CHAPTER 36. RATES - Texas Statutes

UTILITIES CODE

TITLE 2. PUBLIC UTILITY REGULATORY ACT

SUBTITLE B. ELECTRIC UTILITIES

CHAPTER 36. RATES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 36.001. AUTHORIZATION TO ESTABLISH AND REGULATE RATES. (a)

The regulatory authority may establish and regulate rates of an

electric utility and may adopt rules for determining:

(1) the classification of customers and services; and

(2) the applicability of rates.

(b) A rule or order of the regulatory authority may not conflict

with a ruling of a federal regulatory body.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.002. COMPLIANCE WITH TITLE. An electric utility may not

charge or receive a rate for utility service except as provided

by this title.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.003. JUST AND REASONABLE RATES. (a) The regulatory

authority shall ensure that each rate an electric utility or two

or more electric utilities jointly make, demand, or receive is

just and reasonable.

(b) A rate may not be unreasonably preferential, prejudicial, or

discriminatory but must be sufficient, equitable, and consistent

in application to each class of consumer.

(c) An electric utility may not:

(1) grant an unreasonable preference or advantage concerning

rates to a person in a classification;

(2) subject a person in a classification to an unreasonable

prejudice or disadvantage concerning rates; or

(3) establish or maintain an unreasonable difference concerning

rates between localities or between classes of service.

(d) In establishing an electric utility's rates, the commission

may treat as a single class two or more municipalities that an

electric utility serves if the commission considers that

treatment to be appropriate.

(e) A charge to an individual customer for retail or wholesale

electric service that is less than the rate approved by the

regulatory authority does not constitute an impermissible

difference, preference, or advantage.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.004. EQUALITY OF RATES AND SERVICES. (a) An electric

utility may not directly or indirectly charge, demand, or receive

from a person a greater or lesser compensation for a service

provided or to be provided by the utility than the compensation

prescribed by the applicable tariff filed under Section 32.101.

(b) A person may not knowingly receive or accept a service from

an electric utility for a compensation greater or less than the

compensation prescribed by the tariff.

(c) Notwithstanding Subsections (a) and (b), an electric utility

may charge an individual customer for wholesale or retail

electric service in accordance with Section 36.007.

(d) This title does not prevent a cooperative corporation from

returning to its members net earnings resulting from its

operations in proportion to the members' purchases from or

through the corporation.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.005. RATES FOR AREA NOT IN MUNICIPALITY. Without the

approval of the commission, an electric utility's rates for an

area not in a municipality may not exceed 115 percent of the

average of all rates for similar services for all municipalities

served by the same utility in the same county as that area.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.006. BURDEN OF PROOF. In a proceeding involving a

proposed rate change, the electric utility has the burden of

proving that:

(1) the rate change is just and reasonable, if the utility

proposes the change; or

(2) an existing rate is just and reasonable, if the proposal is

to reduce the rate.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.007. DISCOUNTED WHOLESALE OR RETAIL RATES. (a) On

application by an electric utility, a regulatory authority may

approve wholesale or retail tariffs or contracts containing

charges that are less than rates approved by the regulatory

authority but not less than the utility's marginal cost. The

charges must be in accordance with the principles of this title

and may not be unreasonably preferential, prejudicial,

discriminatory, predatory, or anticompetitive.

(b) The method for computing the marginal cost of the electric

utility consists of energy and capacity components. The energy

component includes variable operation and maintenance expense and

marginal fuel or the energy component of purchased power. The

capacity component is based on the annual economic value of

deferring, accelerating, or avoiding the next increment of needed

capacity, without regard to whether the capacity is purchased or

built.

(c) The commission shall ensure that the method for determining

marginal cost is consistently applied among utilities but may

recognize the individual load and resource requirements of the

electric utility.

(d) Notwithstanding any other provision of this title, the

commission shall ensure that the electric utility's allocable

costs of serving customers paying discounted rates under this

section are not borne by the utility's other customers.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.008. STATE TRANSMISSION SYSTEM. In establishing rates

for an electric utility, the commission may review the state's

transmission system and make recommendations to the utility on

the need to build new power lines, upgrade power lines, and make

other necessary improvements and additions.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 405, Sec. 23, eff. Sept. 1,

1999.

SUBCHAPTER B. COMPUTATION OF RATES

Sec. 36.051. ESTABLISHING OVERALL REVENUES. In establishing an

electric utility's rates, the regulatory authority shall

establish the utility's overall revenues at an amount that will

permit the utility a reasonable opportunity to earn a reasonable

return on the utility's invested capital used and useful in

providing service to the public in excess of the utility's

reasonable and necessary operating expenses.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.052. ESTABLISHING REASONABLE RETURN. In establishing a

reasonable return on invested capital, the regulatory authority

shall consider applicable factors, including:

(1) the efforts and achievements of the utility in conserving

resources;

(2) the quality of the utility's services;

(3) the efficiency of the utility's operations; and

(4) the quality of the utility's management.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 405, Sec. 24, eff. Sept. 1,

1999.

Sec. 36.053. COMPONENTS OF INVESTED CAPITAL. (a) Electric

utility rates shall be based on the original cost, less

depreciation, of property used by and useful to the utility in

providing service.

(b) The original cost of property shall be determined at the

time the property is dedicated to public use, whether by the

utility that is the present owner or by a predecessor.

(c) In this section, the term "original cost" means the actual

money cost or the actual money value of consideration paid other

than money.

(d) If the commission issues a certificate of convenience and

necessity or, acting under Section 39.203(e), orders an electric

utility or a transmission and distribution utility to construct

or enlarge transmission or transmission-related facilities to

facilitate meeting the goal for generating capacity from

renewable energy technologies under Section 39.904(a), the

commission shall find that the facilities are used and useful to

the utility in providing service for purposes of this section and

are prudent and includable in the rate base, regardless of the

extent of the utility's actual use of the facilities.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2005, 79th Leg., 1st C.S., Ch.

