TXU ELECTRIC COMPANY, et al., Appellants, v. PUBLIC UTILITY COMMISSION OF TEXAS, et al., Appellees.
No. 00-0936.
Supreme Court of Texas.
June 6, 2001.
Rehearing Overruled Aug. 30, 2001.
51 S.W.3d 275
“The problem of statutory construction is to ascertain the intent of the Legisla-ture. When we abandon the plain meaning of words, statutory construc-tion rests upon insecure and obscure foundations at best. It should perhaps be reiterated that Courts have no con-cern with the wisdom of legislative acts, but it is our plain duty to give effect to the stated purpose or plan of the Legis-lature, although to us it may seem ill advised or impracticable.”23
I would hold that the Commission did not have the statutory authority to include a non-standard trueup in CPL‘s financing order. Accordingly, I respectfully dissent.
PER CURIAM.
In 1999, the Legislature amended the Public Utility Regulatory Act (PURA) to usher in deregulation of retail electric utili-ty rates in Texas.1 As part of that plan, the Legislature concluded that, subject to certain restrictions, an existing utility like TXU Electric Company may recover amounts that the PURA defines as “regu-latory assets” by using securitization fi-nancing. Securitization is accomplished through a financing order issued by the Commission that authorizes a utility to issue transition bonds. The transition bonds are repaid or secured by transition charges to ratepayers in a utility‘s service area. TXU requested the Commission to issue a financing order securitizing certain of its regulatory assets. The Commission authorized securitization of some but not all of those assets. A district court re-versed the Commission‘s order in part and remanded the case for further proceed-ings. TXU and others bring this direct appeal to our Court.2
We hold that: 1) in order to ensure that securitization provides tangible and quantifiable benefits to ratepayers greater than would have been achieved absent the issuance of transition bonds,3 the Commis-sion may apply a present value test in addition to the present value and revenue requirement tests expressly set forth in sections 39.301 and 39.303(a) of the PURA; 2) in applying an additional pres-ent value test, the Commission should as-sume that recovery of regulatory assets and stranded costs absent securitization would occur in substantially less than for-ty years; 3) the Commission must consid-er regulatory assets that a utility seeks to securitize in the aggregate to determine whether those assets meet the require-ments for securitization and cannot cate-gorically exclude certain types of regulato-ry assets from securitization; 4) section 39.253 permits the Commission to apply the rate design methodology established in a utility‘s last rate design case to the data in that rate case rather than to more current data, in order to establish demand allocation factors that determine how transition charges are to be allocated among classes of customers; 5) the Com-mission is authorized by section 39.307 to adopt a non-standard true-up provision that reallocates transition charges among classes of customers in a manner that dif-fers from the allocation procedures set forth in section 39.253; 6) none of the other issues regarding allocation of transi-tion costs among classes of customers has
Justice OWEN filed a concurring opinion, in which Chief Justice PHILLIPS, Justice HECHT, Justice ENOCH, Justice BAKER, Justice ABBOTT, Justice HANKINSON, and Justice JEFFERSON joined.
Justice HECHT filed a concurring opinion, in which Chief Justice PHILLIPS, Justice ABBOTT, Justice HANKINSON, and Justice JEFFERSON joined.
Justice OWEN filed a dissenting opinion, in which Justice ENOCH and Justice BAKER joined.
Justice O‘NEILL did not participate in the decision.
Justice OWEN, joined by Chief Justice PHILLIPS, Justice HECHT, Justice ENOCH, Justice BAKER, Justice ABBOTT, Justice HANKINSON, and Justice JEFFERSON, concurring.
In 1999, the Legislature determined that partial deregulation of the electric power industry was in the public interest. To that end, the Legislature amended the Public Utility Regulatory Act (PURA).1 In City of Corpus Christi v. Public Utility Commission, also decided today, we de-scribe in some detail the sections of the PURA that permit an electric utility to securitize regulatory assets and stranded costs as part of the transition to market-based retail electric rates. We need not repeat that discussion here.
