2005 Texas Utilities Code CHAPTER 37. CERTIFICATES OF CONVENIENCE AND NECESSITY

UTILITIES CODE

CHAPTER 37. CERTIFICATES OF CONVENIENCE AND NECESSITY

SUBCHAPTER A. DEFINITIONS


	§ 37.001. DEFINITIONS.  In this chapter:                                    
		(1)  "Certificate" means a certificate of convenience 
and necessity.        
		(2)  "Electric utility" includes an electric 
cooperative.                   
		(3)  "Retail electric utility" means a person, 
political subdivision, electric cooperative, or agency that 
operates, maintains, or controls in this state a facility to 
provide retail electric utility service.  The term does not include 
a corporation described by Section 32.053 to the extent that the 
corporation sells electricity exclusively at wholesale and not to 
the ultimate consumer.  A qualifying cogenerator that sells 
electric energy at retail to the sole purchaser of the 
cogenerator's thermal output under Sections 35.061 and 36.007 is 
not for that reason considered to be a retail electric utility.  The 
owner or operator of a qualifying cogeneration facility who was 
issued the necessary environmental permits from the Texas Natural 
Resource Conservation Commission after January 1, 1998, and who 
commenced construction of such qualifying facility before July 1, 
1998, may provide electricity to the purchasers of the thermal 
output of that qualifying facility and shall not for that reason be 
considered an electric utility or a retail electric utility, 
provided that the purchasers of the thermal output are owners of 
manufacturing or process operation facilities that are located on a 
site entirely owned before September, 1987, by one owner who 
retained ownership after September, 1987, of some portion of the 
facilities and that those facilities now share some integrated 
operations, such as the provision of services and raw materials.

Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.  Amended 
by Acts 1999, 76th Leg., ch. 405, § 29, eff. Sept. 1, 1999.

SUBCHAPTER B. CERTIFICATE OF CONVENIENCE AND NECESSITY


	§ 37.051. CERTIFICATE REQUIRED.  (a) An electric utility 
may not directly or indirectly provide service to the public under a 
franchise or permit unless the utility first obtains from the 
commission a certificate that states that the public convenience 
and necessity requires or will require the installation, operation, 
or extension of the service.
	(b)  Except as otherwise provided by this chapter, a retail 
electric utility may not furnish or make available retail electric 
utility service to an area in which retail electric utility service 
is being lawfully furnished by another retail electric utility 
unless the utility first obtains a certificate that includes the 
area in which the consuming facility is located.
	(c)  Notwithstanding any other provision of this chapter, 
including Subsection (a), an electric cooperative is not required 
to obtain a certificate of public convenience and necessity for the 
construction, installation, operation, or extension of any 
generating facilities or necessary interconnection facilities.

Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.  Amended 
by Acts 1999, 76th Leg., ch. 405, § 30, eff. Sept. 1, 1999.


	§ 37.052. EXCEPTIONS TO CERTIFICATE REQUIREMENT FOR 
SERVICE EXTENSION.  (a) An electric utility is not required to 
obtain a certificate for an:
		(1)  extension into territory that is:                                        
			(A)  contiguous to the territory the electric 
utility serves;              
			(B)  not receiving similar service from another 
electric utility;  and     
			(C)  not in another electric utility's 
certificated area;                  
		(2)  extension in or to territory the utility serves or 
is authorized to serve under a certificate;  or
		(3)  operation, extension, or service in progress on 
September 1, 1975.     
	(b)  An extension allowed under Subsection (a) is limited to 
a device used:  
		(1)  to interconnect existing facilities;  or                                 
		(2)  solely to transmit electric utility services from 
an existing facility to a customer of retail electric utility 
service.

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


	§ 37.053. APPLICATION FOR CERTIFICATE.  (a) An electric 
utility that wants to obtain or amend a certificate must submit an 
application to the commission.
	(b)  The applicant shall file with the commission evidence 
the commission requires to show the applicant has received the 
consent, franchise, or permit required by the proper municipal or 
other public authority.

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


	§ 37.054. NOTICE AND HEARING ON APPLICATION.  (a) When an 
application for a certificate is filed, the commission shall:
		(1)  give notice of the application to interested 
parties;  and             
		(2)  if requested:                                                            
			(A)  set a time and place for a hearing;  and                                
			(B)  give notice of the hearing.                                             
	(b)  A person or electric cooperative interested in the 
application may intervene at the hearing.

Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.  Amended 
by Acts 1999, 76th Leg., ch. 405, § 31, eff. Sept. 1, 1999.

SUBCHAPTER D. REGULATION OF SERVICES, AREAS, AND FACILITIES


	§ 37.153. REQUIRED REFUSAL OF SERVICE.  A certificate 
holder shall refuse to serve a customer in the holder's 
certificated area if the holder is prohibited from providing the 
service under Section 212.012, 232.029, or 232.0291, Local 
Government Code.

Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.  Amended 
by Acts 2005, 79th Leg., ch. 708, § 13, eff. Sept. 1, 2005.

SUBCHAPTER B. CERTIFICATE OF CONVENIENCE AND NECESSITY


	§ 37.055. REQUEST FOR PRELIMINARY ORDER.  (a) An electric 
utility that wants to exercise a right or privilege under a 
franchise or permit that the utility anticipates obtaining but has 
not been granted may apply to the commission for a preliminary order 
under this section.
	(b)  The commission may issue a preliminary order declaring 
that the commission, on application and under commission rules, 
will grant the requested certificate on terms the commission 
designates, after the electric utility obtains the franchise or 
permit.
	(c)  The commission shall grant the certificate on 
presentation of evidence satisfactory to the commission that the 
electric utility has obtained the franchise or permit.

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


	§ 37.056. GRANT OR DENIAL OF CERTIFICATE.  (a) The 
commission may approve an application and grant a certificate only 
if the commission finds that the certificate is necessary for the 
service, accommodation, convenience, or safety of the public.
	(b)  The commission may:                                                       
		(1)  grant the certificate as requested;                                      
		(2)  grant the certificate for the construction of a 
portion of the requested system, facility, or extension or the 
partial exercise of the requested right or privilege;  or
		(3)  refuse to grant the certificate.                                         
	(c)  The commission shall grant each certificate on a 
nondiscriminatory basis after considering:
		(1)  the adequacy of existing service;                                        
		(2)  the need for additional service;                                         
		(3)  the effect of granting the certificate on the 
recipient of the certificate and any electric utility serving the 
proximate area;  and
		(4)  other factors, such as:                                                  
			(A)  community values;                                                       
			(B)  recreational and park areas;                                            
			(C)  historical and aesthetic values;                                        
			(D)  environmental integrity;                                                
			(E)  the probable improvement of service or 
lowering of cost to consumers in the area if the certificate is 
granted;  and
			(F)  to the extent applicable, the effect of 
granting the certificate on the ability of this state to meet the 
goal established by Section 39.904(a) of this title.

Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.  Amended 
by Acts 2003, 78th Leg., ch. 295, § 2, eff. June 18, 2003.


	§ 37.057. DEADLINE FOR APPLICATION FOR NEW TRANSMISSION 
FACILITY.  The commission must approve or deny an application for a 
certificate for a new transmission facility not later than the 
first anniversary of the date the application is filed.  If the 
commission does not approve or deny the application on or before 
that date, a party may seek a writ of mandamus in a district court of 
Travis County to compel the commission to decide on the 
application.

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


	§ 37.059. REVOCATION OR AMENDMENT OF CERTIFICATE.  (a) 
The commission may revoke or amend a certificate after notice and 
hearing if the commission finds that the certificate holder has 
never provided or is no longer providing service in all or any part 
of the certificated area.
	(b)  The commission may require one or more electric 
utilities to provide service in an area affected by the revocation 
or amendment of a certificate.

