Tex. Codes » Utilities Code · TITLE 2. PUBLIC UTILITY REGULATORY ACT · SUBTITLE B. ELECTRIC UTILITIES · CHAPTER 39. RESTRUCTURING OF ELECTRIC UTILITY INDUSTRY
Texas Codes

Tex. Util. Code § 39.201 (2026)

Cost Of Service Tariffs And Charges

✓ current as of May 2026
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Sec. 39.201. COST OF SERVICE TARIFFS AND CHARGES. (a) Each electric utility shall, on or before April 1, 2000, file proposed tariffs for its proposed transmission and distribution utility.

(b) The filing under this section shall include supporting cost data for determination of nonbypassable delivery charges, which shall be the sum of:

(1) transmission and distribution utility charges by customer class based on a forecasted 2002 test year;

(2) a system benefit fund fee; and

(3) an expected competition transition charge, if any.

(c) Each electric utility shall also identify the unbundled generation and retail energy service costs by customer class.

(d) In accordance with a schedule and procedures it establishes, the commission shall hold a hearing and approve or modify and make effective as of January 1, 2002, the transmission and distribution utility's proposed tariffs for transmission and distribution services, the system benefit fund fee, and the expected competition transition charge as determined under Subsections (g) and (h) and as implemented under Subsections (i)-(l), if any.

(e) The system benefit fund fee shall be that established by the commission under Section 39.903.

(f) The expected competition transition charge shall be that as determined under Subsections (g) and (h) and as implemented under Subsections (i)-(l).

(g) The expected competition transition charge approved by the commission shall be calculated from the amount of stranded costs as defined in Subchapter F that are reasonably projected to exist on the last day of the freeze period modified to reflect any adjustments determined appropriate by the commission under Section 39.261(c).

(h) The electric utility shall use the ECOM administrative model referenced in Section 39.262 to determine estimated stranded costs. The model must include updated company-specific inputs. Natural gas prices used in the model must be market-based natural gas forward prices, where available. Growth rates in generating plant operations and maintenance costs and allocated administrative and general costs shall be benchmarked by comparing those costs to the best available information on cost trends for comparable generating plants. Capital additions shall be benchmarked using the limitation in Section 39.259(b).

(i) An electric utility may:

(1) at any time after the start of the freeze period, securitize 100 percent of its regulatory assets as defined by Section 39.302 and up to 75 percent of its estimated stranded costs as defined by this section and recover those charges through a transition charge, in accordance with a financing order issued by the commission under Section 39.303;

(2) implement, under bond, a nonbypassable charge of up to 100 percent of its estimated stranded costs; or

(3) use a combination of the two methods under Subdivisions (1) and (2).

(j) Any competition transition charge shall be allocated among retail customer classes according to Section 39.253.

(k) In determining the length of time over which stranded costs under Subsection (h) may be recovered, the commission shall consider:

(1) the electric utility's rates as of the end of the freeze period;

(2) the sum of the transmission and distribution charges and the system benefit fund fees;

(3) the proportion of estimated stranded costs to the invested capital of the electric utility; and

(4) any other factor consistent with the public interest as expressed in this chapter.

(l) Two years after customer choice is introduced, the stranded cost estimate under this section shall be reviewed and, if necessary, adjusted to reflect a final, actual valuation in the true-up proceeding under Section 39.262. If, based on that proceeding, the competition transition charge is not sufficient, the commission may extend the collection period for the charge or, if necessary, increase the charge. Alternatively, if it is found in the true-up proceeding that the competition transition charge is larger than is needed to recover any remaining stranded costs, the commission may:

(1) reduce the competition transition charge, to the extent it has not been securitized;

(2) reverse, in whole or in part, the depreciation expense that has been redirected under Section 39.256;

(3) reduce the transmission and distribution utility's rates; or

(4) implement a combination of the elements in Subdivisions (1)-(3).

Added by Acts 1999, 76th Leg., ch. 405, Sec. 39, eff. Sept. 1, 1999.