TXU Electric Company filed an applica-tion with the Public Utility Commission for a financing order in which TXU sought to securitize $1.65 billion in regulatory assets and other costs and proposed to write off about $285 million in regulatory assets. The Commission allowed TXU to securitize $363 million of regulatory assets. TXU and several of the forty-four parties who had intervened in the proceedings before the Commission appealed to district court in Travis County. The district court held that: 1) the Commission did not err in applying a present value test in addition to the present value and revenue require-ment tests set forth in sections 39.301 and 39.303(a) of the PURA; 2) the Commission had the discretion to consider TXU‘s regu-latory assets on an asset-by-asset basis in determining whether securitization would provide tangible benefits to ratepayers; 3) the Commission should have examined how long it would take TXU to recover the regulatory assets at issue under the regu-latory scheme established by the 1999 amendments to the PURA rather than un-der the previously existing regulatory scheme; 4) the Commission was not re-quired to use the average life of the transi-tion bonds that would be issued under the financing order in calculating the maxi-mum amount that TXU could securitize; 5) the Commission‘s Finding of Fact 113 and references to that finding in Conclu-sion of Law 41 and Ordering Paragraph 37, regarding future treatment of reac-quired debt securitized under the financing order, are advisory and have no res judica-ta effect; and 6) the Commission did not
TXU, the Commission, the State of Tex-as, the Office of Public Utility Counsel, Texas Industrial Energy Consumers, Tex-as Retailers Association, the Steering Committee of Cities Served by TXU, the Coalition of Independent Colleges and Universities, and Nucor Steel, a division of Nucor Corporation, appealed directly to this Court pursuant to section 39.303(f) of the PURA.
I
One of the principal issues in this appeal is how to determine the amount of regulatory assets that a utility may securi-tize under the PURA. Section 39.303(a) says that when a utility applies to recover its regulatory assets and eligible stranded costs, the Commission shall adopt a financ-ing order upon finding that “the total amount of revenues to be collected under the financing order is less than the reve-nue requirement that would be recovered over the remaining life of the stranded costs using conventional financing methods and that the financing order is consistent with the standards in Section 39.301.”3 The parties disagree about what constitute “the standards in Section 39.301.” Specifi-cally, the parties diverge on how the Com-mission is to carry out section 39.301‘s directive that it “shall ensure that securiti-zation provides tangible and quantifiable benefits to ratepayers, greater than would have been achieved absent the issuance of transition bonds.”4
A
Section 39.301 and the relevant parts of section 39.303 provide:
§ 39.301 Purpose
The purpose of this subchapter is to enable utilities to use securitization fi-nancing to recover regulatory assets and stranded costs, because this type of debt will lower the carrying costs of the as-sets relative to the costs that would be incurred using conventional utility fi-nancing methods. The proceeds of the transition bonds shall be used solely for the purposes of reducing the amount of recoverable regulatory assets and stranded costs, as determined by the commission in accordance with this chapter, through the refinancing or re-tirement of utility debt or equity. The commission shall ensure that securitiza-tion provides tangible and quantifiable benefits to ratepayers, greater than would have been achieved absent the issuance of transition bonds. The com-mission shall ensure that the structuring and pricing of the transition bonds re-sult in the lowest transition bond charges consistent with market condi-tions and the terms of the financing order. The amount securitized may not exceed the present value of the revenue requirement over the life of the pro-posed transition bond associated with the regulatory assets or stranded costs sought to be securitized. The present value calculation shall use a discount rate equal to the proposed interest rate on the transition bonds.5
§ 39.303. Financing Orders; Terms
(a) The commission shall adopt a fi-nancing order, on application of a utility to recover the utility‘s regulatory assets and eligible stranded costs under Sec-tion 39.201 or 39.262, on making a find-ing that the total amount of revenues to be collected under the financing order is
(b) The financing order shall detail the amount of regulatory assets and stranded costs to be recovered and the period over which the nonbypassable transition charges shall be recovered, which period may not exceed 15 years.
