(a) Purpose. The purpose of this section is to regulate the arrangements between qualifying facilities, retail electric providers with the price to beat obligation (PTB REPs), and electric utilities as required by federal and state law in a manner consistent with the development of a competitive wholesale power market.
(b) Application. This section applies to all PTB REPs and to all electric utilities, including transmission and distribution utilities. The provisions of this section concerning purchase or sale of electricity between an electric utility and a qualifying facility do not apply to a transmission and distribution utility. This section does not apply to municipal utilities, river authorities, or electric cooperatives.
(c) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise:
  (1) Avoided costs--The incremental costs to a PTB REP, or electric utility of electric energy, which, but for the purchase from the qualifying facility or qualifying facilities, such PTB REP or electric utility would generate itself or purchase from another source.
  (2) Back-up power--Electric energy or capacity supplied to replace energy or capacity ordinarily generated by a qualifying facility's own generation equipment during an unscheduled outage of the qualifying facility.
  (3) Cost of decremental energy--The cost savings to a utility associated with the utility's ability to back-down some of its units or to avoid firing units, or to avoid purchases of power from another source because of purchases of power from qualifying facilities.
  (4) Electric utility--For purposes of this section, an integrated investor-owned utility that has not unbundled in accordance with Public Utility Regulatory Act §39.051.
  (5) Firm power--From a qualifying facility, power or power-producing capacity that is available pursuant to a legally enforceable obligation for scheduled availability over a specified term.
  (6) Host utility--The utility with which the qualifying facility is directly interconnected.
  (7) Maintenance power--Electric energy or capacity supplied during scheduled outages of the qualifying facility.
  (8) Market price--The market-clearing price of energy (MCPE) in the balancing energy market for the Electric Reliability Council of Texas (ERCOT) congestion zone in which the power is produced, minus any administrative costs, including an appropriate share of ERCOT-assessed penalties and fees typically applied to power generators.
  (9) Non-firm power from a qualifying facility--Power provided under an arrangement that does not guarantee scheduled availability, but instead provides for delivery as available.
  (10) Parallel operation--A mode of operation which enables a qualifying facility to export automatically any electric capacity which is not consumed by the qualifying facility or the user of the qualifying facility's output. Parallel operation results in three possible states of operation at any point in time:
    (A) The qualifying facility is generating an amount of capacity that is less than the customer's load. The customer is therefore a net consumer.
    (B) The qualifying facility is generating an amount of capacity that is more than the customer's load. The customer is therefore a net producer.
    (C) The qualifying facility is generating an amount of capacity that is equal to the customer's load. The customer is therefore neither a net producer nor a net consumer.
  (11) Purchase--The purchase of electric energy or capacity or both from a qualifying facility by a PTB REP or electric utility.
  (12) Purchasing utility--The electric utility that is purchasing a qualifying facility's capacity and/or energy.
  (13) Quality of firmness of a qualifying facility's power--The degree to which the capacity offered by the qualifying facility is an equivalent quality substitute for firm purchased power or an electric utility's own generation. At a minimum the following factors should be considered in determining quality of firmness:
    (A) reliability of generation and interconnection;
    (B) forced outage rate;
    (C) availability during peak periods;
    (D) the terms of any contract or other legally enforceable obligation, including, but not limited to, the duration of the obligation, performance guarantees, termination notice requirements, and sanctions for noncompliance;
    (E) maintenance scheduling;
    (F) availability for system emergencies, including the ability to separate the qualifying facility's load from its generation;
    (G) the individual and aggregate value of energy and capacity from qualifying facilities on the electric utility's system;
    (H) other dispatch characteristics;
    (I) reliability of primary and secondary fuel supplies used by the qualifying facility; and
    (J) impact on utility system stability.
  (14) Retail electric provider with the price to beat obligation (PTB REP)--A REP that makes available a PTB pursuant to PURA §39.202.
  (15) Sale--The sale of electric energy or capacity or both supplied to a qualifying facility.
  (16) Supplementary power--Electric energy or capacity regularly used by a qualifying facility in addition to that which the facility generates itself.
  (17) System emergency--A condition on a utility's system that is likely to result in imminent significant disruption of service to customers or is imminently likely to endanger life or property.
  (18) Transmission and distribution utility (TDU)--As defined in §25.5 of this title (relating to Definitions).
(d) Negotiation and filing of rates.
  (1) Negotiated rates or terms. Nothing in this section shall:
    (A) limit the authority of any PTB REP or electric utility or any qualifying facility to agree to a rate for any purchase, or terms or conditions relating to any purchase, which differs from the rate or terms or conditions that would otherwise be required by this section; or
    (B) affect the validity of any contract entered into between a qualifying facility and a PTB REP or electric utility for any purchase before the adoption of this section.
  (2) Filing of rates. All rates for sales to qualifying facilities, contractual or otherwise, shall be contained in the schedule of rates of the electric utility filed with the commission.
(e) Availability of electric utility system cost data.
  (1) Applicability. Paragraph (2) of this subsection applies to large electric utilities whose total sales of electric energy for purposes other than resale exceeded 500 million kilowatt-hours during any calendar year beginning after December 31, 1975, and before the immediately preceding calendar year. Paragraph (3) of this subsection applies to all other electric utilities.
  (2) Data request for large electric utilities. Large utilities shall file the following data:
    (A) the estimated avoided cost on the electric utility's system, solely with respect to the energy component, for various levels of purchases from qualifying facilities. Such levels of purchases shall be stated in blocks of one, ten and 100 megawatts or not more than 10% of the system peak demand for systems of less than 1,000 megawatts. The avoided cost shall be stated on a cents-per-kilowatt-hour basis, during daily and seasonal peak and off-peak periods, by year, for the current calendar year and each of the next nine years.
    (B) the electric utility's plan for the addition of capacity by amount and type, for purchases of firm energy and capacity, and for capacity retirements for each year during the succeeding nine years.
    (C) for the current year and each of the next nine years, the estimated capacity costs at completion of the planned capacity additions and planned capacity purchases, on the basis of dollars-per-kilowatt, and the associated energy costs of each unit, expressed in cents per kilowatt-hour. These costs shall be expressed in terms of individual generating units and of individual planned firm purchases. Such information shall be submitted in accordance with the Federal Energy Regulatory Commission Regulations, 18 Code of Federal Regulations, §292.302 and shall be sufficient for qualifying facilities to reasonably estimate the utility's avoided cost. Accompanying each filing pursuant to this rule shall be a detailed explanation of how the data was determined, including sources and assumptions employed.
  (3) Special requirements for small electric utilities. Affected utilities shall, upon request:
    (A) provide to an interested person comparable data to that required under paragraph (2) of this subsection to enable qualifying facilities to estimate the electric utility's avoided costs; or
Cont'd...