Notes of Decisions
Cited in 31 cases, 2001–2011 · leading case: Cities of Corpus Christi v. Pub. Util. Comm'n, 188 S.W.3d 681 (Tex. App. 2005).
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Cities of Corpus Christi v. Pub. Util. Comm'n, 188 S.W.3d 681 (Tex. App. 2005). · cites it 16× “Tex. Util. Code Ann. §§ 39.201 ( l ), .262.”
In Re TXU Elec. Co., 67 S.W.3d 130 (Tex. 2001). · cites it 16× “Tex. Util. Code §§ 39.201( l ), 39.262. If stranded costs remain, the Commission can extend the CTC collection period or increase the charge.”
Centerpoint Energy, Inc. v. Pub. Util. Comm'n, 143 S.W.3d 81 (Tex. 2004). · cites it 10× “[64] TEX. UTIL.CODE § 39.201(a), (c), (d). [65] Id.”
CenterPoint Energy Houston Elec., LLC v. Gulf Coast Coalition of Cities, 252 S.W.3d 1 (Tex. App. 2008). · cites it 8× “Tex. Util. Code Ann. §§ 39.201 , .262(c).”
Reliant Energy, Inc. v. Pub. Util. Comm'n, 101 S.W.3d 129 (Tex. App. 2003). · cites it 4× “See Tex. Util. Code Ann. §§ 39.201 (i), .262(c).”
AEP Texas Cent. Co. v. Pub. Util. Comm'n of Texas, 258 S.W.3d 272 (Tex. App. 2008). · cites it 8× “Once determined by the Commission, the net sum of the final fuel balance and the capacity auction true-up award would result in a credit or bill from the affiliated power generation company to the transmission and distribution utility.”
State v. Pub. Util. Com'n of Texas, 344 S.W.3d 349 (Tex. 2011). · cites it 3× “Tex. Util.Code § 39.201(h). 15 . See id. § 39.”
Texas Indus. Energy Consumers v. Centerpoint Energy Houston Elec., LLC Pub. Util. Comm'n of Texas, 324 S.W.3d 95 (Tex. 2010). · cites it 2× “Tex. Util.Code § 39.201(h). 17 . See id. § 39.”
Centerpoint Energy Houston Elec., LLC v. Gulf Coast Coalition of Cities, 263 S.W.3d 448 (Tex. App. 2008). · cites it 3× “See Tex. Util.Code Ann. §§ 39.201, 39.262(g).”
City of Allen v. Pub. Util. Comm'n, 161 S.W.3d 195 (Tex. App. 2005). · cites it 2× “See Tex. Util.Code Ann. § 39.201 (West Supp.2004-05); 16 Tex.”
State ex rel. Off. of the Attorney Gen. v. Pub. Util. Comm'n of Texas, 246 S.W.3d 324 (Tex. App. 2008). “3d at 83; see Tex. Util. Code Ann. §§ 39.201 , .251-.254, ,256-.”
Centerpoint Energy Houston Elec., LLC & Texas Genco, LP // Cross Gulf Coast Coalition of Cities, Houston Council for Health & Educ., City of Houston, Coalition of Cities v. Pub. Util. Comm'n of Texas, Off. of Pub. Util. Couns., Gulf Coast Coalition of Cities, City of Houston, Texas Indus. Energy Consumers, Houston Council for Health & Educ., State of Texas, Occidental Power Mktg., L.P. (Tex. App. 2007). · cites it 8× “See Tex. Util. Code Ann. § 39.201 (h); Cities of Corpus Christi , 188 S.”
Show all 31 citing cases →
— Tex. Util. Code § 39.201(Z) — 2 cases
Reliant Energy, Inc. v. Pub. Util. Comm'n, 101 S.W.3d 129 (Tex. App. 2003). “See Tex. Util. Code Ann. §§ 39.201 (i), .262(c).”
In Re TXU Elec. Co., 67 S.W.3d 130 (Tex. 2001). “Tex. Util. Code §§ 39.201( l ), 39.262. If stranded costs remain, the Commission can extend the CTC collection period or increase the charge.”
— Tex. Util. Code § 39.201(a) — 2 cases
Centerpoint Energy, Inc. v. Pub. Util. Comm'n, 143 S.W.3d 81 (Tex. 2004). “[64] TEX. UTIL.CODE § 39.201(a), (c), (d). [65] Id.”
Centerpoint Energy Houston Elec., LLC v. Gulf Coast Coalition of Cities, 263 S.W.3d 448 (Tex. App. 2008). “See Tex. Util.Code Ann. §§ 39.201, 39.262(g).”
— Tex. Util. Code § 39.201(b) — 1 case