1, Sec. 1, eff. September 1, 2005.

Sec. 36.054. CONSTRUCTION WORK IN PROGRESS. (a) Construction

work in progress, at cost as recorded on the electric utility's

books, may be included in the utility's rate base. The inclusion

of construction work in progress is an exceptional form of rate

relief that the regulatory authority may grant only if the

utility demonstrates that inclusion is necessary to the utility's

financial integrity.

(b) Construction work in progress may not be included in the

rate base for a major project under construction to the extent

that the project has been inefficiently or imprudently planned or

managed.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.055. SEPARATIONS AND ALLOCATIONS. Costs of facilities,

revenues, expenses, taxes, and reserves shall be separated or

allocated as prescribed by the regulatory authority.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.056. DEPRECIATION, AMORTIZATION, AND DEPLETION. (a)

The commission shall establish proper and adequate rates and

methods of depreciation, amortization, or depletion for each

class of property of an electric or municipally owned utility.

(b) The rates and methods established under this section and the

depreciation account required by Section 32.102 shall be used

uniformly and consistently throughout rate-setting and appeal

proceedings.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.057. NET INCOME; DETERMINATION OF REVENUES AND EXPENSES.

(a) An electric utility's net income is the total revenues of

the utility less all reasonable and necessary expenses as

determined by the regulatory authority.

(b) The regulatory authority shall determine revenues and

expenses in a manner consistent with this subchapter.

(c) The regulatory authority may adopt reasonable rules with

respect to whether an expense is allowed for ratemaking purposes.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.058. CONSIDERATION OF PAYMENT TO AFFILIATE. (a) Except

as provided by Subsection (b), the regulatory authority may not

allow as capital cost or as expense a payment to an affiliate

for:

(1) the cost of a service, property, right, or other item; or

(2) interest expense.

(b) The regulatory authority may allow a payment described by

Subsection (a) only to the extent that the regulatory authority

finds the payment is reasonable and necessary for each item or

class of items as determined by the commission.

(c) A finding under Subsection (b) must include:

(1) a specific finding of the reasonableness and necessity of

each item or class of items allowed; and

(2) a finding that the price to the electric utility is not

higher than the prices charged by the supplying affiliate for the

same item or class of items to:

(A) its other affiliates or divisions; or

(B) a nonaffiliated person within the same market area or having

the same market conditions.

(d) In making a finding regarding an affiliate transaction, the

regulatory authority shall:

(1) determine the extent to which the conditions and

circumstances of that transaction are reasonably comparable

relative to quantity, terms, date of contract, and place of

delivery; and

(2) allow for appropriate differences based on that

determination.

(e) This section does not require a finding to be made before

payments made by an electric utility to an affiliate are included

in the utility's charges to consumers if there is a mechanism for

making the charges subject to refund pending the making of the

finding.

(f) If the regulatory authority finds that an affiliate expense

for the test period is unreasonable, the regulatory authority

shall:

(1) determine the reasonable level of the expense; and

(2) include that expense in determining the electric utility's

cost of service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 405, Sec. 25, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., Ch.

413, Sec. 1, eff. June 17, 2005.

Sec. 36.059. TREATMENT OF CERTAIN TAX BENEFITS. (a) In

determining the allocation of tax savings derived from

liberalized depreciation and amortization, the investment tax

credit, and the application of similar methods, the regulatory

authority shall:

(1) balance equitably the interests of present and future

customers; and

(2) apportion accordingly the benefits between consumers and the

electric or municipally owned utility.

(b) If an electric utility or a municipally owned utility

retains a portion of the investment tax credit, that portion

shall be deducted from the original cost of the facilities or

other addition to the rate base to which the credit applied to

the extent allowed by the Internal Revenue Code.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.060. CONSOLIDATED INCOME TAX RETURNS. (a) Unless it is

shown to the satisfaction of the regulatory authority that it was

reasonable to choose not to consolidate returns, an electric

utility's income taxes shall be computed as though a consolidated

return had been filed and the utility had realized its fair share

of the savings resulting from that return, if:

(1) the utility is a member of an affiliated group eligible to

file a consolidated income tax return; and

(2) it is advantageous to the utility to do so.

(b) The amount of income tax that a consolidated group of which

an electric utility is a member saves, because the consolidated

return eliminates the intercompany profit on purchases by the

utility from an affiliate, shall be applied to reduce the cost of

the property or service purchased from the affiliate.

(c) The investment tax credit allowed against federal income

taxes, to the extent retained by the electric utility, shall be

applied as a reduction in the rate-based contribution of the

assets to which the credit applies, to the extent and at the rate

allowed by the Internal Revenue Code.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.061. ALLOWANCE OF CERTAIN EXPENSES. (a) The regulatory

authority may not allow as a cost or expense for ratemaking

purposes:

(1) an expenditure for legislative advocacy; or

(2) an expenditure described by Section 32.104 that the

regulatory authority determines to be not in the public interest.

