility shall be
a separate, independent entity from any competitive affiliate.
(2)
Sharing of employees, facilities, or other resources.
Except as otherwise allowed in paragraphs (3), (4), or (6) of this subsection,
a utility shall not share employees, facilities, or other resources with its
competitive affiliates unless the utility can prove to the commission prior
to such sharing that the sharing will not compromise the public interest.
Such sharing may be allowed if the utility implements adequate safeguards
precluding employees of a competitive affiliate from gaining access to information
in a manner that would allow or provide a means to transfer confidential information
from a utility to an affiliate, create an opportunity for preferential treatment
or unfair competitive advantage, lead to customer confusion, or create significant
opportunities for cross-subsidization of affiliates. Utilities may share common
officers and directors, property, equipment, computer systems, information
systems, and corporate support services with competitive affiliates to the
extent consistent with the provisions of this section.
(3)
Employee transfers and temporary assignments. A utility
shall not assign, for less than one year, utility employees engaged in transmission
or distribution system operations to a competitive affiliate unless the employee
does not have knowledge of confidential information. Utility employees engaged
in transmission and distribution system operations, including persons employed
by a service company affiliated with the utility who are engaged in transmission
system operations on a day-to-day basis or have knowledge of transmission
and distribution system operations and are transferred to a competitive affiliate,
shall not remove or otherwise provide or use proprietary property or information
gained from the utility or affiliated service company in a discriminatory
or exclusive fashion, to the benefit of the competitive affiliate or to the
detriment of non-affiliated electric suppliers. Movement of an employee engaged
in transmission and distribution system operations, including a person employed
by a service company affiliated with the utility who is engaged in transmission
and distribution system operations on a day-to-day basis or has knowledge
of transmission and distribution system operations from a utility to a competitive
affiliate or vice versa may be accomplished through either the employee's
termination of employment with one company and acceptance of employment with
the other, or a transfer to another company, as long as the transfer results
in the utility bearing no ongoing costs associated with that employee. Transferring
employees shall sign a statement indicating that they are aware of and understand
the restrictions and penalties set forth in this section. The exception to
this provision is that employees may be temporarily assigned to an affiliate
or non-affiliated utility to assist in restoring power in the event of a major
service interruption or assist in resolving emergency situations affecting
system reliability.
(4)
Sharing of office space. A utility's office space
shall be physically separate from that of its competitive affiliates, where
physical separation is accomplished by having office space in separate buildings
or, if within the same building, by a method such as having offices on separate
floors or with separate access, unless otherwise approved by the commission.
(5)
Separate books and records. A utility and its affiliates
shall keep separate books of accounts and records, and the commission may
review records relating to a transaction between a utility and an affiliate.
(A)
In accordance with generally accepted accounting principles
or state and federal guidelines, as appropriate, a utility shall record all
transactions with its affiliates, whether they involve direct or indirect
expenses.
(B)
A utility shall prepare financial statements that are
not consolidated with those of its affiliates.
(C)
A utility and its affiliates shall maintain sufficient
records to allow for an audit of the transactions between the utility and
its affiliates. At any time, the commission may, at its discretion, require
a utility to initiate, at the utility's expense, an audit of transactions
between the utility and its affiliates performed by an independent third party.
(6)
Limited credit support by a utility. A utility
may share credit, investment, or financing arrangements with its competitive
affiliates if it complies with subparagraphs (A) and (B) of this paragraph.
(A)
The utility shall implement adequate safeguards precluding
employees of a competitive affiliate from gaining access to information in
a manner that would allow or provide a means to transfer confidential information
from a utility to an affiliate, create an opportunity for preferential treatment
or unfair competitive advantage, lead to customer confusion, or create significant
opportunities for cross-subsidization of affiliates.
(B)
The utility shall not allow an affiliate to obtain credit
under any arrangement that would include a specific pledge of any assets in
the rate base of the utility or a pledge of cash reasonably necessary for
utility operations. This subsection does not affect a utility's obligations
under other law or regulations, such as the obligations of a public utility
holding company under §25.271(c)(2) of this title (relating to Foreign
Utility Company Ownership by Exempt Holding Companies).
(e)
Transactions between a utility and its affiliates.
(1)
Transactions with all affiliates. A utility shall not
subsidize the business activities of any affiliate with revenues from a regulated
service. In accordance with PURA and the commission's rules, a utility and
its affiliates shall fully allocate costs for any shared services, corporate
support services, offices, employees, property, equipment, computer systems,
information systems, and any other shared assets, services, or products.
