Part 2.
PUBLIC UTILITY COMMISSION OF TEXAS
Chapter 25.
SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS
Subchapter H. ELECTRICAL PLANNING
2.
ENERGY EFFICIENCY AND CUSTOMER-OWNED RESOURCES
16 TAC §25.185
The Public Utility Commission of Texas (commission) adopts
new §25.185, relating to the Energy Efficiency Incentive Program for
Military Bases, including the Military Bases Standard Offer Program (Figure:
16 TAC §25.185(f)(1)), with changes to the text as proposed in the December
5, 2003 issue of the
Texas Register
(28 TexReg
10853). The new rule provides guidance for the implementation of the energy
efficiency program and goal for military bases mandated under the Public Utility
Regulatory Act (PURA) §39.910. Section 39.910 was enacted as a part of
a comprehensive bill to improve the prospects for maintaining military bases
in Texas, as the Department of Defense (DOD) conducts a review of bases, with
the objective of reducing defense costs. The realignment or closure of bases
can have a significant detrimental impact on local communities, and the energy-efficiency
provisions of the bill were intended to reduce energy costs at Texas bases
and give them a better chance of remaining open.
In particular, this section requires that electric utilities that are located
in areas that are not subject to customer choice provide incentives to install
energy efficiency devices or other alternatives on military bases. The goal
for the program is for military bases to reduce electricity consumption by
5.0%. The goal must be achieved by January 1, 2005, and the 5.0% target will
be based on 2002 consumption levels. Under the new rule, the goal is a one-time
requirement to be achieved by January 1, 2005.
Each utility will meet the goal by making sufficient funds available to
fund energy savings in the equivalent of an aggregate 5.0% energy reduction
by bases in its service area. The program is structured as a standard offer
program under which the utility offers predetermined incentives for kilowatt
and kilowatt-hour savings, under standard terms and conditions. The incentive
level for the program is 50% of the cost-effectiveness standard prescribed
in §25.181(e) of this title (relating to the Energy Efficiency Goal).
Incentives may be raised up to 100% of the cost-effectiveness standard, if
the project directly benefits military personnel qualifying as hard-to-reach
customers. Military bases may participate in the program directly, or may
enter in to an agreement with a third-party project sponsor to provide the
services.
The commission initiated the rulemaking proceeding on October 13, 2003
under Project Number 28715,
Rulemaking to Establish
a Energy Efficiency Incentive Program for Military Bases Pursuant PURA §39.910
. Commission Staff distributed a strawman proposal and hosted an informal
workshop on October 30, 2003. At the Open Meeting on November 21, 2003, the
commission approved the publication of the proposed rule for comments in the
December 5, 2003 issue of the
Texas Register
.
Written comments were due on January 5, 2004. El Paso Electric Company
(EPE), Energy Conservation Coalition (ECC), Entergy Gulf States, Inc. (EGSI),
Southwestern Electric Power Company (SWEPCO), Texas Industrial Energy Consumers
(TIEC), and Xcel Energy (Xcel) filed comments. EPE, SWEPCO, and TIEC filed
reply comments on January 14 and 15, 2004. No party requested a hearing pursuant
to the Administrative Procedure Act, Government Code 2001.029.
Responses to the preamble questions
In addition to comments on specific subsections of the proposed rule, the
commission requested that parties address the following specific issues:
1. What utilities, if any, with service areas
outside of the Electric Reliability Council of Texas (ERCOT) are not subject
to PURA §39.910, and why not?
Xcel responded that Southwestern Public Service (SPS) is subject to PURA §39.402,
which provides that until such time as SPS implements customer choice, the
provisions of PURA Chapter 39 (with the exception of the renewable and certain
permitting mandates) shall not apply to SPS.
Similarly, EPE stated that pursuant to the Agreed Order and Stipulation
in Docket Number 12700,
Application of El Paso Electric
Company for Authority to Change Rates
, and PURA §39.102(c) it
is not subject to the requirements of Chapter 39, including PURA §39.910,
and that holding PURA §39.910 applicable to EPE would contradict the
language in PURA §39.102 rather than harmonize the two provisions. In
addition, EPE stated that as it is not subject to the commission power and
jurisdiction under §39.910, PURA §14.002 provides insufficient authority
to adopt a rulemaking addressing EPE. If the legislature had intended for
this provision to apply to EPE, it would have expressly stated so, but PURA §39.910
contains no language indicating the section's applicability to EPE, in spite
of the exception from Chapter 39. EPE also argued that if the Legislature
had wanted PURA §39.910 to apply to EPE, then it would have placed the
provision in Chapter 36, as it did in the case of the discounted rates for
military bases. Finally, EPE stated that EPE's rate freeze expires August
1, 2005, the same year that the Base Realignment and Closure (BRAC) process
will be completed. To EPE this is further indication that the Legislature
did not intend for PURA §39.910 to apply to EPE. EPE offered rule language
that would specifically exclude the EPE from subsection (b).
Commission response
EPE argued that it is not subject to the military base energy efficiency
program because the Legislature failed to state specifically that PURA §39.910
applies to EPE. If, however, applying the plain language of a statute, as
suggested by EPE, would lead to absurd results that the Legislature could
not possibly have intended, then in arriving at a sensible interpretation,
an agency may consider extra-textual factors such as legislative history.
The legislative history of Senate Bill 652, (Act of May 15, 2003, 78th Leg.,
R.S., ch. 149, §23, 2003 Tex. Gen. Laws 223) (SB 652), of which PURA §39.910
was a part, evidences that the purpose of the bill was to lower operating
costs at Texas' 18 major military installations in order to prepare for BRAC
activities in 2005. The Background and Purpose in the bill analysis for SB
652 provides that Texas' 18 major military installations are of economic importance
and vital and historical significance. The Background and Purpose then addresses
employment figures and military expenditures for Texas' 18 major installations
and instructs that the bill provides important cost saving options to reduce
overall base operating costs. Fort Bliss, one of Texas' major 18 military
installations, is subject to the 2005 BRAC and is located in EPE's service
area. In fact, out of Texas' 18 major military bases, only Fort Bliss, Lone
Star Army Ammunition Plant, and Red River Army Depot are served by non-ERCOT
utilities that are subject to PURA §39.910. Excluding EPE from the rule
would mean that Fort Bliss, which is the largest military base in a non-ERCOT
area, the largest Air Defense Artillery Training Center in the world, and
occupies over one million acres, would not be eligible for energy efficiency
incentives. While statutory construction begins with the words used in a statute,
an agency may also consider the object to be attained by the statute, the
circumstances surrounding the enactment of the statute, and the consequences
of a particular construction. The consequence of EPE's construction is that
the military installation that could most benefit from PURA §39.910 because
of its size and scope is ineligible. Such a result would thwart the Legislature's
intent and lead to an absurd result. Therefore, in order to achieve the Legislature's
intent, the commission construes PURA §39.910 to apply to EPE.