(b) The regulatory authority may allow as a cost or expense:

(1) reasonable charitable or civic contributions not to exceed

the amount approved by the regulatory authority; and

(2) reasonable costs of participating in a proceeding under this

title not to exceed the amount approved by the regulatory

authority.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.062. CONSIDERATION OF CERTAIN EXPENSES. The regulatory

authority may not consider for ratemaking purposes:

(1) an expenditure for legislative advocacy, made directly or

indirectly, including legislative advocacy expenses included in

trade association dues;

(2) a payment made to cover costs of an accident, equipment

failure, or negligence at a utility facility owned by a person or

governmental entity not selling power in this state, other than a

payment made under an insurance or risk-sharing arrangement

executed before the date of loss;

(3) an expenditure for costs of processing a refund or credit

under Section 36.110; or

(4) any other expenditure, including an executive salary,

advertising expense, legal expense, or civil penalty or fine, the

regulatory authority finds to be unreasonable, unnecessary, or

not in the public interest.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.063. CONSIDERATION OF PROFIT OR LOSS FROM SALE OR LEASE

OF MERCHANDISE. In establishing an electric or municipally owned

utility's rates, the regulatory authority may not consider any

profit or loss that results from the sale or lease of

merchandise, including appliances, fixtures, or equipment, to the

extent that merchandise is not integral to providing utility

service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.064. SELF-INSURANCE. (a) An electric utility may

self-insure all or part of the utility's potential liability or

catastrophic property loss, including windstorm, fire, and

explosion losses, that could not have been reasonably anticipated

and included under operating and maintenance expenses.

(b) The commission shall approve a self-insurance plan under

this section if the commission finds that:

(1) the coverage is in the public interest;

(2) the plan, considering all costs, is a lower cost alternative

to purchasing commercial insurance; and

(3) ratepayers will receive the benefits of the savings.

(c) In computing an electric utility's reasonable and necessary

expenses under this subchapter, the regulatory authority, to the

extent the regulatory authority finds is in the public interest,

shall allow as a necessary expense the money credited to a

reserve account for self-insurance. The regulatory authority

shall determine reasonableness under this subsection:

(1) from information provided at the time the self-insurance

plan and reserve account are established; and

(2) on the filing of a rate case by an electric utility that has

a reserve account.

(d) After a reserve account for self-insurance is established,

the regulatory authority shall:

(1) determine whether the reserve account has a surplus or

shortage under Subsection (e); and

(2) subtract any surplus from or add any shortage to the

utility's rate base.

(e) A surplus in the reserve account exists if the charges

against the account are less than the money credited to the

account. A shortage in the reserve account exists if the charges

against the account are greater than the money credited to the

account.

(f) The allowance for self-insurance under this title for

ratemaking purposes is not applicable to nuclear plant

investment.

(g) The commission shall adopt rules governing self-insurance

under this section.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.065. PENSION AND OTHER POSTEMPLOYMENT BENEFITS. (a)

The regulatory authority shall include in the rates of an

electric utility expenses for pension and other postemployment

benefits, as determined by actuarial or other similar studies in

accordance with generally accepted accounting principles, in an

amount the regulatory authority finds reasonable. Expenses for

pension and other postemployment benefits include, in an amount

found reasonable by the regulatory authority, the benefits

attributable to the service of employees who were employed by the

predecessor integrated electric utility of an electric utility

before the utility's unbundling under Chapter 39 irrespective of

the business activity performed by the employee or the affiliate

to which the employee was transferred on or after the unbundling.

(b) Effective January 1, 2005, an electric utility may establish

one or more reserve accounts for expenses for pension and other

postemployment benefits. An electric utility shall periodically

record in the reserve account any difference between:

(1) the annual amount of pension and other postemployment

benefits approved as an operating expense in the electric

utility's last general rate proceeding or, if that amount cannot

be determined from the regulatory authority's order, the amount

recorded for pension and other postemployment benefits under

generally accepted accounting principles during the first year

that rates from the electric utility's last general rate

proceeding are in effect; and

(2) the annual amount of pension and other postemployment

benefits as determined by actuarial or other similar studies that

are chargeable to the electric utility's operating expense.

(c) A surplus in the reserve account exists if the amount of

pension and other postemployment benefits under Subsection (b)(1)

is greater than the amount determined under Subsection (b)(2). A

shortage in the reserve account exists if the amount of pension

and other postemployment benefits under Subsection (b)(1) is less

than the amount determined under Subsection (b)(2).

(d) If a reserve account for pension and other postemployment

benefits is established, the regulatory authority at a subsequent

general rate proceeding shall:

(1) review the amounts recorded to the reserve account to

determine whether the amounts are reasonable expenses;

(2) determine whether the reserve account has a surplus or

shortage under Subsection (c); and

(3) subtract any surplus from or add any shortage to the

electric utility's rate base with the surplus or shortage

amortized over a reasonable time.

Added by Acts 2005, 79th Leg., Ch.

385, Sec. 1, eff. June 17, 2005.

SUBCHAPTER C. GENERAL PROCEDURES FOR RATE CHANGES PROPOSED BY

UTILITY

Sec. 36.101. DEFINITION. In this subchapter, "major change"

means an increase in rates that would increase the aggregate

revenues of the applicant more than the greater of $100,000 or

2-1/2 percent. The term does not include an increase in rates

that the regulatory authority allows to go into effect or the

electric utility makes under an order of the regulatory authority

after hearings held with public notice.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.102. STATEMENT OF INTENT TO CHANGE RATES. (a) Except

as provided by Section 33.024, an electric utility may not change

its rates unless the utility files a statement of its intent with

the regulatory authority that has original jurisdiction over

those rates at least 35 days before the effective date of the

proposed change.

(b) The electric utility shall also mail or deliver a copy of

the statement of intent to the appropriate officer of each

affected municipality.

(c) The statement of intent must include:

(1) proposed revisions of tariffs; and

(2) a detailed statement of:

(A) each proposed change;

(B) the effect the proposed change is expected to have on the

revenues of the utility;

(C) each class and number of utility consumers affected; and

(D) any other information required by the regulatory authority's

rules.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.103. NOTICE OF INTENT TO CHANGE RATES. (a) The

electric utility shall:

(1) publish, in conspicuous form and place, notice to the public

of the proposed change once each week for four successive weeks

before the effective date of the proposed change in a newspaper

having general circulation in each county containing territory

affected by the proposed change; and

(2) mail notice of the proposed change to any other affected

person as required by the regulatory authority's rules.