(A)
Sale of products or services by a utility. Unless otherwise
approved by the commission and except for corporate support services, any
sale of a product or service by a utility shall be governed by a tariff approved
by the commission. Products and services shall be made available to any third
party entity on the same terms and conditions.
(B)
Purchase of products, services, or assets by a utility
from its affiliate. Products, services, and assets shall be priced at levels
that are fair and reasonable to the customers of the utility and that reflect
the market value of the product, service, or asset.
(C)
Transfers of assets (except for unbundling pursuant to
PURA §39.051 or asset valuation in accordance with PURA §39.262).
For purposes of this subparagraph, assets are defined as all jurisdictional
capital assets of the utility. Except for asset transfers implementing unbundling
pursuant to PURA §39.051 or asset valuation in accordance with PURA §39.262,
assets transferred from a utility to its affiliates shall be priced at levels
that are fair and reasonable to the customers of the utility and that reflect
the market value of the assets or the utility's fully allocated cost to provide
those assets.
(D)
Transfer of assets implementing unbundling pursuant to
PURA §39.051 or asset valuation in accordance with PURA §39.262.
The transfer from a utility to an affiliate of assets implementing unbundling
pursuant to PURA §39.051 or asset valuation in accordance with PURA §39.262
will be reviewed by the commission pursuant to the applicable provisions of
PURA, and any rules implementing those provisions.
(2)
Transactions with competitive affiliates. Unless
otherwise allowed in this subsection, transactions between a utility and its
competitive affiliates shall be at arm's length. A utility shall maintain
a contemporaneous written record of all transactions with its competitive
affiliates, except those involving corporate support services and those transactions
governed by tariffs. Such records, which shall include the date of the transaction,
name of affiliate involved, name of utility employee knowledgeable about the
transaction, and a description of the transaction, shall be maintained by
the utility for three years. In addition to the requirements specified in
paragraph (1) of this subsection, the following provisions apply to transactions
between utilities and their competitive affiliates.
(A)
Provision of corporate support services. A utility may
engage in transactions directly related to the provision of corporate support
services with its competitive affiliates. Such provision of corporate support
services shall not allow or provide a means for the transfer of confidential
information from the utility to the competitive affiliate, create the opportunity
for preferential treatment or unfair competitive advantage, lead to customer
confusion, or create significant opportunities for cross-subsidization of
the competitive affiliate.
(B)
Purchase of products or services by a utility from its
competitive affiliate. Except for corporate support services, a utility may
not enter into a transaction to purchase a product or service from a competitive
affiliate that has a per unit value of $75,000 or more, or a total value of
$1 million or more, unless the transaction is the result of a fair, competitive
bidding process formalized in a contract subject to the provisions of §25.273
of this title (relating to Contracts Between Electric Utilities and Their
Competitive Affiliates).
(C)
Transfers of assets (except for unbundling pursuant to
PURA §39.051 or asset valuation in accordance with PURA §39.262).
For purposes of this subparagraph, assets are defined as all jurisdictional
capital assets of the utility. Except for asset transfers facilitating unbundling
pursuant to PURA §39.051 or asset valuation in accordance with PURA §39.262,
any transfer from a utility to its competitive affiliates of assets with a
per unit value of $75,000 or more, or a total value of $1 million or more,
must be the result of a fair, competitive bidding process formalized in a
contract subject to the provisions of §25.273 of this title.
(f)
Safeguards relating to provision of products and services.
(1)
Products and services available on a non-discriminatory
basis. If a utility makes a product or service, other than corporate support
services, available to a competitive affiliate, it shall make the same product
or service available, contemporaneously and in the same manner, to all similarly
situated entities, and it shall apply its tariffs, prices, terms, conditions,
and discounts for those products and services in the same manner to all similarly
situated entities. A utility shall process all requests for a product or service
from competitive affiliates or similarly situated non-affiliated entities
on a non-discriminatory basis. If a utility's tariff allows for discretion
in its application, the utility shall apply that provision in the same manner
to its competitive affiliates and similarly situated non-affiliates, as well
as to their respective customers. If a utility's tariff allows no discretion
in its application, the utility shall strictly apply that provision. Utilities
are prohibited from using customer-specific contracts to circumvent these
requirements. A utility shall not create a product or service arrangement
with its competitive affiliate that is so unique that no competitor could
be similarly situated to utilize the product or service.
