(a) Energy conservation program authority. A local distribution company may offer to residential and commercial customers and prospective residential and commercial customers and provide to those customers an energy conservation program pursuant to this section and Texas Utilities Code, §§104.401-104.403. The Commission has exclusive original jurisdiction over energy conservation programs implemented by local distribution companies. A political subdivision served by a local distribution company that implements an energy conservation program approved by the Commission pursuant to this section shall not limit, restrict, or otherwise prevent an eligible customer from participating in the energy conservation program based on the type or source of energy delivered to its customers.
(b) Definitions.
  (1) Administrative costs--All prudently incurred costs of creating, managing, and administering an ECP portfolio.
  (2) Director--The Director of the Gas Services Department of the Oversight and Safety Division or the Director's delegate.
  (3) Energy conservation program (ECP)--A particular program that promotes energy conservation or energy efficiency.
  (4) ECP portfolio--The entire group of energy conservation programs offered to a service area by a local distribution company as described in subsection (f) of this section. The portfolio may consist of one or more programs.
  (5) ECP rate--The energy conservation program rate approved by the Commission in the form of a monthly volumetric charge designed to recover an LDC's authorized administrative and portfolio costs.
  (6) Gas Services--The Gas Services Department of the Oversight and Safety Division of the Commission.
  (7) Local distribution company (LDC)--An investor-owned gas utility that operates a retail gas distribution system.
  (8) Portfolio costs--All prudently incurred non-administrative costs that an LDC seeks to recover through the ECP rate to implement and deliver an ECP portfolio to customers and prospective customers, including but not limited to research and development costs, payment of rebates, material costs, the costs associated with installation and removal of replaced materials and/or equipment, and the cost of education and customer awareness materials related to conservation or efficiency.
  (9) Portfolio term--The term during which an approved ECP portfolio will be in effect.
  (10) Program year--The 12-month period beginning the first day of the month following the Commission's approval of the ECP portfolio.
  (11) Research and development costs--The costs prudently incurred by an LDC to conduct market and engineering studies for the feasibility and design of potential ECPs. Research and development costs cannot exceed 5% of portfolio costs.
(c) General requirements.
  (1) An LDC may recover costs of an ECP portfolio if the ECP portfolio is approved by the Commission pursuant to this section and the LDC implements the approved ECP portfolio. An LDC seeking to implement an ECP portfolio shall apply with Gas Services and receive a final order from the Commission before beginning to recover the approved costs of the ECP portfolio.
  (2) An LDC applying for an ECP portfolio shall submit an application for each service area in which it seeks to implement an ECP.
  (3) If the Commission approves the LDC's application or approves the application with modifications, the LDC may recover costs to implement the ECP portfolio, including costs incurred to design, market, implement, administer, and deliver the ECP portfolio. Any costs included in an ECP portfolio approved by the Commission shall be fully subject to review by the Commission for reasonableness and prudence during the LDC's next statement of intent rate proceeding. The LDC shall include support for this determination in its next statement of intent application. ECP costs that are imprudent or recovered from customers without approval of the Commission are subject to refund as determined by the Commission.
(d) Contents of application. An LDC may apply for approval of an ECP portfolio by submitting an application to Gas Services.
  (1) Initial ECP portfolio application. An initial application for approval of an ECP portfolio shall include:
    (A) a description of any existing energy conservation programs offered by the LDC in the applicable service area prior to the effective date of this section;
    (B) a list and detailed description of each proposed ECP;
    (C) the objectives for each proposed ECP;
    (D) the proposed per-program year portfolio costs for each ECP and the ECP portfolio;
    (E) the proposed per-program year administrative costs for each ECP and the ECP portfolio;
    (F) the proposed per-program year amount and proportion of ECP portfolio costs and administrative costs to be funded by customers;
    (G) the proposed per-program year amount and proportion of ECP portfolio costs and administrative costs to be funded by shareholders;
    (H) the projected annual consumption reduction per customer class for each ECP and the ECP portfolio;
    (I) the projected annual net cost savings per customer class for each ECP and the ECP portfolio;
    (J) a copy of the notice to customers and an affidavit stating the method of notice and the date or dates on which the notice was given;
    (K) copies of written correspondence received by the LDC in response to the notice;
    (L) copies of any proposed advertisements or promotional materials that the LDC intends to distribute to customers if an ECP portfolio is approved;
    (M) copies of the proposed ECP rate schedule or schedules;
    (N) calculation of the proposed ECP rate;
    (O) normalized historical annual volumes per customer class;
    (P) projected volumes for the upcoming program year per customer class;
    (Q) any other information that supports determination of the ECP rate; and
    (R) the name of the LDC's representative, business address, telephone number, and email address.
  (2) Subsequent ECP portfolio application. An LDC shall re-apply for approval of its ECP portfolio in accordance with this paragraph. A subsequent application shall be filed 45 days following the end of the ECP portfolio's second program year. A subsequent application for approval of an ECP portfolio shall include:
    (A) a list and detailed description of each proposed ECP;
    (B) the objectives for each ECP;
    (C) the proposed per-program year portfolio costs for each ECP and the ECP portfolio;
    (D) the proposed per-program year administrative costs for each ECP and the ECP portfolio;
    (E) the actual historical per-program year portfolio costs for each ECP and the ECP portfolio;
    (F) the actual historical per-program year administrative costs for each ECP and the ECP portfolio;
    (G) the historical and proposed per-program year amount and proportion of ECP portfolio costs and administrative costs to be funded by customers;
    (H) the historical and proposed per-program year amount and proportion of ECP portfolio costs and administrative costs to be funded by shareholders;
    (I) the projected per-program year consumption reduction per customer class for each ECP and the ECP portfolio over the new portfolio term and the actual historical per-program year consumption reduction per customer class for each ECP and the ECP portfolio over the previous portfolio term;
    (J) the projected per-program year net cost savings per customer class for each ECP and the ECP portfolio over the new portfolio term and the actual historical per-program year cost savings per customer class for each ECP and the ECP portfolio over the previous portfolio term;
    (K) copies of any proposed advertisements or promotional materials that the LDC intends to distribute to customers if the ECP portfolio is approved;
    (L) copies of the proposed rate schedule or schedules;
    (M) calculation of the proposed ECP rate;
    (N) normalized historical annual volumes per customer class;
    (O) projected volumes for the upcoming program year per customer class;
    (P) any other information that supports determination of the ECP rate; and
Cont'd...