UTILITIES CODE
CHAPTER 37. CERTIFICATES OF CONVENIENCE AND NECESSITY
SUBCHAPTER A. DEFINITIONS
§ 37.001. DEFINITIONS. In this chapter:
(1) "Certificate" means a certificate of convenience
and necessity.
(2) "Electric utility" includes an electric
cooperative.
(3) "Retail electric utility" means a person,
political subdivision, electric cooperative, or agency that
operates, maintains, or controls in this state a facility to
provide retail electric utility service. The term does not include
a corporation described by Section 32.053 to the extent that the
corporation sells electricity exclusively at wholesale and not to
the ultimate consumer. A qualifying cogenerator that sells
electric energy at retail to the sole purchaser of the
cogenerator's thermal output under Sections 35.061 and 36.007 is
not for that reason considered to be a retail electric utility. The
owner or operator of a qualifying cogeneration facility who was
issued the necessary environmental permits from the Texas Natural
Resource Conservation Commission after January 1, 1998, and who
commenced construction of such qualifying facility before July 1,
1998, may provide electricity to the purchasers of the thermal
output of that qualifying facility and shall not for that reason be
considered an electric utility or a retail electric utility,
provided that the purchasers of the thermal output are owners of
manufacturing or process operation facilities that are located on a
site entirely owned before September, 1987, by one owner who
retained ownership after September, 1987, of some portion of the
facilities and that those facilities now share some integrated
operations, such as the provision of services and raw materials.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 29, eff. Sept. 1, 1999.
SUBCHAPTER B. CERTIFICATE OF CONVENIENCE AND NECESSITY
§ 37.051. CERTIFICATE REQUIRED. (a) An electric
utility may not directly or indirectly provide service to the
public under a franchise or permit unless the utility first obtains
from the commission a certificate that states that the public
convenience and necessity requires or will require the
installation, operation, or extension of the service.
(b) Except as otherwise provided by this chapter, a retail
electric utility may not furnish or make available retail electric
utility service to an area in which retail electric utility service
is being lawfully furnished by another retail electric utility
unless the utility first obtains a certificate that includes the
area in which the consuming facility is located.
(c) Notwithstanding any other provision of this chapter,
including Subsection (a), an electric cooperative is not required
to obtain a certificate of public convenience and necessity for the
construction, installation, operation, or extension of any
generating facilities or necessary interconnection facilities.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 30, eff. Sept. 1, 1999.
§ 37.052. EXCEPTIONS TO CERTIFICATE REQUIREMENT FOR
SERVICE EXTENSION. (a) An electric utility is not required to
obtain a certificate for an:
(1) extension into territory that is:
(A) contiguous to the territory the electric
utility serves;
(B) not receiving similar service from another
electric utility; and
(C) not in another electric utility's
certificated area;
(2) extension in or to territory the utility serves or
is authorized to serve under a certificate; or
(3) operation, extension, or service in progress on
September 1, 1975.
(b) An extension allowed under Subsection (a) is limited to
a device used:
(1) to interconnect existing facilities; or
(2) solely to transmit electric utility services from
an existing facility to a customer of retail electric utility
service.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 37.053. APPLICATION FOR CERTIFICATE. (a) An
electric utility that wants to obtain or amend a certificate must
submit an application to the commission.
(b) The applicant shall file with the commission evidence
the commission requires to show the applicant has received the
consent, franchise, or permit required by the proper municipal or
other public authority.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 37.054. NOTICE AND HEARING ON APPLICATION. (a) When
an application for a certificate is filed, the commission shall:
(1) give notice of the application to interested
parties; and
(2) if requested:
(A) set a time and place for a hearing; and
(B) give notice of the hearing.
(b) A person or electric cooperative interested in the
application may intervene at the hearing.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 31, eff. Sept. 1, 1999.
§ 37.055. REQUEST FOR PRELIMINARY ORDER. (a) An
electric utility that wants to exercise a right or privilege under a
franchise or permit that the utility anticipates obtaining but has
not been granted may apply to the commission for a preliminary order
under this section.
(b) The commission may issue a preliminary order declaring
that the commission, on application and under commission rules,
will grant the requested certificate on terms the commission
designates, after the electric utility obtains the franchise or
permit.
(c) The commission shall grant the certificate on
presentation of evidence satisfactory to the commission that the
electric utility has obtained the franchise or permit.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 37.056. GRANT OR DENIAL OF CERTIFICATE. (a) The
commission may approve an application and grant a certificate only
if the commission finds that the certificate is necessary for the
service, accommodation, convenience, or safety of the public.
(b) The commission may:
(1) grant the certificate as requested;
(2) grant the certificate for the construction of a
portion of the requested system, facility, or extension or the
partial exercise of the requested right or privilege; or
(3) refuse to grant the certificate.
(c) The commission shall grant each certificate on a
nondiscriminatory basis after considering:
(1) the adequacy of existing service;
(2) the need for additional service;
(3) the effect of granting the certificate on the
recipient of the certificate and any electric utility serving the
proximate area; and
(4) other factors, such as:
(A) community values;
(B) recreational and park areas;
(C) historical and aesthetic values;
(D) environmental integrity;
(E) the probable improvement of service or
lowering of cost to consumers in the area if the certificate is
granted; and
(F) to the extent applicable, the effect of
granting the certificate on the ability of this state to meet the
goal established by Section 39.904(a) of this title.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts 2003, 78th Leg., ch. 295, § 2, eff. June 18, 2003.