(2)
Discounts, rebates, fee waivers, or alternative tariff
terms and conditions. If a utility offers its competitive affiliate or grants
a request from its competitive affiliate for a discount, rebate, fee waiver,
or alternative tariff terms and conditions for any product or service, it
must make the same benefit(s) contemporaneously available, on a non-discriminatory
basis, to all similarly situated non-affiliates. The utility shall post a
conspicuously placed notice on its Internet site or public electronic bulletin
board for at least 30 consecutive calendar days providing the following information:
the name of the competitive affiliate involved in the transaction; the rate
charged; the normal rate or tariff condition(s); the period for which the
benefit applies; the quantities and the delivery points involved in the transaction
(if any); any conditions or requirements applicable to the benefit, along
with documentation of any cost differential underlying the benefit, and the
procedures by which non-affiliates may obtain the same benefit. The utility
shall maintain records of such information for a minimum of three years, and
shall make such records available for third party review within 72 hours of
a written request, or at a time mutually agreeable to the utility and the
third party. A utility shall not create any arrangement with its competitive
affiliate that is so unique that no competitor could be similarly situated
to benefit from the discount, rebate, fee waiver, or alternative tariff terms
and conditions.
(3)
Tying arrangements prohibited. A utility shall not
condition the provision of any product, service, pricing benefit, or alternative
terms or conditions upon the purchase of any other good or service from the
utility or its competitive affiliate.
(g)
Information safeguards.
(1)
Proprietary customer information. A utility shall provide
a customer with the customer's proprietary customer information, upon request
by the customer. Unless a utility obtains prior affirmative written consent
or other verifiable authorization from the customer as determined by the commission,
it shall not release any proprietary customer information to a competitive
affiliate or any other entity, other than the customer, an independent organization
as defined by PURA §39.151, or a provider of corporate support services
for the sole purpose of providing corporate support services in accordance
with subsection (e)(2)(A) of this section. In order to facilitate the transition
to customer choice, a utility may, as part of its unbundling plan filed pursuant
to PURA §39.051(e) and prior to the start of customer choice, release
proprietary customer information to its affiliated retail electric provider
without authorization of those customers. A utility may also provide proprietary
customer information to a provider of last resort without customer authorization
for the purpose of serving customers who have been switched to the provider
of last resort. The utility shall maintain records that include the date,
time, and nature of information released when it releases customer proprietary
information to another entity in accordance with this paragraph. The utility
shall maintain records of such information for a minimum of three years, and
shall make the records available for third party review within 72 hours of
a written request, or at a time mutually agreeable to the utility and the
third party. When the third party requesting review of the records is not
the customer, commission, or Office of Public Utility Counsel, the records
may be redacted in such a way as to protect the customer's identity.
(2)
Nondiscriminatory availability of aggregate customer
information. A utility shall make aggregate non-proprietary customer information,
including, but not limited to, information about a utility's energy purchases,
sales, or operations or about a utility's energy-related goods or services,
available to a competitive affiliate only if the utility makes such information
available to all non-affiliates under the same terms and conditions and at
the same price as it is made available to any of its affiliates. In addition,
no later than 24 hours prior to a utility's provision to its competitive affiliate
of aggregate customer information, the utility shall post a conspicuously
placed notice on its Internet site or other public electronic bulletin board
for at least 30 consecutive calendar days providing the following information:
the name of the competitive affiliate to which the information will be provided,
the rate charged for the information, a meaningful description of the information
provided, and the procedures by which non- affiliates may obtain the same
information under the same terms and conditions. The utility shall maintain
records of such information for a minimum of three years, and shall make such
records available for third party review within 72 hours of a written request,
or at a time mutually agreeable to the utility and the third party.
(3)
No preferential access to transmission and distribution
information. A utility shall not allow preferential access by its competitive
affiliates to information about its transmission and distribution systems.
(4)
Other limitations on information disclosure. Nothing
in this rule is intended to alter the specific limitations on disclosure of
confidential information in the Texas Utilities Code, the Texas Government
Code, Chapter 552, or the commission's substantive and procedural rules.
(5)
Other information. Except as otherwise allowed in
this subsection, a utility shall not share information, except for information
required to perform allowed corporate support services, with competitive affiliates
unless the utility can prove to the commission that the sharing will not compromise
the public interest prior to any such sharing.
(h)
Safeguards relating to joint marketing and advertising.