(b) The regulatory authority may waive the publication of notice

requirement prescribed by Subsection (a) in a proceeding that

involves only a rate reduction for each affected ratepayer. The

applicant shall give notice of the proposed rate change by mail

to each affected utility customer.

(c) The regulatory authority by rule shall define other

proceedings for which the publication of notice requirement

prescribed by Subsection (a) may be waived on a showing of good

cause. A waiver may not be granted in a proceeding involving a

rate increase to any class or category of ratepayer.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.104. EARLY EFFECTIVE DATE OF RATE CHANGE. (a) For good

cause shown, the regulatory authority may allow a rate change,

other than a major change, to take effect:

(1) before the end of the 35-day period prescribed by Section

36.102; and

(2) under conditions the regulatory authority prescribes,

subject to suspension as provided by this subchapter.

(b) The electric utility shall immediately revise its tariffs to

include the change.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.105. DETERMINATION OF PROPRIETY OF RATE CHANGE; HEARING.

(a) If a tariff changing rates is filed with a regulatory

authority, the regulatory authority shall, on complaint by an

affected person, or may, on its own motion, not later than the

30th day after the effective date of the change, enter on a

hearing to determine the propriety of the change.

(b) The regulatory authority shall hold a hearing in every case

in which the change constitutes a major change. The regulatory

authority may, however, use an informal proceeding if the

regulatory authority does not receive a complaint before the 46th

day after the date notice of the change is filed.

(c) The regulatory authority shall give reasonable notice of the

hearing, including notice to the governing body of each affected

municipality and county. The electric utility is not required to

provide a formal answer or file any other formal pleading in

response to the notice, and the absence of an answer does not

affect an order for a hearing.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.106. REGIONAL HEARING. The commission shall hold a

regional hearing at an appropriate location in a case in which

the commission determines it is in the public interest to hear

testimony at a regional hearing for inclusion in the record.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.107. PREFERENCE TO HEARING. The regulatory authority

shall:

(1) give preference to a hearing under this subchapter and to

deciding questions arising under this subchapter and Subchapter E

over any other question pending before it; and

(2) decide the questions as quickly as possible.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.108. RATE SUSPENSION; DEADLINE. (a) Pending the

hearing and a decision:

(1) the local regulatory authority, after delivering to the

electric utility a written statement of the regulatory

authority's reasons, may suspend the rate change for not longer

than 90 days after the date the rate change would otherwise be

effective; and

(2) the commission may suspend the rate change for not longer

than 150 days after the date the rate change would otherwise be

effective.

(b) The 150-day period prescribed by Subsection (a)(2) shall be

extended two days for each day the actual hearing on the merits

of the case exceeds 15 days.

(c) If the regulatory authority does not make a final

determination concerning a rate change before expiration of the

applicable suspension period, the regulatory authority is

considered to have approved the change. This approval is subject

to the authority of the regulatory authority thereafter to

continue a hearing in progress.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.109. TEMPORARY RATES. (a) The regulatory authority may

establish temporary rates to be in effect during the applicable

suspension period under Section 36.108.

(b) If the regulatory authority does not establish temporary

rates, the rates in effect when the suspended tariff was filed

continue in effect during the suspension period.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.110. BONDED RATES. (a) An electric utility may put a

changed rate into effect throughout the area in which the utility

sought to change its rates, including an area over which the

commission is exercising appellate or original jurisdiction, by

filing a bond with the commission if:

(1) the 150-day suspension period has been extended under

Section 36.108(b); and

(2) the commission fails to make a final determination before

the 151st day after the date the rate change would otherwise be

effective.

(b) The bonded rate may not exceed the proposed rate.

(c) The bond must be:

(1) payable to the commission in an amount, in a form, and with

a surety approved by the commission; and

(2) conditioned on refund.

(d) The electric utility shall refund or credit against future

bills:

(1) money collected under the bonded rates in excess of the rate

finally ordered; and

(2) interest on that money, at the current interest rate as

determined by the commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.111. ESTABLISHMENT OF FINAL RATES. (a) If, after

hearing, the regulatory authority finds the rates are

unreasonable or in violation of law, the regulatory authority

shall:

(1) enter an order establishing the rates the electric utility

shall charge or apply for the service in question; and

(2) serve a copy of the order on the electric utility.

(b) The rates established in the order shall be observed

thereafter until changed as provided by this title.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER D. RATE CHANGES PROPOSED BY REGULATORY AUTHORITY

Sec. 36.151. UNREASONABLE OR VIOLATIVE EXISTING RATES. (a) If

the regulatory authority, on its own motion or on complaint by an

affected person, after reasonable notice and hearing, finds that

the existing rates of an electric utility for a service are

unreasonable or in violation of law, the regulatory authority

shall:

(1) enter an order establishing the just and reasonable rates to

be observed thereafter, including maximum or minimum rates; and

(2) serve a copy of the order on the electric utility.

(b) The rates established under Subsection (a) constitute the

legal rates of the electric utility until changed as provided by

this title.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.152. INVESTIGATING COSTS OF OBTAINING SERVICE FROM

ANOTHER SOURCE. If an electric utility does not produce or

generate the service that it distributes, transmits, or furnishes

to the public for compensation but obtains the service from

another source, the regulatory authority may investigate the cost

of that production or generation in an investigation of the

reasonableness of the electric utility's rates.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.153. RATE-FILING PACKAGE. (a) An electric utility

shall file a rate-filing package with the regulatory authority

not later than the 120th day after the date the authority

notifies the utility that the authority will proceed with an

inquiry under Section 36.151.

