HBA-TYH H.B. 3188 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3188 By: Longoria State Affairs 4/7/1999 Introduced BACKGROUND AND PURPOSE 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. RULEMAKING AUTHORITY 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 BY SECTION ANALYSIS 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.