(1)
Utility name or logo. Before September 1, 2005, a utility
shall not allow the use of its corporate name, trademark, brand, or logo by
a competitive affiliate, on employee business cards or in any written or auditory
advertisements of specific services to existing or potential residential or
small commercial customers located within the utility's certificated service
area, whether through radio or television, Internet-based, or other electronic
format accessible to the public, unless the competitive affiliate includes
a disclaimer with its use of the utility's corporate name, trademark, brand,
or logo. Such disclaimer of the corporate name, trademark, brand, or logo
in the material distributed must be written in a bold and conspicuous manner
or clearly audible, as appropriate for the communication medium, and shall
state the following: "{Name of competitive affiliate } is not the same company
as {name of utility} and is not regulated by the Public Utility Commission
of Texas, and you do not have to buy {name of competitive affiliate}'s products
to continue to receive quality regulated services from {name of utility}."
(2)
Joint marketing, advertising, and promotional activities.
(A)
A utility shall not:
(i)
provide or acquire leads on behalf of its competitive
affiliates;
(ii)
solicit business or acquire information on behalf of
its competitive affiliates;
(iii)
give the appearance of speaking or acting on behalf
of any of its competitive affiliates;
(iv)
share market analysis reports or other types of proprietary
or non- publicly available reports, including, but not limited to, market
forecast, planning, or strategic reports, with its competitive affiliates;
or
(v)
represent to customers or potential customers that it
can offer competitive retail services bundled with its tariffed services.
(B)
A utility shall not engage in joint marketing, advertising,
or promotional activities of its products or services with those of a competitive
affiliate in a manner that favors the affiliate. Such joint marketing, advertising,
or promotional activities include, but are not limited to, the following activities:
(i)
acting or appearing to act on behalf of a competitive
affiliate in any communications and contacts with any existing or potential
customers.
(ii)
joint sales calls;
(iii)
joint proposals, either as requests for proposals or
responses to requests for proposals;
(iv)
joint promotional communications or correspondence, except
that a utility may allow a competitive affiliate access to customer bill advertising
inserts according to the terms of a commission- approved tariff so long as
access to such inserts is made available on the same terms and conditions
to non-affiliates offering similar services as the competitive affiliate that
uses bill inserts;
(v)
joint presentations at trade shows, conferences, or other
marketing- type events within the State of Texas; and
(vi)
providing links from a utility's Internet web site to
a competitive affiliate's Internet web site.
(C)
At a customer's unsolicited request, a utility may participate
in non-sales meetings with a competitive affiliate to discuss technical or
operational subjects regarding the utility's provision of transmission or
distribution services to the customer, but only in the same manner and to
the same extent the utility participates in such meetings with unaffiliated
electric or energy services suppliers and their customers.
(3)
Requests for specific competitive affiliate
information. If a customer or potential customer makes an unsolicited request
to a utility for information specifically about any of its competitive affiliates,
the utility may refer the customer or potential customer to the competitive
affiliate for more information. Under this paragraph, the only information
that a utility may provide to the customer or potential customer is the competitive
affiliate's address and telephone number. The utility shall not transfer the
customer directly to the competitive affiliate's customer service office via
telephone or provide any other electronic link whereby the customer could
contact the competitive affiliate through the utility. When providing the
customer or potential customer information about the competitive affiliate,
the utility shall not promote its competitive affiliate or its competitive
affiliate's products or services, nor shall it offer the customer or potential
customer any opinion regarding the service of the competitive affiliate or
any other service provider.
(4)
Requests for general information about products or
services offered by competitive affiliates and their competitors. If a customer
or potential customer requests general information from a utility about products
or services provided by its competitive affiliate or its affiliate's competitors,
the utility shall not promote its competitive affiliate or its affiliate's
products or services, nor shall the utility offer the customer or potential
customer any opinion regarding the service of the competitive affiliate or
any other service provider. The utility may direct the customer or potential
customer to a telephone directory or to the commission, or provide the customer
with a recent list of suppliers developed and maintained by the commission,
but the utility may not refer the customer or potential customer to the competitive
affiliate as provided for in paragraph (3) of this subsection.
(i)
Remedies and enforcement.
(1)
Internal codes of conduct for the transition period. During
the transition to competition, including the period prior to and during utility
unbundling pursuant to PURA §39.051, each utility shall implement an
internal code of conduct consistent with the spirit and intent of PURA §39.157(d)
and with the provisions of this section. Such internal codes of conduct are
subject to commission review and approval in the context of a utility's unbundling
plan submitted pursuant to PURA §39.051(e); however, such internal codes
of conduct shall take effect, on an interim basis, on January 10, 2000. The
internal codes of conduct shall be developed in good faith by the utility
based on the extent to which its affiliate relationships are known by January
10, 2000, and then updated as necessary to ensure compliance with PURA and
commission rules.