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


	§ 37.060. DIVISION OF MULTIPLY CERTIFICATED SERVICE 
AREAS.  (a) This subsection and Subsections (b)-(g) apply only to 
areas in which each retail electric utility that is authorized to 
provide retail electric utility service to the area is providing 
customer choice.  For purposes of this subsection, an electric 
cooperative or a municipally owned electric utility shall be deemed 
to be providing customer choice if it has approved a resolution 
adopting customer choice that is effective on January 1, 2002, or 
effective within 24 months after the date of the resolution 
adopting customer choice.  All other retail electric utilities 
shall be deemed to be providing customer choice if customer choice 
will be allowed for customers of the retail electric utility on 
January 1, 2002.  In areas in which each certificated retail 
electric utility is providing customer choice, the commission, if 
requested by a retail electric utility, shall examine all areas 
within the service area of the retail electric utility making the 
request that are also certificated to one or more other retail 
electric utilities and, after notice and hearing, shall amend the 
retail electric utilities' certificates so that only one retail 
electric utility is certificated to provide distribution services 
in any such area.  Only retail electric utilities certificated to 
serve an area on June 1, 1999, may continue to serve the area or 
portion of the area under an amended certificate issued under this 
subsection.
	(b)  This section does not apply in any area in which a 
municipally owned utility is certificated to provide retail 
electric utility service if the municipally owned utility serving 
the area files with the commission by October 1, 2001, a request 
that areas within the certificated service area of the municipally 
owned utility remain as presently certificated.
	(c)  The commission shall enter its order dividing multiply 
certificated areas within one year of the date a request is 
received.
	(d)  In amending certificates under this section, the 
commission shall take into consideration the factors prescribed by 
Section 37.056.
	(e)  Notwithstanding Section 37.059, the commission shall 
revoke certificates to the extent necessary to achieve the division 
of retail electric service areas as provided by this section.
	(f)  Unless otherwise agreed by the affected retail electric 
utilities, each retail electric utility shall be allowed to 
continue to provide service to the location of 
electricity-consuming facilities it is serving on the date an 
application for division of the affected multiply certificated 
service areas is filed.  No customer located within the affected 
multiply certificated service areas shall be permitted to switch 
from one retail electric utility to another while an application 
for division of the affected multiply certificated service areas is 
pending.
	(g)  If on June 1, 1999, retail service is being provided in 
an area by another retail electric utility with the written consent 
of the retail electric utility certificated to serve the area, that 
consent shall be filed with the commission.  On notification of that 
consent and a request by an affected retail electric utility to 
amend the relevant certificates, the commission may grant an 
exception or amend a retail electric utility's certificate.  This 
provision shall not be construed to limit the commission's 
authority to grant exceptions or to amend a retail electric 
utility's certificate, upon request and notification, for areas to 
which retail service is being provided pursuant to written consent 
granted after June 1, 1999.
	(h)  The commission may not grant an additional retail 
electric utility certificate to serve an area if the effect of the 
grant would cause the area to be multiply certificated unless the 
commission finds that the certificate holders are not providing 
service to any part of the area for which a certificate is sought 
and are not capable of providing adequate service to the area in 
accordance with applicable standards.  However, neither this 
subsection nor the deadline of June 1, 1999, provided by Subsection 
(a) shall apply to any application for multiple certification filed 
with the commission on or before February 1, 1999, and those 
applications may be processed in accordance with applicable law in 
effect on the date the application was filed.  Applications for 
multiple certification filed with the commission on or before 
February 1, 1999, may not be amended to expand the area for which a 
certificate is sought except for contiguous areas within 
municipalities that provide consent, as required by Section 
37.053(b), not later than June 1, 1999.
	(i)  Notwithstanding any other provision of this section, if 
requested by a municipally owned utility, the commission shall 
examine all areas within the municipally owned utility's service 
area that are also certificated to one or more other retail electric 
utilities and, after notice and hearing, may amend the retail 
electric utilities' certificates so that only one retail electric 
utility is certificated to provide distribution services in the 
area, provided that:
		(1)  the application is filed with the commission 
within 12 months of the effective date of this provision and is 
limited to single certification of the area within the 
municipality's boundaries as of February 1, 1999;
		(2)  the commission preserves the right of an electric 
utility or an electric cooperative to serve its existing customers, 
including any property owned or leased by any customer;  and
		(3)  the municipality is a member city of a municipal 
power agency, as that term is used in Section 40.059.

Added by Acts 1999, 76th Leg., ch. 405, § 32, eff. Sept. 1, 1999.  
Amended by Acts 2001, 77th Leg., ch. 796, § 1, eff. June 14, 
2001.


	§ 37.061. EXISTING SERVICE AREA AGREEMENTS.  (a) 
Notwithstanding any other provision of this title, the commission 
shall allow a municipally owned utility to amend the service area 
boundaries of its certificate if:
		(1)  the municipally owned utility was the holder of a 
certificate as of January 1, 1999;
		(2)  the municipally owned utility has an agreement 
existing before January 1, 1999, with a public utility serving the 
area that the public utility will not contest an application to 
amend the certificate to add municipal territory;  and
		(3)  the area for which a certificate is requested is 
not certificated to a retail electric utility that is not a party to 
the agreement and that has not consented in writing to 
certification of the area to the municipality.
	(b)  The commission may not amend the certificate of the 
public utility serving the affected area based on the granting of a 
certificate to the municipally owned utility.

Added by Acts 1999, 76th Leg., ch. 405, § 32, eff. Sept. 1, 1999.          

