Texas Administrative Code › Title 16 - ECONOMIC REGULATION › Part 2 - PUBLIC UTILITY COMMISSION OF TEXAS › Chapter 25 - SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS › Subchapter K - RELATIONSHIPS WITH AFFILIATES › Section 25.271 - Foreign Utility Company Ownership by Exempt Holding Companies

Current through Reg. 49, No. 28; July 12, 2024
(a) Certification to Securities and Exchange
				  Commission. Upon request by a holding company which is exempt under §3 of
				  the Public Utility Holding Company Act of 1935, codified at 15 United States
				  Code 79, the commission may certify to the Securities and Exchange Commission
				  (SEC) that the commission has the authority and resources to protect ratepayers
				  and that it intends to exercise its authority over holding companies owning
				  both a jurisdictional electric utility and a foreign utility company (FUCO)
				  under the safe harbor provisions of subsection (c) of this section or the
				  case-by-case review provisions of subsection (d) of this section. The
				  commission may also notify the SEC that a previously-issued certification
				  regarding a requesting holding company will be ineffective
				  prospectively.
(b) Policy goals.
				  The commission will seek to protect the public interest in having electricity
				  service available to all citizens of the state at just, fair, and reasonable
				  rates that are unaffected by investments by exempt holding companies in foreign
				  utility companies (FUCOs), while avoiding strictures that would place exempt
				  holding companies at a competitive disadvantage in international markets. The
				  commission will consider these policy goals in each decision whether to issue a
				  certification or to notify the SEC that a previously-issued certification is
				  prospectively withdrawn.
(c) Safe
				  harbor investments. The following safe harbor provisions apply to investments
				  in FUCOs by exempt holding companies that are affiliated with electric
				  utilities subject to the regulatory jurisdiction of the commission:
(1) The commission must certify to the SEC
				  that the commission has the authority and resources to protect ratepayers
				  subject to its jurisdiction and that it intends to exercise its authority,
				  provided that all holding companies of electric utilities that are subject to
				  the regulatory jurisdiction of this commission must have filed with the
				  commission corporate undertakings, signed under oath by an authorized executive
				  officer of the holding company agreeing to adhere to the covenants and to make
				  the filings specified in paragraph (2) of this subsection.
(2) The holding company must adhere to the
				  following covenants:
(A) That any indebtedness
				  incurred in relation to the acquisition by the holding company, or by any
				  affiliate of the electric utility, of an ownership interest in a FUCO will be
				  without recourse to the electric utility;
(B) That the electric utility, the holding
				  company, or any affiliate of the electric utility will not enter into any
				  agreements under the terms of which the electric utility is obligated to commit
				  funds in order to maintain the financial viability of a FUCO or an affiliate of
				  the electric utility investing in a FUCO;
(C) That the electric utility will not
				  provide, directly or indirectly, any guarantees or other forms of credit
				  support for any funds borrowed by the holding company or an affiliate of the
				  electric utility in connection with the acquisition of any ownership interest
				  in a FUCO;
(D) That the electric
				  utility, the holding company, or any affiliate of the electric utility will not
				  make any investment in a FUCO under circumstances in which the electric utility
				  would be liable for the debts and/or liabilities of the FUCO incurred as a
				  result of acts or omissions of the FUCO;
(E) That the electric utility will maintain
				  and provide a copy to the commission of its accounting policies and procedures
				  that assure that the electric utility is adequately and fairly compensated by
				  the holding company or an affiliate of the electric utility for any use of the
				  electric utility's assets or personnel in furtherance of a FUCO;
(F) That the holding company provides the
				  commission reasonable access to books and records and financial statements, or
				  copies thereof, of the FUCO or other affiliate doing business with the FUCO, in
				  English and stated in United States dollars, as the commission may request to:
(i) review transactions between the electric
				  utility and such FUCO or affiliate pursuant to the Public Utility Regulatory
				  Act §14.154; and
(ii) review
				  transactions between any affiliate and the FUCO if such affiliate also has
				  transactions directly or indirectly with the electric utility;
(G) That the holding company will
				  file with the commission quarterly a report listing the total amount of the
				  aggregate investments by the holding company and its subsidiaries and the
				  percentage of the holding company's consolidated net worth, from the company's
				  most recent SEC form 10-Q, represented by such investments;
(i) "Aggregate investment" means all amounts
				  invested, or committed to be invested, in exempt wholesale generators located
				  outside the United States (foreign EWGs) and FUCOs, for which there is
				  recourse, directly or indirectly, to the holding company. Among other things,
				  the term must include preliminary development expenses that culminate in the
				  acquisition of a foreign EWG or a FUCO.
(ii) Such report must be filed no later than
				  ten days following the filing of the 10-Q for the quarter.
(H) That in the event the holding company
				  anticipates making any investment in a FUCO that would result in the aggregate
				  investment as defined in subparagraph (G) of this paragraph of such holding
				  company exceeding 30% of the consolidated net worth of such holding company,
				  the holding company must so advise the commission before a final commitment to
				  ownership of such FUCO is made;
(I)
				  That the electric utility will provide, by March 31 of each year, a copy of the
				  electric utility's three-year cash flow forecast;
(J) That the holding company will provide to
				  the commission all SEC forms for reporting information related to foreign EWG
				  and FUCO investments, no later than ten days after such forms are provided to
				  the SEC;
(K) That the holding
				  company will promptly notify the commission whenever any of the following
				  occurs:
(i) It is unable to provide the
				  certifications, undertakings, or documents provided for in this
				  paragraph;
(ii) The aggregate
				  investment exceeds 30% of consolidated net worth;
(iii) The holding company's operating losses
				  attributable to its direct or indirect investments in foreign EWGs and FUCOs
				  exceeded 5.0% of consolidated retained earnings during the previous four
				  quarters; and
(L) That
				  the holding company will comply with the informational filing requirements of
				  subsection (d) of this section in connection with a contemplated investment in
				  a FUCO, unless the commission finds good cause not to require the holding
				  company to provide such additional information.