(2)
Ensuring compliance for new affiliates. Upon the
creation of a new affiliate, the utility shall immediately notify the commission
of the creation of the new affiliate. The utility shall ensure that any interaction
with the new affiliate is in compliance with this section.
(3)
Compliance Audits. No later than one year after the
utility has unbundled pursuant to PURA §39.051, and, at a minimum, every
third year thereafter, the utility shall have an audit prepared by independent
auditors that verifies that the utility is in compliance with this section.
The utility shall file the results of each audit with the commission within
one month of the audit's completion. The cost of the audits shall not be charged
to utility ratepayers.
(4)
Informal complaint procedure. A utility shall establish
and file with the commission a complaint procedure for addressing alleged
violations of this section. This procedure shall contain a mechanism whereby
all complaints shall be placed in writing and shall be referred to a designated
officer of the utility. All complaints shall contain the name of the complainant
and a detailed factual report of the complaint, including all relevant dates,
companies involved, employees involved, and the specific claim. The designated
officer shall acknowledge receipt of the complaint in writing within five
working days of receipt. The designated officer shall provide a written report
communicating the results of the preliminary investigation to the complainant
within thirty days after receipt of the complaint, including a description
of any course of action that will be taken. In the event the utility and the
complainant are unable to resolve the complaint, the complainant may file
a formal complaint with the commission. The utility shall notify the complainant
of his or her right to file a formal complaint with the commission, and shall
provide the complainant with the commission's address and telephone number.
The utility and the complainant shall make a good faith effort to resolve
the complaint on an informal basis as promptly as practicable.
(5)
Enforcement by the commission. Any transaction or
series or set of transactions between a utility and a competitive affiliate
- except as explicitly allowed under this section - which results in an abuse
of market power shall be deemed a violation of this section. A violation or
series or set of violations of this section that materially impairs, or is
reasonably likely to materially impair, the ability of a person to compete
in a competitive market shall be deemed an abuse of market power.
(A)
In addition to other methods that may be available, the
commission may enforce the provisions of this rule by:
(i)
seeking an injunction or civil penalties to eliminate
or remedy the violation or series or set of violations;
(ii)
suspending, revoking, or amending a certificate or registration
as authorized by PURA §39.356; or
(iii)
pursuing administrative penalties under PURA, Chapter
15, Subchapter B.
(B)
The imposition of one penalty under this section does
not preclude the imposition of other penalties as appropriate for the violation
or series or set of violations.
(C)
In assessing penalties, the commission shall consider
the following factors:
(i)
the utility's prior history of violations;
(ii)
the utility's efforts to comply with the commission's
rules, including the extent to which the utility has adequately and physically
separated its office, communications, accounting systems, information systems,
lines of authority, and operations from its affiliates, and efforts to enforce
these rules;
(iii)
the nature and degree of economic benefit gained by
the utility's competitive affiliate;
(iv)
the damages or potential damages resulting from the violation
or series or set of violations;
(v)
the size of the business of the competitive affiliate
involved;
(vi)
the penalty's likely deterrence of future violations;
and
(vii)
such other factors deemed appropriate and material to
the particular circumstances of the violation or series or set of violations.
(6)
No immunity from antitrust enforcement.
Nothing in these affiliate rules shall confer immunity from state or federal
antitrust laws. Sanctions imposed by the commission for violations of this
rule do not affect or preempt antitrust liability, but rather are in addition
to any antitrust liability that may apply to the anticompetitive activity.
Therefore, antitrust remedies also may be sought in federal or state court
to cure anticompetitive activities.
(7)
No immunity from civil relief. Nothing in these affiliate
rules shall preclude any form of civil relief that may be available under
federal or state law, including, but not limited to, filing a complaint with
the commission consistent with this subsection.
§25.273. Contracts Between Electric Utilities and Their Competitive Affiliates.
(a)
Purpose. This section establishes the requirements for
the implementation of contracts between utilities and their competitive affiliates
resulting from a fair, competitive bidding process.
(b)
Application.