SUBCHAPTER C. MUNICIPALITIES


	§ 37.101. SERVICE IN ANNEXED OR INCORPORATED AREA.  (a) 
If an area is or will be included within a municipality as the 
result of annexation, incorporation, or another reason, each 
electric utility and each electric cooperative that holds or is 
entitled to hold a certificate under this title to provide service 
or operate a facility in the area before the inclusion has the right 
to continue to provide the service or operate the facility and 
extend service within the utility's or cooperative's certificated 
area in the annexed or incorporated area under the rights granted by 
the certificate and this title.
	(b)  Notwithstanding any other law, an electric utility has 
the right to:    
		(1)  continue and extend service within the utility's 
certificated area;  and
		(2)  use roads, streets, highways, alleys, and public 
property to furnish retail electric utility service.
	(c)  The governing body of a municipality may require an 
electric utility to relocate the utility's facility at the 
utility's expense to permit the widening or straightening of a 
street by:
		(1)  giving the electric utility 30 days' notice;  and                        
		(2)  specifying the new location for the facility along 
the right-of-way of the street.
	(d)  This section does not:                                                    
		(1)  limit the power of a city, town, or village to 
incorporate or of a municipality to extend its boundaries by 
annexation;  or
		(2)  prohibit a municipality from levying a tax or 
other special charge for the use of the streets as authorized by 
Section 182.025, Tax Code.

Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.  Amended 
by Acts 1999, 76th Leg., ch. 405, § 33, eff. Sept. 1, 1999.


	§ 37.102. GRANT OF CERTIFICATE FOR CERTAIN 
MUNICIPALITIES.  (a) If a municipal corporation offers retail 
electric utility service in a municipality having a population of 
more than 135,000 that is located in a county having a population of 
more than 1,500,000, the commission shall singly certificate areas 
in the municipality's boundaries in which more than one electric 
utility provides electric utility service.
	(b)  In singly certificating an area under Subsection (a), 
the commission shall preserve the right of an electric utility to 
serve the customers the electric utility was serving on June 17, 
1983.  This subsection does not apply to a customer at least 
partially served by a nominal 69,000 volts system who gave notice of 
termination to the utility servicing that customer before June 17, 
1983.

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

SUBCHAPTER D. REGULATION OF SERVICES, AREAS, AND FACILITIES


	§ 37.151. PROVISION OF SERVICE.  Except as provided by 
this section, Section 37.152, and Section 37.153, a certificate 
holder shall:
		(1)  serve every consumer in the utility's certificated 
area;  and          
		(2)  provide continuous and adequate service in that 
area.                  

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


	§ 37.152. GROUNDS FOR REDUCTION OF SERVICE.  (a) Unless 
the commission issues a certificate that the present and future 
convenience and necessity will not be adversely affected, a 
certificate holder may not discontinue, reduce, or impair service 
to any part of the holder's certificated service area except for:
		(1)  nonpayment of charges;                                                   
		(2)  nonuse;  or                                                              
		(3)  another similar reason that occurs in the usual 
course of business.    
	(b)  A discontinuance, reduction, or impairment of service 
must be in compliance with and subject to any condition or 
restriction the commission prescribes.

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


	§ 37.154. TRANSFER OF CERTIFICATE.  (a) An electric 
utility may sell, assign, or lease a certificate or a right obtained 
under a certificate if the commission determines that the 
purchaser, assignee, or lessee can provide adequate service.
	(b)  A sale, assignment, or lease of a certificate or a right 
is subject to conditions the commission prescribes.

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


	§ 37.155. APPLICATION OF CONTRACTS.  A contract approved 
by the commission between retail electric utilities that designates 
areas and customers to be served by the utilities:
		(1)  is valid and enforceable;  and                                           
		(2)  shall be incorporated into the appropriate areas 
of certification.     

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


	§ 37.156. INTERFERENCE WITH ANOTHER UTILITY.  If an 
electric utility constructing or extending the utility's lines, 
plant, or system interferes or attempts to interfere with the 
operation of a line, plant, or system of another utility, the 
commission by order may:
		(1)  prohibit the construction or extension;  or                              
		(2)  prescribe terms for locating the affected lines, 
plants, or systems.   

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


	§ 37.157. MAPS.  An electric utility shall file with the 
commission one or more maps that show each utility facility and that 
separately illustrate each utility facility for the generation, 
transmission, or distribution of the utility's services on a date 
the commission orders.

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