Tex. Utilities Code § 39.457

In the event that the electric utility subject to this subchapter either merges, consolidates, or otherwise becomes affiliated with another owner of electric generation, or completes the jurisdictional separation authorized by Section 39.452(e) and the resulting vertically integrated utility proposes to join a regional transmission organization, and either action adversely affects the rights or obligations of an electric cooperative under a wholesale generation or transmission agreement entered into before the effective date of this subchapter or otherwise adversely affects the electric cooperative's access to its existing generation resources under said agreements, then the utility shall submit a proposal agreeable to the cooperative and the utility for addressing such rights and obligations in the appropriate regulatory proceeding. Such proposal shall be consistent with applicable law regarding the rights and obligations of the electric cooperative and the utility under such existing generation or transmission agreements.

(b) It is the intent of the legislature that:

(1) securitization of hurricane reconstruction costs will be subject to the same procedures, standards, and protections for the securitization of stranded costs and regulatory assets under Subchapter G in effect on the effective date of this section, except as provided by this subchapter; and

(2) the commission will ensure that securitization of hurricane reconstruction costs provides greater tangible and quantifiable benefits to ratepayers than would have been achieved without the issuance of transition bonds.

(1) "Hurricane reconstruction costs" means reasonable and necessary costs, including costs expensed, charged to the storm reserve, or capitalized, that are incurred by an electric utility subject to this subchapter due to any activity or activities conducted by or on behalf of the electric utility in connection with the restoration of service associated with electric power outages affecting customers of the electric utility as the result of Hurricane Rita, including mobilization, staging, and construction, reconstruction, replacement, or repair of electric generation, transmission, distribution, or general plant facilities.

(2) "Hurricane Rita" means the hurricane of that name that struck the coastal region of this state in September 2005.

(b) If the commission determines it to be appropriate, hurricane reconstruction costs may include carrying costs from the date on which the hurricane reconstruction costs were incurred until the date that transition bonds are issued.

(c) To the extent a utility subject to this subchapter receives insurance proceeds, governmental grants, or any other source of funding that compensates it for hurricane reconstruction costs, those amounts shall be used to reduce the utility's hurricane reconstruction costs recoverable from customers. If the timing of a utility's receipt of those amounts prevents their inclusion as a reduction to the hurricane reconstruction costs that are securitized, the commission shall take those amounts into account in:

(1) the utility's next base rate proceeding; or

(2) any proceeding in which the commission considers hurricane reconstruction costs.
icane reconstruction costs recoverable from customers. If the timing of a utility's receipt of those amounts prevents their inclusion as a reduction to the hurricane reconstruction costs that are securitized, the commission shall take those amounts into account in:

(1) the utility's next base rate proceeding; or

(2) any proceeding in which the commission considers hurricane reconstruction costs.

(b) Subject to the standards, procedures, and tests contained in this subchapter and Subchapter G, the commission shall adopt a financing order on the application of the utility to recover its hurricane reconstruction costs. On the commission's issuance of a financing order allowing for recovery and securitization of hurricane reconstruction costs, the provisions of this subchapter and Subchapter G continue to govern the financing order and the rights and interests established in the order, and this subchapter and Subchapter G continue to govern any transition bonds issued pursuant to the financing order. To the extent any conflict exists between the provisions of this subchapter and Subchapter G in cases involving the securitization of hurricane reconstruction costs, the provisions of this subchapter control.

(c) For purposes of this subchapter, "financing order," as defined by Section 39.302 and as used in Subchapter G, includes a financing order authorizing the securitization of hurricane reconstruction costs.

(g) Notwithstanding Section 39.303(c), hurricane reconstruction costs shall be functionalized and allocated to customers in the same manner as the corresponding facilities and related expenses are functionalized and allocated in the utility's current base rates.

(h) The amount of any accumulated deferred federal income taxes offset, used to determine the securitization total, may not be considered in future rate proceedings. Any tax obligation of the electric utility arising from its receipt of securitization bond proceeds, or from the collection and remittance of transition charges, shall be recovered by the electric utility through the commission's implementation of Section 39.458, Section 39.459, this section, and Sections 39.461-39.463.

(i) If the commission determines that recovery of all or any portion of an electric utility's hurricane reconstruction costs using securitization is not beneficial to ratepayers of the electric utility, under one or more of the tests applied to determine those benefits, the commission shall permit the electric utility to recover the entirety of the hurricane reconstruction costs through an appropriate customer surcharge mechanism, including appropriate carrying costs, provided that the electric utility has not securitized any portion of its hurricane reconstruction costs. A rate proceeding under Chapter 36 may not be required to determine and implement this surcharge mechanism. A rider adopted under this subsection must expire on the implementation of rates resulting from the filing of a Subchapter C, Chapter 36, rate proceeding.