Texas Codes

Tex. Util. Code § 39.256 (2026)

Option To Redirect Depreciation

✓ current as of May 2026

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Sec. 39.256. OPTION TO REDIRECT DEPRECIATION. (a) For the calendar years of 1998, 1999, 2000, and 2001, an electric utility described by Section 39.254 may redirect all or a part of the depreciation expense relating to transmission and distribution assets to its net generation plant assets.

(b) The electric utility shall report a decision under Subsection (a) to the commission and any other applicable regulatory authority.

(c) Any adjustments made to the book value of transmission and distribution assets or the creation of any related regulatory assets resulting from the redirection under this section shall be accepted and applied by the commission for establishing net invested capital and transmission and distribution rates for retail customers in all future proceedings.

(d) Notwithstanding Subsection (c), the design of post-freeze-period retail rates may not:

(1) shift the allocation of responsibility for stranded costs;

(2) include the adjusted costs in wholesale transmission and distribution rates; or

(3) apply the adjustments for the purpose of establishing net invested capital and transmission and distribution rates for wholesale customers.

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

Notes of Decisions

Cited in 10 cases, 2001–2008 · 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 3× “Utilities that had been identified as having potential stranded costs in the 1998 ECOM Report were allowed to "mitigate" them by (1) shifting depreciation from the transmission and delivery assets to the generating assets, Tex. Util.Code Ann. § 39.256 (West Supp.2004-05), and…”

In Re TXU Elec. Co., 67 S.W.3d 130 (Tex. 2001). · cites it 2× “Utilities identified as having stranded costs have been allowed to mitigate them through (1) shifting depreciation from the transmission and delivery assets to the generating assets, Tex. Util. Code § 39.256, and (2) keeping earnings in excess of the allowed rate of return to…”

CenterPoint Energy Houston Elec., LLC v. Gulf Coast Coalition of Cities, 252 S.W.3d 1 (Tex. App. 2008). “Tex. Util.Code Ann. § 39.256. The second step began on the first day of competition, January 1, 2002, and ended December 31, 2003.”

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). “Utilities that had been identified as having potential stranded costs in the 1998 ECOM Report were allowed to "mitigate" them by (1) shifting depreciation from the transmission and delivery assets to the generating assets, Tex. Util. Code Ann. § 39.256 (West Supp.”

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). “Tex. Util. Code Ann. § 39.256 . The second step began on the first day of competition, January 1, 2002, and ended December 31, 2003.”

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. 2008). “Tex. Util. Code Ann. § 39.256 . The second step began on the first day of competition, January 1, 2002, and ended December 31, 2003.”

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