City of Houston 2023Legislative Report

Electric Utilities

Bill Sponsors / Authors:

Will Metcalf   Rep. Will Metcalf
  R - Conroe

Phil King   Sen. Phil King
  R - Weatherford


Supporting Documents / Links:

Electric Utilities GraphicHouse Bill 2555 - Resiliency Rate Increases

House Bill 2555 will authorize an electric utility to file with the Public Utility Commission (PUC) a plan to enhance the resiliency of its transmission and distribution system through at least one of the following methods:

• hardening transmission and distribution facilities;
• modernizing such facilities;
• undergrounding certain electrical distribution lines;
• lightning mitigation;
• flood mitigation;
• information technology;
• cyber security;
• physical security;
• vegetation management; or
• wildfire mitigation and response.

After reading earlier legislation in this report, one might ask, “why does this bill avoid the checks and balances for ratepayers already expanded in Senate Bill 1015?”

That’s a great question!

The City of Houston provided FAQs on House Bill 2555:

TDUs should already be implementing most, if not all, the measures outlined in the bill, including modernizing and hardening distribution facilities and performing vegetation management. Current statutes and administrative rules exist that allow TDUs to seek cost recovery for all these measures through various interim filings.

Under the bill, if the PUC approves the TDU’s resiliency plan, then the legislation will allow the TDU to also expedite recovering the costs (incremental costs that are not already being recovered through base rates or any other rate rider) of the resiliency plan through ratepayers.

  • As previously mentioned, the TDU already has the ability to expeditiously recover incurred costs for system resiliency and for maintaining and updating its transmission and distribution facilities.
  • However, the proposed legislation will go beyond these existing cost recovery rate adjustment mechanisms by initially allowing for the recovery of “estimated” costs, including operation and maintenance (O&M) expenses. The estimated costs would only be trued up in a subsequent review by the PUC.

House Bill 2555 will also bypass City jurisdiction over utility rates and cost recovery as the proposed legislation grants the PUC sole jurisdiction over the approval of the resiliency plan and any surcharge for recovery of the costs of the approved plan.

The City of Houston opposed House Bill 2555 because it sidesteps any local authority that could question the costs that are being forced onto ratepayers.

One of the most concerning aspects is that House Bill 2555 is silent as to what the Public Utility Commission should consider when determining whether the utility’s plan is in the “public interest.” The bill has no mechanism to hold utilities accountable if their system resilience or outage durations suffer despite their resilience investments, or if actual resilience implementation never materializes.