REGULATION OF UTILITY AND TRANSITION TO COMPETITION.

(a) Until the date on which an electric utility subject to this subchapter is authorized by the commission to implement customer choice, the rates of the utility shall be regulated under traditional cost of service regulation and the utility is subject to all applicable regulatory authority prescribed by this subtitle and Subtitle A, including Chapters 14, 32, 33, 36, and 37. Until the date on which an electric utility subject to this subchapter implements customer choice, the provisions of this chapter, other than this subchapter, Sections 39.1516 and 39.905, and the provisions relating to the duty to obtain a permit from the Texas Commission on Environmental Quality for an electric generating facility and to reduce emissions from an electric generating facility, shall not apply to that utility. That portion of any commission order entered before September 1, 2001, to comply with this subchapter shall be null and void.

(b) Until the date on which an electric utility subject to this subchapter implements customer choice, Section 33.008 does not apply and the utility shall pay franchise fees to a municipality as required by the utility's franchise agreement with the municipality. After the date on which an electric utility subject to this subchapter implements customer choice, Section 33.008 applies. However, for purposes of computing the franchise fees as provided by Section 33.008(b), the calendar year immediately preceding the implementation of customer choice shall be substituted for the year 1998.

(c) On or after January 1, 2007, an electric utility subject to this subchapter may choose to participate in customer choice. An electric utility that chooses to participate in customer choice shall file a transition to competition plan with the commission. This transition to competition plan shall identify how utilities subject to this subchapter intend to mitigate market power and achieve full customer choice, including specific alternatives for constructing additional transmission facilities, auctioning rights to generation capacity, divesting generation capacity, or any other measure that is consistent with the public interest. The utility shall also include in the transition to competition plan a provision to establish a price to beat for residential customers and commercial customers having a peak load of 1,000 kilowatts or less. The commission may prescribe additional information or provisions that must be included in the plan. The commission shall approve, modify, or reject a plan within 180 days after the date of a filing under this section; provided, however, that if a hearing is requested by any party to the proceeding, the 180-day deadline will be extended one day for each day of hearings. The transition to competition plan may be updated or amended annually, subject to commission approval until the applicable power region is certified as a qualifying power region under Section 39.152.

(d) On implementation of customer choice, an electric utility subject to this subchapter is subject to the provisions of this subtitle and Subtitle A to the same extent as other electric utilities, including the provisions of Chapter 37 concerning certificates of convenience and necessity.

(e) Notwithstanding Subsection (a), an electric utility subject to this subchapter that elects to deploy advanced metering and meter information networks may recover reasonable and necessary costs incurred in deploying advanced metering and meter information networks. An electric utility that elects to deploy advanced metering or meter information networks is subject to commission rules adopted under Sections 39.107(h) and (k). The commission shall ensure that any deployment plan approved under this section and any related customer surcharge:

(1) are not applicable to customer accounts that receive service at transmission voltage; and

(2) are consistent with commission rules related to advanced metering systems regarding:

(A) customer protections;

(B) data security, privacy, and ownership; and

(C) options given consumers to continue to receive service through a non-advanced meter.

(f) An electric utility subject to this subchapter that elects to deploy an advanced meter information network shall deploy the network as rapidly as practicable to allow customers to better manage energy use and control costs.