Furthermore, even if PURA §39.910 did not apply to EPE, the Commission
nevertheless concludes that it is appropriate to exercise its authority under
PURA §14.001 to require the energy efficiency programs required by this
rule. PURA §14.001 authorizes the commission to regulate and supervise
the business of each public utility within the commission's jurisdiction and
to do anything specifically designated or implied by PURA that is necessary
and convenient to the exercise of the commission's power and jurisdiction.
The programs required by this rule will make the eligible military bases more
efficient and hence less likely to be closed as a result of BRAC. The continued
operation of the military bases benefits the utilities and their other customers.
Each of these bases is a large consumer of electricity. If one of them were
to close, it would constitute a significant, sudden drop in demand for electricity.
As a result, the utility would experience a significant drop in revenues and
earnings, and consequently might seek a rate increase that would be borne
by the utility's other customers. In a number of instances in the past, the
commission has offered discounted rates to avoid loss of large customers.
Furthermore, PURA §36.052(1) requires that the commission consider,
in establishing a reasonable return on invested capital for a utility, the
efforts and achievements of the utility in conserving resources and PURA §36.204
provides that the commission may allow a utility timely recovery of reasonable
costs and additional incentives with respect to conservation and load management.
Thus, PURA §36.052(1) and §36.204, taken together, indicate that
energy efficiency is an appropriate policy objective for the commission in
invoking PURA §14.001 to require energy efficiency programs such as the
ones required by this rule.
If EPE is subject to PURA §39.910, then EPE is authorized to request
recovery of costs associated with the military base energy efficiency program.
PURA §39.910(c) authorizes those utilities subject to PURA §39.910
to request recovery, either through a surcharge or other rate mechanism, of
costs incurred under the section. While EPE is under a rate freeze pursuant
to the Agreed Order in Docket Number 12700, the terms of the order do not
explicitly preclude EPE from recovering these costs after the rate freeze.
In addition, the subsequent enactment of legislation generally overrides a
commission order. Therefore, it appears that PURA §39.910(c) authorizes
EPE to request recovery and that such a request would not be prohibited by
EPE's rate freeze.
If, as discussed above, EPE is not subject to PURA §39.910, it is
still subject to the military base energy efficiency program pursuant to the
commission's authority under PURA 14.001. In that case, the Agreed Order does
not appear to preclude recovery of costs, after the expiration of the freeze,
associated with this new program that is required by the commission. In addition,
PURA §36.204(1) might authorize EPE to request recovery of its costs
incurred under the program, notwithstanding the Agreed Order. PURA §36.204(1)
provides that the commission may allow a utility timely recovery of reasonable
costs of conservation and load management, and like §39.910, it was enacted
after the Agreed Order. Costs associated with the military base energy efficiency
program would be costs incurred for conservation and load management; therefore, §36.204(1)
applies. Additionally, the rule establishing the military base energy efficiency
program is consistent with PURA §36.204(1), because §25.185(h) requires
any utility requesting cost recovery to prove the reasonableness of the costs
associated with the program. Therefore, PURA §36.204 and §25.185(h)
operate together to authorize EPE to request timely recovery of reasonable
costs associated with the military base energy efficiency program.
EGSI and SWEPCO stated that they are subject to PURA §39.910 but take
no position on the applicability to other utilities outside of ERCOT. EGSI
did, however, also state that the energy efficiency program for military was
created to ensure that military bases that were located in utility service
areas outside of ERCOT would have access to energy efficiency incentives,
just as military bases within ERCOT have access to such programs through the
provision of PURA §39.905, as well as customer choice. Although EGSI
is outside of ERCOT, it does offer energy efficiency incentive programs and
has a well developed customer choice pilot program, and as such, EGSI argued,
should not be subject to the requirements of PURA §39.910.
Commission response
The commission disagrees with EGSI that it is not subject to the requirements
of PURA 39.910. As discussed in the commission's responses to Question Number
3, energy efficiency programs for utilities outside of ERCOT were continued
after the implementation of Senate Bill 7 (Act of May 27, 1999, 76th Leg.,
R.S., ch. 405, §39, 1999 Tex. Gen. Laws 2558)(SB 7). Therefore, many
utilities outside ERCOT, including EGSI, already offer energy efficiency incentive
programs. The fact that these programs already exist does not, however, negate
the Legislature's intent that a separate program be developed for military
bases. If the Legislature was seeking merely a set-aside under existing programs
it would not have expressly included a cost-recovery mechanism for programs
implemented under PURA §39.910. The fact that the Legislature created
a specific cost recovery mechanism indicates an expectation that the utility
would incur additional expenses in implementing the military program in conjunction
with existing programs. However, as discussed in response to Question Number
2, the commission has narrowed the definition of "military base" such that
there are no facilities in EGSI's services area to which the program can apply.
2.
What is the proper definition of a military
base under PURA §39.910, and what effect will such a definition have
on the electric utilities subject to PURA §39.910?
SWEPCO, Xcel, EGSI, and EPE argued that the definition of "military base"
in the proposed rule should be amended to include only Texas' 18 large military
bases because the Legislature wanted to strengthen those bases economically
before the 2005 round of BRAC activities by the DOD. SWEPCO, EGSI, and EPE
all noted that the Background and Purpose of SB 652 provides specific information--including
employment figures and expenditures--about Texas' 18 major military installations;
thus, strengthening those 18 bases in preparation for the next round of BRAC
was the Legislature's primary goal. SWEPCO, XCEL, EGSI, and EPE asserted that
in adopting new §25.185, the commission should follow the purpose of
the bill because when construing statutes, the primary objective is to give
effect on the Legislature's intent. SWEPCO argued that the result of the broad
definition of "military base" is that utilities will incur unnecessary expenditures
that must be charged to customers. EGSI offered that requiring energy efficiency
measures be installed in facilities other than those 18 bases can be justified
only if there is some clear indication in PURA or somewhere else in SB 652
that this is what the Legislature intended, and there is, in fact, no such
clear indication. EPE urged the commission to consider, among other things,
the statute's objective, the legislative record, and the circumstances under
which the statute was enacted. Xcel stated that BRAC applies to closures or
realignments of military bases at which 300 or more civilians are employed,
and this interpretation of the term "military base" is consistent with the
understanding of the utilities in Texas subject to PURA §39.910 that
SB 652 would only apply to the 18 largest military bases in the State. EGSI
argued that even if a broad definition of military base is adopted, then the
proposed definition should be clarified to indicate exactly which facilities
fall within the scope of the rule. EGSI offered that its service area contains
many military recruiting offices. It is debatable that such facilities are
"controlled" and would fall within the scope of the rule; however, these facilities
are not typically what one would think of when referring to military bases.