CenterPoint Energy Houston Elec., LLC v. Gulf Coast Coalition of Cities, 252 S.W.3d 1 (Tex. App. 2008). “Tex. Util. Code Ann. §§ 39.201 , .262(c).”
— Tex. Util. Code § 39.201(b)(2) — 1 case
Cities of Corpus Christi v. Pub. Util. Comm'n, 188 S.W.3d 681 (Tex. App. 2005). “Tex. Util. Code Ann. §§ 39.201 ( l ), .262.”
— Tex. Util. Code § 39.201(b)(3) — 3 cases
CenterPoint Energy Houston Elec., LLC v. Gulf Coast Coalition of Cities, 252 S.W.3d 1 (Tex. App. 2008). “Tex. Util. Code Ann. §§ 39.201 , .262(c).”
Cities of Corpus Christi v. Pub. Util. Comm'n, 188 S.W.3d 681 (Tex. App. 2005). “Tex. Util. Code Ann. §§ 39.201 ( l ), .262.”
In Re TXU Elec. Co., 67 S.W.3d 130 (Tex. 2001). “Tex. Util. Code §§ 39.201( l ), 39.262. If stranded costs remain, the Commission can extend the CTC collection period or increase the charge.”
— Tex. Util. Code § 39.201(d) — 4 cases
Cities of Corpus Christi v. Pub. Util. Comm'n, 188 S.W.3d 681 (Tex. App. 2005). “Tex. Util. Code Ann. §§ 39.201 ( l ), .262.”
In Re TXU Elec. Co., 67 S.W.3d 130 (Tex. 2001). “Tex. Util. Code §§ 39.201( l ), 39.262. If stranded costs remain, the Commission can extend the CTC collection period or increase the charge.”
Reliant Energy, Inc. v. Pub. Util. Comm'n, 101 S.W.3d 129 (Tex. App. 2003). “See Tex. Util. Code Ann. §§ 39.201 (i), .262(c).”
Cities of Corpus Christi, Appellants//AEP Texas Cent. Co. Pub. Util. Comm'n of Texas & Constellation New Energy, Inc. v. Pub. Util. Comm'n of Texas & AEP Texas Cent. Co., Appellees//Pub. Util. Comm'n of Texas Cities of Corpus Christi Off. of Pub. Util. Couns. & Constellation NewEnergy, Inc. (Tex. App. 2005).
— Tex. Util. Code § 39.201(g) — 2 cases
In Re TXU Elec. Co., 67 S.W.3d 130 (Tex. 2001). “Tex. Util. Code §§ 39.201( l ), 39.262. If stranded costs remain, the Commission can extend the CTC collection period or increase the charge.”
Cities of Corpus Christi v. Pub. Util. Comm'n, 188 S.W.3d 681 (Tex. App. 2005). “Tex. Util. Code Ann. §§ 39.201 ( l ), .262.”
— Tex. Util. Code § 39.201(h) — 4 cases
Cities of Corpus Christi v. Pub. Util. Comm'n, 188 S.W.3d 681 (Tex. App. 2005). “Tex. Util. Code Ann. §§ 39.201 ( l ), .262.”
State v. Pub. Util. Com'n of Texas, 344 S.W.3d 349 (Tex. 2011). “Tex. Util.Code § 39.201(h). 15 . See id. § 39.”
CenterPoint Energy Houston Elec., LLC v. Gulf Coast Coalition of Cities, 252 S.W.3d 1 (Tex. App. 2008). “Tex. Util. Code Ann. §§ 39.201 , .262(c).”
Texas Indus. Energy Consumers v. Centerpoint Energy Houston Elec., LLC Pub. Util. Comm'n of Texas, 324 S.W.3d 95 (Tex. 2010). “Tex. Util.Code § 39.201(h). 17 . See id. § 39.”
— Tex. Util. Code § 39.201(i) — 2 cases
Centerpoint Energy, Inc. v. Pub. Util. Comm'n, 143 S.W.3d 81 (Tex. 2004). “[64] TEX. UTIL.CODE § 39.201(a), (c), (d). [65] Id.”
Texas Indus. Energy Consumers v. Centerpoint Energy Houston Elec., LLC Pub. Util. Comm'n of Texas, 324 S.W.3d 95 (Tex. 2010). “Tex. Util.Code § 39.201(h). 17 . See id. § 39.”
— Tex. Util. Code § 39.201(i)(1) — 1 case
Centerpoint Energy, Inc. v. Pub. Util. Comm'n, 143 S.W.3d 81 (Tex. 2004). “[64] TEX. UTIL.CODE § 39.201(a), (c), (d). [65] Id.”
— Tex. Util. Code § 39.201(l) — 2 cases
CenterPoint Energy Houston Elec., LLC v. Gulf Coast Coalition of Cities, 252 S.W.3d 1 (Tex. App. 2008). “Tex. Util. Code Ann. §§ 39.201 , .262(c).”
State v. Pub. Util. Com'n of Texas, 344 S.W.3d 349 (Tex. 2011). “Tex. Util.Code § 39.201(h). 15 . See id. § 39.”
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