***
(e) The commission shall issue a fi-nancing order under Subsections (a) and (g) not later than 90 days after the utility files its request for the financing order.6
All parties agree that there are at least two limitations on the maximum amount of regulatory assets or stranded costs that can be securitized. One limitation is found in the last two sentences of section 39.301. They require a present value test. The present value test expressly set forth in section 39.301 examines the revenue re-quirement over the life of the bonds, which under the PURA cannot exceed fifteen years.7
Another limitation on the amount that may be securitized is the revenue require-ment test required by section 39.303(a). All parties agree that under that provision, the total revenues to be collected under the financing order, including the costs of issuing and servicing the bonds, must be less than the revenue requirement using conventional financing methods over the remaining life of the assets, which in this case is presently up to forty years. There is no present value test component in de-termining whether the total revenue re-quirement is met. The revenue require-ment in total dollars over the life of the bonds is compared with the revenue re-quirement in total dollars over the remain-ing life of the regulatory assets.
The Commission and other parties to this appeal have taken the position that there is a third limitation on the amount that may be securitized. They contend that in order for the Commission to dis-charge its obligation to “ensure that secu-ritization provides tangible and quantifia-ble benefits to ratepayers, greater than would have been achieved absent the issu-ance of transition bonds,” the Commission is required to ascertain the present value of the revenue requirements of the regula-tory assets without securitization, using the actual scheduled life of the assets un-der the regulatory scheme as it existed before the 1999 amendments to the PURA. The Commission maintains that it is then required to compare the outcome of that analysis with the present value computa-tion specified in the final two sentences of section 39.301 to see if securitization re-sults in a greater benefit to ratepayers.
The revenue requirement over the forty-year remaining life of the assets that TXU seeks to securitize was about $2.467 billion. Using the interest rates that TXU expect-ed would apply to the transition bonds, the revenue requirement of the bonds was about $124 million less than $2.467 billion. Using TXU‘s “worst case” scenario for interest rates, the revenue requirement of the bonds was about $100,000 less than the $2.467 billion. TXU thus meets the reve-nue requirement test. However, the Com-mission argues that when the present val-ue of transition charges collected over the twelve-year life of the transition bonds is compared with the present value of pay-ment for the regulatory assets over their
TXU takes the position that the Com-mission is not authorized to engraft onto the PURA‘s securitization provisions a present value test that is different from or in addition to the present value test ex-pressly set forth in section 39.301. TXU contends that the only computations that the Legislature intended to be performed in determining the amount to be securi-tized are the two computations to be per-formed under sections 39.301 and 39.303(a), which are the present value cal-culation required by the last two sentences of section 39.301 and the total revenue test under section 39.303(a). TXU contends that the requirement that ratepayers re-ceive a tangible and quantifiable benefit from securitization is measured by these tests and other considerations. TXU says that there are quantifiable benefits to rate-payers from securitizing the $1.65 billion of regulatory assets because to meet the total revenue test in section 39.303(a) and the present value test set forth in the last two sentences of section 39.301, TXU would write off and never recover from ratepay-ers approximately $285 million in regulato-ry assets.
The district court adopted somewhat of a middle ground. It concluded that the Commission had the discretion to apply a second present value test to determine whether securitization provides “tangible and quantifiable benefits” within the mean-ing of section 39.301. But the district court differed with the Commission about how the second present value test should be calculated. The district court conclud-ed that the phrase “absent the issuance of transition bonds” in section 39.301 re-quired the Commission to base its second present value calculation “on the asset re-covery period that exists under the new regulatory scheme” of the PURA. More specifically, the district court held that the Commission‘s second present value test could not “lawfully be based upon the re-covery periods under the earlier system of rate regulation that provided for asset lives up to 40 years.”
