Utilities Code § 39.918

Sec. 39.918. UTILITY FACILITIES FOR POWER RESTORATION AFTER SIGNIFICANT POWER OUTAGE. (a) In this section, "significant power outage" means an event that: (1) results in a loss of electric power that: (A) affects a significant number of distribution customers of a transmission and distribution utility and has lasted or is expected to last for at least six hours; (B) affects distribution customers of a transmission and distribution utility in an area for which the governor has issued a disaster or emergency declaration; (C) affects distribution customers served by a radial transmission or distribution facility, creates a risk to public health or safety, and has lasted or is expected to last for at least 12 hours; or (D) creates a risk to public health or safety because it affects a critical infrastructure facility that serves the public such as a hospital, health care facility, law enforcement facility, fire station, or water or wastewater facility; or (2) causes the independent system operator to order a transmission and distribution utility to shed load. (a-1) The Texas Division of Emergency Management, the independent organization certified under Section 39.151 for the ERCOT power region, or the executive director of the commission may determine that a power outage other than an outage described by Subsection (a) is a significant power outage for the purposes of this section. (b) Notwithstanding any other provision of this subtitle, a transmission and distribution utility may: (1) lease and operate facilities that provide temporary emergency electric energy to aid in restoring power to the utility's distribution customers during a significant power outage in which: (A) the independent system operator has ordered the utility to shed load; or (B) the utility's distribution facilities are not being fully served by the bulk power system under normal operations; and (2) procure, own, and operate, or enter into a cooperative agreement with other transmission and distribution utilities to procure, own, and operate jointly, transmission and distribution facilities that have a lead time of at least six months and would aid in restoring power to the utility's distribution customers following a significant power outage. In this section, long lead time facilities may not be electric energy storage equipment or facilities under Chapter 35. (c) A transmission and distribution utility that leases and operates facilities under Subsection (b)(1) may not sell electric energy or ancillary services from those facilities. (d) A facility described by Subsection (b)(1): (1) must be operated in isolation from the bulk power system; (2) may not be included in independent system operator: (A) locational marginal pricing calculations; (B) pricing; or (C) reliability models; (3) must be: (A) mobile; (B) capable of being moved from its staged location in less than 12 hours; and (C) capable of generating electric energy within three hours after being connected to a demand source; and (4) must have a maximum generation capacity of not more than five megawatts. (e) A transmission and distribution utility that leases and operates facilities under Subsection (b)(1) shall ensure, to the extent reasonably practicable, that retail customer usage during operation of those facilities is adjusted out of the usage reported for billing purposes by the retail customer's retail electric provider. (f) A transmission and distribution utility shall use a competitive bidding process to lease facilities under Subsection (b)(1). (f-1) A transmission and distribution utility may not enter into a lease under Subsection (b)(1) unless: (1) the commission first, in a rate proceeding or a separate contested case hearing, authorizes: (A) the total generating capacity the utility may lease; and (B) the functions for which the utility may lease facilities and the generation capacity the utility may lease for each function; or (2) the lease includes a provision that allows alteration of the lease based on commission order or rule. (f-2) The commission may limit the period during which an authorization issued under Subsection (f-1) is valid. (f-3) Notwithstanding Subsections (f) and (f-1)(1), a transmission and distribution utility may enter into a lease under Subsection (b)(1) without competitive bidding or prior commission approval if: (1) the transmission and distribution utility lacks the leased generating capacity necessary to aid in restoring power to the utility's customers during a significant power outage; (2) the amount of leased generating capacity does not significantly exceed the amount of megawatts necessary to restore electric service to the utility's customers during a significant power outage; and (3) the term of the lease does not significantly exceed the time period that is required to restore electric service to the utility's customers during a significant power outage. (f-4) A transmission and distribution utility that enters into a lease in the manner provided by Subsection (f-3) shall provide documentation to justify the amount of leased generating capacity during the first base rate proceeding after the date the lease begins. (g) A transmission and distribution utility that leases and operates facilities under Subsection (b)(1) or that procures, owns, and operates facilities under Subsection (b)(2) shall include in the utility's emergency operations plan filed with the commission, as described by Section 186.007, a detailed plan on the utility's use of those facilities. (h) The commission shall permit: (1) a transmission and distribution utility that leases and operates facilities under Subsection (b)(1) to recover the reasonable and necessary costs of leasing and operating the facilities, including the present value of future payments required under the lease, using the rate of return on investment established in the commission's final order in the utility's most recent base rate proceeding; and (2) a transmission and distribution utility that procures, owns, and operates facilities under Subsection (b)(2) to recover the reasonable and necessary costs of procuring, owning, and operating the facilities, using the rate of return on investment established in the commission's final order in the utility's most recent base rate proceeding. (i) The commission shall authorize a transmission and distribution utility to defer for recovery in a future ratemaking proceeding the incremental operations and maintenance expenses and the return, not otherwise recovered in a rate proceeding, associated with the leasing or procurement, ownership, and operation of the facilities. (j) A transmission and distribution utility may request recovery of the reasonable and necessary costs of leasing or procuring, owning, and operating facilities under this section, including any deferred expenses, through a proceeding under Section 36.210 or in another ratemaking proceeding. A lease under Subsection (b)(1) must be treated as a capital lease or finance lease for ratemaking purposes. (k) Repealed by Acts 2023, 88th Leg., R.S., Ch. 410 (H.B. 1500), Sec. 46(a)(6), eff. September 1, 2023. Added by Acts 2021, 87th Leg., R.S., Ch. 698 (H.B. 2483), Sec. 1, eff. September 1, 2021. Amended by: Acts 2023, 88th Leg., R.S., Ch. 410 (H.B. 1500), Sec. 39, eff. September 1, 2023. Acts 2023, 88th Leg., R.S., Ch. 410 (H.B. 1500), Sec. 40, eff. September 1, 2023. Acts 2023, 88th Leg., R.S., Ch. 410 (H.B. 1500), Sec. 46(a)(6), eff. September 1, 2023. Acts 2023, 88th Leg., R.S., Ch. 768 (H.B. 4595), Sec. 22.004, eff. September 1, 2023. Acts 2025, 89th Leg., R.S., Ch. 477 (S.B. 231), Sec. 1, eff. June 20, 2025.