Relating to a capacity cost recovery rider for certain electric utilities.

New charges or credits for Texas electricity

The law creates a yearly electric-bill charge or credit tied to wholesale auctions that secure power capacity. It covers only utilities operating entirely outside ERCOT, Texas’s main power grid, in the Southeastern Electric Reliability Council region. To apply, a utility’s latest earnings report must show no earnings above its approved return on equity. Customers pay eligible auction costs or receive eligible auction revenues, excluding amounts already covered by base rates. Each annual update covers June 1 through May 31. It includes past-auction refunds and surcharges shown in settlement statements or federal orders issued during the preceding 12 months. A yearly adjustment compares actual costs and revenues with rider collections from two years earlier and fixes prior application math errors. While these items stay outside base rates, another adjustment accounts for customer growth and weather-adjusted changes in electricity use and demand. Charges follow customer-group allocation shares from the latest base-rate case. They use projected electricity use, or projected peak demand for groups with demand meters. The Public Utility Commission reviews costs and revenues for reasonableness, prudent spending, proper allocation to Texas customers, and overcollection. In later base-rate cases, it reconciles actual amounts and removes rider-eligible items from base rates to prevent double charging. Utilities can apply for costs incurred before September 1, 2026, even before commission rules are adopted. Approved early-recovery rates start with service during or after the first billing cycle of the month following the commission’s order. The authority expires September 1, 2035. The law sets no dollar amount for an individual household’s bill change.