PROPOSED RULES Before an agency may permanently adopt a new or amended section or repeal an existing section, a proposal detailing the action must be published in the Texas Register at least 30 days before action is taken. The 30-day time period gives interested persons an opportunity to review and make oral or written comments on the section. Also, in the case of substantive action, a public hearing must be granted if requested by at least 25 persons, a governmental subdivision or agency, or an association having at least 25 members. Symbology in proposed amendments. New language added to an existing section is indicated by the use of bold text. [Brackets] indicate deletion of existing material within a section. TITLE 1. ADMINISTRATION Part I. Office of the Governor Chapter 5. Budget and Planning Office Subchapter B. State and Local Review of Federal and State Assistance Applications Introduction and General Provisions of the Texas Review and Comment System 1 TAC sec.5.195 The Governor's Office proposes an amendment to sec.5.195, concerning the Texas Review and Comment System. The proposed changes add new programs for review and conform program numbers to current listings in the Catalog of Federal Domestic Assistance. The 160 programs proposed to be added to the Texas Review and Comment System (TRACS) are based on responses to mailout questionnaires to all 24 regional councils of governments and all state agencies with TRACS coordinators. T. C. Adams, state single point of contact, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state and local governments as a result of enforcing or administering the section. Mr. Adams also has determined that for each year of the first five years the section is in effect the public benefits anticipated as a result of enforcing or administering the section will be more effective use of public financial resources and increased information sharing and coordination among affected governmental entities. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to T. C. Adams, State Single Point of Contact, Governor's Office, P.O. Box 12428, Austin, Texas 78711, (512) 463-1771, for a period of 30 days following publication. The amendment is proposed under of the Government Code, Title 7, sec.772.004 and sec.772.005, and the Local Government Code, Chapter 391, which authorizes the Governor's Office to provide for review of state and local applications for grant and loan assistance and to establish policies and guidelines for review and comment. Chapter 391 of the Local Government Code requires applicants for state or federal assistance to submit their applications for review to the appropriate regional planning commissions and directs the governor to issue guidelines for carrying out such reviews. No other statute, code or article is affected by this proposal. sec.5.195. Program Coverage. (a)-(b) (No change.) (c) Federal programs included for review under TRACS pursuant to these laws, plus selected other activities, including all direct federal and state development not specifically excluded by law, are shown, respectively, in Tables I and II. Copies of these tables may be obtained from the State Single Point of Contact, Governor's Budget and Planning Office, Post Office Box 12428
    [Texas Office of State-Federal Relations, Post Office Box 13005], Austin, Texas 78711. As required by state law (Government Code, sec.772.005), all state agencies must notify the governor's office when applying for federal funds.
      Figure 1: 1 TAC sec.5.195(c)
        Figure 2: 1 TAC sec.5.195(c) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 10, 1996. TRD-9600297 Pete Wassdorf Deputy General Counsel Office of the Governor Earliest possible date of adoption: February 19, 1996 For further information, please call: (512) 463-1788 TITLE 16. ECONOMIC REGULATION Part II. Public Utility Commission of Texas Chapter 23. Substantive Rules The Public Utility Commission of Texas proposes amendments to sec.23.3, relating to definitions, sec.23.13, relating to statistical reports, sec.23.21, relating to cost of service, sec.23.23, relating to rate design, sec.23.31, relating to certification criteria, new sec.23.34, relating to integrated resource planning for electric utilities, new sec.23.35, relating to preliminary integrated resource plan, new sec.23.36, relating to solicitation of resources, new sec.23.37, relating to approval of resources procured through solicitation, and amendments to sec.23.44, relating to new construction, and the repeal of sec.23.22, relating to energy efficiency plan. This package of amendments is intended to aid in the development of a competitive wholesale electric market that allows for increased participation by both utilities and certain non-utilities. The amendments would require electric utilities to allow the public to participate in their resource planning processes, and would require electric utilities to consider all of the attributes of a broad range of resources that affect electricity supply and demand. The amendment of sec.23.13 and repeal of sec.23.22 would eliminate the biennial load and capacity resource forecast and energy efficiency plan filing for electric utilities, and would replace it with a triennial integrated resource plan filing, under new sec.23.34 and sec.23.35. Each electric utility, including municipally-owned utilities, would file an integrated resource plan on a staggered three-year schedule, but no hearing would be required for municipally- owned utilities, or for public utilities that are not required to file a request for proposals. The amendments to sec.23.21 would address certain planning expenses incurred by municipalities and utilities. The amendments to sec.23.23 would require the costs of demand-side management and distributed resources to be allocated in a fair and equitable manner, and would allow utilities to request timely recovery of certain resource costs. One amendment to sec.23.31 eliminates the need for a generating unit certificate of convenience and necessity for small-scale renewable resource projects, and the other amendments to sec.23.31 are intended to conform this section to new sec.sec.23.34-23.37, including transition rules. The changes to sec.23.31(h) would make the standards for approval of a notice of intent the same as those for the preliminary integrated resource plan. The chief objective of this rulemaking is to adopt an improved system for regulatory approval of utility resource plans subject to the directives of the statute. New sec.sec.23.34-23.37 establish the framework for regulation of resource planning and competitive procurement for electric utilities. New sec.23.34 describes the integrated resource planning process, and sets out basic policies for the selection of resources. New sec.23.35 requires a utility to file for commission approval of a preliminary integrated resource plan, including a plan for soliciting offers from third parties to supply resources that will meet the needs of the utility and its customers. New sec.23.36 will require a utility to conduct a solicitation for resources to meet the needs of the utility and its customers. The utility may consider formal offers for resources from the utility's affiliate. Following the solicitation, any resources proposed by the utility and the resources offered in the solicitation will be evaluated and the best resources will be selected. The utility then negotiates contracts for the resources. New sec.23.37 addresses commission approval of the contracts for resources. Should a utility reject all resources and request the granting of a certificate of convenience and necessity for a new generating facility, a new provision in sec.23.37 applies. Where the utility has not yet filed a preliminary plan in accordance with sec.23.35, the granting of a certificate will be governed by sec.23.31. The amendment to sec.23.44 would ensure that in all instances where the use of on-site renewable energy might be cost-effective from the customer's perspective, information about renewable energy technologies will be provided by the utility to assist the customer in making an independent and educated decision. There are several regulatory issues in the proposed amendments upon which the commission is particularly interested in public comment. These issues are grouped into fifteen categories: renewable resources; cost recovery for renewable resource projects; removal of barriers to resources caused by rate- setting; public participation; regulatory flexibility; relationship between a utility and its affiliate; transition to competition; procedural requirements; non-exclusion of resources; unbundling; definition of "lowest reasonable system cost;" quantification of the resource selection criteria; risk; low-income and tenant demand-side management programs; and limitation of capital costs for supply-side resources. The following paragraphs provide a framework for discourse on these topics. Specific questions on which the commission requests comment are listed within each section. When writing their comments, interested parties should attempt to follow the grouping of topics as they are organized in this document. The first set of issues relates to renewable resources. The commission proposes in sec.23.31 that electric utility generation facilities of less than ten megawatts operating with renewable resources and distributed resources that exclusively employ renewable energy technologies be exempt from the requirements of a certificate of convenience and necessity. The commission also proposes that a utility demonstrate in its preliminary integrated resource plan that renewable resources have been considered. These sections address the statutory directive contained in the Public Utility Regulatory Act of 1995 (PURA 95), sec.2.051(v). The commission solicits comment on whether these changes are sufficient to create vibrant competition that includes providers of renewable resources. Furthermore, the commission recognizes that different economies of scale apply to different resource types, and that it may be appropriate to make a distinction between large and small renewable resource projects. Are there small-scale, but otherwise economical renewable resource projects that are unlikely to bid into a utility resource solicitation? Do the costs and benefits of small generating facilities warrant exemption from the regulatory oversight required for larger combustion-based generating resources? Should the commission allow generation facilities of less than ten megawatts operating exclusively with renewable resources to make retail sales without a certificate of convenience and necessity, and if so, to what transmission and standby services would such entities and their customers need access? Should utilities be required to have a standard offer for purchases from small-scale resource providers? In addition to the specific questions listed previously, the commission would like the views of the parties on any other proposals that would allow all resources, large and small, to be included in power markets. The second issues relates to cost recovery for renewable resource projects. The commission is considering amendments to provide for the recovery of the costs of a renewable resource project in a manner that recognizes the special characteristics of the project, by permitting the utility to recover the costs of the project through its fuel factor or through other cost-recovery mechanisms. The commission has considered permitting the cost of renewable energy resources to be recovered through a utility's fuel factor. Such an amendment would permit the utility to begin recovering the cost of a renewable energy project sooner than would ordinarily be possible with traditional ratemaking procedures. Should the commission permit a utility to recover renewable resource costs through a fuel factor, or should the commission develop a separate factor? The third set of issues addressed in this rulemaking is the removal of barriers to resources that result from current rate-setting procedures. These barriers impede the use of a resource on grounds that are not related to the real costs and benefits of the resource. The commission solicits comment on the general topic of removing barriers to resources and on the specific topic of timely cost-recovery mechanisms for resources acquired through the solicitation process. Such amendments might be regarded as allowing utilities to recover additional costs at a time when competitive pressures and discussions about restructuring would argue against rate increases. How might such amendments facilitate the procurement of new, low-cost, competitive resources? Should the matter of timely cost recovery be taken up in the context of broader issues of regulatory reform, such as within an investigation of performance-based regulation? The fourth topic for discussion is public participation in a utility's preparation of a resource plan. The proposed rule would urge utilities to establish a working group for providing information to the public and for soliciting their views, or would allow the utility to develop alternative arrangements. Should the right to participate in the working group be limited to utility customers, and if so, should non-customers of the utility be permitted to participate in some other manner? How much flexibility should a utility be afforded in obtaining public input? How is a formal public participation process compatible with the need for flexibility in a competitive market? The fifth group of issues relates to regulatory flexibility. The commission is interested in receiving comments on the proposal in sec.23.35 to allow a utility to waive certain rights, including the right to review bids from its affiliate, in exchange for more regulatory flexibility. Do such waivers better align the interests of the utility and its customers? Are there other ways that utilities should be afforded flexibility? What else can the commission do to reduce the time needed to issue the interim order and final order on the utility's integrated resource plan? The sixth issue relates to the relationship between a utility and its affiliate. The commission has set forth standards in sec.23.36(g), and comment is invited on these proposals. The commission is particularly interested in comments on whether it is appropriate to restrict an affiliate of a utility from the use of the name or trademark of the utility. The seventh set of issues relates to the transition to competition. Since the enactment of the Energy Policy Act of 1992, there have been discussions regarding the relationship between integrated resource planning and competitive markets. In its December 1, 1994, report to the Governor on integrated resource planning, the commission noted that the appropriate application of integrated resource planning principles could smooth the transition to competition. Since the future structure of the electric industry and the regulation of that industry are uncertain, it is important that the commission use the flexibility provided in the statute to balance planning and competitive concerns. Therefore, the commission asks for comments on the opening paragraph of the rule: "nothing in the integrated resource planning process shall inhibit the development of competitive markets for electric power or for energy services." The eighth set of issues includes the application of procedural requirements. While the future structure of the industry is unknown, the unbundling of the industry into energy service, distribution, transmission, system operation, and generation functions would result in an increasing number of investor-owned distribution companies. These would be nongenerating utilities responsible for managing a portfolio of resource contracts and for providing electric service options to customers in a geographic area. When these "discos" need additional resources, they would not "plan to construct" additional generating resources as the statute anticipates; instead, they would acquire resources in the market. Should the commission require all electric utilities in Texas to file a preliminary integrated resource plan, or a letter stating their intent with regard to planning matters? How should the commission develop a robust resource solicitation process that will remain workable under various industry