For the reasons considered below, we conclude that the district court‘s construc-tion of sections 39.301 and 39.303(a) best comports with the express provisions of the PURA. We agree with the district court that the Commission is authorized to impose a second present value test in de-termining the amount of regulatory assets or stranded costs that can be securitized, but in determining present value “absent the issuance of transition bonds,” the Com-mission should use a remaining life for the assets that is far less than forty years. The PURA contemplates that the transi-tion to “a fully competitive electric power industry”8 will span considerably less than forty years.
B
We begin our analysis with the text of section 39.301. As indicated above, the sentence that gives rise to the controversy says, “The commission shall ensure that securitization provides tangible and quanti-fiable benefits to ratepayers, greater than would have been achieved absent the issu-
The PURA provides that if a utility does not securitize all or some of its regulatory assets and stranded costs, they can be recovered through nonbypassable “compe-tition transition charge[s].”10 Section 39.201(k) gives the Commission discretion to determine the length of time over which regulatory assets and stranded costs may be recovered by this method.11 All par-ties, including the Commission, agree that the Commission could shorten the remain-ing life over which regulatory assets and stranded costs will be recovered to a time period far less than the remaining life of up to forty years that those assets and costs would have had absent the 1999 amendments to the PURA. The determina-tion of the appropriate recovery period would occur in a rate proceeding that is separate from securitization.
A large part of the regulatory assets that TXU seeks to securitize are State-ment of Financial Accounting Standard (SFAS) 109 assets. SFAS 109 assets es-sentially represent amounts that TXU would have recovered under the former regulatory scheme from ratepayers over a period of forty years to pay federal income taxes that it will owe in connection with expenditures it made in the past that were capitalized instead of expensed. The Com-mission asks this Court to authorize a present value test for these assets based on a remaining life of forty years even though the Commission knows that in all probability, under section 39.201(k), it will shorten the remaining life to something far less than forty years. Notwithstanding the Commission‘s recognition of this fact, it maintains that the district court erred in requiring it to use a remaining life of less than forty years because amount of any reduction to the forty-year recovery period has yet to be determined. The Office of Public Utility Counsel similary argues says that “the essential problem with the lower court‘s position is that neither TXU, the District Court, or anyone else can state with any level of precision over what peri-od the non-securitized assets will be recov-ered.”
Although there may be some uncertain-ty as to precisely how much the Commis-sion would shorten the recovery period for the regulatory assets at issue if they were not securitized, that uncertainty does not justify the use of a forty-year life. The PURA contemplates a far shorter recovery period for regulatory assets and other stranded costs that are not securitized but are instead recovered through competition transition charges. Each electric utility was required to file by April 1, 2000 pro-posed tariffs that included any expected competition transition charges. All or any part of a utility‘s regulatory assets that are not securitized can be recovered through competition transition charges.12 Section 39.201(k) sets forth the factors that the Commission is to consider in determining the length of time over which stranded costs, including regulatory assets, will be recovered.13 The PURA indicates that a
Statements made by PUC Commission-ers at an open meeting in this case are consistent with our understanding of the Legislature‘s intent. Those Commission-ers indicated that competition transition charges, which would be the method for recovering regulatory assets and stranded costs absent securitization, would be col-lected over a period of time that would be unlikely to exceed fifteen years and that
We therefore conclude that the district court did not err in holding that the Com-mission could employ a present value test in addition to the present value test ex-pressly set forth in section 39.301, but that the Commission must assume that absent securitization, regulatory assets and stranded costs would be recovered through competition transition charges in considerably less than forty years.
II
The financing order in this case approved the issuance of a series of transi-tion bonds with differing maturity dates TXU explains that this was designed to allow its regulatory assets to be securitized at the lowest overall interest rate on the best possible terms, and no one takes issue with that assertion. The bonds’ maturity dates range from one to twelve years after their issuance. TXU contends that in per-forming the present value test set forth in the last two sentences of section 39.301,20 the Commission should have used the weighted average life over which the bonds will be outstanding, which would be ap-proximately six years, rather than twelve years. We approve of the Commission‘s methodology.
