Office of House Bill AnalysisH.B. 3188
By: Longoria
State Affairs


The utility industry is diversifying into other services and products
because of the increase in retail competition for their core products and
services.  The utility or the corporation of which the utility is a part
may either establish unregulated affiliate companies that offer energy
related services or establish relationships with unregulated energy
services companies.  This can lead to situations in which the regulated
utility may use its access to customer and market information, as well as
its access to customers and credibility with customers, to abuse its market
position or market power to aid the unregulated affiliates or business
ventures.  Additionally, the regulated utility is given the cloak of public
purpose and is allowed to enjoy monopoly status within its service
territory, which will be allowed to continue even after retail competition
in electricity is initiated. 

The transition to wholesale competition in power, in an effort to continue
state policies to encourage efficiency, has also had a disruptive effect on
retail markets in energy services.  Recently, utilities have been allowed,
even directed, to solicit energy savings in the same manner they solicit
new generation supplies.  This has led to a situation in which customer
energy services, already available to customers in the retail market, are
being solicited as wholesale products by electric utilities. Because of the
nature of the solicitation process, utilities are forced to select a few
energy service providers to be given access to state-approved utility
incentive funding.  The result is that some companies have access to
incentives that may give them an unfair advantage over other companies in
the market. 

H.B. 3188 requires the Public Utility Commission to adopt rules to regulate
the interaction of the regulated utility with its own affiliated or other
unregulated companies.  This bill also sets forth the parameters for
regulated distribution companies to administer incentive programs or other
programs related to energy efficiency technology or service that is
directly or indirectly financed by rate payments. 


It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Public Utility Commission in
SECTION 1 (Section 2.216, Article 1446c-0, V.T.C.S.) of this bill. 


SECTION 1.  Amends Section 2.216 (Public Utility Regulatory Act of 1995),
Article 1446c-0, V.T.C.S., by adding Subsections (b) and (c), as follows: 

(b)  Requires the Public Utility Commission (commission) to monitor and, by
rule, regulate the relationships among utilities and the affiliates,
partners, and ventures of utilities to ensure that a utility or a utility's
affiliates, partners, and ventures do not gain an unfair advantage over an
unaffiliated person competing in the same market to provide customers with
electricity or with products or services related to energy efficiency. 

(c)  Requires the commission, by rule, to ensure that a utility's incentive
program or other program related to energy efficiency technology or other
program related to energy efficiency technology or service that is directly
or indirectly financed by rate payments  allows a customer free choice
among providers of energy efficiency technology or service (provider),
allows a provider to determine its own products or services, promotes
competition among providers, and does not place a provider at a competitive
disadvantage regarding products or services. 

SECTION 2.  Requires the commission to adopt rules under Section 2.216,
Article 1446c-0 (Public Utility Regulatory Act of 1995), V.T.C.S., as
amended by this Act, no later than December 31, 1997 (sic). 

SECTION 3.  Emergency clause.
  Effective date: upon passage.