(a) Application. This section applies to an electric utility that sells electricity.
(b) Definitions. The following terms, when used in this section, have the following meanings unless the context indicates otherwise.
  (1) Class billing determinants -- Kilowatt-hours (kWh) for each class that is not billed using a demand charge, and kilowatts (kW) for each class that is billed using a demand charge.
  (2) Cost year -- the most recent historical 12-month period for which data are available at the time a utility prepares an application to establish, adjust, or terminate a PCRF.
  (3) Net production capacity invested capital -- Production capacity invested capital costs recorded in Federal Energy Regulatory Commission (FERC) Uniform System of Accounts 303, 310 - 317, 320 - 326, 330 - 337, and 340 - 347, less accumulated depreciation and adjusted for any changes in production capacity-related accumulated deferred federal income taxes and excluding any impact associated with Financial Accounting Standards Board Interpretation No. 48.
(c) Establishment, adjustment, and termination of a PCRF.
  (1) A utility may apply for establishment of a PCRF rider only if all of the following conditions are met:
    (A) the utility's most recent comprehensive base-rate proceeding established sufficient information to allow for the determination of values for the parameters in subsection (h) of this section;
    (B) no more than two years have passed since the final order in the utility's most recent comprehensive base-rate proceeding;
    (C) the utility has not had a PCRF in effect within the last year; and
    (D) no PCRF has been in effect for the utility since the final order in the utility's most recent comprehensive base-rate proceeding.
  (2) The application in which the utility applies for the establishment, adjustment, or termination of a PCRF rider must be limited to issues related to the establishment, adjustment, or termination of the PCRF rider.
  (3) The PCRF must not include:
    (A) the cost of capacity purchased directly or indirectly from an affiliate, as defined in §25.5(3) of this title (relating to Definitions), of the utility, including, without limitation, whether such capacity is acquired through one or more intermediaries or pursuant to a FERC approved agreement or tariff of a Regional Transmission Organization or Independent System Operator, unless such affiliate-related purchases have been previously approved by the commission in a proceeding under subsection (d) of this section;
    (B) the cost of capacity owned by the utility;
    (C) any costs recoverable by the utility under §25.236 of this title (relating to Recovery of Fuel Costs), including purchases of firm energy;
    (D) any costs for purchases made through day-ahead or real-time markets of a Regional Transmission Organization or Independent System Operator.
  (4) Upon the establishment of a utility's PCRF, the utility must annually file an application for an adjustment of the PCRF. The cost year used in an annual PCRF adjustment must be the 12-month period that immediately follows the cost year used to set the existing PCRF. In addition, the utility must file the application to adjust the PCRF promptly after the relevant cost-year data become available. The commission may establish a schedule for the filing of such applications.
  (5) A utility may terminate its PCRF as part of any annual PCRF adjustment proceeding. The final order including the termination of a PCRF must specify the date by which the utility must be required to file an application for the final reconciliation of the costs and revenues associated with the terminated PCRF.
  (6) Commission staff may petition at any time to terminate a utility's PCRF.
  (7) A utility's request to establish, adjust, terminate, or reconcile a PCRF must include the utility's direct testimony supporting the request.
(d) Pre-approval of purchased power agreements.
  (1) The commission may pre-approve a utility's executed agreement for the purchase of power capacity from an affiliate if it finds that the agreement is reasonable, and the utility may thereafter seek to include the capacity costs incurred under such a commission-approved agreement in its PCRF rider.
  (2) Though not required for inclusion in a PCRF rider, a utility may seek commission review of the reasonableness of a utility's executed agreement for the purchase of power capacity from a non-affiliate, and the utility may seek to include the capacity costs incurred under such a commission-approved agreement in its PCRF rider.
  (3) Agreements under paragraphs (1) and (2) of this subsection may include an agreement for the purchase of capacity to be delivered in the future that relies on the construction of a generating unit or units.
  (4) An application in which the utility applies for pre-approval of purchased power capacity agreements under this subsection must be limited to issues related to the pre-approval of such agreements.
  (5) A utility may apply for pre-approval of purchased power agreements under this subsection no more than once per year, and no more than three times between comprehensive base-rate proceedings.
(e) Notice of PCRF proceeding.
  (1) Within one commission working day of filing an application limited to establishing, adjusting, or terminating a PCRF, a utility must provide notice of the application in accordance with the following:
    (A) Method of notice.
      (i) The utility must serve notice of the application on the parties to the utility's last PCRF reconciliation proceeding or, if there has been no PCRF reconciliation proceeding, on the parties to the utility's last comprehensive base-rate proceeding.
      (ii) The utility must issue a news release and post the news release on its website.
    (B) Content of notice. Notice provided pursuant to paragraph (1) of this subsection must include the following:
      (i) The date the application was filed;
      (ii) A description of the application, including the relief requested;
      (iii) The date of the intervention and hearing request deadline. The date of the intervention and hearing request deadline must be 30 days after the application was filed, except that if the date would fall on a day that is not a commission working day, the intervention and hearing request deadline must be the first commission working day after the 30th day after the application was filed;
      (iv) To the extent applicable, the existing PCRF and the proposed PCRF by rate class, and the percentage difference between the two;
      (v) For an application seeking to establish or adjust a PCRF, the following statement: "The PCRF is subject to final review in the next PCRF reconciliation."
      (vi) The statement, "Persons with questions or who want more information on this application may contact (utility name) at (utility address) or call (utility toll-free telephone number) during normal business hours. A complete copy of this application is available for inspection at the address listed above"; and
      (vii) The statement, "Persons who wish to intervene in the proceeding for this application, or who wish to provide their comments concerning this application, should contact the Public Utility Commission of Texas, Customer Protection Division, P.O. Box 13326, Austin, Texas 78711-3326, or call (512) 936-7120 or toll-free at (888) 782-8477. Hearing and speech-impaired individuals may use Relay Texas (toll-free) 1-800-735-2989."
    (C) Proof of notice. Within five commission working days from the filing of the application limited to establishing or adjusting a PCRF, the utility must file proof in the form of an affidavit that it complied with this paragraph.
  (2) If a utility applies to reconcile a PCRF in a base-rate proceeding, the appropriate method and proof of notice set forth in §22.51 of this title (relating to Notice for Public Utility Regulatory Act, Chapter 36, Subchapters C-E; Chapter 51, §51.009; and Chapter 53, Subchapters C-E Proceedings) must apply. The notice must include a description of the requested change to the PCRF.
  (3) If a utility applies to reconcile a PCRF outside of a base-rate proceeding, the method of notice set forth in §25.235(b)(1)(B) of this title (relating to Fuel Costs-General) applies. The proof of notice set forth in §25.235(b)(3) of this title must apply. The notice must include a description of the requested reconciliation of the PCRF.
(f) Procedural schedule. Upon the filing of an application limited to the annual adjustment of a PCRF pursuant to this section, the presiding officer must set a procedural schedule that will enable the commission to issue a final order in the proceeding as follows, except where good cause supports a different procedural schedule:
Cont'd...