(1)
General application. This section applies to:
(A)
electric utilities operating in the State of Texas as
defined in the Public Utility Regulatory Act (PURA) §31.002(6), and transactions
or activities between electric utilities and their affiliates, as defined
in PURA §11.003(2); and
(B)
transmission and distribution utilities operating in a
qualifying power region in the State of Texas as defined in PURA §31.002(19)
upon commission certification of a qualifying power region pursuant to PURA
§39.152, and transactions or activities between transmission and distribution
utilities and their affiliates, as defined in PURA §11.003(2).
(2)
No circumvention of the code of conduct. An
electric utility, transmission and distribution utility, or competitive affiliate
shall not circumvent the provisions or the intent of PURA §39.157 or
any rules implementing those requirements by using any affiliate to provide
information, services, products, or subsidies between the electric utility,
transmission and distribution utility, and a competitive affiliate.
(3)
Petition for waiver. Nothing in this section is intended
to affect or modify the obligation or duties relating to any rules or standards
of conduct that may apply to a utility or the utility's affiliates under orders
or regulations of the Federal Energy Regulatory Commission (FERC) or the Securities
and Exchange Commission (SEC). A utility shall file with the commission a
notice of any provision in this section conflicting with FERC or SEC orders
or regulations. A utility that is subject to statutes or regulations in any
state that conflict with a provision of this section may petition the commission
for a waiver of the conflicting provision on a showing of good cause.
(c)
Definitions. Any terms defined in §25.272 of this
title (relating to Code of Conduct for Electric Utilities and Their Affiliates)
have the same meanings herein.
(d)
Competitive bidding required. The utility shall conduct
competitive bidding, as required by §25.272 of this title, to procure
products and services, other than corporate support services, that are offered
by an competitive affiliate or to sell to any competitive affiliate assets
that have a per unit value of more than $75,000, or a total value of more
than $1 million. This section does not apply to transfers that facilitate
unbundling under PURA §39.051 or asset valuation under PURA §39.262.
(1)
Notice. The utility shall provide reasonable notice of
any request for proposals required pursuant to this section. Such notice shall
include:
(A)
notice by publication in trade journals or newspapers
as appropriate;
(B)
notice by mail to persons who previously requested to
be notified of the request for proposals; and
(C)
notice conspicuously placed on the utility's Internet
site or other public electronic bulletin board.
(2)
Independent evaluator. The utility shall use
an independent evaluator when a competitive affiliate's bid is included among
the bids to be evaluated. If an independent evaluator is required, the utility
shall maintain a record of communications with the independent evaluator.
The independent evaluator shall in writing identify the bids that are most
advantageous and warrant negotiation and contract execution, in accordance
with the criteria set forth in the request for proposals. The utility retains
responsibility for final selection of products or services.
(3)
Competitive bidding procedures. The utility shall
make a request for proposals available to interested persons.
(A)
The request for proposals must clearly set forth the eligibility
and selection criteria and shall specify the weight to be given to any non-cost
selection criteria.
(B)
The utility shall strictly enforce the criteria specified
in the request for proposals.
(4)
Evaluation of bids. The utility or independent
evaluator, as appropriate, shall evaluate each bid submitted in accordance
with the criteria specified in the request for proposals. The utility or independent
evaluator may not give preferential treatment or consideration to any bid.
(5)
Rejection of bids. The utility is not required to
accept a bid and may reject any or all bids in accordance with the selection
criteria specified in the request for proposals.
(e)
Contracts. A utility shall file with the commission a
signed copy of any contracts entered into with a competitive affiliate as
the result of the fair, competitive bidding process described in subsection
(d) of this section. A contract shall include, at a minimum, the following
provisions:
(1)
the effective date of the agreement and parties to the
agreement;
(2)
the term of the agreement;
(3)
a narrative describing the products or services provided
to the utility, including a list by specific service of all the affiliated
companies who provide or receive these services, or a narrative describing
the assets being sold by the utility to the competitive affiliate;
(4)
the obligations of the parties;
(5)
the price for those products, services, or assets
governed by the contract; and
(6)
billing and payment procedures.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of the Secretary of State, on
August 9, 1999.
TRD-9904888
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: September 19, 1999
For further information, please call: (512) 936-7308
2.
Transmission and Distribution Applicable to All Electric Utilities
16 TAC §25.227
The Public Utility Commission of Texas (commission) proposes
new §25.227, relating to Electric Utility Service for Public Retail Customers.