§ 37.057. DEADLINE FOR APPLICATION FOR NEW TRANSMISSION
FACILITY. The commission must approve or deny an application for a
certificate for a new transmission facility not later than the
first anniversary of the date the application is filed. If the
commission does not approve or deny the application on or before
that date, a party may seek a writ of mandamus in a district court of
Travis County to compel the commission to decide on the
application.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 37.059. REVOCATION OR AMENDMENT OF
CERTIFICATE. (a) The commission may revoke or amend a
certificate after notice and hearing if the commission finds that
the certificate holder has never provided or is no longer providing
service in all or any part of the certificated area.
(b) The commission may require one or more electric
utilities to provide service in an area affected by the revocation
or amendment of a certificate.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 37.060. DIVISION OF MULTIPLY CERTIFICATED SERVICE
AREAS. (a) This subsection and Subsections (b)-(g) apply only to
areas in which each retail electric utility that is authorized to
provide retail electric utility service to the area is providing
customer choice. For purposes of this subsection, an electric
cooperative or a municipally owned electric utility shall be deemed
to be providing customer choice if it has approved a resolution
adopting customer choice that is effective on January 1, 2002, or
effective within 24 months after the date of the resolution
adopting customer choice. All other retail electric utilities
shall be deemed to be providing customer choice if customer choice
will be allowed for customers of the retail electric utility on
January 1, 2002. In areas in which each certificated retail
electric utility is providing customer choice, the commission, if
requested by a retail electric utility, shall examine all areas
within the service area of the retail electric utility making the
request that are also certificated to one or more other retail
electric utilities and, after notice and hearing, shall amend the
retail electric utilities' certificates so that only one retail
electric utility is certificated to provide distribution services
in any such area. Only retail electric utilities certificated to
serve an area on June 1, 1999, may continue to serve the area or
portion of the area under an amended certificate issued under this
subsection.
(b) This section does not apply in any area in which a
municipally owned utility is certificated to provide retail
electric utility service if the municipally owned utility serving
the area files with the commission by October 1, 2001, a request
that areas within the certificated service area of the municipally
owned utility remain as presently certificated.
(c) The commission shall enter its order dividing multiply
certificated areas within one year of the date a request is
received.
(d) In amending certificates under this section, the
commission shall take into consideration the factors prescribed by
Section 37.056.
(e) Notwithstanding Section 37.059, the commission shall
revoke certificates to the extent necessary to achieve the division
of retail electric service areas as provided by this section.
(f) Unless otherwise agreed by the affected retail electric
utilities, each retail electric utility shall be allowed to
continue to provide service to the location of
electricity-consuming facilities it is serving on the date an
application for division of the affected multiply certificated
service areas is filed. No customer located within the affected
multiply certificated service areas shall be permitted to switch
from one retail electric utility to another while an application
for division of the affected multiply certificated service areas is
pending.
(g) If on June 1, 1999, retail service is being provided in
an area by another retail electric utility with the written consent
of the retail electric utility certificated to serve the area, that
consent shall be filed with the commission. On notification of that
consent and a request by an affected retail electric utility to
amend the relevant certificates, the commission may grant an
exception or amend a retail electric utility's certificate. This
provision shall not be construed to limit the commission's
authority to grant exceptions or to amend a retail electric
utility's certificate, upon request and notification, for areas to
which retail service is being provided pursuant to written consent
granted after June 1, 1999.
(h) The commission may not grant an additional retail
electric utility certificate to serve an area if the effect of the
grant would cause the area to be multiply certificated unless the
commission finds that the certificate holders are not providing
service to any part of the area for which a certificate is sought
and are not capable of providing adequate service to the area in
accordance with applicable standards. However, neither this
subsection nor the deadline of June 1, 1999, provided by Subsection
(a) shall apply to any application for multiple certification filed
with the commission on or before February 1, 1999, and those
applications may be processed in accordance with applicable law in
effect on the date the application was filed. Applications for
multiple certification filed with the commission on or before
February 1, 1999, may not be amended to expand the area for which a
certificate is sought except for contiguous areas within
municipalities that provide consent, as required by Section
37.053(b), not later than June 1, 1999.
(i) Notwithstanding any other provision of this section, if
requested by a municipally owned utility, the commission shall
examine all areas within the municipally owned utility's service
area that are also certificated to one or more other retail electric
utilities and, after notice and hearing, may amend the retail
electric utilities' certificates so that only one retail electric
utility is certificated to provide distribution services in the
area, provided that:
(1) the application is filed with the commission
within 12 months of the effective date of this provision and is
limited to single certification of the area within the
municipality's boundaries as of February 1, 1999;
(2) the commission preserves the right of an electric
utility or an electric cooperative to serve its existing customers,
including any property owned or leased by any customer; and
(3) the municipality is a member city of a municipal
power agency, as that term is used in Section 40.059.