EGSI suggested that the definition of military base be clarified to include
only those facilities that occupy no fewer than ten acres of land. EGSI argued
that including this clarification in the definition would have the merit of
trying to target those facilities at which substantial energy savings could
be achieved.
SWEPCO stated that Red River Army Depot (RRAD) could be targeted for closure
in 2005. Therefore, SWEPCO suggested that the rule should also exclude any
base that the DOD decides to close.
SWEPCO estimated that the cost of the program if the commission simply
list the 18 military bases would be approximately $720,000. If the definition
in the proposed rule is adopted, then SWEPCO estimated the total cost will
be higher, but it did not provide information as to what the additional cost
will be because SWEPCO was unsure of what additional military facilities would
be covered by the rule. Similarly, EGSI offered that none of the 18 major
military bases are in EGSI's service territory. Therefore, EGSI would not
incur any energy efficiency costs, if the definition only addresses those
18 bases. If the definition is left as proposed, then EGSI cannot know for
sure what the cost implications will be because EGSI does not know how many
military facilities would be eligible for the energy efficiency measures.
Commission response
The commission agrees with EGSI, EPE, Xcel, and SWEPCO that the purpose
of SB 652 is to prepare Texas' 18 major military bases for BRAC. EGSI, SWEPCO,
and EPE all suggested that the commission list the 18 major bases to which
PURA §39.910 is intended to apply; however, the commission concurs with
EGSI that the definition of "military base" should target only those facilities
at which substantial energy savings could be achieved. The commission concludes
that defining "military base" in terms of usage is the most prudent way to
assure that the rule includes Texas' 18 major bases and targets those facilities
at which substantial energy savings could be achieved. Therefore, the commission
modifies the definition of "military base" to provide that a "military base"
is a military installation as defined in 10 U.S.C. §2687(e)(1) with a
cumulative peak demand of three mega-watts or greater.
The commission agrees with SWEPCO that RRAD was targeted for realignment
in 1995, but the commission concludes that RRAD was not realigned after the
Base Realignment and Closure Commission decided that RRAD was essential for
military readiness. The commission concurs with SWEPCO that the definition
of "military base" should exclude any base that is scheduled for closure.
Therefore, the commission adopts a definition of "military base" that excludes
only those facilities that have been scheduled for closure under the Defense
Base Closure and Realignment Act of 1990 (10 U.S.C. §2687), and subsequent
amendments.
3. Should electric utilities, considering prior
commission policy, be allowed to count savings achieved under this program
towards satisfying the requirements of PURA §39.905?
EGSI, EPE, SWEPCO, and Xcel responded the utilities should be allowed to
count the savings achieved under §39.910 towards satisfying the requirements
of PURA §39.905. Excel argued that there is little difference between
the program being proposed in this rulemaking and the programs implemented
under PURA §39.905. In addition, the goal of the programs under PURA §39.905
is to reduce peak summer demand and annual energy usage and implementation
of the programs proposed in this rulemaking will produce similar results.
EGSI and SWEPCO stated that there is nothing in PURA §39.910 or §39.905
that indicates that military energy efficiency savings cannot count towards
the 10% goal under PURA §39.905, nor would it result in harm to either
statutory provision. In addition, EGSI and EPE stated that excluding these
savings would be arbitrary and would hold these companies to a higher energy
efficiency goal than the ERCOT utility. EPE argued that this would be tantamount
to increasing the utility's goal from 10% to 15%. SWEPCO argued that it is
not the purpose of PURA §39.910 to acquire additional energy efficiency
savings, rather the purpose is to strengthen the financial viability of military
bases. According to SWEPCO, if the goals of both sections of PURA can be met
or furthered by the same program, then neither section is violated, and the
purpose of both will be furthered at the least cost. SWEPCO noted that this
issue is relevant for it is already subject to PURA §39.905 pursuant
to the Order on Rehearing in Docket Number 24468,
Staff's Petition to Determine Readiness for Retail Competition in the Portions
of Texas within the Southwest Power Pool
.
EGSI and SWEPCO also stated that the commission should minimize the total
costs of acquiring energy efficiency, as it did when it adopted the policy
of allowing utilities to count the energy efficiency savings achieved under
PURA §39.903(e)(1) and (f)(2) towards the goal in PURA §39.905.
Similarly, EPE argued that the commission specifically authorized standard
offer program savings achieved under PURA §39.903(f)(2) to be counted
towards the goal in PURA §39.905, in spite of the fact that these programs
use different cost-effectiveness standards. EGSI further noted that whereas
it is true that savings under the energy efficiency grant program in §25.182
of this title (relating to Energy Efficiency Grant Program) do not count towards
the goal in PURA §39.905, it should be noted that the grant program is
not on the same footing as the program under PURA §39.903. First, utilities
voluntarily apply for the grants from a state-funded program (the costs are
not included in rates); and second, the purpose of the grant program is to
reduce emissions. In contrast, the program under PURA §39.903, as the
programs under PURA §39.905 and §39.910, is funded through rates
and has the purpose of reducing customer energy costs.
TIEC, in reply comments, agreed with commenters that suggested that utilities
should be allowed to count savings achieved under PURA §39.910 towards
the goal in §39.905. From an overall ratepayer perspective, TIEC agreed
that that overall cost minimization is critical. If both goals can be achieved
without incurring substantial cost, the commission should adopt such an approach.
ECC stated that the savings from PURA §39.910 should not count towards
the utilities' goal under PURA §39.905. ECC argued that the Legislature
would not have created the new PURA §39.910 had it not intended it to
be an extra incentive above and beyond existing programs. Allowing the savings
from this new program to reduce the amount of incentives available under §39.905
programs could actually lessen the potential benefit to military bases. EPE
responded that ECC's assertion is not supported by any plain reading of the
statute. Moreover, according to EPE, the commission has already rejected this
argument when it allowed utilities to count savings achieved under PURA §39.903.
Finally, EPE disputed whether counting these savings would somehow reduce
the benefits to the military bases. In reply comments, SWEPCO disagreed with
ECC's assertion that the Legislature would have required utilities to be subject
to both PURA §39.910 and §39.905 as separate goals; reiterated its
argument that allowing utilities to count the savings would be consistent
with commission prior policy; and disputed that such a policy would lessen
the potential benefits for military bases.
