Section 7.480 - Energy Conservation Programs(a) Energy conservation program authority. A local distribution company may offer to residential and commercial customers and prospective residential and commercial customers and provide to those customers an energy conservation program pursuant to this section and Texas Utilities Code, §§ 104.401 - 104.403. The Commission has exclusive original jurisdiction over energy conservation programs implemented by local distribution companies. A political subdivision served by a local distribution company that implements an energy conservation program approved by the Commission pursuant to this section shall not limit, restrict, or otherwise prevent an eligible customer from participating in the energy conservation program based on the type or source of energy delivered to its customers.(b) Definitions. (1) Administrative costs--All prudently incurred costs of creating, managing, and administering an ECP portfolio.(2) Director--The Director of the Gas Services Department of the Oversight and Safety Division or the Director's delegate.(3) Energy conservation program (ECP)--A particular program that promotes energy conservation or energy efficiency.(4) ECP portfolio--The entire group of energy conservation programs offered to a service area by a local distribution company as described in subsection (f) of this section. The portfolio may consist of one or more programs.(5) ECP rate--The energy conservation program rate approved by the Commission in the form of a monthly volumetric charge designed to recover an LDC's authorized administrative and portfolio costs.(6) Gas Services--The Gas Services Department of the Oversight and Safety Division of the Commission.(7) Local distribution company (LDC)--An investor-owned gas utility that operates a retail gas distribution system.(8) Portfolio costs--All prudently incurred non-administrative costs that an LDC seeks to recover through the ECP rate to implement and deliver an ECP portfolio to customers and prospective customers, including but not limited to research and development costs, payment of rebates, material costs, the costs associated with installation and removal of replaced materials and/or equipment, and the cost of education and customer awareness materials related to conservation or efficiency.(9) Portfolio term--The term during which an approved ECP portfolio will be in effect.(10) Program year--The 12-month period beginning the first day of the month following the Commission's approval of the ECP portfolio.(11) Research and development costs--The costs prudently incurred by an LDC to conduct market and engineering studies for the feasibility and design of potential ECPs. Research and development costs cannot exceed 5% of portfolio costs.(c) General requirements. (1) An LDC may recover costs of an ECP portfolio if the ECP portfolio is approved by the Commission pursuant to this section and the LDC implements the approved ECP portfolio. An LDC seeking to implement an ECP portfolio shall apply with Gas Services and receive a final order from the Commission before beginning to recover the approved costs of the ECP portfolio.(2) An LDC applying for an ECP portfolio shall submit an application for each service area in which it seeks to implement an ECP.(3) If the Commission approves the LDC's application or approves the application with modifications, the LDC may recover costs to implement the ECP portfolio, including costs incurred to design, market, implement, administer, and deliver the ECP portfolio. Any costs included in an ECP portfolio approved by the Commission shall be fully subject to review by the Commission for reasonableness and prudence during the LDC's next statement of intent rate proceeding. The LDC shall include support for this determination in its next statement of intent application. ECP costs that are imprudent or recovered from customers without approval of the Commission are subject to refund as determined by the Commission.(d) Contents of application. An LDC may apply for approval of an ECP portfolio by submitting an application to Gas Services. (1) Initial ECP portfolio application. An initial application for approval of an ECP portfolio shall include: (A) a description of any existing energy conservation programs offered by the LDC in the applicable service area prior to the effective date of this section;(B) a list and detailed description of each proposed ECP;(C) the objectives for each proposed ECP;(D) the proposed per-program year portfolio costs for each ECP and the ECP portfolio;(E) the proposed per-program year administrative costs for each ECP and the ECP portfolio;(F) the proposed per-program year amount and proportion of ECP portfolio costs and administrative costs to be funded by customers;(G) the proposed per-program year amount and proportion of ECP portfolio costs and administrative costs to be funded by shareholders;(H) the projected annual consumption reduction per customer class for each ECP and the ECP portfolio;(I) the projected annual net cost savings per customer class for each ECP and the ECP portfolio;(J) a copy of the notice to customers and an affidavit stating the method of notice and the date or dates on which the notice was given;(K) copies of written correspondence received by the LDC in response to the notice;(L) copies of any proposed advertisements or promotional materials that the LDC intends to distribute to customers if an ECP portfolio is approved;(M) copies of the proposed ECP rate schedule or schedules;(N) calculation of the proposed ECP rate;(O) normalized historical annual volumes per customer class;(P) projected volumes for the upcoming program year per customer class;(Q) any other information that supports determination of the ECP rate; and(R) the name of the LDC's representative, business address, telephone number, and email address.