(b) The regulatory authority may grant an extension of the

120-day period prescribed by Subsection (a) or waive the

rate-filing package requirement on agreement of the parties.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.154. DEADLINE. (a) The regulatory authority shall make

a final determination not later than the 185th day after the date

the electric utility files the rate-filing package required by

Section 36.153.

(b) The deadline prescribed by Subsection (a) is extended two

days for each day the actual hearing on the merits of the case

exceeds 15 days.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.155. INTERIM ORDER ESTABLISHING TEMPORARY RATES. (a)

At any time after an initial complaint is filed under Section

36.151, the regulatory authority may issue an interim order

establishing temporary rates for the electric utility to be in

effect until a final determination is made.

(b) On issuance of a final order, the regulatory authority:

(1) may require the electric utility to refund to customers or

to credit against future bills:

(A) money collected under the temporary rates in excess of the

rate finally ordered; and

(B) interest on that money, at the current interest rate as

determined by the commission; or

(2) shall authorize the electric utility to surcharge bills to

recover:

(A) the amount by which the money collected under the temporary

rates is less than the money that would have been collected under

the rate finally ordered; and

(B) interest on that amount, at the current interest rate as

determined by the commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.156. AUTOMATIC TEMPORARY RATES. (a) The rates charged

by the electric utility on the 185th day after the date the

utility files the rate-filing package required by Section 36.153

automatically become temporary rates if:

(1) the 185-day period has been extended under Section

36.154(b); and

(2) the regulatory authority has not issued a final order or

established temporary rates for the electric utility on or before

the 185th day.

(b) On issuance of a final order, the regulatory authority:

(1) shall require the electric utility to refund to customers or

to credit against future bills:

(A) money collected under the temporary rates in excess of the

rate finally ordered; and

(B) interest on that money, at the current interest rate as

determined by the commission; or

(2) shall authorize the electric utility to surcharge bills to

recover:

(A) the amount by which the money collected under the temporary

rates is less than the money that would have been collected under

the rate finally ordered; and

(B) interest on that amount, at the current interest rate as

determined by the commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER E. COST RECOVERY AND RATE ADJUSTMENT

Sec. 36.201. AUTOMATIC ADJUSTMENT FOR CHANGES IN COSTS. Except

as permitted by Section 36.204, the commission may not establish

a rate or tariff that authorizes an electric utility to

automatically adjust and pass through to the utility's customers

a change in the utility's fuel or other costs.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 405, Sec. 26, eff. Sept. 1,

1999.

Sec. 36.202. ADJUSTMENT FOR CHANGE IN TAX LIABILITY. (a) The

commission, on its own motion or on the petition of an electric

utility, shall provide for the adjustment of the utility's

billing to reflect an increase or decrease in the utility's tax

liability to this state if the increase or decrease:

(1) results from Chapter 5, Acts of the 72nd Legislature, 1st

Called Session, 1991; and

(2) is attributable to an activity subject to the commission's

jurisdiction.

(b) The commission shall apportion pro rata to each type and

class of service provided by the utility any billing adjustment

under this section. The adjustment:

(1) shall be made effective at the same time as the increase or

decrease of tax liability described by Subsection (a)(1) or as

soon after that increase or decrease as is reasonably practical;

and

(2) remains effective only until the commission alters the

adjustment as provided by this section or enters an order for the

utility under Subchapter C or D.

(c) Each year after an original adjustment, the commission

shall:

(1) review the utility's increase or decrease of tax liability

described by Subsection (a)(1); and

(2) alter the adjustment as necessary to reflect the increase or

decrease.

(d) A proceeding under this section is not a rate case under

Subchapter C.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.203. FUEL COST RECOVERY; ADJUSTMENT OF FUEL FACTOR. (a)

Section 36.201 does not prohibit the commission from reviewing

and providing for adjustments of a utility's fuel factor.

(b) The commission by rule shall implement procedures that

provide for the timely adjustment of a utility's fuel factor,

with or without a hearing. The procedures must require that:

(1) the findings required by Section 36.058 regarding fuel

transactions with affiliated interests are made in a fuel

reconciliation proceeding or in a rate case filed under

Subchapter C or D; and

(2) an affected party receive notice and have the opportunity to

request a hearing before the commission.

(c) The commission may adjust a utility's fuel factor without a

hearing if the commission determines that a hearing is not

necessary. If the commission holds a hearing, the commission may

consider at the hearing any evidence that is appropriate and in

the public interest.

(d) The commission shall render a timely decision approving,

disapproving, or modifying the adjustment to the utility's fuel

factor.

(e) The commission by rule shall provide for the reconciliation

of a utility's fuel costs on a timely basis.

(f) A proceeding under this section is not a rate case under

Subchapter C.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.204. COST RECOVERY AND INCENTIVES. In establishing

rates for an electric utility, the commission may:

(1) allow timely recovery of the reasonable costs of

conservation, load management, and purchased power,

notwithstanding Section 36.201; and

(2) authorize additional incentives for conservation, load

management, purchased power, and renewable resources.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 405, Sec. 27, eff. Sept. 1,

1999.

Sec. 36.205. PURCHASED POWER COST RECOVERY. (a) This section

applies only to an increase or decrease in the cost of purchased

electricity that has been:

(1) accepted by a federal regulatory authority; or

(2) approved after a hearing by the commission.

(b) The commission may use any appropriate method to provide for

the adjustment of the cost of purchased electricity on terms

determined by the commission.

(c) Purchased electricity costs may be recovered:

(1) concurrently with the effective date of the changed costs to

the purchasing electric utility; or

(2) as soon after the effective date as reasonably practical.