The Commission‘s method of calculating present value takes into account the actual timing of bond payments until the last payment is made on the oldest bond. The Commission concluded, and we agree, that accounting for the actual timing of pay-ments is necessary to determine present value. TXU‘s averaging method does not mathematically account for transition charges that will be collected until the last of the series of transition bonds matures twelve years from the date of issuance.
III
Another significant issue presented is whether, in determining the amount to be securitized, the Commission must con-sider the regulatory assets or other stranded costs to be securitized in the aggregate or, instead, may conduct an as-set-by-asset analysis. We conclude that the Commission must consider regulatory assets in the aggregate for the same rea-sons expressed in Corpus Christi.21
Briefly, what is at issue in this case are regulatory assets that do not currently earn a return. The majority of TXU‘s regulatory assets fall into this category. Among TXU‘s regulatory assets that earn no return are approximately $1.45 billion in SFAS 109 assets. As explained above, these assets essentially represent amounts that TXU would have recovered under the former regulatory scheme from ratepayers to pay federal income taxes that it will owe, when it recovers through rates, ex-penditures it made in the past that were capitalized instead of expensed.
Some of TXU‘s regulatory assets do earn a return, as much as 13.637 percent. The proposed interest rate on TXU‘s tran-sition bonds was 7.24 percent. According-
The State of Texas, the Office of Public Utility Counsel, and Texas Industrial En-ergy Consumers have taken the position that to maximize the benefit of securitiza-tion to ratepayers, all regulatory assets that do not earn a rate of return should be declared ineligible for securitization. The State and those aligned with it on these issues contend that each regulatory asset must be analyzed on a stand-alone basis to determine if securitization of that asset benefits ratepayers. As we explain in Cor-pus Christi, the PURA does not support that position.22 The PURA says that all regulatory assets are to be securitized on application of a utility, subject to the re-quirement that “the total amount of reve-nues to be collected under the financing order” meets certain requirements.23 The PURA defines “regulatory asset” with specificity.24 Regulatory assets are de-fined with reference to a utility‘s 1998 Securities and Exchange Commission Form 10-K, which lists regulatory assets. A utility is entitled to securitize 100 per-cent of its regulatory assets,25 subject only to the tests in sections 39.303(a) and 39.301.26 The present value test in section 39.301 ensures that a utility will not recov-er a return on these assets higher than the return it would receive under the existing regulatory scheme. Neither the present value test nor the requirement in section 39.301 that the Commission “ensure that securitization provides tangible and quanti-fiable benefits to ratepayers, greater than would have been achieved absent the issu-ance of transition bonds”27 authorizes the Commission to “maximize” benefits to ratepayers by refusing to securitize certain types of regulatory assets when 100 per-cent of regulatory assets are “qualified costs” under the PURA.28
The district court erred in concluding that the Commission has the discretion to consider regulatory assets on an asset-by-asset basis. Because the Commission did not consider the regulatory assets and oth-er costs that TXU sought to securitize in the aggregate, the Commission must do so on remand.