restructuring scenarios? The ninth category of issues relates to non-exclusion of resources. In sec.23.36 of the proposal, relating to solicitation of resources, the commission addresses the eligibility criteria for bidders in the resource solicitation process. It has been the commission's experience that utilities have not considered bids that require self-generation, relocation, fuel switching, load management cooperatives, and certain rate design options, such as interruptible rates or real-time pricing. What level of discretion should utilities exercise in excluding resources from consideration within a request for proposals? How should the commission balance the utility's desire for flexibility with the requirement that a utility consider a broad array of resources? Should the commission require electric utilities to review and fairly evaluate the bids of retail market competitors (such as natural gas utilities) that are based on alternative-fuel technologies (such as natural gas cooling)? If so, and if such bids are "best" according to the specific criteria contained in the request for proposals, what action should the commission take if a utility does not negotiate contracts and procure resources from such bidders? The tenth area of discussion relates to unbundling. Since both natural gas utilities and electric utilities are authorized to serve the same end-use customers in Texas, there is limited retail competition for certain customer energy needs. This competition is so limited, with respect to some customers energy needs, that electric utilities essentially have a monopoly. Problems arise when a monopoly utility uses revenues and information from one sector of its operations to subsidize its activities in partially-competitive markets. One potential solution to the challenge of regulating the limited end-use competition that exists in today's retail markets is an opening up of such retail markets to more competition. There are steps that the commission might take to deregulate the energy services markets, without affecting retail electric utility access. Should the commission address the regulatory problems associated natural gas providers and electric utilities by functionally unbundling the electric distribution operations of electric utilities? The division of the electric distribution company into a new regulated component (the wires and distribution system operation) and an unregulated component (energy services) would require a complete unbundling of retail rates and services, such that captive electric customers would select from a menu of service options. A broad array of innovative energy services could then be provided in competitive markets, and all competitors, including electric utility subsidiaries, could provide service on an equal basis. Such a system would require that competitors in energy service markets be granted the same access to electric customer information (such as names, addresses and loads) that is available to utility subsidiaries. Third parties could then work with electric customers to reduce total energy costs or to provide new services. The commission is interested in receiving comments on the benefits of such an approach and the problems associated with implementing competitive energy service markets. Is the proposed preliminary plan filing requirement under s23.35(a)(2)(A) a sufficient means of ensuring that a utility's retail rates and services offer a broad menu of options to retail customers? The eleventh topic is the definition of "lowest reasonable system cost." Certain interested parties request that the commission set firm public policies with regard to this definition. Other interested parties believe that commodity costs must drive resource selection and that introducing issues other than direct cost may inhibit competitive forces. Is it appropriate for the commission to leave further definition of the term "lowest reasonable system cost" to each utility's preliminary integrated resource plan? What is the appropriate role of the commission in setting long-term planning goals for Texas, and how would those goals affect the definition of lowest reasonable system cost? Can the goals of the statute relating to the diversity or mix of resources be met in light of the commission's proposal to require all-source bidding under sec.23.34(i)(1)? The twelfth topic is the quantification of the resource selection criteria. Should the commission employ market valuations of environmental and other non- cost factors which influence the utility's resource selection process? Is it appropriate to give a utility the flexibility to use its discretion and judgment in the final selection of resources, particularly with regard to those non-cost criteria that are difficult to quantify? The thirteenth topic for discussion is risk. A utility's treatment of various factors of risk is intertwined with the definition of "lowest reasonable system cost." Comprehensive resource planning usually requires identification of appropriate scenarios of the future and an examination of the incidence of various factors of risk in such scenarios. What techniques or methods should this commission require utilities to apply in assessing risk in the context of resource planning? In the absence of a specific risk-assessment methodology, how can the commission ensure that a utility has appropriately investigated risk? To what extent should the commission pursue a regulatory regime in which utilities assume all future resource risk, including fuel cost risk, and bear or reap the costs or rewards of such risk? The fourteenth topic of discussion is low-income and tenant demand-side management programs. The proposed regulations require utilities to report on their activities related to these programs, and offer an exclusion to the solicitation process in certain cases. Is it appropriate for the commission to be more specific by rule? The fifteenth issue is the commission's proposal in sec.23.31 and sec.23.37 to limit the capital costs of a utility's new supply-side option that may be included in rate base. Some parties have asserted that a solicitation for resources will not be fair unless the utility is held to the same rules as the unaffiliated parties that bid in the solicitation. In particular, they suggest that the commission limit a utility's cost recovery for a new generating unit to the cost estimate prepared by the utility at the time that it conducts a solicitation under sec.23.36. The commission is interested in the comments of the public on whether such a limit is an appropriate policy. A final issue is the reimbursement of cities' expenses for participating in this rulemaking. Some parties have expressed the view that the statute limits such recovery to the cost of participating in individual utility integrated resource planning (IRP) proceedings, while others believe that the statute refers to all IRP proceedings, including rulemaking proceedings. The commission proposes to allow reimbursement of cities' expenses for IRP rulemaking proceedings, as well as individual utility IRP proceedings. The commission believes that IRP rulemaking proceedings fall within the scope of the proceedings referenced by PURA 95, sec.1.003(13) and sec.1.003(13A). One matter related to integrated resource planning that is not addressed in this proposal is the changes to sec.23.66 related to qualifying facility bidding and utility avoided costs pursuant to the standards of PURA 95, sec.2. 051(z). Those amendments are likely to be proposed several months from now when published changes to sec.23.66 are completed in Project Number 14045. Nat Treadway, economist, Office of Policy Development, has determined that for the first five years that the proposed sections are in effect there will be no additional fiscal implications for state and local government as a result of enforcing or administering the sections. Mr. Treadway also has determined that for the first five years that the proposed sections are in effect the public benefit anticipated as a result of enforcing the sections includes improving the process of planning, competitive procurement, and licensing of the resources to meet the needs of electric utility customers, in order to ensure that these resources will be economical, reliable, and responsive to the needs of customers. An improved resource selection process should result in greater certainty in the regulatory process, the reduction of the time, costs, and risks associated with litigating certification proceedings at the commission and in the courts, reduction in the cost of providing electric service, and more rational allocation of costs. The proposed amendments relating to integrated resource planning are likely to increase the costs to utilities of complying with the commission's rules, but the benefits described above are expected to outweigh the costs. The costs of complying with the amendments concerning integrated resource planning are difficult to estimate and are likely to vary from utility to utility. Utilities that must file only a letter every three years will incur no new measurable costs. A rough estimate of the annual cost for those that file an integrated resource plan is from $10,000 to $4 million, depending on the size of the utility and its resource needs. To put these figures in context, the cost of service for the largest electric utility in the state is about $5.6 billion, while the revenue of a small utility is measured in millions of dollars. There will be no adverse effect on small businesses from adopting these amendments. Amendments to some of the sections relating to integrated resource planning are likely to increase the opportunities for small businesses to provide resources to electric utilities, but the magnitude of this benefit is uncertain. It is anticipated that the economic impact of the rules on the persons that are required to comply with them will be favorable, but it is impossible to estimate the magnitude of this benefit. These rules should improve utility resource planning by bringing the views of the public into the planning process, by requiring explicit consideration of environmental costs and the risks associated with a resource plan, and by increasing reliance on the discipline of market forces to control the cost of resources. It is anticipated that the proposed sections will have a favorable effect on employment opportunities in the geographic areas affected by implementing these sections, but it is impossible to estimate the magnitude of the benefit. Comments on the proposal (15 copies) may be submitted to Paula Mueller, Secretary of the Commission, 7800 Shoal Creek Boulevard, Austin, Texas 78757, within 30 days after publication. Reply comments may be filed 15 days thereafter. Comments and replies should refer to Project Number 14400. There will be a public hearing at which interested persons may make oral comments concerning the proposed amendments on March 19, 1996, at the offices of the commission at the above address. General Rules 16 TAC sec.23.3 The amendment is proposed under Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec.1.101, which provide the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, and sec.2.051, which requires the commission to adopt integrated resource planning regulations by September 1, 1996. The following statute is affected by this rule: Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec. s1.101, 2.001, 2.051, 2.057, 2. 1511, 2.208, 2.209, and 2.255. sec.23.3. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Demand-side management -Activities that affect the magnitude and/or timing of electricity usage. Demand-side management resource or demand-side resource -Activities that result in the deferral of capacity needs and/or energy usage. Distributed resource -A distributed resource is a generation, storage, or targeted demand-side resource, generally between one kilowatt and 10 megawatts, located at a customer's site or near a load center, and connected at the distribution voltage level (60,000 volts and below), that provides geographic advantages to the system, such as deferring the need for upgrading local facilities. Renewable energy technology-Renewable energy technology shall mean any technology that exclusively relies on an energy source that is naturally regenerated over a short time scale and derived directly from the sun (solar- thermal, photochemical, and photoelectric), indirectly from the sun (wind, hydropower, and photosynthetic (stored in biomass)), or from other natural movements and mechanisms of the environment (geothermal and tidal energy). A renewable energy technology does not rely on energy resources derived from fossil fuels, waste products from fossil fuels, or waste products from inorganic sources. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 12, 1996. TRD-9600421 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Earliest possible date of adoption: February 19, 1996 For further information, please call: (512) 458-0100 Records and Reports 16 TAC sec.23.13 The amendment is proposed under Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec.1.101, which provide the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, and sec.2.051, which requires the commission to adopt integrated resource planning regulations by September 1, 1996. The following statute is affected by this rule: Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec. s1.101, 2.001, 2.051, 2.057, 2. 1511, 2.208, 2.209, and 2.255. sec.23.13. Statistical Reports. (a)-(b) (No change.) [(c) Electric utilities. [(1) Every generating electric utility in the state (including municipally owned electric utilities and electric utilities that will acquire generating capacity at any time during the minimum forecast period) shall prepare and transmit to the commission by December 31, 1983, and every two years thereafter, a report specifying at least a ten-year forecast of load and required resources for its service area. The report shall include the following: [(A) a description of methods and economic/demographic assumptions incorporated in the forecast and of projected population growth, urban development, industrial expansion, and other growth factors influencing the demand for electric energy in the service area; [(B) a list of existing electric generating plants in service with a description of planned and potential generating capacity at existing sites; [(C) projected annual system capacity, peak load, interruptible load, and reserve margins; [(D) forecasted annual load duration curves and peak loads for major demand sectors in the service area; [(E) projected annual firm purchases and sales of capacity; [(F) a description of how electrical energy requirements identified in the forecast will be met, including: [(i) a list of planned annual capacity additions and retirements; [(ii) description of general location, types of fuel used, and estimated shutdown and spent nuclear fuel disposal costs for planned facility additions and retirements; [(iii) projection of annual fuel mix by type of fuel for the forecast period; [(iv) a description of how future electrical energy requirements can be met through improvements in generating/transmission efficiency; importation of power; interstate or interregional pooling; improvements in other operating efficiencies; load management; use of alternative energy sources such as hydro, wind, and solar; development of cogeneration and small power production facilities; and conservation. [(G) descriptions of current load management and conservation programs and efforts to encourage cogeneration and small power production; [(H) such additional information (including historical data) as the commission deems necessary to the evaluation of utility forecasts and resource plans and the development of the statewide electrical energy forecast. [(2) The time period for which required information shall be filed includes the current year and a forecast period of at least ten years. Due to the December 31 filing date, current year data may have to be a combination of actual and estimated information. The commission may also require certain historical data. [(3) All required information shall be filed on forms prescribed by the commission. Electric utilities operating in Texas and another state(s) shall file a separate form for Texas-only operations and a form covering total system operations. [(4) Four copies of all required forms shall be filed with the commission filing clerk. (c)
