Texas Utilities Code - UTIL § 36.216. Recovery of Annual Capacity-Related 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.

(b) It is the intent of the legislature that certain changes to the level of an electric utility's capacity-related costs and capacity-related revenues due to wholesale rate decisions and determinations by a federal agency or a regional transmission organization subject to federal jurisdiction should be timely reflected in the utility's rates.

(c) On application by an electric utility that has not exceeded the utility's authorized return on equity as shown in the utility's most recent earnings monitoring report at the time of the application, the commission shall establish a capacity cost recovery rider that must be annually updated and that allows:

(d) In this section, eligible costs and revenues are capacity-related costs and revenues associated with the electric utility's participation in a multi-state capacity auction operated by a regional transmission organization or independent system organization authorized by the Federal Energy Regulatory Commission, to the extent the costs and revenues are not already being recovered through the utility's base rates.

(e) Amounts recovered through a capacity cost recovery rider are subject to reconciliation in the next base rate proceeding for the electric utility.  As part of the reconciliation, the commission shall review the costs and revenues to determine if they were reasonable and prudently incurred and to ensure the electric utility is only recovering costs allocable to retail customers in this state and is not over-recovering costs.  In each base rate proceeding following the establishment of a capacity cost recovery rider, the commission shall remove from the electric utility's base rates all cost and revenue items eligible for recovery through the electric utility's capacity cost recovery rider.

(f) The annual revenue requirement and rates for a proposed capacity cost recovery rider must include:

(g) The capacity cost recovery rider charges must be derived using:

(h) The billing determinants must be derived using each customer class's projected kilowatt-hour usage, except for customer classes with demand meters for which the billing determinants must be derived using each customer class's projected kilowatt billing demand.

(i) Until the time the electric utility removes from base rates the costs eligible for rider recovery under Subsection (d), and the costs eligible for rider recovery described in Subsection (g)(2), and these costs are recovered solely through the capacity cost recovery rider, the calculation of the capacity cost recovery rider must include a load growth adjustment to take into account changes in the number of the utility's customers and the effects, on a weather-normalized basis, that energy consumption and energy demand have on the amount of revenue recovered through the utility's base rates.

(j) The commission shall process an application to establish or update a capacity cost recovery rider in accordance with Subsections (k)-(o).

(k) For a capacity cost recovery rider that will include an electric utility's costs to be incurred beginning on June 1 of a given year, the utility must submit the rider application not later than:

(l) The application must be fully documented, including testimony and all supporting work papers in native format.

(m) A response to the electric utility's filing that is made by commission staff or an intervenor:

(n) Any other inaccuracy identified under Subsection (m)(2) may be addressed only in the electric utility's next capacity cost recovery rider application.

(o) The commission may review costs and revenues and shall issue an order approving, modifying, or denying an electric utility's proposed or updated capacity cost recovery rider not later than the 60th day after the date the application is filed.

(p) This section expires September 1, 2035.