Part 2.
PUBLIC UTILITY COMMISSION OF TEXAS
Chapter 25.
SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS
Subchapter J. COSTS, RATES AND TARIFFS
2.
RECOVERY OF STRANDED COSTS
16 TAC §25.263
The Public Utility Commission of Texas (commission) adopts
an amendment to §25.263, relating to True-Up Proceeding, with no changes
to the proposed text as published in the April 9, 2004
Texas Register
(29 Tex Reg 3585). The amendment to §25.263 implements
the provisions of Public Utility Regulatory Act (PURA) §39.262, which
sets forth the requirements for the final true-up of stranded costs. The amendment
deletes the conflict-of- interest provisions in subsection (f) of the rule,
relating to the employment of a valuation panel to ascertain the existence
and value of a control premium for any power generation company that uses
the partial stock valuation method to determine the market value of its generation
assets, in connection with determining the company's stranded costs. The commission
will instead consider appropriate conflict-of-interest standards in selecting
persons to serve on the valuation panel. This amendment is adopted under Project
Number 29478.
A public hearing on the amendment was held at commission offices on Tuesday,
April 13, 2004 at 9:30 a.m. Representatives from CenterPoint Energy Houston
Electric, LLC (CenterPoint); Texas Industrial Energy Consumers (TIEC); and
Clark, Thomas & Winters (CTW) attended the hearing and provided comments.
To the extent that these comments differ from the submitted written comments,
such comments are summarized herein.
The commission received one set of written comments on the proposed amendment
jointly filed by the City of Houston, Coalition of Cities, Office of Public
Utility Counsel, Texas Industrial Energy Consumers, Gulf Coast Coalition of
Cities, Houston Council for Health and Education, and State of Texas (collectively,
"Ratepayer Advocates").
Summary of Comments at Public Hearing
CenterPoint commented at the public hearing that with regard to potential
conflicts of interest, the banks that are eligible to serve on the valuation
panel also perform work for some of the major intervenor groups. CenterPoint
noted that, therefore, the concerns relating to conflicts of interest in the
selection of a valuation panel are not completely one-sided.
Summary of Ratepayer Advocates' Written Comments
Ratepayer Advocates noted in their written comments that the stated purpose
of the proposed amendment is to attract "a broader group of persons who would
be eligible to serve on the valuation panel and a more accurate determination
of the market value of stranded costs." Ratepayer Advocates additionally noted
that the commission's initial Request for Proposal (RFP) in this project did
not elicit any responses, and that they appreciate the commission's efforts
to broaden the prospective panel for valuation of the control premium pursuant
to PURA §39.262(h)(3). Ratepayer Advocates expressed concern, however,
that the proposed amendment may not adequately address the intent of the legislature
that the panelists be "independent," and may not be sufficient to elicit an
adequate number of responses because of the strong disincentives for "sell-side"
investment banks to participate. Ratepayer Advocates suggested that the foremost
intent of the Legislature was that the participating investment bankers remain
independent. To the extent that a potential panelist is not independent, this
would clearly violate the intent of the Legislature in enacting PURA §39.262.
Therefore, the Ratepayer Advocates urged the commission to expressly include
appropriate conflict-of-interest standards in the rule.
Ratepayer Advocates noted that banks and similar sell-side intermediaries,
which include mergers and acquisitions firms, make their money from commissions
on the issuance of new securities, commissions on the sales and trading of
existing securities, and from transaction fees involving mergers, acquisitions
and divestitures. Even a relatively small offering (
e.g.
, $200 million) can generate three to five million dollars in fees
for the intermediaries involved. Consequently, Ratepayers Advocates noted,
it cannot be assumed that any large investment bank would be willing to jeopardize
this lucrative business in order to participate in a commission valuation
panel that yields relatively little compensation and that has the potential
to alienate future clients. Ratepayer Advocates averred that it may be that
it was this disincentive, rather than the direct prohibition of conflicts
of interest, which kept any of the top ten investment banks from bidding on
the last RFP. If this is the case, Ratepayer Advocates submitted, then the
recently approved amendment to the rule may not be sufficient inducement for
these firms to bid on any future RFP.
