Utilities Code Chapter 31

The statute’s principal legal mechanisms are definition, regulatory framework setting, delegation of administrative duties, and programmatic encouragement. The main concepts in the text are as follows, with section citations in parentheses:

• Regulatory purpose and scope: The statute establishes that electric utilities are often local monopolies and that public agencies regulate electric utility rates, operations, and services, and it directs updating rules and policies to fit a more competitive wholesale market (Sec. 31.001(a)-(c)). This situates all downstream definitions and duties within a public-interest regulatory frame.
• Definitions as gating rules: The wide-ranging, operational definitions in Sec. 31.002 determine who is an "electric utility," "retail electric provider," "power generation company," "power marketer," "transmission and distribution utility," "exempt wholesale generator," and ancillary categories such as "distributed natural gas generation facility" and "electric generation equipment lessor or operator" (Sec. 31.002(1)-(20)). These definitions include express exclusions (for example, municipal corporations, electric cooperatives, certain wholesale-only sellers, the state) that contractually and administratively gate statutory obligations and exemptions (Sec. 31.002(6)(A)-(J)).
• Aggregation and customer choice: The text defines "aggregation" with an explicit limitation that aggregation must not allow customers to avoid nonbypassable charges or fees (Sec. 31.002(3)). It defines "customer choice" as the freedom of a retail customer to purchase electric services individually or through voluntary aggregation and to choose among fuels, efficiency programs, and renewable suppliers (Sec. 31.002(4)). Those definitions frame market participation rights and constraints.
• Distinction between generation and retail functions: Several definitions and exclusions operationalize structural separation. For example, a "retail electric provider" is defined as an entity that sells to retail customers and "may not own or operate generation assets but may aggregate distributed energy resources under Section 39.3515" (Sec. 31.002(17)). Conversely, a "power generation company" generates electricity intended for wholesale, cannot own transmission or distribution facilities (with limited exceptions), and does not have a certificated service area (Sec. 31.002(10)). An "exempt wholesale generator" has specified FERC registration or application requirements (Sec. 31.002(7)). These distinctions assign different legal identities and limits to market roles.
• Treatment of new and distributed technologies: The statute recognizes distributed generation and leasing arrangements. "Distributed natural gas generation facility" is defined by location (on customer's side of meter) and size (≤ 2,000 kW) (Sec. 31.002(4-a)). "Electric generation equipment lessor or operator" is defined by three functional criteria and exclusion from being treated as an electric utility (Sec. 31.002(4-b), 31.002(6)(J)(v)). The statute also contemplates electric energy storage as falling within the ambit of power generation companies where applicable (Sec. 31.002(10)(A)).
• Transportation charging service carve-out: The commission may, by rule, exempt providers who own or operate equipment used solely to provide electricity charging service for a mode of transportation from the definitions of "electric utility" and "retail electric provider" (Sec. 31.0021). This creates a procedural channel for removing EV charging operators and similar equipment providers from standard utility regulatory classification.
• Programmatic encouragement and resource roles: The commission is authorized to act as a resource center to assist school districts on energy-efficient facility development and must provide information on financing solar panels (Sec. 31.004). A variety of entities are required to "consider" establishing a set of customer-option programs aimed at reducing air contaminants and encouraging energy efficiency and technology deployment (Sec. 31.005). The language "shall consider" signals a legislative expectation rather than a command to implement.
• Cybersecurity coordination: The commission is required to establish a program to monitor cybersecurity efforts among utilities, provide best-practice guidance (including software integrity, vendor risk management and procurement controls, vendor incident notification, and vendor remote access), and facilitate information sharing; it may collaborate with state cybersecurity bodies (Sec. 31.052).

These concepts combine to allocate regulatory identity, specify who may be treated as utilities or nonutilities, create administrative roles and degrees of discretion for the commission, and set out soft-law expectations for program adoption and cybersecurity guidance. The definitions in Sec. 31.002 are structurally decisive because the statutory reach of many duties and programs turns on whether an entity falls within or outside those categories.