          [(d)] Telephone utilities. Each telephone utility shall submit annually a station data report on a form prescribed by the commission. (d)
            [(e)] Other statistical reports. Other reports shall be filed as requested by the commission. Other reports may include, but are not limited to, customer class credit risk analyses, appliance saturation and energy use studies, and special cost of service-related studies. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 12, 1996. TRD-9600422 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Earliest possible date of adoption: February 19, 1996 For further information, please call: (512) 458-0100 Rates 16 TAC sec.23.21 The amendment is proposed under Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec.1.101, which provide the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, and sec.2.051, which requires the commission to adopt integrated resource planning regulations by September 1, 1996. The following statute is affected by this rule: Texas Civil Statutes Annotated, Article 1446c-0 (Vernon Supplement 1996), sec.sec.1.101, 2.001, 2.051, 2.057, 2.1511, 2.208, 2.209, and 2.255. sec.23.21. Cost of Service. (a)-(f) (No change.) (g) Treatment of integrated resource plan costs. (1) Cost recovery for resources procured through certified contracts. In setting a public utility's rates for a period during which a certified contract is effective, the regulatory authority shall consider payments made under the contract to be reasonable and necessary operating expenses of the public utility. The reasonableness of the utility's administration of these contracts shall be reviewed as part of the contract cost reconciliation process described in sec.23.23(e)(2)(B) of this title (relating to Rate Design). (2) Cost recovery for resources acquired outside solicitation. The reasonable expenses of the public utility for new or incremental resources acquired outside the solicitation process may be recovered only after commission review has been conducted in accordance with the provisions of either sec.2.211 or sec.2.212 of the Act. (3) Reimbursement of planning expenses. (A) Expenses of a municipality related to integrated resource planning. To the extent that the public utility is required by the commission to reimburse a municipality for expenses the municipality incurred for its participation in a proceeding conducted under ssec.23.34-23.37 of this title (relating to Integrated Resource Planning, Preliminary Integrated Resource Plan, Solicitation of Resources, and Approval of Resources Procured Through Solicitation), the commission shall, as part of its determination approving the public utility's integrated resource plan, authorize a surcharge to be included in the public utility's rates to recover the municipality's expenses for participating in the integrated resource plan proceeding before the public utility's next preliminary integrated resource plan is filed. Municipalities shall be entitled to similar compensation for the expenses they incur for participating in integrated resource planning rulemaking proceedings before the commission. (B) Expenses of a utility related to integrated resource planning. The reasonable expenses of the public utility for planning, preparation, and participation in a proceeding conducted under ssec.23.34-23.37 of this title may be recovered only after commission review has been conducted in accordance with the provisions of either sec.2.211 or sec.2.212 of the Act. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 12, 1996. TRD-9600423 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Earliest possible date of adoption: February 19, 1996 For further information, please call: (512) 458-0100 16 TAC sec.23.22 (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Public Utility Commission of Texas or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) The amendment is proposed under Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec.1.101, which provide the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, and sec.2.051, which requires the commission to adopt integrated resource planning regulations by September 1, 1996. The following statute is affected by this rule: Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec. s1.101, 2.001, 2.051, 2.057, 2. 1511, 2.208, 2.209, and 2.255. sec.23.22. Energy Efficiency Plan. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 12, 1996. TRD-9600416 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Earliest possible date of adoption: February 19, 1996 For further information, please call: (512) 458-0100 16 TAC sec.23.23 The amendment is proposed under Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec.1.101, which provide the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, and sec.2.051, which requires the commission to adopt integrated resource planning regulations by September 1, 1996. The following statute is affected by this rule: Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec. s1.101, 2.001, 2.051, 2.057, 2. 1511, 2.208, 2.209, and 2.255. sec.23.23. Rate Design. (a)-(d) (No change.) (e) Electric. Rates shall not be unreasonably preferential, prejudicial, or discriminatory, but shall be sufficient, equitable, and consistent in application to each class of customers, taking into consideration the need to conserve energy and resources. (1) Demand-side resources and distributed resources. The costs associated with demand-side resources and distributed resources shall be allocated to customer classes in a fair and equitable manner. (2) Timely cost recovery and incentives. The commission may allow timely recovery of reasonable costs of conservation, load management, and purchased power, notwithstanding sec.2.212(g)(1) of the Act, and may authorize additional incentives for conservation, load management, purchased power, and renewable energy technology resources. The incentives and cost recovery factors for purchased power, if allowed, shall be limited to those that are necessary to encourage the utility to include economical purchased power as part of its energy and capacity resource supply plan. (A) Cost recovery factors. The determination of the need for any cost recovery factor shall be made during the commission review of the utility's final plan. Upon approval of a cost recovery factor, the commission shall determine what type of information the utility needs to file in support of a reconciliation and other matters necessary to perform the reconciliation. (B) Reconciliation. To the extent that the commission authorizes utilities to recover costs of demand-side management programs, conservation, load management, or purchased power through various cost recovery factors, the commission shall make a final reconciliation of the costs recovered through those cost recovery factors. Reconciliation shall occur on a schedule determined by the commission. The reconciliation shall review the reasonableness of the utilityss administration of the contracts and programs whose costs are being reconciled, and reconcile the revenue collected under each cost recovery factor and the costs that the utility incurred on purchased power, demand-side management, conservation, or load management during the reconciliation period. (C) Incentives. Any cost recovery factor established for recovery of purchased power costs may include the costs incurred by the utility for the purchase of capacity and energy, together with an incentive (or mark-up) added to the costs, or other mechanism, as determined by the commission, to reasonably compensate the utility for financial risks, if any, to the utility associated with purchased power obligations and the value added by the utility in making the purchased power available to its customers. Incentives are an exceptional form of relief which may be recovered from ratepayers only on entry of a finding by the commission that such relief is necessary to maintain the financial integrity of the utility. (3) Energy generated by a renewable energy technology. To the extent permitted by this paragraph, a utility may treat the costs of energy or capacity provided by a renewable energy technology as an eligible fuel expense under subsection (b) of this section. (A) A utility may treat such costs as eligible fuel expenses only if the costs are not otherwise being recovered from its customers and the renewable energy technology has been certified by the commission as part of the utility's final integrated resource plan. The utility may not include an amount related to a renewable energy technology in the eligible fuel expense that is greater than the product of the utility's approved fuel factor and the kilowatt-hours of energy provided by the renewable energy technology. (B) The capital costs of a renewable energy technology that may be included in the utility's base rates shall be reduced by the amount that the utility recovers under this paragraph, in connection with the renewable energy technology. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 12, 1996. TRD-9600417 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Earliest possible date of adoption: February 19, 1996 For further information, please call: (512) 458-0100 Certification 16 TAC sec.23.31 The amendment is proposed under Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec.1.101, which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, and sec.2.051, which requires the commission to adopt integrated resource planning regulations by September 1, 1996. The following statute is affected by this rule: Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec. s1.101, 2.001, 2.051, 2.057, 2. 1511, 2.208, 2.209, and 2.255. sec.23.31. Certification Criteria. (a)-(b) (No change.) (c) Certificates of convenience and necessity for new service areas and facilities. Except for certificates granted under subsection (b) of this section, the commission may grant an application
              [applications] and issue a certificate only if it finds
                [these certificates only after finding] that the certificate is necessary for the service, accommodation, convenience, or safety of the public. To grant an application of
                  [For] an electric utility for a new
                    generating unit, the commission [may grant an application only when it finds that purchased power, conservation, and alternative capacity and associated energy sources available at a lower or equal cost to the ratepayers, together with capacity from qualifying facilities with which contracts have been executed, cannot be reasonably expected to be available in sufficient quantity and for sufficient duration to allow the utility to modify its capacity expansion plan so as to provide for deferral or cancellation of the generating unit for which certification is requested.] must, in addition, find that the proposed generating unit is the best and most economical choice of technology for the service area, that cost-effective conservation and cost-effective alternative energy sources cannot reasonably meet the need, and that, after conducting a resource solicitation, evaluating the bids, and conducting negotiations, the proposed generating unit is superior to such third-party offers. Certificates of convenience and necessity for new generating facilities pursuant to this section require a notice of intent. This subsection does not apply to a certificate of convenience and necessity requested as part of the integrated resource planning process under s23.37(f) of this title (relating to Approval of Resources Procured Through Solicitation). (1) The commission may issue a
                      [the] certificate as applied for, or refuse to issue it, or issue it for the construction of a portion[, only] of the contemplated system or facility or extension thereof, or for the partial exercise only of the right or privilege. The commission may amend or revoke any certificate issued under this section if it finds
                        [upon a finding of fact] that the public convenience and necessity requires such amendment or revocation. [The cost of construction of a new electric generating unit found reasonable in granting a certificate may be taken into consideration in determining the amount of construction work in progress and the plant in service associated with that unit to be included in the rate base of the utility. In addition, the projected design electrical rating, capacity factor, and heat rate associated with the unit shall be taken into consideration in determining recoverable fuel expenses associated with the operation of the unit.] [(1)] A certificate, or certificate amendment, is required for the following: (A)-(E) (No change.) (2) A certificate is not required for the following: (A)-(H) (No change.) (I) a new generation facility that produces less than 87,600 megawatt- hours annually and that exclusively relies on a renewable energy technology. (3)-(8) (No change.) (9) Paragraphs
                          [The amendment to paragraphs] (5)-(8) of this subsection do not apply if the utility has filed a preliminary integrated resource plan under sec.23.35 of this title (relating to Preliminary Integrated Resource Plan)
                            [shall apply to any utility that files an application for a certificate of convenience and necessity for a new generating unit after the adoption of the amendment.] (10) To provide for the orderly transition to an integrated resource planning process and to avoid delays in the construction of resources necessary to provide electric service, an integrated resource plan shall not be required prior to the issuance of a certificate of convenience and necessity for the construction of generating facilities if: (A) the commission has approved the utility's notice of intent prior to the effective date of this section; (B) the utility has conducted a solicitation for resources to meet the need identified in the utility's notice of intent in accordance with commission rules then in effect; and (C) the utility has submitted to the commission the results of the solicitation and an application for certification of facilities to meet the need identified in the utility's notice of intent. (i) A certificate of convenience and necessity shall be granted by the commission if the facilities are needed to meet future demand, the facilities are the best and most economical choice of technology for the service area, and cost-effective conservation and cost-effective alternative energy sources cannot reasonably meet the need. (ii) The commission may impose limits on the cost of a rate-based utility resource addition that may be included in the utility's invested capital for ratemaking purposes based on the capital, operating, fuel, and other costs associated with the least cost resource bid possessing comparable operational characteristics, which was submitted in the utility's solicitation for resources. The least cost resource bid for the purposes of determining this cost limitation shall be determined by the commission based on the utility resource selection process approved by the commission. In the event the commission imposes a limit on the cost of a resource addition pursuant to this subsection, the utility shall not be subject to a ratemaking disallowance relating to its expenditures on such resource addition which are up to and including the amount of the cost limitation. If the actual construction cost of the resource addition is less than the commission-imposed cost limitation, the utility's shareholders shall be entitled to retain half the difference between the commission-imposed cost limitation and the actual cost to construct the utility resource addition. (d)-(i) (No change.) (j) Notice-of-intent applications for generating plants. A utility must
                              [should] file a notice-of-intent (NOI) application upon deciding that it should construct a new generating plant. (1) (No change.) (2) Commission review. The commission shall
                                [will] approve the NOI if it concludes that the proposed plant is feasible and reasonable and that the utility will conduct a fair and reasonable resource solicitation.