(d) The commission may provide a mechanism to allow an electric

utility that has a noncontiguous geographical service area and

that purchases power for resale for that noncontiguous service

area from electric utilities that are not members of the Electric

Reliability Council of Texas to recover purchased power costs for

the area in a manner that reflects the purchased power cost for

that specific geographical noncontiguous area. The commission may

not require an electric cooperative corporation to use the

mechanism provided under this section unless the electric

cooperative corporation requests its use.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.206. MARK-UPS. (a) A cost recovery factor established

for the recovery of purchased power costs may include:

(1) the cost the electric utility incurs in purchasing capacity

and energy;

(2) a mark-up added to the cost or another mechanism the

commission determines will reasonably compensate the utility for

any financial risk associated with purchased power obligations;

and

(3) the value added by the utility in making the purchased power

available to customers.

(b) The mark-ups and cost recovery factors, if allowed, may be

those necessary to encourage the electric utility to include

economical purchased power as part of the utility's energy and

capacity resource supply plan.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.207. USE OF MARK-UPS. Any mark-ups approved under

Section 36.206 are an exceptional form of rate relief that the

electric utility may recover from ratepayers only on a finding by

the commission that the relief is necessary to maintain the

utility's financial integrity.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 405, Sec. 28, eff. Sept. 1,

1999.

Sec. 36.208. PAYMENT TO QUALIFYING FACILITY. In establishing an

electric utility's rates, the regulatory authority shall:

(1) consider a payment made to a qualifying facility under an

agreement certified under Subchapter C, Chapter 35, to be a

reasonable and necessary operating expense of the electric

utility during the period for which the certification is

effective; and

(2) allow full, concurrent, and monthly recovery of the amount

of the payment.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.209. RECOVERY BY CERTAIN NON-ERCOT UTILITIES OF CERTAIN

TRANSMISSION COSTS. (a) This section applies only to an

electric utility that operates solely outside of ERCOT in areas

of this state included in the Southeastern Electric Reliability

Council, the Southwest Power Pool, or the Western Electricity

Coordinating Council and that owns or operates transmission

facilities.

(b) The commission, after notice and hearing, may allow an

electric utility to recover on an annual basis its reasonable and

necessary expenditures for transmission infrastructure

improvement costs and changes in wholesale transmission charges

to the electric utility under a tariff approved by a federal

regulatory authority to the extent that the costs or charges have

not otherwise been recovered. The commission may allow the

electric utility to recover only the costs allocable to retail

customers in the state and may not allow the electric utility to

over-recover costs.

Added by Acts 2005, 79th Leg., Ch.

1024, Sec. 1, eff. June 18, 2005.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1226, Sec. 1, eff. June 19, 2009.

SUBCHAPTER H. RATES FOR GOVERNMENTAL ENTITIES

Sec. 36.351. DISCOUNTED RATES FOR CERTAIN INSTITUTIONS OF HIGHER

EDUCATION. (a) Notwithstanding any other provision of this

title, each electric utility and municipally owned utility shall

discount charges for electric service provided to a facility of a

four-year state university, upper-level institution, Texas State

Technical College, or college.

(b) The discount is a 20-percent reduction of the utility's base

rates that would otherwise be paid under the applicable tariffed

rate.

(c) An electric or municipally owned utility is exempt from this

section if the 20-percent discount results in a reduction equal

to more than one percent of the utility's total annual revenues.

(d) A municipally owned utility is exempt from this section if

the municipally owned utility, on September 1, 1995, discounted

base commercial rates for electric service provided to all

four-year state universities or colleges in its service area by

20 percent or more.

(e) This section does not apply to a rate charged to an

institution of higher education by a municipally owned utility

that provides a discounted rate to the state for electric

services below rates in effect on January 1, 1995, if the

discounted rate provides a greater financial discount to the

state than is provided to the institution of higher education

through the discount provided by this section.

(f) An investor-owned electric utility may not recover from

residential customers or any other customer class the assigned

and allocated costs of serving a state university or college that

receives a discount under this section.

(g) Each electric utility shall file tariffs with the commission

reflecting the discount required under this section. The initial

tariff filing is not a rate change for purposes of Subchapter C.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.352. SPECIAL RATE CLASS. Notwithstanding any other

provision of this title, if the commission, on or before

September 1, 1995, approved the establishment of a separate rate

class for electric service for a university and grouped public

schools in a separate rate class, the commission shall include

community colleges in the rate class with public school

customers.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.353. PAYMENT IN LIEU OF TAX. (a) A payment made in

lieu of a tax by a municipally owned utility to the municipality

by which the utility is owned may not be considered an expense of

operation in establishing the utility's rate for providing

utility service to a school district or hospital district.

(b) A rate a municipally owned utility receives from a school

district or hospital district may not be used to make or to cover

the cost of making payments in lieu of taxes to the municipality

that owns the utility.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 36.354. DISCOUNTED RATES FOR MILITARY BASES. (a)

Notwithstanding any other provision of this title, each

municipally owned utility, electric cooperative, or electric

utility in an area where customer choice is not available or the

commission has delayed the implementation of full customer choice

in accordance with Section 39.103 shall discount charges for

electric service provided to a military base.

(b) The discount under Subsection (a) is a 20 percent reduction

of the base commercial rate that the municipally owned utility,

electric cooperative, or electric utility would otherwise charge

the military installation.

(c) An electric utility, municipally owned utility, or electric

cooperative may assess a surcharge to all of the utility's retail

customers in the state to recover the difference in revenue

between the revenues from the discounted rate for military bases

provided under Subsection (a) and the base commercial rate. This

subsection does not apply to an electric utility, municipally

owned utility, or electric cooperative that was providing

electric service to a military base on December 31, 2002, at a

rate constituting a discount of 20 percent or more from the

utility's base commercial rate that the utility would otherwise

charge the military base.

