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On April 16, 2009, Governor Rick Perry signed Senate Bill (SB) 769, which reduces the impact to electricity customers of rebuilding and restoring utility service following hurricanes and other natural disasters, an issue the governor declared an emergency item. This bill allows utilities to issue low-cost bonds to recover restoration costs, providing utilities and customers a cost-saving alternative to their current options.
"With every storm, we examine our recovery approaches to do better next time. This legislation is part of that process, and it will better prepare Texas to ercover from Mother Nature's next big show," Governor Perry said. "The bill I am signing today will help us prepare even better for the next storm and recovery more quickly when it has gone."
Following Hurricane Ike, 99% of Centerpoint and Entergy customers were without power. The total cost for restoring these utility systems is projected to be $650 million for Centerpoint and $580 million for Entergy. Projected savings from using the financing mechanism provided for by the bill is $200 million or more for each company's customers.
SB 769 authorizes the Public Utility Commission (PUC), after a full review, to permit an electric utility to obtain timely recovery of reasonable and necessary utility system restoration costs, and permits utilities to use securitization financing for the recovery, significantly lowering costs to consumers.
Securitization financing has been used previously, including the costs related to Hurricane Rita in 2005. SB 769 allows use of this mechanism for Hurricane Ike restoration costs, and allows the PUC to approve the financing for any future hurricane or major storm event without requiring new legislation, allowing the state to respond expeditiously to future storms. |
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