                                  [, is compatible with the commission's most recent long-term forecast, and should be given further consideration in light of the alternatives. Approval of the NOI thus allows the utility to apply for certification of the proposed plant, but does not imply that the plant is the best alternative available to the utility.] (3) Standards. In determining whether the proposed plant is reasonable or whether the utility will conduct a fair and reasonable resource solicitation, the commission shall
                                    [Standards. The commission will] apply the standards of sec.sec.23.34-23.36 of this title (relating to Integrated Resource Plan, Preliminary Integrated Resource Plan, Solicitation of Resources) .
                                      [in this paragraph in reviewing a utility's NOI filing, which must include the information required in the commission's application to enable the commission to decide the appropriateness of the proposed plant.] [(A) Specificity of plans. The utility's plans and cost estimates must be specific enough for the proposed plant to be compared with alternatives, but the plans should not be final. In particular, the utility need not propose a specific site for a generating plant. [(B) Need. The utility must demonstrate that the proposed plant is compatible with the commission's most recent long-term forecast. Such compatibility may be demonstrated by showing that there is a reasonable likelihood that the proposed plant will be needed when scheduled to be in service. The demonstration of compatibility includes consideration of any data that materially affect the commission's most recent long-term forecast.] (4)-(5) (No change.) (6) Applicability. This subsection shall no longer apply if a utility has filed a preliminary integrated resource plan under sec.23.35 of this title. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 12, 1996. TRD-9600418 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Earliest possible date of adoption: February 19, 1996 For further information, please call: (512) 458-0100 16 TAC sec.sec.23.34-23.37 The new sections are proposed under Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec.1.101, which provide the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, and sec.2.051, which requires the commission to adopt integrated resource planning regulations by September 1, 1996. The following statute is affected by this rule: Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec. s1.101, 2.001, 2.051, 2.057, 2. 1511, 2.208, 2.209, and 2.255. sec.23.34. Integrated Resource Planning. (a) Purpose. The commission's regulation of utility resource planning and procurement is intended to ensure that utilities provide reliable energy service at the lowest reasonable system cost. The development of a competitive wholesale electric market that allows for increased participation by both utilities and certain non-utilities is in the public interest. Solicitations for demand-side and supply-side resources conducted by electric utilities can contribute to the development of such a market. Utilities shall consider all of the attributes of a broad range of resources that affect the supply or demand for electricity, procure resources based upon a fair and reasonable evaluation of the costs and attributes of resources that may be obtained in a market, and negotiate contracts that appropriately allocate risk. Nothing in the integrated resource planning process shall inhibit the development of competitive markets for electric power or for energy services. (1) The commission finds that where a public utility plans to employ a solicitation process that permits it to consider the bid of its affiliate or consider the construction of a generating facility that requires a certificate of convenience and necessity, a deliberate and thorough integrated resource planning process is necessary to ensure the selection of the resources that best meet the needs of the utility's customers and ensure that the development of competitive markets is not inhibited. (2) The commission finds that where a public utility waives its right to consider the bid of its affiliate and waives the right to construct a generating facility that requires a certificate of convenience and necessity in this planning cycle, the public interest is served by relying on the discipline of market forces with limited regulatory monitoring and oversight. (b) Application. The requirements of this section and sec.23.35 of this title (relating to Preliminary Integrated Resource Plan) apply as specified in this subsection. The requirements of sec.23.36 and sec.23.37 of this title (relating to Solicitation of Resources and Approval of Resources Procured Through Solicitation) apply to each public utility that must procure resources pursuant to a resource solicitation. (1) Generating public utilities are subject to the requirements of this section and sec.sec.23.35-23.37 of this title. (2) Nongenerating public utilities planning to construct generating resources are subject to the requirements of this section and sec.sec.23.35-23.37 of this title. (3) A nongenerating public utility that seeks to purchase more than 25% of its peak demand or more than 70 megawatts is subject to the solicitation requirements contained in sec. s23. 36-23.37 of this title, unless the purchase is from an existing unaffiliated power supplier. The commission may conduct a public hearing to consider the results of the solicitation, if it determines that such a hearing is necessary. The commission shall issue an order approving, modifying, or rejecting the results of the solicitation within 90 days of the date that the solicitation results are filed with the commission. (4) Every three years, a municipally-owned utility shall submit to the commission a report containing all of the information required in a preliminary integrated resource plan under sec.23.35 of this title, but shall not otherwise be subject to the requirements of this section. (5) A river authority subject to sec.2. 0012 of the Act is subject to the requirements of this section and sec. s23. 35-23.37 of this title with respect to the area served by the river authority on January 1, 1975. (6) In any three year period, a public utility that is not otherwise subject to the requirements of this section or sec.23.35 of this title shall submit a resource planning statement in lieu of submitting a preliminary integrated resource plan. The statement shall describe the utility's contractual relationship with wholesale suppliers and shall state the degree to which the utility relies on the resource planning capabilities of the supplier. Such a utility shall cooperate with its wholesale suppliers in providing information and developing and implementing a resource plan to the extent that such information exchanges do not otherwise affect either utility's competitive strategy. (c) Structure of integrated resource planning. The integrated resource planning process consists of the following steps and activities: (1) Preparation of preliminary integrated resource plan and public participation. In accordance with this section, the utility shall notify the public of the opportunities for public participation in its planning activities, encourage public participation, develop criteria for the evaluation and selection or rejection of resources, and prepare a preliminary integrated resource plan. The utility shall open a docket for the exchange of information at least 120 days prior to the date on which the utility is scheduled to file its preliminary integrated resource plan. (2) Request for approval of preliminary integrated resource plan. In accordance with sec.23.35 of this title, the utility shall file its preliminary integrated resource plan and the commission shall issue an interim order on the preliminary plan, including the request for proposals. The interim order shall be issued within 60 days or 180 days, depending on the utility's binding election pursuant to sec.23.35(a)(2)(K) of this title. (3) Solicitation. In accordance with sec.23.36 of this title, the utility shall conduct a solicitation. The utility shall evaluate the bids and select the best resources consistent with the specific criteria approved as part of the preliminary integrated resource plan. The duration of the resource solicitation bidding, evaluation, and negotiation processes is proposed by each utility and subject to commission approval. (4) Approval of resources procured through solicitation. If the utility has selected resources pursuant to a solicitation in accordance with sec.23.36 of this title, it may request commission certification of the contracts under sec.23.37 of this title. If the utility plans to acquire additional generating facilities that require an amendment of its certificate of convenience and necessity, it shall apply for such an amendment, in accordance with sec.23.37(f) of this title. The commission order on the final plan shall be issued within 90 days or 180 days, depending on the utility's binding election pursuant to sec.23.35(a)(2)(K) of this title. (5) Resource acquisition outside the solicitation. In accordance with subsection (j) of this section, the utility may acquire resources outside the solicitation process consistent with the utility's last approved integrated resource planning goals. (d) Staggered schedule. In a regularly scheduled meeting in October 1996 and every two years thereafter, the commission shall adopt a staggered schedule for the filing of preliminary integrated resource plans by electric utilities. The schedule will set forth the name of each electric utility affected by sec.sec.23.34-23.37 of this title, and the date on which each of these utilities shall file its next preliminary plan. (e) Filing requirements. In a regularly scheduled meeting in October 1996 and no less frequently than two years thereafter, the commission shall adopt forms for preliminary and final integrated resource plans. The forms shall reflect the differences in capabilities of small and large utilities, and of utilities with different structures and patterns of ownership. Electric utilities that provide service that is subject to rate regulation by a federal agency or an agency of another state shall file any information required in this section or sec.sec.23.35-23.37 of this title separately identifying information for Texas- only operations and for total system operations. Upon a showing of good cause, a utility that is subject to resource planning requirements of another state or federal agency may file all or part of its integrated resource plan in a format required by the federal agency, the regulatory agency of another state, or a regional planning agency. A public utility that is a full-requirements wholesale customer of, or otherwise relies on the resource planning and procurement capabilities of an electric utility in Texas shall submit a statement to that effect in lieu of submitting a preliminary integrated resource plan under sec.23.35 of this title. (f) Public participation. The purposes of public participation are to present information concerning resource planning issues and the utility's resource planning process to the customers of the utility, and for the utility to obtain the views of customers on planning issues. The utility shall facilitate the presentation to customers of information from a broad range of perspectives and shall seek the views of a broad spectrum of customers. (1) Notice. At least 120 days prior to the date that it is required to file its preliminary integrated resource plan, a utility shall file a request to open a docket for the exchange of information with interested parties related to the preparation of its resource plan. The utility shall provide reasonable notice of the filing of the resource planning information docket and the opportunities for public participation. Such notice shall include: (A) direct notice to all customers of the utility by means of a bill insert; (B) direct notice to all retail customers of a full-requirements wholesale customer, or direct notice to all retail customers of utilities that rely on the resource planning and procurement capabilities of the utility; (C) notice by mail to the secretary of the commission, the Office of Public Utility Counsel, and the governing bodies of municipalities in the utility's service area; (D) direct notice to persons who submitted to the commission a request that the utility notify them of resource planning matters; such a request must include the person's name, address, and the name of the utility; and (E) notice by publication in the service area. (2) Scope and nature. A utility shall permit interested persons to participate in its resource planning. (A) The utility shall establish an integrated resource plan working group or shall provide information to customers and solicit customer views in whatever manner the utility determines will satisfy the intent of this subsection. The utility may exclude from the working group persons who are not customers or persons who provide competitive products or services. The utility shall have the right to require members of the working group to execute non-disclosure agreements to govern proprietary information before disclosing any such information to the members. (B) The utility shall schedule meetings of the working group on a periodic basis, develop proposed agendas for the meetings, and, prepare summaries of the meeting discussions, subject to approval by the working group. The utility shall provide information on the status of its resource plan development, permit other interested persons, including competitors and persons who are not customers, to provide information to the working group, and solicit the views of the working group on the utility's planning process, including its goals, assumptions, models, and the preferred plan. The utility shall use its computer models to develop alternative resource plans based on suggestions from the working group. (C) The utility shall make available to the public at convenient locations in its service area copies of its most-recent resource plan and the order of the commission concerning the plan. (g) Lists of interested persons. The secretary of the commission shall maintain certain lists of interested persons for the purposes set out in this subsection. This subsection expires on September 1, 2002. (1) The secretary shall