(d) Each electric utility shall file a tariff with the

commission reflecting the discount required by Subsection (a) and

may file a tariff reflecting the surcharge provided by Subsection

(c). Not later than the 30th day after the date the commission

receives the electric utility's tariff reflecting the surcharge,

the commission shall approve the tariff. A proceeding under this

subsection is not a rate change for purposes of Subchapter C.

(e) An electric utility, municipally owned utility, or electric

cooperative is exempt from the requirements of Subsection (a) if:

(1) the 20 percent discount would result in a reduction of

revenue in an amount that is greater than one percent of the

utility's total annual revenues; or

(2) the utility:

(A) was providing electric service to a military base on

December 31, 2002, at a rate constituting a discount of 20

percent or more from the utility's base commercial rate that the

utility would otherwise charge the military base; and

(B) continues to provide electric service to the military base

at a rate constituting a discount of 20 percent or more from the

utility's base commercial rate that the utility would otherwise

charge the military base.

(f) Each electric utility shall provide the Texas Military

Preparedness Commission with the base commercial rate that the

utility would otherwise charge the military base and the rate the

utility is charging the military base.

(g) For the purposes of this section, the term "military base"

does not include a military base:

(1) that has been closed or realigned under the Defense Base

Closure and Realignment Act of 1990 (10 U.S.C. Section 2687) and

its subsequent amendments;

(2) that is administered by an authority established by a

municipality under Chapter 378, Local Government Code, as added

by Chapter 1221, Acts of the 76th Legislature, Regular Session,

1999;

(3) that is operated by or for the benefit of the Texas National

Guard, as defined by Section 431.001, Government Code, unless the

base is served by a municipally owned utility owned by a city

with a population of 650,000 or more; or

(4) for which a municipally owned utility has acquired the

electric distribution system under 10 U.S.C. Section 2688.

Added by Acts 2003, 78th Leg., ch. 149, Sec. 21, eff. May 27,

2003.

SUBCHAPTER I. SECURITIZATION FOR RECOVERY OF SYSTEM

RESTORATION COSTS

Sec. 36.401. SECURITIZATION FOR RECOVERY OF SYSTEM RESTORATION

COSTS; PURPOSE. (a) The purpose of this subchapter is to enable

an electric utility to obtain timely recovery of system

restoration costs and to use securitization financing to recover

these costs, because that type of debt will lower the carrying

costs associated with the recovery of these costs, relative to

the costs that would be incurred using conventional financing

methods. The proceeds of the transition bonds may be used only

for the purposes of reducing the amount of recoverable system

restoration costs, as determined by the commission in accordance

with this subchapter, including the refinancing or retirement of

utility debt or equity.

(b) It is the intent of the legislature that:

(1) securitization of system restoration costs will be

accomplished using the same procedures, standards, and

protections for securitization authorized under Subchapter G,

Chapter 39, as in effect on the effective date of this section,

except as provided by this subchapter; and

(2) the commission will ensure that securitization of system

restoration costs provides greater tangible and quantifiable

benefits to ratepayers than would have been achieved without the

issuance of transition bonds.

Added by Acts 2009, 81st Leg., R.S., Ch.

1, Sec. 1, eff. April 16, 2009.

Sec. 36.402. SYSTEM RESTORATION COSTS; STANDARDS AND

DEFINITIONS. (a) In this subchapter, "system restoration costs"

means reasonable and necessary costs, including costs expensed,

charged to self-insurance reserves, deferred, capitalized, or

otherwise financed, that are incurred by an electric utility due

to any activity or activities conducted by or on behalf of the

electric utility in connection with the restoration of service

and infrastructure associated with electric power outages

affecting customers of the electric utility as the result of any

tropical storm or hurricane, ice or snow storm, flood, or other

weather-related event or natural disaster that occurred in

calendar year 2008 or thereafter. System restoration costs

include mobilization, staging, and construction, reconstruction,

replacement, or repair of electric generation, transmission,

distribution, or general plant facilities. System restoration

costs shall include reasonable estimates of the costs of an

activity or activities conducted or expected to be conducted by

or on behalf of the electric utility in connection with the

restoration of service or infrastructure associated with electric

power outages, but such estimates shall be subject to true-up and

reconciliation after the actual costs are known.

(b) System restoration costs shall include carrying costs at the

electric utility's weighted average cost of capital as last

approved by the commission in a general rate proceeding from the

date on which the system restoration costs were incurred until

the date that transition bonds are issued or until system

restoration costs are otherwise recovered pursuant to the

provisions of this subchapter.

(c) To the extent a utility subject to this subchapter receives

insurance proceeds, governmental grants, or any other source of

funding that compensate it for system restoration costs, those

amounts shall be used to reduce the utility's system restoration

costs recoverable from customers. If the timing of a utility's

receipt of those amounts prevents their inclusion as a reduction

to the system restoration costs that are securitized, or the

commission later determines as a result of the true-up and

reconciliation provided for in Subsection (a) that the actual

costs incurred are less than estimated costs included in the

determination of system restoration costs, the commission shall

take those amounts into account in:

(1) the utility's next base rate proceeding; or

(2) any subsequent proceeding, other than a true-up proceeding

under Section 39.307, in which the commission considers system

restoration costs.

(d) If the commission determines that the insurance proceeds,

governmental grants, or other sources of funding that compensate

the electric utility for system restoration costs, or the amount

resulting from a true-up of estimated system restoration costs

are of a magnitude to justify a separate tariff rider, the

commission may establish a tariff rider to credit such amounts

against charges, other than transition charges or system

restoration charges as defined in Section 36.403, being collected

from customers.

(e) To the extent that the electric utility receives insurance

proceeds, governmental grants, or any other source of funding

that is used to reduce system restoration costs, the commission

shall impute interest on those amounts at the same cost of

capital included in the utility's system restoration costs until

the date that those amounts are used to reduce the amount of

system restoration costs that are securitized or otherwise

reflected in the rates of the utility.

