Texas House bill by Rep. Geren establishes capital investment procedure for ERCOT electric utilities

Passed bill authored by State Rep. Charlie Geren aims to create a streamlined capital investment procedure for electric utilities operating solely within ERCOT, seeking to regulate transmission investment adjustments and cost allocations after significant capital expenditures, according to the Texas Legislature website.

In the House, 54 Democrats and 56 Republicans voted in favor of the bill, while 28 Republicans opposed it.

Meanwhile, in the Senate, 11 Democrats and 20 Republicans voted in favor, with no opposing votes.

Charlie Geren introduced the bill in the Texas House on Friday, March 14, during the 89th regular legislative session.

Geren, a Republican, was elected to the Texas State House in 2003 to represent the state’s 99th House district, replacing previous state representative Kenny Marchant.

According to the Texas Legislature, the bill’s official text was summarized as follows: ‘Relating to an alternative capital recovery process for certain utilities’.

The following is our breakdown, based on the actual bill text, and may include interpretation to clarify its provisions.

In essence, this bill introduces a single capital investment procedure for certain electric utilities operating solely within ERCOT, who are constructing transmission as part of a commission-approved reliability plan and have made capital expenditures exceeding 300% of annual depreciation by September 1, 2025. These utilities can opt for a system-wide annual proceeding to adjust non-fuel rates to reflect changes in transmission and distribution invested capital. Utilities may defer certain costs as a regulatory asset and update cost allocations among customer classes. The commission must approve adjustments within 120 days, and utilities must notify changes 45 days in advance. Utilities cannot file another adjustment for 12 months and must comply with various regulatory conditions. The act takes effect immediately if it secures a two-thirds vote in both legislative houses; otherwise, it becomes effective on September 1, 2025.

The bill received its final legislative approval on Wednesday, May 28, and was signed into law by Gov. Greg Abbott on Friday, June 20.

Bills in Texas go through a multi-step legislative process, including committee review, debates, and votes in both chambers before reaching a final decision. Each session, there are typically thousands of bills introduced, but only a portion successfully navigate the process to become law.

You can read more about the bills and other measures here.