Ratepayer Advocates also commented that, to the extent that any large investment
bank does intend to issue securities for CenterPoint or related entities,
it is hard to see how any such panelist could be considered independent. It
cannot be assumed that an investment bank would ignore its own financial gain
in issuing securities, and jeopardize further engagement with CenterPoint,
to issue a valuation opinion unfavorable to CenterPoint in this case. Ratepayer
Advocates therefore requested that the commission consider alternatives which
Ratepayer Advocates believe are viable options under PURA. Specifically, the
Ratepayer Advocates requested that the commission seek to fulfill the legislative
intent underlying PURA §39.262 by issuing an RFP that would seek responses
from alternate groups of independent financial experts, including "buy-side"
analysts who do not make their money through transaction fees and trading
commissions. Ratepayer Advocates noted that although PURA §39.262(h)(3)
states that the valuation panel must consist of financial experts, chosen
from the top ten nationally recognized investment banks, there is a very real
possibility that the commission will not be able to convene an independent
valuation panel in accordance with this language. Thus, Ratepayer Advocates
suggested that it may be impossible for the commission to follow the exact
letter of the statute should it choose to convene a valuation panel. Ratepayer
Advocates averred that Texas law is clear that the commission has the authority
to consider alternatives necessary to fulfill legislative intent if the plain
language of the statute cannot be followed or following the plain language
of the statute would lead to an absurdity.
Ratepayer Advocates noted that The Texas Supreme Court has long recognized
that "the intention of the legislature in enacting a law is the law itself,
and must be enforced when ascertained,
although it
may not be consistent with the strict letter of the statute
. Courts
will not follow the letter of the statute when it leads away from the true
intent and purpose of the legislature and to conclusions inconsistent with
the general purpose of the act." (Ratepayer Advocates' emphasis)
Ratepayer Advocates cited the directive in PURA §39.262(a) that an
electric utility "may not be permitted to overrecover stranded costs through
the procedures established by this section or through the application of the
measures provided by the other sections of this chapter." They opined that
the Legislature could not have intended that a control premium be avoided
simply because the top ten independent investment banking firms with demonstrated
experience in the electric utility industry failed to respond to a RFP. To
the extent that an independent valuation panel cannot be convened, and a control
premium exists for a particular stock, then a utility would overrecover stranded
costs by the measures set forth in "this section"--PURA §39.262-- if
the control premium is not adopted. Ratepayer Advocates therefore argued that
not convening an independent panel, simply because of a failure to receive
responses from the top ten independent investment banking firms, would lead
to a result that directly contravenes PURA.
Ratepayer Advocates commented that the commission has ample experience
to select a fair valuation panel consisting of financial experts chosen from
among the most nationally recognized firms with demonstrated experience in
the United States electric industry. Ratepayer Advocates opined that such
a selection by the commission would comply with the intent of PURA, which
is the supreme law, although it may not be possible to comply with the strict
letter of the law. Accordingly, Ratepayer Advocates requested that the commission
issue an alternative RFP that is consistent with the legislative intent behind
PURA §39.262, while using the commission's expertise to ensure compliance
with the Legislative intent in selecting qualified financial experts to serve
on the panel. Ratepayer Advocates strongly urged the commission to consider
alterative panels to analyze the need for a control premium, as the case law
strongly supports such options when it is impossible to follow the exact letter
of the statute, while still complying with legislative intent.
The commission understands Ratepayer Advocates' concern to be that the
amended rule will not attract a sufficient number of independent, qualified
respondents. Ratepayer Advocates' concern is premature. As reflected in the
filings in this Project, the commission has received several responses from
apparently qualified RFP respondents. As the Ratepayer Advocates note, one
of the chief concerns with respect to independence is the prospect that serving
on the valuation panel would impair a company's future business prospects
with CenterPoint or a related company. The RFP contains clear restrictions
on performing current or post-agreement work for either CenterPoint Energy
Houston Electric, LLC, or Texas Genco, LP, and despite this prohibition, the
commission received several responses to the RFP. The Ratepayer Advocates
in their comments did not specifically suggest that the commission change
the proposed rule, and the commission is not making any changes in response
to these comments. The commission shares Ratepayer Advocates' concern that
it be able to select independent, qualified persons to serve on a valuation
panel, and it intends to make every reasonable effort to select such a panel.