(2) Subsequent ECP portfolio application. An LDC shall re-apply for approval of its ECP portfolio in accordance with this paragraph. A subsequent application shall be filed 45 days following the end of the ECP portfolio's second program year. A subsequent application for approval of an ECP portfolio shall include:(A) a list and detailed description of each proposed ECP;(B) the objectives for each ECP;(C) the proposed per-program year portfolio costs for each ECP and the ECP portfolio;(D) the proposed per-program year administrative costs for each ECP and the ECP portfolio;(E) the actual historical per-program year portfolio costs for each ECP and the ECP portfolio;(F) the actual historical per-program year administrative costs for each ECP and the ECP portfolio;(G) the historical and proposed per-program year amount and proportion of ECP portfolio costs and administrative costs to be funded by customers;(H) the historical and proposed per-program year amount and proportion of ECP portfolio costs and administrative costs to be funded by shareholders;(I) the projected per-program year consumption reduction per customer class for each ECP and the ECP portfolio over the new portfolio term and the actual historical per-program year consumption reduction per customer class for each ECP and the ECP portfolio over the previous portfolio term;(J) the projected per-program year net cost savings per customer class for each ECP and the ECP portfolio over the new portfolio term and the actual historical per-program year cost savings per customer class for each ECP and the ECP portfolio over the previous portfolio term;(K) copies of any proposed advertisements or promotional materials that the LDC intends to distribute to customers if the ECP portfolio is approved;(L) copies of the proposed rate schedule or schedules;(M) calculation of the proposed ECP rate;(N) normalized historical annual volumes per customer class;(O) projected volumes for the upcoming program year per customer class;(P) any other information that supports determination of the ECP rate; and(Q) the name of the LDC's representative, business address, telephone number, and email address.(3) Notice of subsequent application. If in the subsequent application the LDC proposes a new ECP or proposes changes to an existing ECP such that costs to customers increase, the LDC shall provide notice in accordance with subsection (e) of this section and include in its subsequent application the documents required by paragraph (1)(J) and (K) of this subsection.(4) Addition of new programs to existing ECP portfolio. An initial or subsequent application may contain information on one or more ECPs. If an LDC proposes to add a new ECP to its portfolio after approval of its initial application, the LDC shall propose the new ECP in its subsequent application and include the information required by paragraph (1) of this subsection for the proposed new ECP.(e) Notice and promotional materials.(1) Notice. An LDC shall print the notice of its application for an ECP portfolio in type large enough for easy reading. The notice shall be the only information contained on the piece of paper on which it is written or in the emailed notice if applicable. An LDC may give the notice required by this section either by separate mailing or by otherwise delivering the notice with its billing statements. Notice may be provided by email if the customer to receive the notice has consented to receive notices by email. Notice by mail shall be presumed to be complete three days after the date of deposit of the paper upon which it is written, enclosed in a postage-paid, properly addressed wrapper, in a post office or official depository under the care of the United States Postal Service. The notice shall be provided in English and Spanish. The notice to customers shall include the following information: (A) a description of each ECP in its proposed portfolio;(B) the effect the proposed ECP portfolio is expected to have on the rates applicable to each affected customer class and on an average bill with and without gas cost for each affected customer class;(C) the service area in which the proposed ECP portfolio would apply;(D) the date the proposed ECP portfolio application was or will be filed with the Commission;(E) the LDC's address, telephone number, and web address of the specific webpage on which the ECP portfolio application may be obtained; and(F) a statement that any affected person may file written comments concerning a proposed ECP portfolio with Gas Services by email to MOS@rrc.texas.gov and to an email address for the LDC included in its notice.(2) Promotional materials. Any ECP program or portfolio promotional materials shall be provided to customers in English and Spanish.(f) Portfolio. An ECP portfolio:(1) shall be designed to overcome barriers to the adoption of energy-efficient equipment, technologies, and processes, and be designed to change customer behavior as necessary; and(2) may include measures such as:(A) direct financial incentives;(B) technical assistance and information, including building energy performance analyses performed by the LDC or a third party approved by the LDC;(C) discounts or rebates for products; and(D) weatherization for low-income customers.(g) Cost recovery mechanism. The application for approval of an ECP portfolio shall include a proposed ECP rate. Cost recovery shall be limited to the incremental costs of providing an ECP portfolio that are not already included in the then-current cost of service rates of the LDC. Administrative costs in excess of 15% of the portfolio costs shall not be included in the ECP rate or recovered from customers in any way. The cost recovery mechanism applies to both initial and subsequent ECP applications.