Commission response
Prior to the introduction of customer choice pursuant to PURA Chapter 39
all utilities operated energy efficiency programs. These programs were the
result of the integrated planning process or other proceedings. With the enactment
of SB 7, utilities subject to PURA Chapter 39 were required to operate energy
efficiency programs pursuant to PURA §39.905. Programs not consistent
with these provisions were terminated or phased out. Those utilities not subject
to PURA §39.905, however, continue the pre-existing programs at pre-established
funding levels. Funding for programs consistent with the provisions of §39.905
was established in the utilities' cost-of-service rates, based on funding
necessary to achieve the goal and taking into consideration the cost-effectiveness
standards, incentive levels by customer class, equity considerations, and
the extent to which savings resulting from PURA §39.903 would be used
to satisfy the 10% goal. No utility has used the savings achieved under PURA §39.903
towards satisfying the goal established in PURA §39.905. Thus, no utility
has reduced funding available under PURA §39.905 programs to the applicable
customer class based on the potential savings resulting from PURA §39.903.
The utilities and TIEC appear to argue that allowing utilities to count
the savings achieved under PURA §39.910 towards the goal in PURA §39.905
will reduce overall costs. These costs are, however, already included in the
rates. Therefore, cost reduction would only occur if utilities were to use
funding for PURA §39.905 to satisfy the requirements of PURA 39.910.
This would result in decreased incentive funds being available for certain
customers because these funds would have to be diverted to eligible customers
under this program. In effect, the utility would be robbing Peter to pay Paul.
Finally, the statute provides for a cost recovery mechanism for this program.
If the Legislature was seeking merely a set-aside under existing programs
it would not have expressly included a cost recovery mechanism. Rather this
indicates an expectation that the utility would incur additional expenses
in implementing the military program in conjunction with existing programs.
Clearly, this is a limited, one-time, additional expenditure on behalf of
a specific group of customers for a specific purpose.
The commission therefore concludes that utilities should not be allowed
to count the savings achieved under this program towards satisfying the requirements
of PURA §39.905. The commission notes, however, that the 10% goal under
PURA §39.905 is expressed as a minimum. Therefore, utilities may report
the savings achieved under this program in the reporting provisions of §25.181(h)(4)
of this title as additional savings above the 10% minimum. The commission
has made no changes to the rule in response to these comments.
General comments
Eligibility of thermal storage
ECC stated that the importance of customer choice should be honored by
ensuring that all technologies that reduce consumption or reduce energy costs
are eligible under the program. ECC is particularly concerned that thermal
storage technologies be deployed under the military bases program. According
to ECC, such technologies require large capital outlays that discourage deployment
and thermal storage technologies should not be excluded as an eligible measure.
EPE responded that it could not support ECC's request that the rule be
expanded to include thermal storage technologies. EPE stated that PURA §39.910
explicitly provides that the program reduce the consumption of electricity
by military bases. EPE noted that thermal storage technologies primarily shift
load from on-peak to off-peak, rather than reduce consumption. EPE agreed
that thermal storage technologies require large capital outlays, but it stated
that because of this they are not cost-effective energy reduction programs
and should, therefore, not be included in the rule.
Commission response
ECC appears to misunderstand the nature of a standard offer program. A
standard offer program is measure-blind in the sense that it does not specify
measures and any measure may participate as long as it meets standard criteria.
These criteria are established to ensure that these measures are cost-effective
and will produce the projected savings over a ten-year period. EPE is correct
in stating that PURA §39.910 explicitly provides that the program reduce
energy consumption by military bases and expresses that goal in energy. If
an applicant can demonstrate that a thermal storage technology will reduce
energy consumption, it could be selected under the standard offer program.
The commission declines to amend the rule to endorse or prohibit specific
energy efficiency measures.
Comments on the proposed rule
§25.185(c) Eligibility for incentives
ECC stated that it supported the language that would allow retail electric
providers and competitive energy service providers to enter into a contract
with the utility and receive incentives only if they have an agreement with
a military base. ECC stated that the choice of provider should stay with the
customer.
§25.185(d) Program goal
Xcel agreed that the goal set out in PURA §39.910 is a one-time requirement
to be achieved by January 1, 2005.
§25.185(g) Utility administration
In reference to §25.185(g)(5), EPE stated that the commission does
not have the express authority to limit the application of emission reductions
for the purpose of state law and state programs. Therefore, subsection (g)(5)
should be deleted.
Commission response
The commission agrees that there is no benefit in disallowing utilities
to use the energy efficiency savings achieved under the military bases program
pursuant to PURA §39.910 towards satisfying an obligation to reduce air
emissions under state or federal law or a state or federal regulatory program.
The commission has, therefore, deleted paragraph (g)(5).
§25.185(h) Reporting and cost recovery
TIEC urged that the commission clarify that the surcharge to recover the
program costs may only be determined through a regular base-rate proceeding,
not separately from other transmission and distribution rates. According to
TIEC, this is dictated by PURA §39.910, traditional transmission cost
recovery principles, and past commission practice. The statutory language
authorizes the commission to adopt the most appropriate rate mechanism for
recovering costs, which is a comprehensive base-rate proceeding. It is only
through a comprehensive proceeding that the commission can determine whether
the totality of the utility's revenues are insufficient to recover base-rate
costs, plus reasonable rate of return, and adjust the base rate accordingly.
To set the surcharge separately would result in piecemeal ratemaking, which
the commission has consistently rejected. In addition, according to TIEC,
the Legislature did not authorize the commission to recover these costs separately.
TIEC reiterated its arguments in reply comments.
Conversely, EGSI and SWEPCO advocated for clarification that the utility
be allowed to request cost recovery of such costs independent of a general
rate case. Both utilities offered rule language to that effect.
In reply comments, EPE disputed TIEC's assertion that the Legislature intended
that cost recovery be determined through a full rate case, for the statute
does not limit cost recovery to circumstances in which the utility needs additional
revenues to meet its rate of return, and does not require an analysis of the
utility's costs of service outside the military base program. According to
EPE, the statute requires that the commission allow utilities to recover these
costs and even specifies a recovery method such as the nonbypassable surcharge.
