By: Creighton S.B. No. 1782               A BILL TO BE ENTITLED   AN ACT   relating to the response and resilience of certain utilities to   major weather-related events or natural disasters.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 36.402(a), Utilities Code, is amended to   read as follows:          (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. System   restoration costs also include reasonable and necessary   weatherization and storm-hardening costs incurred, as well as   reasonable estimates of costs to be incurred by the electric   utility, but such estimates shall be subject to true-up and   reconciliation after the actual costs are known.          SECTION 2.  Chapter 36, Utilities Code, is amended by adding   Subchapter J to read as follows:   SUBCHAPTER J. LOWER COST FINANCING MECHANISM FOR    SECURITIZATION FOR RECOVERY OF SYSTEM RESTORATION COSTS          Sec. 36.407.  LOWER COST FINANCING MECHANISM FOR   SECURITIZATION FOR RECOVERY OF SYSTEM RESTORATION COSTS; PURPOSE   AND DEFINITIONS.           (a)  Except as otherwise specifically provided in this   subchapter, the same procedures, standards, and protections for   securitization authorized in Subchapter I and, to the extent made   applicable to Subchapter I, Subchapter G, Chapter 39, apply to the   lower cost financing mechanism for securitization of transition   costs (or "system restoration costs") as set forth in Subchapter I.   To the extent any conflict exists between the provisions of this   subchapter and Subchapter I or, to the extent made applicable by   Subchapter I, Subchapter G, Chapter 39, in cases involving the   securitization of system restoration costs under this subchapter,   the provisions of this subchapter control.          (b)  The purpose of this subchapter is to make available a   lower cost and supplemental financing mechanism to allow an   electric utility to obtain timely recovery of system restoration   costs under Subchapter I through securitization and the issuance of   transition bonds (or "system restoration bonds") by an issuer other   than the electric utility or an affiliated special purpose entity.   Financing of system restoration costs pursuant to this subchapter   is hereby recognized to be a valid and essential public purpose.          (c)  The Texas Electric Utility System Restoration   Corporation shall be created pursuant to this subchapter as a   special purpose public corporation and instrumentality of the state   for the essential public purpose of providing a lower cost   financing mechanism available to the commission and an electric   utility to attract low-cost capital to finance system restoration   costs.          (d)  System restoration bonds issued consistent with this   subchapter will be solely the obligation of the issuer and the   corporation (as borrower, if applicable) and will not be a debt of   or a pledge of the faith and credit of the state.          (e)  System restoration bonds issued consistent with this   subchapter shall be nonrecourse to the credit or any assets of the   state and the commission.          (f)  This subchapter does not in any way limit or impair the   commission's jurisdiction under this title to regulate the rates   charged and the services rendered by electric utilities in this   state.          (g)  An electric utility receiving the proceeds of   securitization financing under this subchapter shall not be   required to provide utility services to the corporation or the   state as a result of receiving such proceeds except in their role as   customers of the electric utility, nor shall this subchapter create   any obligation of the corporation or any issuer to provide any   electric services to the electric utility or its customers.          (h)  As used in this subchapter:                      (1)  "corporation" means the Texas Electric   Utility System Restoration Corporation.                      (2)  "issuer" means the corporation or any other   Texas corporation, public trust, public instrumentality, or other   entity that issues system restoration bonds approved by a financing   order.                (3)  For purposes of this subchapter, "qualified   costs," as defined by Section 39.302 and as used in Subchapter G,   Chapter 39, also includes all costs of establishing, maintaining,   and operating the corporation and all costs of the corporation and   any issuer in connection with the issuance and servicing of the   system restoration bonds, all as approved in the financing order.                (4)  Except as otherwise specifically provided in this   subchapter, the defined terms provided in Subchapter I and, if made   applicable by Subchapter I, Subchapter G, Chapter 39, have the same   meaning in this subchapter.          Sec. 36.408.  CREATION OF THE CORPORATION. (a) The   corporation shall be incorporated as a nonprofit corporation and   instrumentality of the state, and shall perform the essential   governmental function of financing system restoration costs in   accordance with this subchapter. The corporation shall perform   only those functions consistent with this subchapter, shall   exercise its powers through a governing board, and shall be subject   to the regulation of the commission. The corporation shall have a   legal existence as a public corporate body and instrumentality of   the state separate and distinct from the state.          (b)  Assets of the corporation shall not be considered part   of any state fund. The state shall not budget for or provide any   general fund appropriations to the corporation, and the debts,   claims, obligations, and liabilities of the corporation shall not   be considered to be a debt of the state or a pledge of its credit.   The corporation shall be self-funded. Prior to the imposition of   transition charges (or "system restoration charges"), the   corporation may accept and expend for its operating expenses such   funds as may be received from any source, including financing   agreements with the state, a commercial bank, or another entity to   finance the corporation's obligations until the corporation   receives sufficient transition property to cover its operating   expenses as financing costs, and to repay any short-term borrowing   under any such financing agreement.            (c)  The corporation shall have the powers, rights, and   privileges provided for a corporation organized under Chapter 22,   Business Organizations Code, subject to the express exceptions and   limitations set forth in this subchapter.          (d)  An incorporator selected by the executive director of   the commission shall prepare the articles of incorporation of the   corporation under Chapter 22, Business Organizations Code, which   articles shall be consistent with the provisions of this   subchapter.          (e)  State officers, departments, and agencies are   authorized to render services to the corporation within their   respective functions, as may be requested by the commission or the   corporation.          (f)  The corporation and any issuer may retain such   professionals, financial advisors, and accountants as it may deem   necessary to fulfill its duties under this subchapter and may   determine their duties and compensation, subject to approval of the   commission.          (g)  The governing body of the corporation shall be a board   of directors that shall consist of five members appointed by the   commission. All official action of the governing body shall   require the favorable vote of a majority of the board members   present and voting at any meeting of the board of directors.          Sec. 36.409.  POWERS AND DUTIES OF THE CORPORATION. (a) The   corporation shall, in each instance subject to the prior   authorization of the commission, participate in the financial   transactions contemplated by this subchapter. The corporation   shall engage in no other business activities except those   activities provided for in this subchapter and those ancillary and   incidental thereto. Neither the corporation nor any issuer shall   apply any proceeds of system restoration bonds or system   restoration charges to any purpose not specified in a financing   order, or to any purpose in excess of the amount allowed for such   purpose in the order, or to any purpose in contravention of the   order.          (b)  The governing board of the corporation shall, pursuant   to the provisions of this subchapter, have the power to employ or   retain such persons as are necessary to perform the duties of the   corporation.          (c)  The corporation may:                (1)  Acquire, sell, pledge, and transfer transition   property as necessary to effect the purposes of this subchapter. In   connection therewith, the corporation may agree to such terms and   conditions as it deems necessary and proper, consistent with the   terms of a financing order, (i) to acquire transition property and   to pledge such transition property, and any other collateral, (a)   to secure payment of system restoration bonds issued by the   corporation, together with payment of any other qualified costs, or   (b) to secure repayment of any borrowing from any other issuer of   system restoration bonds, or (ii) to sell the transition property   to another issuer, which may in turn pledge such transition   property, together with any other collateral, to the repayment of   system restoration bonds issued by the issuer together with any   other qualified costs;                (2)  Issue system restoration bonds on terms and   conditions consistent with a financing order;                 (3)  Borrow funds from an issuer of system restoration   bonds to acquire transition property, and pledge such transition   property to the repayment of any borrowing from an issuer, together   with any related qualified costs, all on terms and conditions   consistent with a financing order. The corporation may also borrow   funds for initial operating expenses as specified in Section   36.408;                (4)  Sue or be sued in its corporate name. The   corporation has the authority to intervene as a party before the   commission or any court in this state in any matter involving the   corporation's powers and duties;                (5)  Negotiate and become a party to such contracts as   necessary, convenient, or desirable to carry out the purposes of   this subchapter; and                (6)  Engage in corporate actions or undertakings that   are permitted for nonprofit corporations in this state and that are   not prohibited by, or contrary to, the provisions of this   subchapter.           (d)  The corporation shall maintain separate accounts and   records relating to each electric utility that is collecting system   restoration charges for all charges, revenues, assets,   liabilities, and expenses relating to that utility's related system   restoration bond issuances.          (e)  The governing board of the corporation shall be   prohibited from authorizing any rehabilitation, liquidation, or   dissolution of the corporation, and no such rehabilitation,   liquidation, or dissolution of the corporation shall take effect as   long as any system restoration bonds are outstanding unless   adequate protection and provision has been made for the payment of   the bonds pursuant to the documents authorizing the issuance of the   bonds. In the event of any rehabilitation, liquidation, or   dissolution, the assets of the corporation shall be applied first   to pay all debts, liabilities, and obligations of the corporation,   including the establishment of reasonable reserves for any   contingent liabilities or obligations, and all remaining funds of   the corporation shall be applied and distributed as provided by an   order of the commission.          (f)  Prior to the date that is two years and one day after   which the corporation no longer has any payment obligation with   respect to any system restoration bonds, including any obligation   to any issuer of any system restoration bonds outstanding, the   corporation is prohibited from filing and shall have no authority   to file a voluntary petition under the Federal Bankruptcy Code, as   it may, from time to time, be in effect, and neither any public   official nor any organization, entity, or other person shall   authorize the corporation to be or to become a debtor under the   Federal Bankruptcy Code during such period.  The state covenants   that it will not limit or alter the denial of authority under this   subsection or subsection (e), and the provisions of such   subsections are hereby made a part of the contractual obligation   that is subject to the state pledge set forth in Section 39.310.          (g)  The corporation shall prepare an operating budget   annually that shall be submitted for approval to the commission. If   requested by the commission, the corporation shall prepare and   submit an annual report containing, among other appropriate   matters, the annual operating and financial statements of the   corporation.          Sec. 36.410.  COMMISSION REGULATION OF THE CORPORATION. The   commission shall regulate the corporation as provided for in this   subchapter. Such regulation shall be concomitant with the   commission's regulation of public utilities. Notwithstanding such   regulation, the corporation is not a public utility.          Sec. 36.411.  