UTILITIES CODE
CHAPTER 35. ALTERNATIVE ENERGY PROVIDERS
SUBCHAPTER A. COMPETITION AND TRANSMISSION ACCESS IN THE WHOLESALE
MARKET
§ 35.001. DEFINITION. In this subchapter, "electric
utility" includes a municipally owned utility and an electric
cooperative.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 16, eff. Sept. 1, 1999.
§ 35.002. RIGHT TO COMPETE AT WHOLESALE. A provider of
generation, including an electric utility affiliate, exempt
wholesale generator, and qualifying facility, may compete for the
business of selling power.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 35.003. PURCHASE FROM AFFILIATE; UNDUE PREFERENCE
PROHIBITED. (a) An electric utility may purchase power from an
affiliate in accordance with this title.
(b) An electric utility may not grant an undue preference to
a person in connection with the utility's purchase or sale of
electric energy at wholesale or other utility service.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 35.004. PROVISION OF TRANSMISSION SERVICE. (a) An
electric utility or transmission and distribution utility that owns
or operates transmission facilities shall provide wholesale
transmission service at rates and terms, including terms of access,
that are comparable to the rates and terms of the utility's own use
of its system.
(b) The commission shall ensure that an electric utility or
transmission and distribution utility provides nondiscriminatory
access to wholesale transmission service for qualifying
facilities, exempt wholesale generators, power marketers, power
generation companies, retail electric providers, and other
electric utilities or transmission and distribution utilities.
(c) When an electric utility, electric cooperative, or
transmission and distribution utility provides wholesale
transmission service within ERCOT at the request of a third party,
the commission shall ensure that the utility recovers the utility's
reasonable costs in providing wholesale transmission services
necessary for the transaction from the entity for which the
transmission is provided so that the utility's other customers do
not bear the costs of the service.
(d) The commission shall price wholesale transmission
services within ERCOT based on the postage stamp method of pricing
under which a transmission-owning utility's rate is based on the
ERCOT utilities' combined annual costs of transmission divided by
the total demand placed on the combined transmission systems of all
such transmission-owning utilities within a power region. An
electric utility subject to the freeze period imposed by Section
39.052 may treat transmission costs in excess of transmission
revenues during the freeze period as an expense for purposes of
determining annual costs in the annual report filed under Section
39.257. Notwithstanding Section 36.201, the commission may approve
wholesale rates that may be periodically adjusted to ensure timely
recovery of transmission investment. Notwithstanding Section
36.054(a), if the commission determines that conditions warrant the
action, the commission may authorize the inclusion of construction
work in progress in the rate base for transmission investment
required by the commission under Section 39.203(e).
(e) The commission shall ensure that ancillary services
necessary to facilitate the transmission of electric energy are
available at reasonable prices with terms and conditions that are
not unreasonably preferential, prejudicial, discriminatory,
predatory, or anticompetitive. In this subsection, "ancillary
services" means services necessary to facilitate the transmission
of electric energy including load following, standby power, backup
power, reactive power, and any other services as the commission may
determine by rule. On the introduction of customer choice in the
ERCOT power region, acquisition of generation-related ancillary
services on a nondiscriminatory basis by the independent
organization in ERCOT on behalf of entities selling electricity at
retail shall be deemed to meet the requirements of this subsection.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts 1999, 76th Leg., ch. 405, § 17, eff. Sept. 1, 1999; Acts
2003, 78th Leg., ch. 295, § 1, eff. June 18, 2003.
§ 35.005. AUTHORITY TO ORDER TRANSMISSION
SERVICE. (a) The commission may require an electric utility to
provide transmission service at wholesale to another electric
utility, a qualifying facility, an exempt wholesale generator, or a
power marketer and may determine whether terms for the transmission
service are reasonable.
(b) The commission may require transmission service at
wholesale, including the construction or enlargement of a facility.
(c) The commission may not issue a decision or rule relating
to transmission service that is contrary to an applicable decision,
rule, or policy statement of a federal regulatory agency having
jurisdiction.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 18, eff. Sept. 1, 1999.
§ 35.006. RULES RELATED TO WHOLESALE TRANSMISSION
SERVICE, RATES, AND ACCESS. (a) The commission shall adopt rules
relating to wholesale transmission service, rates, and access. The
rules:
(1) must be consistent with the standards in this
subchapter;
(2) may not be contrary to federal law, including any
applicable decision, rule, or policy statement of a federal
regulatory agency having jurisdiction;
(3) must require transmission services that are not
less than the transmission services the Federal Energy Regulatory
Commission may require in similar circumstances;
(4) must require that an electric utility provide all
ancillary services associated with the utility's discounted
wholesale sales at the same prices and under the same terms as the
services are provided to a third person; and
(5) must require that an electric utility provide all
ancillary services associated with the utility's discounted
wholesale sales to a third person on request.