In specifying a nonbypassable surcharge or
other
rate mechanism, the Legislature expressly allowed for cost recovery
from its retail customers notwithstanding its other approved rates. Similarly,
SWEPCO responded that had the Legislature intended for cost recovery to be
determined through a full rate case it would not have specified that the commission
approve a nonbypassable surcharge or other rate mechanism as the vehicle for
cost recovery. In addition, according to EPE and SWEPCO, the Legislative intent
to allow timely cost recovery is clear from the rate discount for military
bases provision in the same bill. PURA §36.354 requires that the commission
approve a surcharge within 30 days to recover the cost of lost revenues resulting
from the discounted tariff. Finally, EPE disputed that such a surcharge would
result in piecemeal ratemaking. Unlike the costs in the utility cost of service
rate, including the energy efficiency program costs resulting from PURA §39.905,
the costs resulting from this program are not recurring costs. Rather, these
costs will be one-time costs to be recovered through a one-time request. According
to EPE, litigating an entire rate case for the purpose of recovering non-recurring
costs is not reasonable or cost-effective. In addition, the requirements under
the rule ensure a thorough review of the utilities' expenditures before cost
recovery is approved.
Commission response
The language of the statute provides a nonbypassable surcharge or other
rate mechanism to recover costs incurred in implementing this program. The
statute does not require cost recovery to be determined though a full-rate
case. Litigating an entire rate case for the purpose recovering such a one-time
expense may not be reasonable or cost-effective. Since it is a limited to
a one-time expense it should also be fairly easy to subject it to a thorough
review before cost-recovery is approved. In addition, the cost-recovery would
be subject to true-up during a rate-setting proceeding in the future. The
commission does agree that the language in the rule should be clarified and
has adopted the revision proposed by EGSI and SWEPCO. While piecemeal rate-making
is ordinarily a concern in setting regulated rates, the specific authorization
to approve special rates to recover the costs associated with this program
obviates this concern.
In reference to §25.185(h)(4), EGSI and SWEPO objected to the requirement
that only costs resulting in energy savings counting towards the goal be eligible
for cost recovery. According to EGSI and SWEPCO a utility may act reasonably
and incur costs, yet the savings may not occur because of events beyond the
utility's control. For example, the DOD is implementing cost cutting and reorganization
policies that could lead to the closing of a facility before savings have
been achieved. EGSI and SWEPCO argued that they should be able to recover
such costs to the extent they were prudently incurred.
Commission response
In principle the utility should only be reimbursed for expenses resulting
in quantifiable energy savings. The commission finds that should a situation
arise where an investment does not result in energy savings due to unforeseen
circumstances, the utility may file a request for a good-cause exception.
Comments on the Template
No party provided comments regarding the proposed Military Bases Standard
Offer Program.
All comments, including any not specifically referenced herein, were fully
considered by the commission. The commission has made other minor modifications
for the purpose of clarifying its intent and improving style and readability.
The new rule is adopted under the Public Utility Regulatory Act,
Texas Utilities Code Annotated (PURA) §14.001 and §14.002, which
provide the Public Utility Commission with the authority to make and enforce
rules reasonably requires in the exercise of its power and jurisdiction; and
specifically PURA §39.910 that requires the commission to promulgate
rules to implement the energy efficiency incentive program and goal for military
bases.
Cross Reference to Statutes: Public Utility Regulatory Act, Texas Utilities
Code Annotated (PURA) §§14.001, 14.002, 39.910.
§25.185.Energy Efficiency Incentive Program for Military Bases.
(a)
Purpose. The purpose of this section is to provide implementation
guidelines for the Military Bases Standard Offer Program (Military Bases SOP)
mandated by Public Utility Regulatory Act (PURA) §39.910. Energy efficiency
projects installed under the Program must result in reductions in energy consumption
and energy costs.
(b)
Application. This section applies to electric utilities,
as that term is defined in §25.5 of this title (relating to Definitions),
in areas not subject to customer choice pursuant to PURA §39.102(a),
including electric utilities conducting a pilot retail competition project
under PURA §39.103 and §39.104.
(c)
Eligibility for incentives. Military bases, retail electric
providers, and competitive energy service providers are eligible to receive
energy efficiency incentives from electric utilities. Military bases may act
as their own project sponsors and receive incentives directly from the electric
utility to install energy efficiency projects in their facilities. Retail
electric providers and competitive energy service providers may enter into
a contract with an electric utility and receive incentives to install energy
efficiency projects only if they have an agreement with the military base.
The military base is not under any obligation to enter into an agreement with
a third-party to provide energy efficiency services. A retail electric provider
operating as an energy efficiency service provider in a utility service area
that is not subject to customer choice may not sell or market retail electric
services in that area, unless a pilot project is being conducted in the area
under PURA §39.103 and §39.104.
(d)
Program goal. The goal of the Military Bases SOP is to
reduce energy consumption of military bases by 5.0%, as compared to consumption
levels in 2002, by January 1, 2005. Utilities will meet this goal by making
sufficient incentives available based on the cost-effectiveness and avoided
cost standards as set forth in §25.181(e) of this title (relating to
Energy Efficiency Goal) and subsection (f) of this section. The goal shall
be expressed as an aggregate based on the individual military bases' consumption
in an electric utility's service area.
(e)
Definitions. The words and terms in §25.181 of this
title apply to this section unless modified in this subsection. In addition,
the following words and terms, when used in this section shall have the following
meanings unless the context clearly indicates otherwise:
(1)
Competitive energy service provider--Energy efficiency
service provider.
(2)
Energy efficiency service provider--A person who installs
energy efficiency measures or performs other energy efficiency services. An
energy efficiency service provider may be a retail electric provider or a
military base, if the person has executed a standard offer contract.
(3)
Military base--A federally owned or operated military installation
or facility that is not scheduled for closure under the Defense Base Closure
and Realignment Act of 1990 (10 U.S.C. §2687), and subsequent amendments
with a cumulative peak demand of three mega-watts or greater.
(4)
Project sponsor--An energy efficiency service provider
that has an executed standard offer contract with an electric utility.
(5)
Standard offer program--A program under which a utility
administers standard offer contracts between the utility and energy efficiency
service providers.
(f)
Basic program elements.
(1)
The Program will offer incentives under the Military Bases
Standard Offer Program (Military Bases SOP).
Figure: 16 TAC §25.185(f)(1) (.pdf)
(2)
The Military Bases SOP is subject to the guidelines of §25.181(j)
and (l) of this title, except for the following provisions:
(A)
Programs need not be developed to address each customer
class as required under §25.181(j)(2)(A) of this title.
(B)
Lighting measures need not be limited to 65% of the projected
savings as required by §25.181(j)(2)(G) of this title.
(C)
Military bases, acting as a project sponsor, need not provide
the documentation required under §25.181(j)(2)(N) of this title.