Added by Acts 2009, 81st Leg., R.S., Ch.

1, Sec. 1, eff. April 16, 2009.

Sec. 36.403. STANDARDS AND PROCEDURES GOVERNING SECURITIZATION

AND RECOVERY OF SYSTEM RESTORATION COSTS. (a) The procedures

and standards of this subchapter and the provisions of Subchapter

G, Chapter 39, govern an electric utility's application for, and

the commission's issuance of, a financing order to provide for

the securitization of system restoration costs, or to otherwise

provide for the recovery of system restoration costs.

(b) Subject to the standards, procedures, and tests contained in

this subchapter and Subchapter G, Chapter 39, the commission

shall adopt a financing order on the application of the electric

utility to recover its system restoration costs. If on its own

motion or complaint by an affected person, the commission

determines that it is likely that securitization of system

restoration costs would meet the tests contained in Section

36.401(b), the commission shall require the utility to file an

application for a financing order. On the commission's issuance

of a financing order allowing for recovery and securitization of

system restoration costs, the provisions of this subchapter and

Subchapter G, Chapter 39, continue to govern the financing order

and the rights and interests established in the order, and this

subchapter and Subchapter G, Chapter 39, continue to govern any

transition bonds issued pursuant to the financing order. To the

extent any conflict exists between the provisions of this

subchapter and Subchapter G, Chapter 39, in cases involving the

securitization of system restoration costs, the provisions of

this subchapter control.

(c) For purposes of this subchapter, "financing order," as

defined by Section 39.302 and as used in Subchapter G, Chapter

39, includes a financing order authorizing the securitization of

system restoration costs.

(d) For purposes of this subchapter, "qualified costs," as

defined by Section 39.302 and as used in Subchapter G, Chapter

39, includes 100 percent of the electric utility's system

restoration costs, net of any insurance proceeds, governmental

grants, or other source of funding that compensate the utility

for system restoration costs, received by the utility at the time

it files an application for a financing order. Qualified costs

also include the costs of issuing, supporting, and servicing

transition bonds and any costs of retiring and refunding existing

debt and equity securities of an electric utility subject to this

subchapter in connection with the issuance of transition bonds.

For purposes of this subchapter, the term qualified costs also

includes:

(1) the costs to the commission of acquiring professional

services for the purpose of evaluating proposed transactions

under this subchapter; and

(2) costs associated with ancillary agreements such as any bond

insurance policy, letter of credit, reserve account, surety bond,

swap arrangement, hedging arrangement, liquidity or credit

support arrangement, or other financial arrangement entered into

in connection with the issuance or payment of transition bonds.

(e) For purposes of this subchapter, "transition bonds," as

defined by Section 39.302 and as used in Subchapter G, Chapter

39, includes transition bonds issued in association with the

recovery of system restoration costs. Transition bonds issued to

securitize system restoration costs may be called "system

restoration bonds" or may be called by any other name acceptable

to the issuer and the underwriters of the transition bonds.

(f) For purposes of this subchapter, "transition charges," as

defined by Section 39.302 and as used in Subchapter G, Chapter

39, includes nonbypassable amounts to be charged for the use of

electric services, approved by the commission under a financing

order to recover system restoration costs, that shall be

collected by an electric utility, its successors, an assignee, or

other collection agents as provided for in the financing order.

Transition charges approved by the commission under a financing

order to recover system restoration costs may be called "system

restoration charges" or may be called by any other name

acceptable to the issuer and the underwriters of the transition

bonds.

(g) Notwithstanding Section 39.303(c), system restoration costs

shall be functionalized and allocated to customers in the same

manner as the corresponding facilities and related expenses are

functionalized and allocated in the electric utility's current

base rates. For an electric utility operating within the

Electric Reliability Council of Texas, system restoration costs

that are properly includable in the transmission cost of service

mechanism adopted under Section 35.004 and associated deferred

costs not included under Section 35.004 shall be recovered under

the method of pricing provided for in that section and commission

rules promulgated under that section; provided, however, that an

electric utility operating under a rate freeze or other

limitation on its ability to pass through wholesale costs to its

customers may defer such costs and accrue carrying costs at its

weighted average cost of capital as last approved by the

commission in a general rate proceeding until such time as the

freeze or limitation expires.

(h) The amount of any accumulated deferred federal income taxes

offset, used to determine the securitization total, may not be

considered in future rate proceedings. Any tax obligation of the

electric utility arising from its receipt of securitization bond

proceeds, or from the collection and remittance of transition

charges, shall be recovered by the electric utility through the

commission's implementation of this subchapter.

(i) Notwithstanding a rate freeze or limitations on an electric

utility's ability to change rates authorized or imposed by any

other provision of this title or by a regulatory authority, an

electric utility is entitled to recover system restoration costs

consistent with the provisions of this subchapter.

(j) If in the course of a proceeding to adopt a financing order

the commission determines that the recovery of all or any portion

of an electric utility's system restoration costs, using

securitization, is not beneficial to ratepayers of the electric

utility, under one or more of the tests applied to determine

those benefits, the commission shall nonetheless use the

proceeding to issue an order permitting the electric utility to

recover the remainder of its system restoration costs through an

appropriate customer surcharge mechanism, including carrying

costs at the electric utility's weighted average cost of capital

as last approved by the commission in a general rate proceeding,

to the extent that the electric utility has not securitized those

costs. A rate proceeding under Subchapter C or D shall not be

required to determine and implement this surcharge mechanism. On

the final implementation of rates resulting from the filing of a

rate proceeding under Subchapter C or D that provides for the

recovery of all r