maintain a list of persons who have requested to be notified of resource planning matters, including opportunities for public participation and the filing of preliminary and final integrated resource plans. Persons requesting inclusion on such lists must state in writing their name and address and the name of the utility in which they have interest. The secretary shall provide utility-specific lists upon request to any utility or interested party. (2) The secretary shall maintain a list of persons who have requested to be notified of the issuance of any request for proposals for resources in Texas and shall provide that list upon request to any utility or interested party. (3) The secretary shall maintain a list of persons who have identified themselves as independent evaluators and who have requested to be notified of the issuance of any request for qualifications for consultants who may assist utilities in the evaluation of bids. The secretary shall provide that list upon request to any utility or interested party. (h) Lowest reasonable system cost. In determining the lowest reasonable system cost of an electric utility's plan, the commission shall consider in addition to direct costs the following: (1) the effect on the rates and bills of various types of customers; (2) minimization of the risks of future fuel costs and regulations; (3) the appropriateness and reliability of the mix of resources; an appropriate and reliable mix of resources may include a portfolio of cost- effective sources of power including but not limited to resources that are fueled and non-fueled, such as renewable resources and conservation measures and a mixture of long-term and short-term contracts; and (4) the costs of compliance with the environmental protection requirements of all applicable state and federal laws, rules, and orders. (i) General guidelines for evaluating and selecting resources. The commission finds that the development of a competitive wholesale electric market that allows for increased participation by both utilities and certain non-utilities is in the public interest. Existing markets are not fully open nor fully competitive; therefore, the commission finds that a formal solicitation process with regulatory oversight is appropriate. (1) In formally soliciting bids the utility shall use an all-source, integrated, demand-side and supply-side resource solicitation process. The all- source solicitation may include separate, parallel request for proposals which are fully coordinated to meet the resource need, and which are integrated at the final stages of resource selection. The utility may conduct targeted solicitations upon a showing of good cause. (2) In developing its specific resource evaluation criteria, the utility shall quantify all of the factors it considers in evaluating resources, including a proposed quantification of all of the criteria described in subsection (h) of this section. Where appropriate, the utility shall employ market valuations of environmental and other non-cost factors which influence its resource selection process. (3) In developing its specific resource evaluation criteria, the utility shall consider the lowest reasonable system cost, the input of customers through the public participation process, and the long-term planning goals in the most recently adopted statewide integrated resource plan. (j) Resources acquired outside the solicitation process. (1) Consistent with the utility's most recent approved integrated resource planning goals, if any, the utility, including a nongenerating utility, may add new or incremental resources outside the solicitation process including: (A) contract renegotiation for existing capacity from an electric cooperative or unaffiliated power generating facilities; (B) demand-side management resources of less than one megawatt peak demand impact per year, if acquired by an electric cooperative or acquired by any utility by contract from a service provider with which the utility is not affiliated; (C) renewable energy technology resources that produce less than 87,600 megawatt-hours annually, if acquired by an electric cooperative or acquired by any utility by contract from a service provider with which the utility is not affiliated; (D) capacity purchases with terms of two years or less from an electric cooperative or unaffiliated power suppliers, or capacity purchases necessary to satisfy unanticipated emergency conditions; (E) the exercise of an option in an existing purchased power contract or a purchased power contract with an electric cooperative or unaffiliated supplier approved in accordance with this section and sec.sec.23.35-23.37 of this title; (F) distributed resources that rely exclusively on renewable energy technologies and that are less costly than transmission and distribution extensions or upgrades; and (G) demand-side management programs for low-income customers that a utility develops through coordination with state or federally authorized weatherization providers, and demand-side management programs for tenants. (2) The addition of new or incremental resources by a utility under this subsection does not require an amendment to the utility's integrated resource plan. (k) Statewide integrated resource plan. (1) Process. In a regularly scheduled meeting in November 1998 and every two years thereafter the commission shall adopt a statewide integrated resource plan within Chapter 24 of the commission's policy statements. The statewide plan shall include the commission's long-term resource planning goals. When it adopts the statewide plan, the commission shall send the plan and a report on the plan to the governor and shall notify each electric utility that a statewide plan has been adopted. The commission shall make the statewide plan and the report on the plan available to the public. (2) Contents of the report. The report on the statewide plan shall include the commission's long-term resource planning goals and: (A) historical data for electric consumption statewide and by utility; (B) historical data for electric generation by utility and by type of capacity, including alternative energy sources; (C) an inventory of generation capacity statewide and by utility; (D) quantitative data on demand-side management programs to the extent the commission determines necessary; (E) each generating utility's forecast without adjustment; (F) a projection of the need for electric services; (G) a description of the approved individual integrated resource plans of public utilities; and (H) an assessment of transmission planning being performed by utilities within this state. (3) Recommendations regarding transmission system needs. In carrying out its duties related to the integrated resource planning process and in setting rates for utilities that are not required to file an integrated resource plan, the commission may review the state's transmission system to determine and make recommendations to public utilities on the need to build new power lines, upgrade power lines, or make other improvements and additions. sec.23.35. Preliminary Integrated Resource Plan. (a) Filing requirements. (1) All utilities. Preliminary integrated resource plans for a ten-year period shall be submitted every three years and shall be accompanied by an executive summary. A preliminary plan submitted under this section must include: (A) statistical data, including the utility's forecast or projections of: (i) annual peak demand and electricity usage; (ii) adjustments to peak demand and electricity usage related to demand-side management programs, interruptible load, and other factors, (iii) system capacity, reserve margins, and planned resource additions and retirements; and (B) the utility's projection of transmission line additions. (2) Public utilities. In addition to the information requested in paragraph (1) of this subsection, public utilities shall submit: (A) a description of energy service options and pricing options available to each class of customers including alternative arrangements relating to: (i) the reliability of service (variations in firmness or interruptibility); (ii) the quality of service (voltage fluctuation or other quality attributes); (iii) the stability of prices (such as rate guarantees and budget plans); (iv) the choice of power service (such as green pricing or access to particular generators); (v) the time of usage (such as seasonality, time-of-use, and real-time pricing); (vi) alternative billing or metering arrangements (such as conjunctive billing); (vii) backup, standby, or maintenance power service; (viii) other factors of service and pricing structures that affect customer choice and resource planning; (B) an estimate of the energy savings and demand reduction the utility can achieve during the ten-year period by use of demand-side management resources, and the range of possible costs for those resources; (C) a description of how the utility will achieve equity among customer classes and provide demand-side programs to each customer class including tenants and low-income ratepayers; (D) a description of how the utility promotes the development of renewable energy technologies and small power production, and the application of distributed resources; (E) an estimate of additional supply-side resources needed to meet future demand, and an estimate of the amount and operational characteristics of the additional capacity needed, the types of viable supply-side resources for meeting that need, and the range of probable costs of those resources; (F) a record of public participation including copies of agendas of meetings of the working group, summaries of the discussion at the meetings, and the utility's responses to suggestions from the working group. Utilities that satisfy the intent of sec.23.34(f) of this title (relating to Integrated Resource Plan) in some other manner shall provide a record of that process; (G) an evaluation of different internally-consistent planning scenarios and a discussion of the incidence and treatment of various factors of risk; (H) proposed solicitations for new or replacement demand-side or supply-side resources including: (i) a description of the resource solicitation process; (ii) the proposed request for proposals and draft standard contract for resources; (iii) the specific criteria the utility will use to evaluate and select or reject those resources; (iv) an explanation and quantification of how the utility assigns value to important options, such as options to accelerate or delay a project, to characteristics of resources, such as intermittence and dispatchability, and to factors of risk, such as fuel risk mitigation; and (v) the extent to which the specific criteria deviate from the general guidelines, the lowest reasonable system cost, the input of customers as a result of public participation process, or the long-term planning goals in the most recently adopted statewide integrated resource plan on a showing of good cause; (I) a table which sets forth the method by which the utility intends to allocate the costs of different types of demand-side and supply-side resources that could be procured; (J) any proposed incentive factors and the justification for such factors; and (K) a binding election indicating whether the utility's affiliates will be permitted to submit a bid or whether the utility waives the right to consider such bids, and a binding election by the utility reserving the right to request a certificate of convenience and necessity for generating facilities during this planning cycle or waiving this right. (b) Availability of information. The utility shall make copies of the preliminary integrated resource plan available to the public at convenient locations in its service area and shall provide copies of the executive summary to interested persons, upon request. (c) Proposed resource solicitation process. The utility shall propose procedures for soliciting bids, which may include requests for proposals, and standard contracts for different types of resources. The solicitation procedures must be consistent with this section and sec.23.34 of this title and must address the general guidelines in sec.23.34(i) of this title. The utility's request for proposals shall include a statement of the minimum size requirements, or other restriction, for resources in the solicitation, if the utility proposes such limitations and restrictions. The utility's request for proposals shall include the specific, quantified criteria to be used in evaluation and selection or rejection of resources and a description of the methods that will be used in evaluating resources. The utility's request for proposals shall require bidders to provide adequate information to evaluate the bids in accordance with the approved selection criteria. (d) Deficiencies in filing. After a public utility files a resource plan, the commission shall on its own motion or on the motion of an affected party, determine whether the preliminary integrated resource plan filing complies with the filing requirements of this section. The filing, or lack thereof, of a proposed request for proposals is one matter that the commission shall consider in its review of the preliminary plan filing. Parties may file motions alleging material deficiencies in the utility's application for approval of the resource plan not later than 21 days after the filing of the application. The utility may file responses to such motions not later than five days after the receipt of such motions. The commission shall rule on such motions not later than 40 days after the date that the application was filed. If the commission concludes that the filing is materially deficient, it shall require the utility to supplement its filing or to file a new preliminary integrated resource plan within a specified time. The deadline for issuing an order in a utility's application for approval of a resource plan, and other deadlines related to the processing of the application, shall be calculated from the date that the utility files a plan that is not materially deficient. (e) Notice. The utility shall file copies of its application under this section with the filing clerk of the commission, the Office of Public Utility Counsel, and any intervenors in the proceeding. The utility shall also provide notice of the filing by publication in its service area and to any person who have requested, in writing, to be notified of resource planning matters. The