(3)
Incentive payments shall be made for energy and peak demand
savings. For the purpose of this section, incentive payments for military
bases, as individual customers, shall not exceed 50% of the cost effectiveness
standard set forth in §25.181(e) of this title. Incentive payments may
be increased to 100% of the cost-effectiveness standard if the end-use beneficiary
qualifies as a hard-to-reach customer residing on a military base.
(4)
Incentive payments are made to the project sponsor who
is under contract with the utility. The project sponsor is responsible for
producing the energy savings regardless of whether it is the military base.
The project sponsor, if other than the military base, is not obligated to
pass on or share incentive payments with the military base.
(5)
Inspection, measurement and verification requirements shall
be consistent with the Military Bases SOP and in accordance with §25.181(l)
of this title. Deemed savings estimates adopted under §25.184(d) of this
title (relating to Energy Efficiency Implementation Project) may be used in
lieu of measurement and verification, where appropriate.
(6)
Cost effectiveness and avoided cost criteria shall be consistent
with §25.181(e) of this title.
(7)
Projects or measures under this program are not eligible
for incentive payments or compensation if:
(A)
A project would achieve demand reduction by eliminating
an existing function or shutting down a facility or operation;
(B)
It would result in building vacancies or the re-location
of existing operations to locations outside of the facility or the area served
by the participating utility;
(C)
A measure would be installed even in the absence of the
energy efficiency service provider's proposed energy efficiency project;
(D)
A project results in negative environmental or health effects,
including effects that result from improper disposal of equipment and materials;
(E)
The project involves the installation of self-generation
or cogeneration equipment, except for renewable demand side management or
fuel cell technologies; or
(F)
The measure has less than a ten-year life or is a plug-in
load.
(g)
Utility administration. An electric utility shall administer
the Military Bases SOP in a market-neutral, nondiscriminatory manner. An electric
utility may not offer underlying competitive services. The cost of administration
for the Military Bases SOP may not exceed 20% of the total program budget.
(1)
Administrative costs include costs necessary for electric
utility conducted inspections and the costs necessary to meet the following
requirements:
(A)
Conduct informational activities designed to explain the
Military Bases SOP to energy efficiency service providers, military base personnel,
and vendors;
(B)
Review and select proposals for energy efficiency projects
in accordance with the Military Bases SOP guidelines and applicable rules
of the standard offer programs under §25.181(j) of this title, and subsection
(f)(1) of this section;
(C)
Inspect projects to verify that measures were installed
and are capable of performing their intended function, as required in §25.181(l)
of this title, before final payment is made; and
(D)
Review and approve project sponsor savings monitoring reports.
(2)
Only projects installed within the electric utility's service
area are eligible for incentives under this program.
(3)
An electric utility may not count the energy and demand
savings achieved under the Military Bases SOP towards satisfying the requirements
of PURA §39.905.
(4)
Incentives paid for energy and demand savings under the
Military Bases SOP may not supplement or increase incentives made for the
same energy and demand savings under programs pursuant to PURA §39.905
or any other energy efficiency program subject to cost recovery.
(5)
The electric utility shall compensate project sponsors
for energy efficiency projects in accordance with the applicable rules of
the standard offer programs under §25.181(j) of this title and the requirements
of this section.
(h)
Reporting and cost recovery. Each utility shall track its
energy efficiency expenditures separately from other expenditures and report
these to the commission. Costs associated with the Military Bases SOP under
this section shall be recovered through a commission-approved surcharge or
other rate mechanism. The utility may, but is not required to, request recovery
of such costs independent of a general rate case.
(1)
By April 1, 2004, each utility will file with the commission
a plan indicating for calendar year 2004:
(A)
The program goal for its service area as prescribed in
subsection (d) of this section;
(B)
The amount of incentive funds, by incentive level, being
made available;
(C)
The type of outreach activities conducted; and
(D)
A listing of military bases expected to participate in
the program.
(2)
By April 1, 2005, each utility will file with the commission
a report, indicating for calendar year 2004:
(A)
A listing of military bases participating in the Military
Bases SOP; and
(B)
The amount of energy and demand savings under contract,
by incentive level.
(3)
By January 1, 2006, each utility will file with the commission
a final report, indicating for the calendar year 2004:
(A)
The amount of energy and demand savings achieved;
(B)
The total amount spent on administrative activities and
incentives in the program;
(C)
An explanation for the reasons why the goal under subsection
(d) of this section was not met, if applicable; and
(D)
The amount, by cost category, for which the electric utility
is seeking cost recovery.
(4)
Only costs that have resulted in energy savings counting
towards the goal are subject to recovery.
(5)
Reported energy savings must be measurable and documented.
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 March 3, 2004.
TRD-200401704
Adriana Gonzales
Rules Coordinator
Public Utility Commission of Texas
Effective date: March 23, 2004
Proposal publication date: December 5, 2003
For further information, please call: (512) 936-7223
Chapter 401.
ADMINISTRATION OF STATE LOTTERY ACT
Subchapter E. RETAILER RULES
16 TAC §401.369
The Texas Lottery Commission adopts new rule 16 TAC §401.369
relating to online self-service terminals with changes to the proposed text
as published in the January 2, 2004 issue of the
Texas Register
(29 TexReg 35). The change to the text is to delete
subsection (f), revise subsection (g) to clarify that each SST installed at
a retailer location will be equipped with a remote shut off device, and to
renumber the subsections accordingly in light of the deletion of subsection
(f). The changes are made in response to comment expressing concern about
the ability of minors to purchase tickets from an SST and are to clarify the
agency's position regarding providing a remote shut off device for each SST.
The new rule sets out the requirements imposed on a retailer for placement
of a self-service terminal at the retailer's location. Specifically, the rule
defines the term self-service terminal, indicates that a retailer must comply
with the criteria established by the Executive Director for placement and
retention of a self-service terminal, provides for the use of a remote shut
off device for each SST at a retailer location, requires the retailer to keep
the self-service terminal stocked with printer supplies and online roll stock,
requires the retailer to undergo training relating to use and maintenance
of the terminal, and requires the retailer to allow service technicians access
to the terminal during normal business hours.