(b) The commission shall adopt rules relating to the
registration and reporting requirements of a qualifying facility,
exempt wholesale generator, and power marketer.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 35.007. TARIFFS REQUIRED. (a) Except as provided by
Subsection (b), an electric utility that owns or operates a
transmission facility shall file a tariff in compliance with
commission rules adopted under Section 35.006.
(b) An electric utility is not required to file a tariff
under this section if the utility's terms for access and pricing for
wholesale transmission service are included in another electric
utility's tariff.
(c) An electric utility shall file a tariff required by this
section with the appropriate state or federal regulatory agency
having jurisdiction over the utility's transmission service.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 35.008. ALTERNATIVE DISPUTE RESOLUTION. The
commission may require that each party to a dispute concerning
prices or terms of wholesale transmission service engage in a
nonbinding alternative dispute resolution process before seeking
resolution of the dispute by the commission.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
SUBCHAPTER B. EXEMPT WHOLESALE GENERATORS AND POWER MARKETERS
§ 35.031. AUTHORITY TO OPERATE. An exempt wholesale
generator or power marketer may sell electric energy only at
wholesale.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 35.032. COMMISSION REGISTRATION AND REQUIRED
REPORTS. (a) An exempt wholesale generator or power marketer
that sells electric energy in this state shall, not later than the
30th day after the date it becomes subject to this section:
(1) register with the commission; or
(2) provide to the commission proof that it has
registered with the Federal Energy Regulatory Commission or has
been authorized by the Federal Energy Regulatory Commission to sell
electric energy at market-based rates.
(b) The exempt wholesale generator or power marketer may
register by filing with the commission:
(1) a description of the location of any facility used
to provide service;
(2) a description of the type of service provided;
(3) a copy of any information filed with the Federal
Energy Regulatory Commission in connection with registration with
that commission; and
(4) other information required by commission rule.
(c) An exempt wholesale generator or power marketer
required to register under Subsection (a) shall file any report
required by commission rule.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 35.033. AFFILIATE WHOLESALE PROVIDER. An affiliate
of an electric utility may be an exempt wholesale generator or power
marketer and may sell electric energy to its affiliated electric
utility in accordance with laws governing wholesale sales of
electric energy.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 19, eff. Sept. 1, 1999.
§ 35.034. TRANSFER OF ASSETS. (a) Unless an electric
utility receives commission approval under Subsection (b), the
utility may not sell or transfer a facility to an affiliate or
otherwise consider the facility to be an eligible facility as
defined by federal law if on May 27, 1995, the utility had a rate or
charge in effect:
(1) for or in connection with the construction of the
facility;
(2) for electric energy produced by the construction
of the facility; or
(3) for electric energy produced by the facility other
than a portion of a rate or charge that represents recovery of the
cost of a wholesale rate or charge.
(b) The commission, after notice and hearing, may allow an
electric utility to sell or transfer a facility governed by
Subsection (a) to an affiliate or otherwise allow the facility to
become an eligible facility only if the transaction:
(1) will benefit ratepayers of the utility making the
sale or transfer;
(2) is in the public interest; and
(3) otherwise complies with state law.
(c) For purposes of this section, "electric utility" does
not include a river authority.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 20, eff. Sept. 1, 1999.
§ 35.035. VALUATION AND ACCOUNTING OF TRANSFERRED
ASSETS. (a) A transfer of assets from an electric utility to an
affiliated exempt wholesale generator or power marketer shall be
valued at the greater of net book cost or fair market value.
(b) A transfer of assets from an exempt wholesale generator
or power marketer to an affiliated electric utility shall be valued
at the lesser of net book cost or fair market value.
(c) At the time that a transfer of assets between an
electric utility and an affiliated exempt wholesale generator or
power marketer is approved, the commission shall order the utility
to adjust its rates so that the utility's tariffs reflect benefits
from the proceeds of the sale and exclude any costs associated with
the transferred facility.
(d) For purposes of this section, "electric utility" does
not include a river authority.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 21, eff. Sept. 1, 1999.
SUBCHAPTER C. QUALIFYING FACILITIES
§ 35.061. ENCOURAGEMENT OF ECONOMICAL PRODUCTION. The
commission shall adopt and enforce rules to encourage the
economical production of electric energy by qualifying facilities.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 35.062. APPLICATION FOR CERTIFICATION. (a) An
electric utility or a qualifying facility may submit to the
commission for certification a copy of an agreement between the
utility and facility for the purchase of capacity.
(b) An agreement submitted for certification under this
section may provide that the agreement is contingent on
certification by the commission.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 35.063. HEARING. (a) The commission, on its own
motion or on the request of a party to the agreement or another
affected person, may conduct a hearing on an agreement for which
certification is sought under Section 35.062.