With regard to CenterPoint's comments at the public hearing, the commission
acknowledges that to the extent that the same investment banks eligible for
the valuation panel also conduct business with certain of the intervenor groups,
this would have the effect of mitigating concerns about conflicts with CenterPoint
or Texas Genco. Similar, however, to its conclusions regarding Ratepayer Advocates'
comments, the commission is not making any changes in response to these comments
because CenterPoint did not specifically suggest that the commission change
the proposed rule.
This amendment is adopted under the Public Utility Regulatory
Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement
2004) (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 specifically, PURA §39.262, which requires the
commission to conduct a true-up proceeding for each investor-owned electric
utility on a schedule and under procedures to be determined by the commission.
Cross Reference to Statutes: Public Utility Regulatory Act §§14.002,
39.252 and 39.262.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on May 13, 2004.
TRD-200403257
Adriana Gonzales
Rules Coordinator
Public Utility Commission of Texas
Effective date: June 2, 2004
Proposal publication date: April 9, 2004
For further information, please call: (512) 936-7223
Chapter 60.
TEXAS COMMISSION OF LICENSING AND REGULATION
The Texas Department of Licensing and Regulation ("Department") adopts
the repeal of existing rules at 16 Texas Administrative Code ("TAC"), §60.10
and §§60.100-60.108, 60.120-60.124, 60.150-60.160, 60.170-60.174,
and 60.190-60.192 and adopts new rules at 16 TAC §60.10, §60.66,
and §§60.100-60.101, 60.150-60.159, and 60.170-60.173, concerning
authority and responsibilities, organization, and practice and procedure before
the Texas Commission of Licensing and Regulation and the Department as published
in the February 6, 2004, issue of the
Texas Register
(29 TexReg 1127), without changes, and will not be republished. Section
60.160(c) is changed from the proposed text as published in the February 6,
2004, issue of the
Texas Register
(29 TexReg
1127) to correct a typographical error.
The repeal removes the sections concerning definitions and hearings procedures
that must be rewritten to comply with Senate Bills 279 and 1147 passed during
the 78th Legislative Session that amend Chapter 51, Texas Occupations Code,
providing for the addition of new requirements that hearings before the Department
be heard by the State Office of Administrative Hearings and that the Department
develop and implement a negotiated rulemaking and an alternative dispute resolution
procedure. The new rules are necessary to comply with new legislation, provide
the public access to new avenues for settling cases, and increase regulatory
efficiency.
The Department drafted and distributed the rule proposal to persons internal
and external to the agency. No comments were received.
Subchapter A. AUTHORITY AND RESPONSIBILITIES
16 TAC §60.10
The repeal is adopted under Chapter 51, §§51.201
and 51.203, Texas Occupations Code, which authorize the Commission to adopt
rules as necessary for its own procedures and to implement each law establishing
a program regulated by the Department.
The statutory provisions affected by the adopted repeal are those set forth
in the Chapter 51, Texas Occupations Code. No other statutes, articles, or
codes are affected by the repeal as adopted.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on May 12, 2004.
TRD-200403201
William H. Kuntz, Jr.
Executive Director
Texas Department of Licensing and Regulation
Effective date: June 1, 2004
Proposal publication date: February 6, 2004
For further information, please call: (512) 463-7348
16 TAC §60.10
The new rules are adopted under Chapter 51, §§51.201
and 51.203, Texas Occupations Code, which authorize the Commission to adopt
rules as necessary for its own procedures and to implement each law establishing
a program regulated by the Department.
The statutory provisions affected by the new rule adoption are those set
forth in the Chapter 51, Texas Occupations Code. No other statutes, articles,
or codes are affected by the new rules as adopted.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on May 12, 2004.