Written comments by one commenter were received. The commenter indicated
that a letter sent by the commenter to the Texas Legislature that was attached
to the letter sent to the agency employee identified in the rule proposal
to whom comment should be sent represented "the voice of the People with regard
to this proposed rule". The commenter was critical of the agency employee
assigned to receive comment and believed that this employee had lied to the
commenter when responding to the commenter's questions regarding the functionality
of the self-service terminal (SST). The commenter was also critical of the
Executive Director's response to a question posed by the Commission's Chairman
in the September 11, 2003 Commission meeting regarding where the SSTs would
be placed in retailer locations. The commenter also questioned why the agency
treated an email inquiry regarding the cost of the SSTs that she sent to the
Executive Director as an Open Records request. The commenter commented as
to how retailers would react when "law enforcement agencies start targeting
their stores and begin issuing citations to store personnel for allowing minors
to purchase lottery products then issuing minors citations for purchasing
lottery products via the scratch vending machines and the new SST's". The
commenter indicated that the comments pertaining to the proposed rule originated
from the 10,000 plus comments she received in January 2004. The commenter
also provided input that is not relevant to the proposed rule. The subject
areas of this input include payment amounts to Lotto Texas winners, the handling
of an Open Records request regarding Instant Game #423 that the commenter
sent to the agency's Open Records Coordinator, the handling by the agency
of an Open Records request regarding sales and number of winners for each
prize category for Mega Millions drawing, the prize amount paid to a Mega
Millions jackpot winner, the response agency staff provided the commenter
in response to a question about a former Commissioner, the method of paying
Lotto Texas jackpot winners and the handling of an agency investigation regarding
the payment of Lotto Texas jackpot winners, and past rulemakings on on-line
game rules.
The following is a summary of the commenter's letter to all members of
the Texas Legislature that was attached to her letter to the agency employee
identified in the rule proposal to whom comment should be sent. The commenter
wanted to bring to the attention of the members of the Texas Legislature the
contract amendment to the lottery operations and services contract relating
to the SSTs and LED signs. The commenter alleges that the money spent was
a new contract for services and not within the operation of the lottery as
it existed at the time of passage of a rider in the agency's legislative appropriations
bill pattern. The commenter alleges that the subject rider was in place to
allocate additional funds for the payment of existing contracts to operate
the lottery if sales exceeded the projected comptroller estimates. The commenter
indicated that as a result of the $12.4 million expenditure, the Commission
proposed the new rule. The commenter believes that to use the SSTs, the Commission
has to have a rule and believes that this is "equivalent to a state starting
a lottery then asking the People to vote for a state lottery." The commenter
sets out a timeline for "purchase of self service terminals" that includes
the timeline relating to the Commission's proposal of the new rule. The commenter
compares the Commission's actions relating to the use of SSTs and the Commission's
actions relating to acquisition of drawing machines in connection with the
adoption of the Lotto Texas rule in 2003. The commenter indicated that "the
People, by way of a form that was posted on my website, are appalled that
the state would spend taxpayer dollars at this time and in this manner when
funds are so desperately needed elsewhere." The commenter indicated that between
January 8th and 12th, she received over 7000 letters, emails, and forms-most
from school teachers who were angry at her because the first sentence on her
form said "Self service terminals could be good thing for players and retailers
alike." The commenter indicated that the input she received was that retailers
didn't need two terminals and the state had better use for the money. The
commenter indicated that the People do not believe that the Executive Director
of any state agency should have "sole" authority to spend $12.4 million and
especially when the operation of the agency on the day the decision was made
to expend $12.4 million did not include the operation of the self service
terminals. The commenter further indicated that the existence of self service
terminals is dependent on a rule change, and the Commission did not post the
rule for public comment until January 2004. The commenter further indicated
the Commission's main objective in purchasing self service terminals was to
lessen the workload of grieving retailers and the Legislature has not allowed
the Commission to increase retailers' commissions so this is how the Commission
did it behind the Legislature's back. The commenter also indicated that the
retailers' major complaint is the tremendous increase of store transactions
required daily without pay. The commenter further stated that retailers receive
no pay for checking or cashing winning tickets and because of the rule changes
made to online games in the past couple of years, the retailers now have hundreds
of thousands of $2, $3, $5 prizes to pay daily which they did not agree to
when they became lottery retailers. The commenter believes that with every
rule change, retailers were promised sales would increase but all that increased
was their work load because of the increase of low tier prizes associated
with the rule changes. The commenter indicated that to solve the "excessive
retailer transactions" problems, all the Commission had to do was (1) change
the prize structure on the online games to eliminate the $2, $3, and $5 prizes
that players opposed and is causing the excessive transactions and (2) write
a rule or law that says that "players shall bear the sole responsibility of
checking their own tickets". The commenter further indicated that since it's
a known fact that lottery terminals and clerks err in checking players' tickets,
this would have protected the people. In the letter to the members of the
Legislature, a portion of the letter addressed the proposed SST rule itself.
In the letter, the commenter and roughly 3000 of the legislative members'
constituents requested that the members ask the Commission to specify in the
new rule exactly where the terminals shall be placed in the stores. The commenter
further indicated that they need to insure that minors have no access to gambling
devices and that the rule is vague and unrealistic on this issue. The commenter
further indicated that "the terminals have the capabilities to read drivers
licenses but the TLC opted to use the shut off valves instead-as if clerks
are 'really' going to observe everyone who uses the terminals." The commenter
also indicated that it should be mandatory that one has to show a valid ID
before purchasing lottery tickets like they do when they purchase beer or
cigarettes. The commenter also indicated that "because terminals and clerks
are known to err in checking players tickets-this results in players becoming
unsuspecting victims to a known flaw and their prizes are going unclaimed."
The commenter believes that players should check their own tickets and that
this action alone would reduce the daily transactions enormously. The commenter
further indicated that the rule does not state the capabilities of the terminals
but the Commission has every intention of allowing and encouraging players
to check their tickets via the terminals, the purpose is to take the load
off of the retailers. The commenter believes this is the Commission's "way
of intentionally robbing the People of Texas".
Agency response: While the commenter commented on several topics, including
issues not relevant to the rule proposal, the Commission will limit its response
to the comments relevant to the rule proposal. The Commission disagrees with
the comments but has revised the text of the rule to clarify the agency's
position regarding providing a remote shut off device for each SST. The purpose
of the new rule is to set out the requirements imposed on a retailer for placement
of an SST at the retailer's location. The purpose of the amendment to the
lottery operations and service contract relating to the SSTs and LED signs
was to obtain the use of such items. In obtaining the SSTs and LED signs,
the Commission complied with applicable law. Additionally, contrary to the
commenter's position, the SSTs can be used by the Commission without a rule.
