(a) Application. The provisions of this section apply only to an electric utility that operates solely outside of the Electric Reliability Council of Texas.
(b) Adjustments to test year information.
  (1) Definitions.
    (A) Test year--The period defined in §25.5(134) of this title (relating to Definitions).
    (B) Update period--For a utility that elects to file under paragraph (2)(B) of this subsection, the period beyond the end of the test year, for which period the electric utility initially submits estimated information and later submits actual information to be used in establishing its base rates. The update period chosen by the utility must end on the last day of a calendar or fiscal year quarter, and not later than the 30th day before the date the applicable rate proceeding is filed.
  (2) Test year election. In establishing the base rates of an electric utility under the Public Utility Regulatory Act (PURA), Chapter 36, Subchapter C or D, the commission shall determine the utility's revenue requirement based on, at the election of the utility:
    (A) information submitted for a test year; or
    (B) information submitted for a test year updated to include actual information for the update period regarding increases and decreases in the utility's cost of service, including expenses, capital investment, cost of capital, and sales.
  (3) Requirements for test year update. The updated information authorized to be submitted by paragraph (2)(B) of this subsection shall be subject to the following additional standards:
    (A) expenses authorized by §25.231(b) of this title (relating to Cost of Service) for inclusion in revenue requirement shall reflect the 12-month period ending on the final day of the update period;
    (B) components of rate base as defined by §25.231(c)(2) of this title shall be included through the end of the update period;
    (C) the electric utility's cost of capital shall be updated to reflect any transactions affecting those items that occur between the end of the test year and the end of the update period; and
    (D) the utility's sales revenues, customer count, and billing determinants shall reflect the 12-month period ending on the final day of the update period.
  (4) Use of estimates; supplementation of information.
    (A) An electric utility that includes estimated information for the update period in the initial filing of a rate proceeding shall supplement that filing with actual information not later than the 45th day after the date the initial filing was made. The update must provide actual information for all information originally estimated. The utility shall update every component of its cost of service that changed, including flow-through effects and attendant impacts of changes. The utility need not, however, update or refile every piece of information in the originally filed case. The utility shall file the entire update on a single business day.
    (B) The commission shall extend the deadline for concluding the rate proceeding for a period of time equal to the period between the date the initial filing of the proceeding was made and the date of the supplemental filing made under subparagraph (A) of this paragraph, except that the extension period may not exceed 45 days.
  (5) Known and measurable changes. In establishing the base rates of an electric utility, an electric utility that makes an election under paragraph (2) of this subsection is not precluded from proposing known and measurable adjustments to the utility's historical rate information as permitted by PURA and the commission's rules.
  (6) Post-test year adjustment for newly constructed or acquired natural-gas-fired power plant. In addition to the test year update authorized by paragraph (2)(B) of this subsection, and without limiting the availability of known and measurable adjustments otherwise permitted by PURA and commission rules, the commission shall allow an electric utility to make a known and measurable adjustment for a newly constructed or acquired natural-gas-fired generation facility.
    (A) The commission is required to allow a known and measurable adjustment under this paragraph only if the natural-gas-fired generation facility is in service before the effective date of new rates.
    (B) A known and measurable adjustment under this paragraph shall include the utility's prudent capital investment in the facility, a reasonable return on such capital investment, depreciation expense, reasonable and necessary operating expenses, and all attendant impacts associated with the newly constructed or acquired natural-gas-fired generation facility, including any offsetting revenue, as determined by the commission.
    (C) Notwithstanding the requirements of §25.231(c)(2)(F)(i)(II) of this title, the commission shall allow an adjustment under this paragraph regardless of whether the investment is less than 10% of the utility's rate base before the date of the adjustment.
(c) Requirement to initiate rate proceeding.
  (1) Timing. An electric utility is required to make filings with regulatory authorities as required by PURA, Chapter 33, Subchapter B, and shall file a rate-filing package under PURA, Chapter 36, Subchapter D, to initiate a comprehensive base rate proceeding before all of the utility's regulatory authorities in the following circumstances:
    (A) on or before the fourth anniversary of the date of the final order in the utility's most recent comprehensive base rate proceeding; or
    (B) if the commission determines, before the deadline described in subparagraph (A) of this paragraph, that the utility has earned materially more than the utility's authorized rate of return on investment, on a weather-normalized basis, in the utility's two most recent consecutive commission earnings monitoring reports.
    (C) If a rate-filing package is required to be submitted under this subsection, the utility's rate filing shall reflect a test year, which at the election of the utility may be updated pursuant to subsection (b)(2)(B) of this section, and may be otherwise adjusted for known and measurable changes as permitted by PURA and commission rules.
  (2) Extension of rate-case-filing deadline. A utility is required to make a rate filing by the deadline set forth in paragraph (1)(A) of this subsection unless the commission grants an extension of the deadline. The commission may extend the deadline set forth in paragraph (1)(A) of this subsection and set a new deadline if the commission determines that a comprehensive base rate case would not result in materially different rates. The utility shall have the burden to prove that a delay in the rate-case-filing deadline is warranted and shall submit all requisite information to meet such burden.
    (A) On or before the third anniversary of the date of the final order in the utility's most recent comprehensive base rate proceeding, the utility shall submit a filing to the commission indicating whether the utility seeks an extension to the deadline described in paragraph (1)(A) of this subsection. If the utility seeks an extension, at the time of such filing it shall provide all relevant information to meet its burden in showing that an extension is justified. The commission shall give interested parties a reasonable opportunity to present materials and argument before making a determination under this paragraph; the Administrative Law Judge(s) assigned to the docket concerning the extension shall set procedural guidelines, including discovery limits and deadlines allowing the commission sufficient time to provide notice pursuant to paragraph (3)(A)(i) of this subsection.
    (B) Standard of review. In determining whether to extend the time period for the filing of a base rate proceeding, the commission may consider matters such as the following:
      (i) the results of recent earnings monitoring reports for the utility, including such adjustments to those reports as may be found appropriate by the commission;
      (ii) recent and expected levels of expenses, sales revenues, and capital investment for the utility;
      (iii) recent and projected financial results for the utility;
      (iv) continued appropriateness of the utility's allocation of costs and rate design;
      (v) capital market conditions;
      (vi) whether there has been a material change in circumstances since the utility's base rates were last established by the commission; and
      (vii) any other factors the commission deems relevant to its determination.
  (3) Notice.
    (A) Notice to the utility. The utility must make the filings described in paragraph (1) of this subsection not later than the 120th day after the date the commission provides written notice to the utility:
      (i) that a filing under paragraph (1)(A) of this subsection will be required; or
Cont'd...