IV
A number of parties have chal-lenged the manner in which the Commis-sion allocated transition charges among customer classes. TXU proposed and the Commission adopted seven regulatory as-set recovery classes for purposes of col-lecting transition charges. Those classes and the regulatory asset allocation factors assigned to each under section 39.253 are:
| Class: | Allocation Factor: |
| Residential | 41.2705% |
| General Service-Secondary | 44.7323% |
| General Service-Primary | 5.8982% |
| High Voltage Service | 2.7875% |
| Lighting Service | 0.6836% |
| Instantaneous Interruptible | 1.8568% |
| Noticed Interruptible | 2.7711% |
| Total | 100.0000% |
Nucor Steel is in the Instantaneous In-terruptible regulatory asset recovery class. Nucor Steel is a nonfirm, also known as an interruptible, customer on TXU‘s system. A utility may interrupt service to an inter-ruptible customer for specified reasons, typically during periods of high demand from other customers on that utility‘s sys-tem. Texas Industrial Energy Consumers
The pertinent section of the PURA is 39.253(c)-(h).29 As we explain in greater detail in Corpus Christi,30 the allocation of stranded costs under section 39.253 has two basic components. One is determined by applying the same “methodology used to allocate the costs of the underlying as-sets in the electric utility‘s most recent commission order addressing rate de-sign.”31 The other is the energy con-sumption of the respective classes32 “based on the relevant class characteristics as of May 1, 1999, adjusted for normal weather conditions.”33 The question pre-sented here is whether the Commission should apply the same methodology used in TXU‘s last rate design case to the data used in that rate case, or whether the Commission is free to choose more recent data.34
We conclude in Corpus Christi and in this case that the PURA is unclear in this regard.35 In such a situation, we give some deference to the Commission as long as its interpretation of a code provision is a reasonable one and does not conflict with the code‘s language.36 The Commission construed section 39.253 to mean that the methodology used in a utility‘s last rate design case is to be applied to the data used in that rate case. That is a reason-able construction of the PURA that does not contradict any of its language, and we agree with the Commission‘s construction.
V
Several parties who are also parties in Corpus Christi raise many of the same issues in both cases.37 Our decision in CP & L resolves each of these issues, and we will not lengthen this opinion by reiterat-ing all the reasons for our holdings. We instead briefly summarize each issue and our disposition.
Certain of TXU‘s customers assert that the Commission failed to follow section 39.253 in allocating transition costs to the
TIEC says that in determining how much of the transition costs should be allocated to the industrial classes, the Commission should have excluded load lost when customers switched to sources of power that exempt them from paying tran-sition charges.39 Again, for the reasons we consider in Corpus Christi, we reject that argument.40
VI
Several parties to this appeal, in-cluding the Commission, contend that the district court erred when it held that the Commission‘s Finding of Fact 113 and ref-erences to that finding in Conclusion of Law 41 and Ordering Paragraph 37 were “advisory and superfluous to the Order and therefore [have] no res judicata ef-fect.” The finding of the Commission that is at issue concerned loss on reacquired debt.
TXU reacquired preferred stock and high-cost debt before the maturity date of that debt by paying a premium. The loss TXU sustained in those transactions is in-cluded in the definition of regulatory as-sets under the PURA, and the Commission allowed TXU to include loss on reacquired debt as part of the amount securitized in the financing order. This same loss on reacquired debt is also reflected as an increase in TXU‘s cost of capital, and that in turn increases TXU‘s rate of return. The Commission and others were con-cerned that TXU would enjoy a double recovery of its losses. Responding to that concern, the Commission concluded that loss on reacquired debt “should not be removed from [TXU‘s] cost-of-capital cal-culation for purposes of the annual report submitted pursuant to PURA § 39.257,” but that instead an adjustment should be made in future proceedings.41 In the Fi-nancing Order, Finding of Fact 113, the Commission said that:
[A]n adjustment should be made in the true up proceeding under PURA § 39.262 to account for the effect of securitizing the loss on reacquired debt on [TXU‘s] cost of capital. This treat-ment is necessary to comply with the Legislature‘s mandate in PURA § 39.262(a) that a utility and its affiliates “may not be permitted to overrecover stranded costs” by using any of the methods provided in Chapter 39 [§ 39.262(a)]. In addition, any determi-nations regarding the effect of securitiz-ing loss on reacquired debt on the calcu-lation of stranded costs should not be made in this docket but should be made in [TXU‘s] cost unbundling case under PURA § 39.201.42
We agree with the district court that this was an advisory and premature find-
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For the reasons considered above, we conclude that: 1) in order to ensure that securitization provides tangible and quan-tifiable benefits to ratepayers greater than would have been achieved absent the issuance of transition bonds, the Commis-sion may apply a present value test in addition to the present value and revenue requirement tests expressly set forth in sections 39.301 and 39.303(a) of the PURA; 2) in applying an additional pres-ent value test, the Commission should as-sume that recovery of regulatory assets and stranded costs absent securitization would occur in substantially less than for-ty years; 3) the Commission must consid-er regulatory assets that a utility seeks to securitize in the aggregate to determine whether those assets meet the require-ments for securitization and cannot cate-gorically exclude certain types of regulato-ry assets from securitization; 4) section 39.253 permits the Commission to apply the rate design methodology established in a utility‘s last rate design case to the data in that rate case rather than to more current data, in order to establish demand allocation factors that determine how transition charges are to be allocated among classes of customers; 5) none of the other issues regarding allocation of transition costs among classes of custom-ers has merit; and 6) certain findings of fact and conclusions of law by the Com-mission are advisory.