notice shall be completed not later than fifteen days after the filing of the application. Interested persons may intervene in the proceeding not later than 45 days after the date on which the utility files its resource plan. (f) No hearing required. A commission hearing is not required for a preliminary integrated resource plan filed by a river authority or generating electric cooperative that does not intend to build a new generating plant, or for a preliminary plan filed by a municipally owned public utility. (g) Commission review of the preliminary integrated resource plan. The commission may review a utility's preliminary plan only if it includes a proposed solicitation under subsection (a) of this section. The commission may review a preliminary plan on its own motion or on the motion of the utility or of an affected person, and in conducting such a review, shall convene a public hearing on the adequacy and merits of the preliminary plan. (1) Procedure. At the hearing, any interested person may intervene, present evidence, and cross-examine witnesses regarding the contents and adequacy of the preliminary plan. Discovery is limited to issues relating to the development of the preliminary plan, fact issues included in the preliminary plan, and other issues the commission is required to decide relating to the preliminary plan. The time for providing responses to requests for information may be shortened on motion of any party and for a showing of good cause. (A) The commission shall issue an interim order on the preliminary plan not later than the 180 days after the date the utility files the preliminary plan if the utility elects to consider bids from its affiliates or reserves its right to request a certificate of convenience and necessity for generating facilities. The 180-day period may be extended for a period not to exceed 30 days for extenuating circumstances encountered in the development and processing of an initial plan, if the extenuating circumstances are fully explained and agreed to by the commissioners. (B) The commission shall issue an interim order on the preliminary plan within 60 days of the date the utility files the preliminary plan if the public utility waives its right to consider the bid of its affiliates in the solicitation process and waives its right to construct a generating facility that requires a certificate of convenience and necessity during this planning cycle. If the public utility makes such an election, it shall be binding on the utility for the resource planning cycle for which the utility makes such an election. Parties must identify in their list of issues any factual matters that require a hearing. (2) Commission determinations. After the hearing, the commission shall make the following determinations with regard to the utility's preliminary integrated resource plan filing: (A) whether the utility's plan is based on substantially accurate data and an adequate method of forecasting; (B) whether the utility's plan adequately addresses transmission needs; (C) whether the menu of service options available to each class of customers is sufficiently broad to satisfy the needs of customers and the utility's resource planning needs; (D) whether the utility's preliminary plan identifies and takes into account any present and projected reductions in the demand for energy that may result from cost-effective measures to improve conservation and energy efficiency in the customer classes that the utility serves; (E) whether the utility's proposals to achieve equity among customer classes and provide demand-side programs to each customer class, including tenants and low-income ratepayers are adequate; (F) whether the utility's proposals to develop renewable energy technologies and small power production and to apply distributed resources are adequate; (G) if additional supply-side resources are needed to meet future demand, whether the utility's preliminary plan adequately demonstrates the amount and operational characteristics of the additional capacity needed, the types of viable supply-side resources for meeting that need, and the range of probable costs of those resources; (H) whether the utility's preliminary plan demonstrates that there were reasonable opportunities for appropriate persons to participate in the development of the preliminary plan; (I) whether the utility's plan identifies appropriate scenarios and takes into account the incidence and allocation of various factors of risk; (J) whether the specific criteria the utility will use to evaluate and select or reject resources are reasonable and consistent with the general guidelines and criteria, the lowest reasonable system cost, the input of customers through the public participation process, and the long-term planning goals in the most recently adopted statewide integrated resource plan and whether the proposed solicitation procedures will encourage bids for a broad range of options to meet the needs of the utility's customers; (K) whether the cost allocation method proposed by the utility for different resource types is reasonable; and (L) whether any incentive factors are appropriate, the levels of such incentive factors, and the effect of such incentive factors on the cost of affected resources and the resource selection process. (3) Interim order. To approve and establish an interim order on the proposed preliminary plan the commission must make an affirmative finding regarding all matters set forth in paragraph (g)(2) of this section, except that the commission shall consider subparagraphs (g)(2)(B), (C), and (F) of this section without necessarily requiring an affirmative finding for all three subparagraphs. In its interim order, the commission shall approve the preliminary plan, modify the preliminary plan, or, if necessary, remand the preliminary plan for additional proceedings. sec.23.36. Solicitation of Resources. (a) Purpose. The purpose of the utility's resource solicitation process is to obtain commitments from third parties for new and replacement resources, facilitate the evaluation of resources subject to the specific criteria set forth in the request for proposals, and serve as a starting point for further contract negotiations. A solicitation may be required as part of the integrated resource planning process, may be initiated by a utility, or may be ordered by the commission in the context of another proceeding. (b) Solicitation required. The utility shall conduct solicitations for demand- side and supply-side resources, as prescribed in the approved preliminary plan. (c) Notice. The utility shall provide reasonable notice of the request for proposals. Such notice shall include: (1) direct notice to customers of the utility likely to submit a bid; (2) notice by mail to the secretary of the commission and the Office of Public Utility Counsel; and (3) notice by mail to persons who requested to be notified of the request for proposals by submitting their name and address to the commission. (d) Eligibility to bid. The solicitation procedures shall encourage broad participation by persons who are capable of providing demand-side or supply-side resources, including customers of the utility. In addition to soliciting resources from unaffiliated third parties, the utility may prepare and submit a bid of a new utility demand-side management program as prescribed by subsection (f) of this section and may receive bids from one or more of its affiliates as prescribed by subsection (g) of this section. (e) Solicitation procedures. Each bidder, including the utility and its affiliates, shall submit two copies of its bid to the secretary of the commission. The secretary shall ensure that the utility has access to all bids at the same time, and shall keep a copy of each bid submitted by the utility or the utility's affiliate. A bid submitted under this subsection or retained under this subsection is confidential and is not subject to disclosure under Chapter 552, Government Code. (f) Utility bids for demand-side management resources. The request for proposals shall indicate whether the utility reserves the right to use its own proposed demand-side management program to meet a need identified in the preliminary plan. If the utility retains this right, it must prepare a bid reflecting that resource. A bid prepared by the utility under this subsection must comply with the solicitation, evaluation, selection, and rejection criteria specified in the preliminary plan. The utility may not give preferential treatment or consideration to a bid prepared under this subsection. (g) Utility affiliate bids. If a utility retains the right to consider a bid from its affiliates, the utility affiliate must prepare a bid in the solicitation process. A bid prepared by the utility affiliate under this subsection must comply with the solicitation, evaluation, selection, and rejection criteria specified in the preliminary plan. The utility may not give preferential treatment or consideration to a bid prepared under this subsection. (1) Each utility that retains the right to consider a bid from its affiliates must establish written procedures to ensure that all transactions between the utility and its affiliates are conducted on an arm's length basis. Such utilities must maintain a record of the time and date of all conversations, data, and written materials exchanged between its personnel and the personnel of its affiliates. (2) The utility and its affiliates must maintain separate books; must not incur debt in a manner that would permit the creditor of the affiliate to have recourse to the assets of the utility; must value any assets transferred between the utility and its affiliate in accordance with state and federal regulations to prevent cross subsidies; and must not share officers, directors, or employees or own property in common. The utility must not perform on behalf of its affiliates the hiring or training of personnel, the purchase, installation or maintenance of equipment (except under contract), or research and development. The utility must not share any information related to customers energy service needs, loads, end-use devices, industrial processes, costs, prices or any other information related to strategic planning or retail markets, except as shared equally with all other competitive resource bidders. The utility must not allow its utility affiliate to use its name or trademark, and the utility must not carry out any joint promotion, marketing, sales, or advertising campaigns with its affiliates, except as are available to all other competitive resource bidders. (3) If a utility signs a contract for resources with its affiliate, the utility must carry out transactions with independence, pursuant to the contract, and in an auditable manner, and the utility and its affiliate must each have an annual compliance review conducted by an independent entity. (h) Independent evaluator. The utility may use an independent party to assist in the evaluation of bids. The independent evaluator may 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 resources. (i) Evaluation of bids. The utility shall evaluate each bid submitted, including a bid from its affiliate, in accordance with the criteria specified in the preliminary plan. (j) Negotiation. The utility shall negotiate the necessary contracts. A utility may negotiate a pricing structure that is suitable for the resource, considering such factors as the reliability of the resource, the need for security of performance, the availability of other means of ensuring security of performance, the nature of the resource, the level of risk, and other appropriate factors. The utility shall negotiate contract terms that appropriately allocate the risks of future fuel costs and other resource costs between the resource provider and the utility. (k) Rejection of third party bids. The utility is not required to accept a bid and may reject any or all bids in accordance with the selection and rejection criteria specified in the preliminary plan. If the results of the solicitations and contract negotiations do not meet the supply-side needs identified in the preliminary plan, the utility may apply for a certificate of convenience and necessity for a utility-owned resource addition notwithstanding the fact a solicitation was conducted and the addition was not included in the approved preliminary plan. Such a resource shall be subject to a cost limitation pursuant to sec.23.37(f) of this title (relating to Approval of Resources Procured Through Solicitation). (l) Time limit for filing complaint. A complaint by a bidder concerning the utility's decision on the acquisition of resources in a solicitation may not be filed later than 90 days after the person receives a notice of the outcome of the solicitation, under subsection (k) of this section. If such a complaint is filed, it shall be consolidated with any application for the approval of contracts, under sec.23.37 of this title. sec.23.37. Approval of Resources Procured Through Solicitation. (a) Application. An electric utility seeking commission approval or certification of contracts for resources shall request such approval pursuant to the provisions of this section. An interim order approving a utility's preliminary resource plan and a competitive resource solicitation is required prior to filing of an application for approval or certification of contracts for resources, except as specifically provided for by law. (1) A public utility that has conducted a competitive resource solicitation pursuant to sec.23.36 of this title (relating to Solicitation of Resources) shall submit its proposed final integrated resource plan for commission review. (2) A utility qualified to apply for contract approval pursuant to sec.23.34(b) (3) of this title (relating to Integrated Resource Plan) shall submit its proposed contract for resources for commission review. The commission shall certify the contract on finding that the contract is reasonable. Nothing in this paragraph is intended to alter or amend existing wholesale power supply contracts. (b) Procedure. The commission shall, on request by an affected person and within 90 days after the date a utility files its final integrated resource plan under this section, convene a public hearing on the reasonableness and cost- effectiveness of the proposed final plan. Interested persons may intervene in the proceeding not later than 45 days after the date on which the