FINANCING ORDER. (a) This section applies to   the commission's issuance of a financing order under this   subchapter.            (b)  Except as otherwise specifically provided in this   subchapter, the provisions in Subchapter I and, to the extent made   applicable to Subchapter I, Subchapter G, Chapter 39, addressing   the commission's issuance of a financing order apply to the   commission's issuance of a financing order under this subchapter.          (c)  The corporation and any issuer shall be a party to the   commission's proceedings addressing the issuance of a financing   order along with the pertinent electric utility.           (d)  A financing order issued under this subchapter shall, in   addition to the requirements of Subchapter I (as applicable):                (1)  Require the sale, assignment, or other transfer of   certain specified transition property created by the financing   order to the corporation (in the manner contemplated by Section   39.308), and following such sale, assignment, or transfer, system   restoration charges paid under any financing order shall be   created, assessed, and collected as the property of the   corporation, subject to subsequent sale, assignment, or transfer by   the corporation as authorized under this subchapter.                  (2)  Authorize either:                      (A)  the issuance of system restoration bonds by   the corporation secured by a pledge of such specified transition   property, and the application of the proceeds of such system   restoration bonds (net of issuance costs) to the acquisition of the   transition property from the electric utility; or                       (B)  the acquisition of specified transition   property from the electric utility by the corporation, financed (i)   by a loan by an issuer to the corporation of the proceeds of system   restoration bonds (net of issuance costs), or (ii) by the   acquisition by an issuer from the corporation of such transition   property, and in each case, the pledge of such transition property   to the repayment of such loan or system restoration bonds, as   applicable;                 (3)  Authorize the electric utility to serve as   collection agent to collect the system restoration charges and   transfer those collected charges to the corporation, the issuer, or   a financing party, as appropriate.          (e)  After issuance of the financing order, the corporation   shall arrange for the issuance of system restoration bonds as   specified in the financing order by it or another issuer selected by   the corporation and approved by the commission.          (f)  System restoration bonds issued pursuant to a financing   order under this section are secured only by the related transition   property and any other funds pledged under the bond documents, and   no assets of the state or electric utility shall be subject to   claims by such bondholders. Notwithstanding the provisions in   Subchapter G, Chapter 39, following assignment of the transition   property, the electric utility shall not have any beneficial   interest or claim of right in such system restoration charges or in   any transition property.          Sec. 36.412.  SEVERABILITY. Effective on the date the first   system restoration bonds associated with system restoration costs   are issued under this subchapter, if any provision in this title or   portion of this title is held to be invalid or is invalidated,   superseded, replaced, repealed, or expires for any reason, that   occurrence does not affect the validity or continuation of this   subchapter, Subchapter I, as it applies to this subchapter,   Subchapter G, Chapter 39, as it applies to this subchapter, or any   part of those provisions, or any other provision of this title that   is relevant to the issuance, administration, payment, retirement,   or refunding of system restoration bonds or to any actions of the   electric utility, its successors, an assignee, a collection agent,   the corporation, an issuer, or a financing party, and those   provisions shall remain in full force and effect.          SECTION 3.  Section 37.051, Utilities Code, is amended by   adding Subsection (d) to read as follows:          (d)  Notwithstanding any other provision of this title, an   electric utility may, but shall not be required to, obtain a   certificate to install, own, or operate a generation facility with   a capacity of ten megawatts or less.          SECTION 4.  Section 37.056(c)(4)(E), Utilities Code, is   amended to read as follows:                      (E)  the probable improvement of service or   lowering of cost to consumers in the area if the certificate is   granted, including any potential economic or reliability benefits   associated with dual fuel and fuel storage capabilities; and          SECTION 5.  Subchapter F, Chapter 104, Utilities Code, is   amended by adding Section 104.259 to read as follows:          Sec. 104.259.  PRIORITIES DURING NATURAL GAS CURTAILMENT.   (a) If the curtailment of natural gas is necessary during a state   of disaster as declared by the governor or an extreme weather   emergency as defined in Section 104.258, a gas utility shall   observe the following priorities for the continued delivery of gas   in descending order:                (1)  deliveries of natural gas by gas utilities to   residences, hospitals, schools, churches, and other human needs   customers, and deliveries to local distribution companies that   serve human needs customers.                (2)  deliveries of natural gas by gas utilities to   electric generation facilities that serve human needs customers.                (3)  deliveries of natural gas by gas utilities to   small industrial and regular commercial loads, defined as those   customers using less than 3,000,000 cubic feet of gas per day, and   delivery of gas for use as pilot lights or in accessory or auxiliary   equipment essential to avoid serious damage to industrial plants;                (4)  deliveries of natural gas by gas utilities to   large users of gas for fuel as raw material where an alternate fuel   source cannot be used and operation and plant production would be   curtailed or completely cease when gas is curtailed;                (5)  deliveries of natural gas by gas utilities to   large users of gas for boiler fuel or other fuel users where an   alternate fuel source can be used. This category is not to be   determined by whether or not a user has actually installed   alternate fuel facilities, but whether or not an alternate fuel   could be used.          SECTION 6.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution. If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect September 1, 2021.