Justice HECHT, joined by Chief Justice PHILLIPS, Justice ABBOTT, Justice HANKINSON, and Justice JEFFERSON, concurring.
We join fully in the Court‘s judgment and in JUSTICE OWEN‘S concurring opinion. This is the opinion of the Court regarding the validity of the “non-standard true-up” included in the Public Utility Commission‘s financing order for TXU Electric Compa-ny.
The financing order for TXU con-tains a non-standard true-up procedure es-sentially identical to the one in the financ-ing order for Central Power and Light Company, which we approve today in City of Corpus Christi v. Public Utility Com-mission, 51 S.W.3d 231 (Tex. 2001). A Commission witness testified that if any TXU customer class experienced a de-crease in power usage of more than six to nine percent, that class would be “at risk for a cascading loss scenario.” The argu-ments for and against that procedure in this case are the same as those made in Corpus Christi with one exception. Nucor Steel, one of TXU‘s largest customers, ar-gues that any overpayments or underpay-ments of transition charges by any one class should be reallocated among all TXU‘s customers, thereby fully cross-col-lateralizing responsibility for the transition as TXU proposed to the Commission. Without deciding whether the Commission was empowered to depart this far from the allocation requirements of section 39.253, we easily conclude that the Commission was not required to adopt this approach instead of the somewhat more restricted non-standard true-up. For the same rea-sons explained in our concurring opinion in that case, we approve of the non-standard true-up procedure in this case.
Justice OWEN, joined by Justice ENOCH and Justice BAKER, dissenting.
The financing order for TXU contains a non-standard true-up provision that is vir-tually identical to the non-standard true-up provision at issue in City of Corpus Christi
Notes
(k) In determining the length of time over which stranded costs under Subsection (h) may be recovered, the commission shall con-sider:
(1) the electric utility‘s rates as of the end of the freeze period;
Two years after customer choice is intro-duced, the stranded cost estimate under this section shall be reviewed and, if necessary, adjusted to reflect a final, actual valuation in the true-up proceeding under Section 39.262. If, based on that proceeding, the competition transition charge is not sufficient, the com-mission may extend the collection period for the charge or, if necessary, increase the charge. Alternatively, if it is found in the true-up proceeding that the competition tran-sition charge is larger than is needed to re-cover any remaining stranded costs, the com-mission may:....
(c) After January 10, 2004, at a schedule and under procedures to be determined by the commission, each transmission and dis-tribution utility, its affiliated retail electric provider, and its affiliated power genera-tion company shall jointly file to finalize stranded costs under Subsections (h) and (i) and reconcile those costs with the estimated stranded costs used to develop the competi-tion transition charge in the proceeding held under Section 39.201. Any resulting difference shall be applied to the nonby-passable delivery rates of the transmission and distribution utility, except that at the utility‘s option, any or all of the remaining stranded costs may be securitized under Subchapter G.
The amount securitized may not exceed the present value of the revenue requirement over the life of the proposed transition bond associated with the regulatory assets or stranded costs sought to be securitized. The present value calculation shall use a discount rate equal to the proposed interest rate on the transition bonds.