HBA-KDB H.B. 2151 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2151 By: Danburg State Affairs 3/14/2001 Introduced BACKGROUND AND PURPOSE With the passage of Senate Bill 7, the 76th legislature restructured the electric utility industry. There was a provision within the legislation that authorized political subdivisions to form political subdivision corporations (corporations) to aggregate the purchasing of electricity. However, political subdivisions do not have the ability to get assistance from corporations in the management of natural gas purchases. Unlike private electricity customers, corporations do not have the option of obtaining certifications as retail electric providers. House Bill 2151 authorizes such a corporation to assist political subdivisions with natural gas purchasing and to form and operate as a retail electric provider for electric consumption by its members. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 2151 amends the Local Government and Utilities codes relating to the authority of political subdivisions to aggregate, purchase, and sell energy and natural gas. The bill adds school districts and special districts to the definition of "political subdivision." The bill authorizes a political subdivision to join with another political subdivision or subdivisions to form a political subdivision corporation or corporations (corporation) to negotiate the purchase of natural gas, or likewise aid or act on behalf of the political subdivisions for which the corporation is created, with respect to their own natural gas use for their respective public facilities, in accordance with all applicable laws and rules. Additionally, such corporations may provide education and information services for the political subdivisions for which the corporation is created, including education and information related to the aggregation of electricity and natural gas, the purchase, sale, use, and management of electricity and natural gas, and the operation of facilities dependent on electricity or natural gas. The bill authorizes a corporation to obtain certification as a retail electric provider and sell electricity as a retail electric provider. The bill authorizes a corporation to negotiate on behalf of its incorporating political subdivisions for the purchase of natural gas, make contracts for the purchase of natural gas, purchase natural gas, and take any other action necessary to purchase or sell natural gas for use in the public facilities of the political subdivision or subdivisions represented by the corporation. The corporation is authorized to take any of the preceding actions only to the same extent its incorporating political subdivisions have the authority to take that action under other law. The bill does not create new or additional authority for an incorporating political subdivision to take these actions. In addition to an aggregation fee charged per kilowatt hour, the bill authorizes a corporation to recover its expenses through an aggregation fee charged according to any other appropriate formula determined by the corporation. The bill authorizes a corporation to only aggregate the purchasing of electricity for the facilities of political subdivisions that receive electric service from an entity that has implemented customer choice. EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001.