utility files its resource plan. The time for providing responses to requests for information may be shortened on motion of any party and for a showing of good cause. (1) The commission shall make its determination and issue a final order within 180 days after the date the utility files the proposed final plan if the utility elected to consider bids from its affiliates or reserved its right to request a certificate of convenience and necessity for generating facilities. (2) The commission shall make its determination within 90 days after the date the proposed contract for resources or proposed final plan is submitted if the request is made by a utility requesting certification of contracts with unaffiliated resource providers. Parties must identify in their list of issues any factual matters that require a hearing. A utility may qualify for a 90-day determination if the utility satisfies the conditions contained in one of the following subparagraphs: (A) the utility is qualified pursuant to sec.23.34(b)(3) of this title, (B) the utility waived its right to consider bids from its affiliates and waived its right to request a certificate of convenience and necessity for generating facilities during this planning cycle, (C) the utility rejected all bids received from its affiliates and rejected all bids submitted under sec.23.36(f) of this title, and the utility is not requesting a certificate of convenience and necessity for generating facilities during this planning cycle, and the utility makes a showing of good cause. (c) Filing requirements. After conducting solicitations and negotiating contracts, a public utility shall submit to the commission a proposed final integrated resource plan. The application shall include all testimony supporting the final plan. The proposed final plan must include: (1) the contracts for resources and the following information concerning resources that the utility proposes to acquire: (A) the reliability of the proposed resource, the financial condition of the provider, and the safety of that resource contract; (B) whether the contract would unreasonably impair the continued reliability of electric systems affected by the purchase after giving consideration to consistently applied regional or national reliability standards, guidelines, or criteria; and (C) whether the purchase can reasonably be expected to produce benefits to customers of the purchasing utility; (2) information about the integrated resource planning and solicitation processes including: (A) a copy of the interim order on the preliminary integrated resource plan and any required studies or analyses; (B) a record of public input since the filing of the preliminary integrated resource plan. Utilities that satisfy the intent of sec.23.34(f) of this title in some other manner shall provide a description of that process; and (C) the results of the solicitation including: (i) the number, type, and size (in megawatts and megawatt-hours) of bids received; (ii) a description of the evaluation process and any related methods, manuals, formulas, or processes; (iii) a description of the negotiation process; and (iv) a demonstration that the solicitation, evaluation; and selection were conducted in accordance with the specific criteria included in the preliminary plan; (3) a description of the plan to achieve equity among customer classes and provide demand-side programs to each customer class including tenants and low- income ratepayers; (4) the terms and conditions under which the utility will provide resources to meet a need identified in the preliminary plan, if the utility accepts a bid submitted under sec.23.36(f) of this title; (5) if the utility signed a contract for resources with its affiliate, any information necessary to satisfy all the standards of sec.23.36(g) of this title; (6) an action plan covering a period of three years and the methods by which the utility intends to monitor resources after selection and acquisition; (7) proposed timely cost recovery factors, if any, and the data necessary to reconcile existing timely cost recovery factors, if any; and (8) an application for a certificate of convenience and necessity, if necessary. (d) Notice. The utility shall file copies of its application under this section upon the filing clerk of the commission, the Office of Public Utility Counsel, and any intervenors in the proceeding. The utility shall also provide notice of the filing by publication in its service area, to any intervenor in its preliminary integrated resource plan proceeding, to any bidder in its solicitation, and to any person who has requested, in writing, to be notified of resource planning matters. The notice shall be completed not later than fifteen days after the filing of the application. (e) Hearing on the final integrated resource plan. (1) Scope. At the hearing, any interested person may intervene, present evidence, and cross-examine witnesses regarding the reasonableness and cost- effectiveness of the proposed final plan. Parties will not be allowed to litigate or conduct discovery on issues that were litigated or could have been litigated in connection with the filing of the utility's preliminary plan. (2) Discovery. To the extent permitted by federal law, the commission may issue a written order for access to the books, accounts, memoranda, contracts, or records of any exempt wholesale generator or power marketer selling energy at wholesale to a utility, if the examination is required for the effective discharge of the commission's regulatory responsibilities under the Act, except that if the commission issues such an order, the books, accounts, memoranda, contracts, and records obtained by the commission are confidential and not subject to disclosure under Chapter 552, Government Code. (3) Commission determinations. After the hearing, the commission shall determine whether: (A) to certify the contracts upon consideration of: (i) the reliability of the proposed resource, the financial condition of the provider, and the safety of that resource contract; (ii) whether the contract would unreasonably impair the continued reliability of electric systems affected by the purchase after giving consideration to consistently applied regional or national reliability standards, guidelines, or criteria; and (iii) whether the purchase can reasonably be expected to produce benefits to customers of the purchasing utility. Commission certification of a resource contract does not negate the necessity of the resource to comply with all applicable environmental and siting regulations; (B) the utility's proposed final plan was developed in accordance with the preliminary plan and commission rules and whether: (i) the utility has met the requirements of the interim order, if any; (ii) the resource solicitations, evaluations, selections, and rejections were conducted in accordance with the specific criteria included in the preliminary plan; and (iii) the utility's proposed final plan is cost-effective and provides reliable energy service at lowest reasonable system cost as defined in sec.23.34(h) of this title; (C) the final plan is equitable among customer classes and provides demand- side programs to each customer class, including tenants and low-income ratepayers; (D) the utility has an adequate plan to acquire and monitor the resources; (E) the commission should certify any utility bid submitted under sec.23.36(f) of this title that resulted from the solicitations; (F) the utility treated and considered its affiliate's bid in the same manner it treated and considered other bids intended to meet the same resource needs. Further, if the public utility requests certification of a contract with the utility's affiliate, the commission shall determine, in connection with such purchase, whether: (i) the transaction will benefit consumers; (ii) the transaction violates any state law, including least-cost planning; (iii) the transaction provides the utility's affiliate any unfair competitive advantage by virtue of its affiliation or association with the utility; (iv) the transaction is in the public interest; and (v) the commission has sufficient regulatory authority, resources, and access to the books and records of the utility and its affiliate to make these determinations. (G) the commission should grant a timely cost recovery factor, and if so, the mechanism and level of such factor, including the reconciliation of any existing factor; and (H) the commission should grant a requested certificate of convenience and necessity for a utility-owned resource addition. (4) Final order. To approve the final plan and contracts for resources the commission must make an affirmative finding regarding all matters set forth in paragraph (3) of this subsection, except that the commission shall consider paragraph (3)(E) and (G) of this subsection without necessarily requiring an affirmative finding for both subparagraphs. The commission shall approve the proposed final plan, modify the proposed final plan, or, if necessary, remand the proposed final plan for additional proceedings. (f) Certificate of convenience and necessity for generating facilities. In determining whether to grant a requested certificate of convenience and necessity for new generating facilities under the integrated resource planning process, the commission shall consider the effect of the granting of a certificate on the recipient of the certificate and on any public utility of the same kind already serving the proximate area. The commission shall also consider other factors such as community values, recreational and park areas, historical and aesthetic values, environmental integrity, and the probable improvement of service or lowering of cost to consumers in that area if the certificate is granted. The commission shall grant the certificate as part of the approval of the final plan if it finds that: (1) the proposed addition is necessary under the final plan; (2) the proposed addition is the best and most economical choice of technology for that service area. In reviewing the cost of the proposed addition: (A) the commission may impose limits on the cost of a rate-based utility resource addition that may be included in the utility's invested capital for ratemaking purposes based on the capital, operating, fuel, and other costs associated with the least cost resource bid possessing comparable operational characteristics, which was submitted in the utility's solicitation for resources; (B) the least cost resource bid for the purposes of determining this cost limitation shall be determined by the commission based on the utility resource selection process approved by the commission. In the event the commission imposes a limit on the cost of a resource addition pursuant to this subsection, the utility shall not be subject to a ratemaking disallowance relating to its expenditures on such resource addition which are up to and including the amount of the cost limitation. If the actual construction cost of the resource addition is less than the commission-imposed cost limitation, the utility's shareholders shall be entitled to retain half the difference between the commission-imposed cost limitation and the actual cost to construct the utility resource addition; and (3) cost-effective conservation and other cost-effective alternative energy sources cannot reasonably meet the need. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 12, 1996. TRD-9600419 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Earliest possible date of adoption: February 19, 1996 For further information, please call: (512) 458-0100 Customer Service and Protection 16 TAC sec.23.44 The amendment is proposed under Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec.1.101, which provide the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, and sec.2.051, which requires the commission to adopt integrated resource planning regulations by September 1, 1996. The following statute is affected by this rule: Texas Civil Statutes, Article 1446c-0 (Vernon Supplement 1996), sec. s1.101, 2.001, 2.051, 2.057, 2. 1511, 2.208, 2.209, and 2.255. sec.23.44. New Construction. (a)-(b) (No change.) (c) Line extension and construction charges. Every utility shall file its extension policy as required in sec.23.24(b)(1) of this title (relating to Form and Filings of Tariffs). The policy shall be consistent, nondiscriminatory, and subject to the approval of the commission. No contribution in aid of construction may be required of any customer except as provided for in the extension policy. (1)-(2) (No change.) (3) If, in order to provide service to a prospective or existing customer, a utility must provide a line extension to or on the customer's premises, and if the utility will require that customer to pay a Contribution in Aid to Construction (CIAC), a prepayment, or sign a contract with a term of one year or longer, the utility shall provide the customer with information about on-site renewable energy technology alternatives. The information shall comply with guidelines or other requirements set out by the commission, and shall be provided to the customer at the time the estimate of the CIAC or prepayment is presented to the customer, or, in the event there is no CIAC or prepayment, before a contract is signed. The information is intended to assist the customer in becoming more knowledgeable in evaluating the options available. (d) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 12, 1996. TRD-9600424 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Earliest possible date of adoption: February 19, 1996 For further information, please call: (512) 458-0100 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 1. General Administration Subchapter B. Fees, Charges, and Costs 28 TAC sec.1.302 The Texas Department of Insurance proposes new sec.1.302, concerning the fee to be charged for affixing the official seal of the Department and for certifying to the seal. New sec.1.302 is necessary to comply with the Civil Practice and Remedies Code, sec.22.004 as newly enacted by the 74th Legislature in House Bill 1943 and to provide a uniform fee for all requests for affixing the official seal and certifying to the seal. The Insurance Code, Article 4. 