(1) A separate ECP rate shall be calculated for each customer class in accordance with the following formula: ECP rate = (CCR per Class + BA per Class)/Projected Volume per Class per Program Year, where:(A) CCR, Current Cost Recovery, is all projected costs attributable to the LDC's energy conservation portfolio for the program year;(B) BA, Balance Adjustment, is the computed difference between CCR collections by class and expenditures by class, including the pro-rata share of common administrative costs for each class for the program year and collection of the over/under recovery during the prior program year; and(C) Class is the customer class to which the ECP rate will apply.(2) An ECP rate may not exceed $0.20/Mcf for the residential customer class and $0.20/Mcf for the commercial customer class.(3) Upon the Commission's approval of the ECP rate, the LDC shall update its residential and commercial ECP rate schedules to reflect the approved ECP rate.(h) Procedure for review. The Director of Gas Services shall ensure that applications for ECP portfolios are reviewed for compliance with the requirements of Texas Utilities Code, §§ 104.401 - 104.403 and this section. Upon completion of the review, Gas Services will prepare a written recommendation, which shall be provided to the applicant LDC. The written recommendation shall be provided to the applicant LDC within 120 days of the date the application is filed with Gas Services. (1) The recommendation may include: (A) approval of the application for an ECP portfolio as filed;(B) approval of the application for an ECP portfolio with modifications; or(C) rejection of the application for an ECP portfolio.(2) The recommendation shall be submitted to the Commission for decision at a scheduled open meeting.(3) If the Commission approves an ECP portfolio application at an open meeting, the LDC shall file the applicable ECP rate schedules in accordance with subsection (i) of this section.(4) Previous ECP rates shall remain in effect while an annual report or a subsequent ECP portfolio application is under review.(5) Previous ECP rates shall cease to be in effect 30 days after an LDC fails to meet a required filing deadline.(6) Neither the review of an ECP portfolio application nor the review of a proposed ECP rate or rate schedule is a ratemaking proceeding for the purposes of Texas Utilities Code § 103.022.(i) Rate schedules. The LDC shall include proposed rate schedules with its initial application, each subsequent application, and each annual report for an ECP portfolio. Each ECP rate schedule shall be made on a form approved by the Commission and made available on the Commission's website. If the LDC's proposed ECP portfolio is approved by the Commission, the approved rate schedules shall be electronically filed by the LDC in accordance with § 7.315 of this title (relating to Filing of Tariffs). If an ECP rate is adjusted in an annual report filing, the LDC shall also file an adjusted rate schedule. An ECP rate approved by the Commission at an open meeting and implemented by the LDC or adjusted in an annual report filing pursuant to subsection (j) of this section shall be subject to refund unless and until the rate schedules are electronically filed and accepted by Gas Services in accordance with § 7.315 of this title and reviewed for prudence and reasonableness in a subsequent statement of intent rate proceeding.(j) ECP annual report. (1) An LDC implementing an approved ECP portfolio pursuant to this section shall file an ECP annual report with the Commission. The report shall be filed each year an approved ECP portfolio is implemented and shall be filed no later than 45 days following the end of the LDC's program year. The ECP annual report shall be in the format prescribed by the Commission and shall include the following: (A) an overview of the LDC's ECP portfolio;(B) a description of each ECP offered under the portfolio that includes the program's performance for the program year, including any evaluation of cost-effectiveness, actual program expenditures, and program results;(C) the LDC's planned ECPs for the upcoming program year;(D) for each applicable customer class, rate schedules detailing program expenditures for the program year, actual amounts collected for the program year, and the calculation of the adjusted ECP rate;(E) the number of customers participating in each ECP per customer class per the applicable program year;(F) normalized historical annual volumes per customer class per the applicable program year; and(G) projected volumes for the upcoming program year per customer class.(2) In its annual report, an LDC shall include an ECP rate adjustment request if applicable. A separately adjusted ECP rate shall be calculated for each customer class in accordance with the formula described in subsection (g) of this section. The rate adjustment request shall adjust the ECP rates then in effect to:(A) true up the difference between the program costs and actual amounts collected through the ECP rates in effect during the previous program year; and(B) account for any changes to the proposed ECP costs and projected recovery.(3) The LDC shall not implement any adjusted ECP rates until 30 days after submitting the annual report.(4) Each annual report filed with the Commission shall be made available on the LDC's website.(k) Reimbursement. An LDC implementing an approved ECP portfolio pursuant to this section shall reimburse the Commission for the LDC's share of the Commission's estimated costs related to administration of reviewing and approving or denying cost recovery applications under this section. The Director shall estimate the LDC's share of the Commission's annual costs related to the processing of such applications. The LDC shall reimburse the Commission for the amount so determined within 30 days after receipt of notice of the amount of the reimbursement.16 Tex. Admin. Code § 7.480
Adopted by Texas Register, Volume 49, Number 14, April 5, 2024, TexReg 2177, eff. 4/8/2024