The proposed new rule will establish terms under which the General Land Office
may take utility service, including transmission, distribution, and customer
services to convey power to public retail customers purchased under the Public
Utility Regulatory Act (PURA) §35.102. Project Number 21073 has been
assigned to this proceeding.
Constance T. Corona, rate analyst, Office of Regulatory Affairs, has determined
that for each year of the first five-year period the proposed section is in
effect there will be no fiscal implications for state or local government
as a result of enforcing or administering the section. There are no fiscal
impacts in addition to those fiscal impacts resulting from Senate Bill 7.
Ms. Corona has determined that for each year of the first five years the
proposed section is in effect the public benefit anticipated as a result of
enforcing the section will be to allow public retail customers the option
to purchase power at a lower cost directly from the General Land Office. There
will be no effect on small businesses or micro- businesses as a result of
enforcing this section. There is no anticipated economic cost to persons who
are required to comply with the section as proposed.
Ms. Corona has also determined that for each year of the first five years
the proposed section is in effect there should be no affect on a local economy,
and therefore no local employment impact statement is required under Administrative
Procedure Act 2001.022.
The commission staff will conduct a public hearing on this rulemaking under
Government Code §2001.029 at the commission's offices, located in the
William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701,
on September 1, 1999, at 9:00 a.m. in the Commissioners' Hearing Room.
Comments on the proposed new rule (16 copies) may be submitted to the Filing
Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, PO
Box 13326, Austin, Texas 78711-3326, within 14 days after publication. The
commission invites specific comments regarding the costs associated with,
and benefits that will be gained by, implementation of the proposed section.
The commission will consider the costs and benefits in deciding whether to
adopt the section. All comments should refer to Project Number 21073.
This new rule is proposed under the Public Utility Regulatory
Act, Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA), which
provides the Public Utility Commission with the authority to make and enforce
rules reasonably required in the exercise of its powers and jurisdiction,
and §35.102 which grants the Commissioner of the General Land Office
the authority to sell or otherwise convey power generated from royalties taken
in kind as provided by §§52.133(f), 53.026, and 53.077, Natural
Resources Code, directly to a public retail customer.
Cross-Index to Statutes: Public Utility Regulatory Act §§35.101,
35.102, 35.103, 35.104, 35.105, and 35.106.
§25.227. Electric Utility Service for Public Retail Customers.
(a)
Purpose. The purpose of this section is to establish the
terms under which the General Land Office may take utility service, including
transmission, distribution, and customer services, in order to convey power
to public retail customers purchased under the Public Utility Regulatory Act
(PURA) §35.102. This section also requires electric utilities to file
tariffs to specify the terms and conditions under which the General Land Office
may take utility service from an affected utility pursuant to PURA §35.103(b).
These tariffs must also include any stranded costs associated with providing
the service.
(b)
Application. This section shall apply to electric utilities
that provide retail electric service in Texas, including municipally owned
electric utilities and electric cooperatives that have adopted customer choice.
This section shall not apply to either municipally owned electric utilities
or to electric cooperatives that have not adopted customer choice. In a certificated
area of an electric utility in which customer choice has not been introduced,
the General Land Office may not engage in retail transactions that exceed
2.5% of a retail electric utility's total retail load.
(c)
Definitions. As used in this section, the following terms
have the following meanings unless the context clearly indicates otherwise:
(1)
Affected utilities - shall refer to all utilities as defined
in subsection (b) of this section.
(2)
Customer service - As defined in §25.221 of
this title (relating to Electric Cost Separation).
(3)
Distribution service - As defined in §25.221
of this title (relating to Electric Cost Separation)
(4)
Transmission service - As defined in §25.221
of this title (relating to Electric Cost Separation).
(5)
Public retail customer - A retail customer that is
an agency of this state, a state institution of higher education, a public
school district, or a political subdivision of this state.
(6)
Stranded cost - The amount estimated by the commission
in the "base case" of the "Potentially Strandable Investment (ECOM) Report:
1998 Update," as described in PURA §39.262(i).
(7)
Functional percentage - The ratio of each of the
transmission, distribution, and customer service costs to total costs for
each rate class of each utility, as identified in Appendix F of the Staff
Report filed in Project Number 20749,
Functional
Cost Separation of Electric Utilities in Texas.
(d)
Obligations of affected utilities.
(1)
Each affected utility is obligated to provide the services
prescribed by this section on a comparable and non-discriminatory basis, and
under the same terms and conditions for service to similarly situated customers.
(2)
Each affected utility's obligations shall include,
but are not limited to, the obligation to extend electric service to new locations.
