Electric and Gas Utility Legislative Wrap-Up: Cities Win Some, Lose Some

by Thomas Brocato and Hannah Wilchar

On May 29, 2017, the Texas Legislature adjourned sine die ending the 85th Legislative Session. More than 100 bills relating to gas and electric utility consumers were filed, with many affecting municipalities. Although cities faced challenges on numerous issues, the Session was an overall success with respect to utility issues. This legislative wrap-up provides status reports on bills Lloyd Gosselink was actively engaged on or monitored on behalf of the Steering Committee of Cities Served by Oncor, Steering Committee of Cities Served by Atmos, and the Texas Coalition for Affordable Power (collectively, “Cities”).

One of Cities’ biggest successes this Session was the passage of Representative Rick Miller’s House Bill (“HB”) 931, which helps cities build hike and bike trails within electric transmission line corridors. This bill has been on Cities’ legislative agenda for several years and is important to many municipalities with limited green space available for parks within their city limits. After multiple floor amendments, a 30-minute debate, and a last-minute motion to reconsider, HB 931 was the final bill passed by the 85th Legislature on May 30th and signed by the Governor on June 15th.

A couple of high-profile utility bills were also passed this Session. The Railroad Commission Sunset Bill, HB 1818, by Representative Larry Gonzales, was signed in the House on May 10th and by the Governor on May 22nd. This bill authorizes the continuation of the agency for several more years, and also spells out various adjustments to the agency’s operations. However, HB 1818 does not include several of Cities’ recommended reforms, such as the use of independent administrative law judges for the adjudication of gas utility cases, which were included in versions of this bill during previous legislative sessions. It also does not change the name of the Railroad Commission, an issue that has long been contested and considered at the Legislature. Senator Kelly Hancock’s Senate Bill (“SB”) 735 was also passed minus many of its more impactful provisions. Originally an omnibus electric utility reform bill, SB 735 was trimmed down to establishing a schedule for mandatory electric utility rate cases. It also includes other changes to rate-setting procedures that, taken collectively, would be something of a mixed bag for consumers. This bill was signed by the Governor on May 27th.

Other bills of interest that passed include SB 1976, by Senator John Whitmire, and Senator Hancock’s SB 736. SB 1976 ensures the continuation of a process under which the Public Utility Commission identifies low-income customers and which is important for maintaining various customer protections. SB 1976 was signed into law on May 19th. SB 736 prohibits the General Land Office (“GLO”) from selling electricity. It was adopted by the Senate on April 12th with an amendment allowing the GLO’s electric sales program to continue through 2022.

Electric bills that ultimately did not pass include Representative Tan Parker’s HB 787 and Senator Bob Hall’s SB 83, both relating to electric grid security. HB 787 would have authorized the investigation of threats to the electric grid from cyber-attacks, while SB 83 would have established a number of potentially expensive measures to strengthen the grid against cyber and electro-magnetic attacks. Although the bills made clear that a future legislature would determine whether grid enhancements would actually be implemented and how they would be paid for, the bills stalled in committees. Likewise, HB 1427, sponsored by Representative Pat Fallon, was strongly supported by Cities but did not pass. This bill would have clarified the proposition that a city’s zoning authority extends over electric cooperatives. HB 1427 was adopted on May 2nd by the House Urban Affairs Committee but stalled in House Calendars.

Overall, Cities experienced a successful 85th Legislature with favorable outcomes for important electric and gas utility bills impacting municipalities.

Thomas Brocato is a Principal in the Firm’s Energy and Utility Practice Group and Hannah Wilchar is an Associate in the Firm’s Energy and Utility Practice Group. If you have any questions concerning these legislative issues or other matters, please contact Thomas at 512.322.5857 or tbrocato@lglawfirm.com, or Hannah at 512.322.5811 or hwilchar@lglawfirm.com.