(b) A request for a hearing or a commission decision to hold
a hearing must be made not later than the 90th day after the date the
agreement is submitted to the commission.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 35.064. CERTIFICATION STANDARDS. The commission
shall certify an agreement submitted under Section 35.062 if the
agreement:
(1) provides for payments over the contract term that
are equal to or less than the electric utility's avoided costs, as
established by the commission and in effect at the time the
agreement was signed; and
(2) provides the electric utility the opportunity to
acquire the cogeneration or small-power production installation
before the installation is offered to another purchaser or provides
other sufficient assurance that the electric utility will be
provided with a comparable supply of electricity, if the qualifying
facility ceases to operate the installation.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 35.065. DEADLINES FOR COMMISSION ACTION. (a) Except
as provided by Subsection (b), the commission shall make its
determination regarding whether a certification should be granted
under Section 35.064 not later than the 90th day after the date the
agreement is submitted.
(b) If a hearing is held under Section 35.063, the
commission shall make its determination regarding whether a
certification should be granted not later than the 120th day after
the date the agreement is submitted, except that this deadline is
extended by two days for each day in excess of five days on which the
commission conducts a hearing on the merits of the certification.
(c) If the commission does not make a determination by the
date provided by Subsection (a) or (b), as applicable, the
agreement is considered to meet the requirements of Section 35.064
and the certification is considered granted.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 35.066. TERM OF CERTIFICATION. A certification of an
agreement granted under this subchapter is effective until the
earlier of:
(1) the expiration date of the agreement; or
(2) the 15th anniversary of the date of the
certification.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
SUBCHAPTER D. STATE AUTHORITY TO SELL OR CONVEY POWER
§ 35.101. DEFINITIONS. In this subchapter:
(1) "Commissioner" means the Commissioner of the
General Land Office.
(2) "Public retail customer" means a retail customer
that is an agency of this state, a state institution of higher
education, a public school district, a political subdivision of
this state, a military installation of the United States, or a
United States Department of Veterans Affairs facility.
Added by Acts 1999, 76th Leg., ch. 405, § 22, eff. Sept. 1, 1999.
Amended by Acts 2003, 78th Leg., ch. 149, § 19, eff. May 27,
2003.
§ 35.102. STATE AUTHORITY TO SELL OR CONVEY POWER OR
NATURAL GAS. (a) The commissioner, acting on behalf of the state,
may sell or otherwise convey power or natural gas generated from
royalties taken in kind as provided by Sections 52.133(f), 53.026,
and 53.077, Natural Resources Code, directly to a public retail
customer regardless of whether the public retail customer is also
classified as a wholesale customer under other provisions of this
title.
(b) To ensure that the state receives the maximum benefit
from the sale of power or natural gas generated from royalties taken
in kind, the commissioner shall use all feasible means to sell that
power or natural gas first to public retail customers that are
military installations of the United States, agencies of this
state, institutions of higher education, or public school
districts. The remainder of the power or natural gas, if any, may
be sold to public retail customers that are political subdivisions
of this state or to a United States Department of Veterans Affairs
facility.
Added by Acts 1999, 76th Leg., ch. 405, § 22, eff. Sept. 1, 1999.
Amended by Acts 2003, 78th Leg., ch. 149, § 20, eff. May 27,
2003.
§ 35.103. ACCESS TO TRANSMISSION AND DISTRIBUTION
SYSTEMS; RATES. (a) Except as provided in Section 35.104, the
state is entitled to have access to all transmission and
distribution systems of all electric utilities, transmission and
distribution utilities, municipally owned utilities, and electric
cooperatives that serve public retail customers.
(b) An entity described by Subsection (a) shall provide any
utility service, including transmission, distribution, and other
services, which must include any stranded costs associated with
providing service, to the state at the lowest applicable rate
charged for similar service to other customers.
Added by Acts 1999, 76th Leg., ch. 405, § 22, eff. Sept. 1, 1999.
§ 35.104. LIMIT IN CERTAIN AREAS. Sections 35.102 and
35.103 do not apply to the rates, retail service area, facilities,
or public retail customers of a municipally owned electric utility
that has not adopted customer choice or an electric cooperative
that has not adopted customer choice. In a certificated service
area of an electric utility in which customer choice has not been
introduced, the state may not engage in retail transactions that
exceed 2.5 percent of a retail electric utility's total retail
load.
Added by Acts 1999, 76th Leg., ch. 405, § 22, eff. Sept. 1, 1999.
§ 35.105. WHOLESALE CUSTOMERS. This subchapter does
not prevent the commissioner, acting on behalf of this state, from
registering as a power marketer.
Added by Acts 1999, 76th Leg., ch. 405, § 22, eff. Sept. 1, 1999.
§ 35.106. ACCESS TO POWER GENERATION. If pipeline
capacity is available on an existing facility of a gas utility or
municipally owned utility, a gas utility or a municipally owned
utility may not refuse to provide gas service to an electric utility
generating facility, if the purpose of the service is to generate
power for public retail customers by the state or an agency of this
state.
Added by Acts 1999, 76th Leg., ch. 405, § 22, eff. Sept. 1, 1999.
