2005 Texas Utilities Code CHAPTER 35. ALTERNATIVE ENERGY PROVIDERS

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 Acts 1999, 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 Acts 1999, 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 Acts 1999, 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 Acts 1999, 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 Acts 1999, 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.