TRD-200403202
William H. Kuntz, Jr.
Executive Director
Texas Department of Licensing and Regulation
Effective date: June 1, 2004
Proposal publication date: February 6, 2004
For further information, please call: (512) 463-7348
16 TAC §60.66
The new rule is adopted under Chapter 51, §§51.201
and 51.203, Texas Occupations Code, which authorize the Commission to adopt
rules as necessary for its own procedures and to implement each law establishing
a program regulated by the Department.
The statutory provisions affected by the new rule adoption are those set
forth in the Chapter 51, Texas Occupations Code. No other statutes, articles,
or codes are affected by the new rules as adopted.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on May 12, 2004.
TRD-200403203
William H. Kuntz, Jr.
Executive Director
Texas Department of Licensing and Regulation
Effective date: June 1, 2004
Proposal publication date: February 6, 2004
For further information, please call: (512) 463-7348
16 TAC §§60.100 - 60.108, 60.120 - 60.124, 60.150 - 60.160, 60.170 - 60.174, 60.190 - 60.192
The repeal is adopted under Chapter 51, §§51.201
and 51.203, Texas Occupations Code, which authorize the Commission to adopt
rules as necessary for its own procedures and to implement each law establishing
a program regulated by the Department.
The statutory provisions affected by the adopted repeal are those set forth
in the Chapter 51, Texas Occupations Code. No other statutes, articles, or
codes are affected by the repeal as adopted.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on May 12, 2004.
TRD-200403204
William H. Kuntz, Jr.
Executive Director
Texas Department of Licensing and Regulation
Effective date: June 1, 2004
Proposal publication date: February 6, 2004
For further information, please call: (512) 463-7348
16 TAC §§60.100, 60.101, 60.150 - 60.160, 60.170 - 60.173
The new rules are adopted under Chapter 51, §§51.201
and 51.203, Texas Occupations Code, which authorize the Commission to adopt
rules as necessary for its own procedures and to implement each law establishing
a program regulated by the Department. The statutory provisions affected by
the new rule adoption are those set forth in the Chapter 51, Texas Occupations
Code. No other statutes, articles, or codes are affected by the new rules
as adopted.
§60.160.Failure to Attend Hearing and Default.
(a)
If, within twenty days after receiving a Notice of Alleged
Violation, the Respondent fails to accept the Department’s determination
and recommended administrative penalty and/or sanction, or fails to make a
written request for a hearing on the determination, the Department may propose
entry of a default order against the Respondent unless otherwise provided
by applicable law.
(b)
Where a Respondent fails to answer to the Notice of Alleged
Violation, the Department may present to the Commission and/or the Executive
Director a motion for default order along with a proposed default order containing
findings of fact and conclusions of law. Respondents will be notified as to
the time and place the motion for default order will be considered. If a Respondent
attends at the time and place prescribed in the notice, an administrative
hearing may be set in accordance with §60.101(b).
(c)
After receiving a notice proposing denial of an application
or a notice proposing denial of an opportunity to take an examination, an
Applicant may request a hearing in writing within twenty days of receipt of
the notice or forfeit the right to a hearing unless otherwise provided by
applicable law.
(d)
1 TAC §155.55 (SOAH rules) applies where a Respondent
fails to appear on the day and time set for administrative hearing. In that
case, the Department’s staff may move either for dismissal of the case
from SOAH’s docket or for the issuance of a default proposal for decision
by the judge.
(e)
Any document served upon a party is prima facie evidence
of receipt if it is directed to the party’s last known complete, correct
address as shown by the Department’s records. This presumption is rebuttable.
Failure to claim properly addressed certified or registered mail will not
support a finding of nondelivery.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on May 12, 2004.
TRD-200403205
William H. Kuntz, Jr.
