Senate Bill 769 – the first major piece of legislation from the 81st Legislature signed into law by Gov. Rick Perry – allows electric utilities to gain more rapid recovery of storm restoration costs through the use of securitization. Although promoted as a way to address recovery costs associated with Hurricane Ike, it’s written in a much broader fashion and so can be used by utilities to recover costs associated with a wide array of major "weather related events" in the future.
While the legislature wanted to insure grid reliability and expedited cost recovery, the rush to get this authorization of piecemeal ratemaking to the Governor resulted in utilities obtaining the right to estimate certain costs and continue to earn a return on hundreds of millions of dollars of abandoned and useless assets until their next comprehensive rate case. The Governor signed the bill on April 16 and already CenterPoint Energy and Entergy Texas have filed applications seeking Ike cost rate surcharges of $677.8 million and $577.5 million respectively.
Hurricane Ike made landfall in September of 2008 and carved a wide path of destruction through Texas. In the end, Ike was the third costliest U.S. hurricane of all time.
-- Pat Jackson
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