(3)
The affected utility shall provide to the General
Land Office within 48 hours of collection all billing determinants applicable
to each public retail customer to which the General Land Office conveys power.
(e)
Filing requirements.
(1)
Upon a request for service pursuant to this section by
the General Land Office, an affected utility shall file tariffs to implement
the provisions of this section not later than 15 days from the date of the
request. The proposed tariffs shall comply with subsection (f) of this section,
and with the commission's standard tariff format for this section. As part
of this filing, affected utilities shall provide all supporting workpapers
and documents used in the calculation of the power delivery charge and the
competition transition charge.
(2)
The commission shall approve or deny a proposed tariff
filed under this section within 30 days of filing.
(f)
Tariff requirements. Each tariff shall contain the following
provisions:
(1)
Power delivery charge. The sum of the transmission, distribution,
and customer services charges established under this section. No credits shall
be made to the power delivery charge, except for credits related to transmission-level
service and billing and customer service, as provided in paragraphs (5) and
(6) of this subsection.
(2)
Transmission rate. A charge for transmission service
as established in subsection (h) of this section. A separate charge shall
be listed for each rate class.
(3)
Distribution rate. A charge for distribution service
as established in subsection (h) of this section. A separate charge shall
be listed for each rate class.
(4)
Customer service rate. A charge for retail customer
service as established in subsection (h) of this section. A separate charge
shall be listed for each rate class.
(5)
Transmission-level service credit. A credit equal
to the Distribution rate, to be applied to the power delivery charge for public
retail customers which take transmission-level electric service.
(6)
Billing and customer service credit. A credit equal
to the tariff administration, energy services, and other customer services
portion of the customer service rate, which shall be applied to the power
delivery charge if the affected utility does not bill the public retail customer
directly on behalf of the General Land Office.
(7)
Competition transition charge. A charge as established
in subsection (g) of this section for the recovery of stranded costs associated
with providing the service.
(8)
Terms and conditions. Terms and conditions shall
be consistent with the existing bundled rate tariffs.
(g)
Competition transition charge (CTC)
(1)
The competition transition charge shall be calculated
as follows:
(A)
The stranded costs for each utility shall be amortized
over the average remaining life of the generation asset(s) underlying the
stranded costs, and shall be allocated to each class pursuant to the method
prescribed by PURA §39.253;
(B)
The rate design of the CTC for each class shall be consistent
with the rate design used to recover the costs of the generation assets underlying
the stranded costs in the utility's last rate proceeding, calculated to reflect
billing determinants for the year ending April 30, 1999.
(2)
The CTC calculated pursuant to this section
shall remain in effect until replaced by the CTC put into effect pursuant
to PURA §39.201.
(h)
Rate design.
(1)
The functional percentages determined for each rate class
for each utility in Project Number 20749 shall be applied to each component
of the existing bundled rate. The existing rate structure shall be maintained.
(2)
The rate design required by this section shall remain
in effect until replaced by the rate design put into effect pursuant to PURA
§39.201.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of the Secretary of State, on
August 6, 1999.
TRD-9904849
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: September 19, 1999
For further information, please call: (512) 936-7308
Chapter 103.
General Rules
electric
] utilities and their affiliates.
all electric utilities, as defined in the Public Utility Regulatory Act (PURA)
§31.002 (1), operating in the State of Texas, and to affiliates as defined
in PURA §11.003 (2) to the extent specified herein.
]
(c)
] Annual report of affiliate
activities. A "Report of Affiliate Activities" shall be filed annually with
the commission. Using forms approved and provided by the commission,
a
[
an electric
] utility shall report activities among itself
and its affiliates
in accordance with all requirements in this section
. The report shall be filed by June 1, and shall encompass the period
from January 1 through December 31 of the immediately preceding year.
(d)
] Copies of contracts or agreements.
A
[
An electric
] utility shall reduce to writing and file
with the commission copies of any contracts or agreements it has with its
affiliates. The requirements of this subsection are not satisfied by the filing
of an earnings report. All contracts or agreements shall be filed by June
1 of each year as attachments to the Report of Affiliate Activities required
in subsection
(d)
[
(c)
] of this section. In subsequent
years, if no significant changes have been made to the contract or agreement,
an amendment sheet may be filed in lieu of refiling the entire contract or
agreement.
Subchapter K. Relationships with Affiliates
Subchapter I. Transmission and Distribution
Part VI.
Texas Motor Vehicle Board