Added by Acts 1999, 76th Leg., ch. 405, § 32, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 796, § 1, eff. June 14,
2001.
§ 37.061. EXISTING SERVICE AREA
AGREEMENTS. (a) Notwithstanding any other provision of this
title, the commission shall allow a municipally owned utility to
amend the service area boundaries of its certificate if:
(1) the municipally owned utility was the holder of a
certificate as of January 1, 1999;
(2) the municipally owned utility has an agreement
existing before January 1, 1999, with a public utility serving the
area that the public utility will not contest an application to
amend the certificate to add municipal territory; and
(3) the area for which a certificate is requested is
not certificated to a retail electric utility that is not a party to
the agreement and that has not consented in writing to
certification of the area to the municipality.
(b) The commission may not amend the certificate of the
public utility serving the affected area based on the granting of a
certificate to the municipally owned utility.
Added by Acts 1999, 76th Leg., ch. 405, § 32, eff. Sept. 1, 1999.
SUBCHAPTER C. MUNICIPALITIES
§ 37.101. SERVICE IN ANNEXED OR INCORPORATED
AREA. (a) If an area is or will be included within a municipality
as the result of annexation, incorporation, or another reason, each
electric utility and each electric cooperative that holds or is
entitled to hold a certificate under this title to provide service
or operate a facility in the area before the inclusion has the right
to continue to provide the service or operate the facility and
extend service within the utility's or cooperative's certificated
area in the annexed or incorporated area under the rights granted by
the certificate and this title.
(b) Notwithstanding any other law, an electric utility has
the right to:
(1) continue and extend service within the utility's
certificated area; and
(2) use roads, streets, highways, alleys, and public
property to furnish retail electric utility service.
(c) The governing body of a municipality may require an
electric utility to relocate the utility's facility at the
utility's expense to permit the widening or straightening of a
street by:
(1) giving the electric utility 30 days' notice; and
(2) specifying the new location for the facility along
the right-of-way of the street.
(d) This section does not:
(1) limit the power of a city, town, or village to
incorporate or of a municipality to extend its boundaries by
annexation; or
(2) prohibit a municipality from levying a tax or
other special charge for the use of the streets as authorized by
Section 182.025, Tax Code.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 33, eff. Sept. 1, 1999.
§ 37.102. GRANT OF CERTIFICATE FOR CERTAIN
MUNICIPALITIES. (a) If a municipal corporation offers retail
electric utility service in a municipality having a population of
more than 135,000 that is located in a county having a population of
more than 1,500,000, the commission shall singly certificate areas
in the municipality's boundaries in which more than one electric
utility provides electric utility service.
(b) In singly certificating an area under Subsection (a),
the commission shall preserve the right of an electric utility to
serve the customers the electric utility was serving on June 17,
1983. This subsection does not apply to a customer at least
partially served by a nominal 69,000 volts system who gave notice of
termination to the utility servicing that customer before June 17,
1983.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
SUBCHAPTER D. REGULATION OF SERVICES, AREAS, AND FACILITIES
§ 37.151. PROVISION OF SERVICE. Except as provided by
this section, Section 37.152, and Section 37.153, a certificate
holder shall:
(1) serve every consumer in the utility's certificated
area; and
(2) provide continuous and adequate service in that
area.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 37.152. GROUNDS FOR REDUCTION OF
SERVICE. (a) Unless the commission issues a certificate that the
present and future convenience and necessity will not be adversely
affected, a certificate holder may not discontinue, reduce, or
impair service to any part of the holder's certificated service
area except for:
(1) nonpayment of charges;
(2) nonuse; or
(3) another similar reason that occurs in the usual
course of business.
(b) A discontinuance, reduction, or impairment of service
must be in compliance with and subject to any condition or
restriction the commission prescribes.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 37.153. REQUIRED REFUSAL OF SERVICE. A certificate
holder shall refuse to serve a customer in the holder's
certificated area if the holder is prohibited from providing the
service under Section 212.012 or 232.029, Local Government Code.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 37.154. TRANSFER OF CERTIFICATE. (a) An electric
utility may sell, assign, or lease a certificate or a right obtained
under a certificate if the commission determines that the
purchaser, assignee, or lessee can provide adequate service.
(b) A sale, assignment, or lease of a certificate or a right
is subject to conditions the commission prescribes.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 37.155. APPLICATION OF CONTRACTS. A contract
approved by the commission between retail electric utilities that
designates areas and customers to be served by the utilities:
(1) is valid and enforceable; and
(2) shall be incorporated into the appropriate areas
of certification.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 37.156. INTERFERENCE WITH ANOTHER UTILITY. If an
electric utility constructing or extending the utility's lines,
plant, or system interferes or attempts to interfere with the
operation of a line, plant, or system of another utility, the
commission by order may:
(1) prohibit the construction or extension; or
(2) prescribe terms for locating the affected lines,
plants, or systems.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 37.157. MAPS. An electric utility shall file with the
commission one or more maps that show each utility facility and that
separately illustrate each utility facility for the generation,
transmission, or distribution of the utility's services on a date
the commission orders.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