Executive Director
Texas Department of Licensing and Regulation
Effective date: June 1, 2004
Proposal publication date: February 6, 2004
For further information, please call: (512) 463-7348
The Texas Department of Licensing and Regulation ("Department") adopts
the repeal of 16 Texas Administrative Code ("TAC"), Chapter 60, Subchapter
E, Administration, §60.201; and adopts new rules at 16 Texas Administrative
Code, Chapter 60, Subchapter E, Administration, Division 2, Training, §60.210;
Division 3, Historically Underutilized Businesses, §60.220; Division
4, Bid Opening and Tabulation, §60.230; and Division 5, Vendor Protests, §60.240
and §60.241, regarding the Texas Commission of Licensing and Regulation
administrative rules as published in the February 20, 2004, issue of the
The repeal allows for a rule organizational structure that can accommodate
several different but related rule matters in the area of agency internal
administration, such as compliance with statutory training and purchasing
requirements. The adoption of the new rules also complies with Texas Government
Code §§2161.003, 2155.076 and 2156.005, which require, respectively,
agency rules pertaining to historically underutilized businesses, vendor protest
procedures, and bid opening and tabulation.
The Department drafted and distributed the proposal to persons internal
and external to the agency. No comments were received.
Subchapter E. ADMINISTRATION
16 TAC §60.201
The repeal is adopted under Chapter 51, §51.201, Texas
Occupations Code, which authorizes the Commission to adopt rules as necessary
for its own procedures.
The statutory provisions affected by the adopted repeal are those set forth
in Texas Occupations Code, Chapter 51. No other statutes, articles, or codes
are affected by the repeal as adopted.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on May 12, 2004.
TRD-200403206
William H. Kuntz, Jr.
Executive Director
Texas Department of Licensing and Regulation
Effective date: June 1, 2004
Proposal publication date: February 20, 2004
For further information, please call: (512) 463-7348
2.
TRAINING
16 TAC §60.210
The new rule is adopted under Chapter 51, §51.201, Texas
Occupations Code, which authorizes the Commission to adopt rules as necessary
for its own procedures.
The statutory provisions affected by the adopted new rule are those set
forth in Chapter 51, Texas Occupations Code, and Chapter 656, Texas Government
Code. No other statutes, articles, or codes are affected by the new rule as
adopted.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on May 12, 2004.
TRD-200403207
William H. Kuntz, Jr.
Executive Director
Texas Department of Licensing and Regulation
Effective date: June 1, 2004
Proposal publication date: February 20, 2004
For further information, please call: (512) 463-7348
16 TAC §60.220
The new rule is adopted under Chapter 51, §51.201, Texas
Occupations Code, which authorizes the Commission to adopt rules as necessary
for its own procedures.
The statutory provisions affected by the adopted new rule are those set
forth in Chapter 51, Texas Occupations Code and Chapter 2161, Texas Government
Code. No other statutes, articles, or codes are affected by the new rule as
adopted.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on May 12, 2004.
TRD-200403208
William H. Kuntz, Jr.
Executive Director
Texas Department of Licensing and Regulation
Effective date: June 1, 2004
Proposal publication date: February 20, 2004
For further information, please call: (512) 463-7348
16 TAC §60.230
The new rule is adopted under Chapter 51, §51.201, Texas
Occupations Code, which authorizes the Commission to adopt rules as necessary
for its own procedures.
The statutory provisions affected by the adopted new rule are those set
forth in Texas Occupations Code, Chapter 51 and Chapter 2156, Texas Government
Code. No other statutes, articles, or codes are affected by the new rule as
adopted.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on May 12, 2004.
TRD-200403209
William H. Kuntz, Jr.
Executive Director
Texas Department of Licensing and Regulation
Effective date: June 1, 2004
Proposal publication date: February 20, 2004
For further information, please call: (512) 463-7348
Part 4.
TEXAS DEPARTMENT OF LICENSING AND REGULATION
Subchapter B. ORGANIZATION
Subchapter D. PRACTICE AND PROCEDURE
Chapter 60.
TEXAS COMMISSION OF LICENSING AND REGULATION
Subchapter E. ADMINISTRATION
3.
HISTORICALLY UNDERUTILIZED BUSINESSES
4.
BID OPENING AND TABULATION
5.
VENDOR PROTESTS