No retailer is obligated or required to have an SST installed at the retailer's
location. However, if a retailer chooses to have an SST, requirements to be
imposed on a retailer must be contained in a rule. As a result, the rule focuses
on requirements imposed on a retailer in connection with use of an SST. The
provisions of the rule define the term self-service terminal, indicate that
a retailer must comply with the criteria established by the Executive Director
for placement and retention of a self-service terminal, provides for the use
of a remote shut off device in connection with each SST, require the retailer
to keep the self-service terminal stocked with printer supplies and online
roll stock, require the retailer to undergoing training relating to use and
maintenance of the terminal, and require the retailer to allow service technicians
access to the terminal during normal business hours. Each of these provisions
is intended to ensure that the operation of an SST in a retail location complies
with applicable law. The commenter expressed concerns regarding access by
minors to SSTs. The Commission shares the commenter's concern. The Commission
expects its retailers to comply with state law and not allow a minor to purchase
a ticket. The Commission does not intend to require a retailer to use an SST;
but, if a retailer accepts an SST, the retailer must comply with the provisions
of the State Lottery Act, administrative rules, and training requirements.
Pursuant to provisions of the rule, specifically, subsection (e), SSTs will
be placed only in locations approved by the Commission. The Commission intends
that the locations will be in high foot traffic areas that are within plain
sight of store personnel at all times. All SSTs will be equipped with a remote
on/off mechanism that will allow store personnel to turn off the SST from
up to 100 feet away from the SST if they see a minor trying to make a purchase
from the SST. It would be impracticable to state exactly where 1000 SSTs would
be located within 1000 different retail locations. The floor plans, schematics,
and SST placement opportunities vary in every location. The Commission considered
the comment regarding the concern that minors could purchase lottery tickets
from an SST. The Commission revised the rule language to clarify that each
SST shall be equipped with a remote shut off device for the retailer's use
to prevent a minor from purchasing a ticket from the SST. As to the comment
regarding the reason for the rule, the rule was proposed to set out requirements
imposed on a retailer in connection with use of an SST. However, the Commission
anticipates an increase in sales and revenue as a result of the use of SSTs.
The Commission also anticipates an increase in revenue for retailers as well
as reduced operating costs. Contrary to the comment, the rule does not increase
retailer commission thresholds as suggested by the commenter. Additionally,
the rule was not proposed to address "excessive retailer transactions" problems
as the commenter suggests. The Commission also disagrees with the commenter's
contention that lottery terminals err. The Commission agrees that clerks err.
Whenever there is a human element in a process, there's potential for human
error. The use of an SST places the choice for the transaction, whether it's
the purchase of a ticket or checking whether a ticket is potentially a winner,
on the player. SSTs allow players to check to see if their tickets are winners.
This should be a convenience to Texas Lottery players, but there is no requirement
that players check their tickets in this manner. Finally, the Commission disagrees
with the commenter's suggestion to make it mandatory for a player to show
valid identification before purchasing lottery tickets. The commenter compares
this suggested requirement to what she believes is a requirement before a
person may purchase beer or cigarettes. As to sales of alcohol, the commenter's
belief is incorrect. The Commission is unaware of a statutory requirement
that a person must present valid identification to verify that the person
is not a minor prior to purchasing alcohol. Instead, the statutory framework
prohibits the sale of alcohol to a minor and prohibits the purchase of alcohol
by a minor. The State Lottery Act framework is similar in prohibiting the
sale of a lottery ticket to a minor and the purchase of a lottery ticket by
a minor. With regard to sales of cigarettes, Texas Health & Safety Code,
Section 161.083 cites federal regulation, 21 C.F.R. Section 897.14(b), and
provides that a person may not sell, give or cause to be sold a tobacco product
to a person under 27 years of age without presentation of an apparently valid
proof of identification. However, the State Lottery Act is silent on this
issue. At this time, the Commission chooses not to impose this type of a requirement.
From a practical perspective, the use of driver's licenses at an SST is not
an effective method to prevent minors from making a purchase from an SST.
Instead, the proper placement of SSTs at participating retailer locations,
and retailer oversight over each SST are better approaches to managing illegal
lottery ticket purchases from an SST.
One group or association, The Lotto Report, is opposed to the new rule.
The new rule is adopted under Government Code, Section 466.015
which authorizes the Commission to adopt all rules necessary to administer
the State Lottery Act and to adopt rules governing the establishment and operation
of the lottery, and under Government Code, Section 467.102 which authorizes
the Commission to adopt rules for the enforcement and administration of the
laws under the Commission's jurisdiction.
The amendments implement Government Code, Chapter 466.
§401.369.Online Self-Service Terminals.
(a)
No retailer may sell commission online game tickets from
an online self-service terminal, except those online self-service terminals
supplied and placed by the commission. For purposes of this section an online
self-service terminal is defined as a terminal that dispenses online lottery
game tickets without the assistance of a retailer's personnel.
(b)
Online self-service terminals may be placed by the commission
or the commission's designated representative in a retailer's business location
based upon criteria established by the executive director. The criteria may
include, but is not limited to, consideration of the location of the retailer,
the type of the business to which a license is assigned, the size of the retailer's
location and a minimum sales criteria which shall be provided to the retailers
prior to implementation of such criteria.
(c)
A retailer must maintain the minimum sales criteria established
by the executive director to retain an online self-service terminal. A retailer
who does not maintain minimum sales in accordance with such sales criteria
may be placed in a sales review period unless good cause exists as determined
by the executive director. After the retailer's sales review period has expired,
the retailer's sale of online lottery game tickets shall be reviewed. If the
retailer has not maintained the minimum sales level in accordance with the
minimum lottery ticket sales criteria during such sales review period, the
commission or commission's designated representative may remove the online
self-service terminal.
(d)
The minimum sales criteria established by the executive
director shall be provided to retailers at least 30 days prior to implementation
of such minimum sales criteria.
(e)
Online self-service terminals may only be placed within
the retailer's location in a site and manner approved by the commission.
(f)
A retailer's location shall be equipped only with an online
self-service terminal(s) containing a remote shut off device.
(g)
A retailer shall keep the online self-service terminal
stocked with printer supplies and online roll stock that is authorized by
the commission for use with the online self-service terminal.
(h)
A retailer shall maintain the key to the self-service terminal.
If the retailer loses the key, the retailer shall pay $100 per terminal for
the service call to install new locks and key.
(i)
A retailer and certain retailer employees shall undergo
required training and comply with requirements identified in the training
relating to the use and maintenance of online self-service terminals.
(j)
A retailer shall allow service technicians access to the
online self-service terminal during normal business hours to service and repair
the online self-service terminal.
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 March 5, 2004.
TRD-200401745
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Effective date: March 25, 2004
Proposal publication date: January 2, 2004
For further information, please call: (512) 344-5113
Part 9.
TEXAS LOTTERY COMMISSION
Chapter 402.
BINGO REGULATION AND TAX