CHAPTER 37. CERTIFICATES OF CONVENIENCE AND NECESSITY
UTILITIES CODE
TITLE 2. PUBLIC UTILITY REGULATORY ACT
SUBTITLE B. ELECTRIC UTILITIES
CHAPTER 37. CERTIFICATES OF CONVENIENCE AND NECESSITY
SUBCHAPTER A. DEFINITIONS
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 405, Sec. 29, eff. Sept. 1,
1999.
SUBCHAPTER B. CERTIFICATE OF CONVENIENCE AND NECESSITY
Sec. 37.051. CERTIFICATE REQUIRED. (a) An electric utility or
other person may not directly or indirectly provide service to
the public under a franchise or permit unless the utility or
other person 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.
(d) A certificate may be granted to an electric utility or other
person under this section for a facility used as part of the
transmission system serving the ERCOT power region solely for the
transmission of electricity.
(e) The commission may consider an application filed by a person
not currently certificated as an electric utility for a
certificate of convenience and necessity to construct
transmission capacity that serves the ERCOT power region. Before
granting a certificate under this section, the commission must
find, after notice and hearing, that:
(1) the applicant has the technical ability, financial ability,
and sufficient resources in this state to own, operate, and
maintain reliable transmission facilities;
(2) the applicant has the resources and ability to comply with
commission rules, requirements of the independent organization
certified under Section 39.151 for the ERCOT power region, and
requirements of the National Electric Reliability Council
applicable to the provisions of transmission service; and
(3) for an application filed by a person that is not an electric
utility, granting the application will not adversely affect
wholesale transmission rates, as compared to the rates projected
to be charged if an existing electric utility were to build the
transmission facility.
(f) The commission shall consider the requirements of Subsection
(e) to have been met by an electric utility or other person that:
(1) is selected by the commission as a transmission provider
under a plan adopted by the commission under Section 39.904 not
later than September 1, 2009; and
(2) before the certificate is issued, provides to the commission
a detailed plan regarding the offices, personnel, and other
resources the electric utility or other person will have in this
state to ensure provision of continuous and adequate transmission
service.
Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 405, Sec. 30, eff. Sept. 1,
1999.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1170, Sec. 2, eff. June 19, 2009.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 37.053. APPLICATION FOR CERTIFICATE. (a) An electric
utility or other person 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, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1170, Sec. 3, eff. June 19, 2009.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 405, Sec. 31, eff. Sept. 1,
1999.
Sec. 37.0541. CONSOLIDATION OF CERTAIN PROCEEDINGS. The
commission shall consolidate the proceeding on an application to
obtain or amend a certificate of convenience and necessity for
the construction of a transmission line with the proceeding on
another application to obtain or amend a certificate of
convenience and necessity for the construction of a transmission
line if it is apparent from the applications or a motion to
intervene in either proceeding that the transmission lines that
are the subject of the separate proceedings share a common point
of interconnection. This section does not apply to a proceeding
on an application for a certificate of convenience and necessity
for a transmission line to serve a competitive renewable energy
zone as part of a plan developed by the commission under Section
39.904(g)(2).
Added by Acts 2009, 81st Leg., R.S., Ch.
1170, Sec. 1, eff. June 19, 2009.
Sec. 37.055. REQUEST FOR PRELIMINARY ORDER. (a) An electric
utility or other person that wants to exercise a right or
privilege under a franchise or permit that the utility or other
person 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 or other person obtains
the franchise or permit.
(c) The commission shall grant the certificate on presentation
of evidence satisfactory to the commission that the electric
utility or other person has obtained the franchise or permit.
Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1170, Sec. 4, eff. June 19, 2009.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2003, 78th Leg., ch. 295, Sec. 2, eff. June 18,
2003.
Sec. 37.057. DEADLINE FOR APPLICATION FOR NEW TRANSMISSION
FACILITY. The commission may grant a certificate for a new
transmission facility to a qualified applicant that meets the
requirements of this subchapter. 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, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1170, Sec. 4, eff. June 19, 2009.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 32, eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 796, Sec. 1, eff. June
14, 2001.
Sec. 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, Sec. 32, eff. Sept. 1,
1999.
SUBCHAPTER C. MUNICIPALITIES
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 405, Sec. 33, eff. Sept. 1,
1999.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
SUBCHAPTER D. REGULATION OF SERVICES, AREAS, AND FACILITIES
Sec. 37.151. PROVISION OF SERVICE. Except as provided by this
section, Section 37.152, and Section 37.153, a certificate
holder, other than one granted a certificate under Section
37.051(d), 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, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1170, Sec. 4, eff. June 19, 2009.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, 232.029, or 232.0291, Local Government Code.
Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2005, 79th Leg., Ch.
708, Sec. 13, eff. September 1, 2005.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff. Sept. 1, 1997.