07(A)(2), authorizes the Department to charge up to $20 for affixing the official seal and certifying to the seal. 28 TAC sec.7.1301(d) provides for a $10 fee for affixing the official seal and certifying to the seal for certain authorized insurers. The practice of the Department has been to charge $10 for all requests for affixing the official seal and certifying to the seal. New sec.22.004 of the Civil Practice and Remedies Code requires an additional $1.00 for a request for production or certification of a record under a subpoena, a request for production, or other instrument issued under the authority of a tribunal that compels production or certification of a record. The $1.00 fee is specifically required in addition to any other fee charged. To comply with sec.22.004 and to establish a uniform fee for all instances in which the official seal is affixed and certified to, new 28 TAC sec.1.302 will provide for a single $11 fee for each certification, regardless of the authority or intent of the person or entity making the request. Simultaneous to proposed new sec.1.302, the Department is proposing amendments to 28 TAC sec.7.1301 and sec.7.1404 to delete references to the current fees for certification addressed in those sections. The proposed amendments to those sections are published elsewhere in this issue of the Texas Register. Mary Keller, Senior Associate Commissioner, Legal and Compliance, has determined that for each year of the first five years the new section is in effect, the fiscal impact of administering or enforcing the new section will be an increase of approximately $52,000 to the state's general revenue fund. Ms. Keller also has determined that there will be no impact on local government as a result of administering or enforcing the new section and no impact on local employment or the local economy. Ms. Keller also has determined that for each year of the first five years new sec.1.302 is in effect, the public will benefit from the uniformity of 28 TAC sec.sec.1.302, 7.1301, and 7.1404; and the Civil Practice and Remedies Code, sec.22.004. There will be less confusion about the amount of the certification fee charged, i.e. a flat fee of $11. The public will also benefit from streamlined administration within the Department, as it will not be necessary to make a determination about the authority under which a request for certification has been made and which fee applies. There is no anticipated difference in the cost of compliance between small and large businesses, or between business entities and natural persons. There is no anticipated economic cost to persons who are required to comply with the proposal which arises as a result of provisions of the new section because it is for the most part simply conforming with the Civil Practice and Remedies Code, sec.22.004. The only cost of compliance will be the additional $1.00 charged for certifications not covered by sec.22.004. Comments on the proposed new section must be submitted within 30 days after publication of the proposed section in the Texas Register, to the Chief Clerk, P.O. Box 149104, Mail Code 113-1C, Austin, Texas 78714-9104. An additional copy of the comment must be submitted to Robert R. Carter, Jr., Staff Attorney, Legal and Compliance, Mail Code 110-1A, Texas Department of Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104. Any requests for a public hearing should be submitted separately to the Office of the Chief Clerk. The new section is proposed under the Insurance Code, Article 1.03A. Article 1.03A provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance as authorized by statute. The proposed new section affects regulation pursuant to the following statutes: Civil Practice and Remedies Code, sec.22.004; Insurance Code, Article 4.07(A)(2). sec.1.302. Charges for Affixing the Official Seal and Certifying to the Seal. The charge to any person or entity requesting the affixing of the official seal and certifying to the seal shall be $11, inclusive of the $1. 00 fee required by the Civil Practice and Remedies Code, sec.22.004. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 12, 1996. TRD-9600465 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 19, 1996 For further information, please call: (512) 463-6327 Chapter 7. Corporate and Financial Regulation Subchapter M. Regulatory Fees 28 TAC sec.7.1301 The Texas Department of Insurance proposes an amendment to sec.7.1301, concerning the fee to be charged for affixing the official seal of the Department and for certifying to the seal. Amended sec.7.1301 is necessary to comply with the Civil Practice and Remedies Code, sec.22.004 as newly enacted by the 74th Legislature in House Bill 1943, to provide a uniform fee for all requests for affixing the official seal and certifying to the seal, and to conform to new sec.1.302. The Insurance Code, Article 4.07(A)(2), authorizes the Department to charge up to $20 for affixing the official seal and certifying to the seal. 28 TAC sec.7.1301(d)(3) provides for a $10 fee for affixing the official seal and certifying to the seal for certain authorized insurers. The practice of the Department has been to charge $10 for all requests for affixing the official seal and certifying to the seal. New sec.22. 004 of the Civil Practice and Remedies Code requires an additional $1.00 for a request for production or certification of a record under a subpoena, a request for production, or other instrument issued under the authority of a tribunal that compels production or certification of a record. The $1.00 fee is specifically required in addition to any other fee charged. To comply with sec.22.004 and to establish a uniform fee for all instances in which the official seal is affixed and certified to, proposed new 28 TAC sec.1.302, simultaneously published elsewhere in this issue of the Texas Register, will provide for a single $11 fee for each certification, regardless of the authority or intent of the person or entity making the request. 28 TAC sec.7. 1301(d)(3), which references the $10 charge, should be deleted and the remainder of said rule should be renumbered accordingly. Simultaneous to this notice of proposed amendment of sec.7.1301, the Department is proposing amended sec.7.1404 to delete reference to the current fee for certification addressed in that section. The proposed amendment to sec.7.1404 is published elsewhere in this issue of the Texas Register. Mary Keller, Senior Associate Commissioner, Legal and Compliance, has determined that for each year of the first five years the $1.00 increase in certification charges is in effect, the fiscal implications for the state of administration and enforcement will be an increase of approximately $52,000 to the state's general revenue fund. Ms. Keller also has determined that there will be no impact on local government as a result of administrating and enforcing the increase and no impact on local employment or the local economy. Ms. Keller also has determined that for each year of the first five years amended sec.7.1301 is in effect, the public will benefit from the uniformity of 28 TAC sec.sec.7.1301, 1.302, and 7.1404; and the Civil Practice and Remedies Code, sec.22.004. There will be less confusion about the amount of the fee charged, i.e. a flat fee of $11. The public will also benefit from streamlined administration within the Department, as it will not be necessary to make a determination about the authority under which a request for certification is made and which fee applies. There is no anticipated difference in the cost of compliance between small and large businesses, or between business entities and natural persons. There is no anticipated economic cost to persons who are required to comply with the proposal which arises as a result of provisions of the amended section because it is for the most part simply achieving conformity with new 28 TAC sec.1.302 and the Civil Practice and Remedies Code, sec.22.004. The only cost of compliance will be the additional $1.00 charged for certifications not covered by sec.22.004. Comments on the proposed amendment must be submitted within 30 days after publication of the proposed section in the Texas Register, to the Chief Clerk, P.O. Box 149104, Mail Code 113-1C, Austin, Texas 78714-9104. An additional copy of the comment must be submitted to Robert R. Carter, Jr., Staff Attorney, Legal and Compliance, Mail Code 110-1A, Texas Department of Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104. Any requests for a public hearing should be submitted separately to the Office of the Chief Clerk. The amendment is proposed under the Insurance Code, Article 1.03A. Article 1.03A provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance as authorized by statute. The proposed amendment affects regulation pursuant to the following statutes: Civil Practice and Remedies Code, sec.22.004; Insurance Code, Article 4.07(A)(2). sec.7.1301. Regulatory Fees. (a)-(c) (No change.) (d) Fees for authorized insurers writing classes of insurance in this state which are regulated by the Insurance Code, Chapters 1-3, 6-20, 20A, 22, and 23. For the following filings and actions, the fees shall be as follows: (1)-(2) (No change.) [(3) For affixing the official seal and certifying to the seal, the fee shall be $10.] (3)
                                        [(4)] For reservation of name, the fee shall be $100. (4)
                                          [(5)] For renewal of reservation of name, the fee shall be $25. (5)
                                            [(6)] For filing application for admission of a foreign or alien insurance company, including issuance of certificate of authority, the fee shall be $2,000. (6)
                                              [(7)] For filing original charter, including issuance of certificate of authority, the fee shall be $1,500. (7)
                                                [(8)] For filing amendment to charter, including issuance of certificate of authority, if a hearing is held, the fee shall be $250. (8)
                                                  [(9)] For filing amendment to charter, including issuance of certificate of authority, if a hearing is not held, the fee shall be $125. (9)
                                                    [(10)] For filing designation of attorney for service of process or amendment thereto, the fee shall be $25. (10)
                                                      [(11)] For filing a total reinsurance agreement, the fee shall be $750. (11)
                                                        [(12)] For filing a partial reinsurance agreement, the fee shall be $150. (12)
                                                          [(13)] For filing a direct reinsurance agreement pursuant to the Insurance Code, Article 22.19, the fee shall be $150. (13)
                                                            [(14)] For filing for approval of reinsurance agreement pursuant to the Insurance Code, Article 21.26, the fee shall be $750. (14)
                                                              [(15)] For filing for approval of merger pursuant to the Insurance Code, Article 21.25, the fee shall be $750. (15)
                                                                [(16)] For accepting a security deposit, excluding deposits made pursuant to the Insurance Code, Article 3.16, the fee shall be $100. (16)
                                                                  [(17)] For substitution/amendment of a security deposit, excluding deposits made pursuant to the Insurance Code, Article 3.16, the fee shall be $50. (17)
                                                                    [(18)] For certification of statutory deposit, the fee shall be $10. (18)
                                                                      [(19)] For filing notice of intent to relocate the books/records pursuant to the Insurance Code, Article 1.28, the fee shall be $150. (19)
                                                                        [(20)] For filing restated articles of incorporation for domestic/foreign companies, the fee shall be $250. (20)
                                                                          [(21)] For filing a statement pursuant to the Insurance Code, Article 21.49-1, sec.5, for the first $9,900,000 of the purchase price or consideration, the fee shall be $500. (21)
                                                                            [(22)] For filing a statement pursuant to the Insurance Code, Article 21.49-1, sec.5, if the purchase price or consideration exceeds $9, 900,000, an additional $250 for each $10 million exceeding $9,900,000 but not more than a $5,000 total fee. (22)
                                                                              [(23)] For filing registration statement pursuant to the Insurance Code, Article 21.49-1, sec.3, the fee shall be $150. (23)
                                                                                [(24)] For filing for review pursuant to the Insurance Code, Article 21.49-1, sec.4, or Article 22.15, the fee shall be $250. (24)
                                                                                  [(25)] For filing for an exemption pursuant to the Insurance Code, Article 21.49-1, sec.5(e), the fee shall be $250. (e)-(j) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 12, 1996. TRD-9600443 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 19, 1996 For further information, please call: (512) 463-6327 Subchapter N. Service of Process 28 TAC sec.7.1404 The Texas Department of Insurance proposes an amendment to sec.7.1404, concerning the fee to be charged for affixing the official seal of the Department and for certifying to the seal. Amended sec.7.1404 is necessary to comply with the Civil Practice and Remedies Code, sec.22.004 as newly enacted by the 74th Legislature in House Bill 1943, to provide a uniform fee for all requests for affixing the official seal and certifying to the seal, and to conform to new sec.1.302 and amended sec.7.1301. The Insurance Code, Article 4. 07(A)(2), authorizes the Department to charge up to $20 for affixing the official seal and certifying to the seal. 28 TAC sec.7.1301, currently provides for a $10 certification fee for requests from certain insurers. 28 TAC sec.7. 1404(g) currently provides for a $10 fee for certificates of service, which involve the affixing of the official seal and certifying to the seal, other than the two certificates of service automatically issued to plaintiffs and court clerks. New sec.22.004 of the Civil Practice and Remedies Code requires an additional $1.00 for a request