The statute creates legal categories that determine which entities are subject to its provisions or are excluded. Key affected parties and the statutory mechanics affecting them are:

• Electric utilities: Defined as persons or river authorities that own or operate for compensation equipment or facilities to produce, generate, transmit, distribute, sell, or furnish electricity in the state, including lessees, trustees, receivers, and certain recreational vehicle park owners who fail to comply with specified consumer protections (Sec. 31.002(6)). However, the definition explicitly excludes several classes (Sec. 31.002(6)(A)-(J)), which narrows who is treated as an "electric utility" in practice.
• Municipal corporations: Municipal utilities are expressly excluded from the term "electric utility" (Sec. 31.002(6)(A)). Nonetheless, municipally owned electric utilities are expressly within the class of entities to which the customer-option program consideration applies (Sec. 31.005(a)(1)).
• Electric cooperatives and municipally owned electric utilities: These entities are both excluded from the electric-utility definition and are separately identified as utilities for the purposes of the subchapter's utility definition (Sec. 31.002(6)(G); Sec. 31.051(1)-(3)). They are also listed among entities directed to consider customer-option programs (Sec. 31.005(a)(1)-(3)).
• Retail electric providers: The term "retail electric provider" covers persons that sell electric energy to retail customers, with the statutory limitation that such a provider "may not own or operate generation assets but may aggregate distributed energy resources under Section 39.3515" (Sec. 31.002(17)). Retail electric providers are among the entities to consider customer-option programs (Sec. 31.005(a)(5)).
• Power generation companies and exempt wholesale generators: Entities that generate electricity intended for wholesale sales and meet the statutory criteria for not owning transmission/distribution facilities and lacking certificated service areas are defined as power generation companies (Sec. 31.002(10)). Exempt wholesale generators are a defined subset that must apply to FERC or register as required by Section 35.032 (Sec. 31.002(7)). These categories affect whether the entity is treated as an "electric utility" under Sec. 31.002(6).
• Power marketers: Persons that become owners of electric energy for the purpose of selling it at wholesale, that do not own generation, transmission, or distribution facilities, and that have FERC market-based-rate authority or registration under Section 35.032 are defined as power marketers (Sec. 31.002(11)). Power marketers are also among the entities included in the customer-option program consideration (Sec. 31.005(a)(4)).
• Transmission and distribution utilities: Defined for the statute as persons or river authorities owning or operating transmission or distribution equipment for compensation in a qualifying power region, but not including municipally owned utilities or electric cooperatives (Sec. 31.002(19)). They are listed in the customer-option program group (Sec. 31.005(a)(6)).
• Retail customers: Defined as the separately metered end-use customer who purchases and ultimately consumes electricity (Sec. 31.002(16)). Rights such as "customer choice" are defined with retail customers and voluntary aggregation in mind (Sec. 31.002(4)).
• School districts and educators: The commission "may serve as a resource center to assist school districts" and, as part of that role, may present programs, provide technical assistance, collect and distribute information, offer workshops, and must provide information about financing solar panels for school district buildings (Sec. 31.004(a)-(c)). The statutory language makes the commission's assistance a permissible program (it "may" do so), not an obligation to school districts.
• Providers of electricity charging service for modes of transportation (for example, operators of EV charging infrastructure): These providers are potentially affected by Sec. 31.0021, which authorizes the commission by rule to exempt them from the definitions of "electric utility" or "retail electric provider." That means such providers could be removed from these statutory categories if the commission issues an exemption rule (Sec. 31.0021).
• Owners/operators/lessors of electric generation equipment used temporarily on a third-party site: The statute defines an "electric generation equipment lessor or operator" and makes clear such persons are not included in the definition of "electric utility" so long as the three statutory criteria are met (Sec. 31.002(4-b); Sec. 31.002(6)(J)(v)). The criteria require the equipment to be used on the third party's site until the third party obtains service, to produce on-site electricity for consumption by that third party (not resale), and not to interconnect with the transmission or distribution system (Sec. 31.002(4-b)(A)-(C)).
• Entities subject to cybersecurity monitoring guidance: The commission's cybersecurity coordination program applies to utilities as defined by Sec. 31.051, namely electric cooperatives, electric utilities, municipally owned electric utilities, and transmission and distribution utilities (Sec. 31.051; Sec. 31.052(a)). The program requires guidance and information sharing among those utilities.
• Entities involved in aggregation and voluntary associations: Aggregation is defined to include multi-site purchases and voluntary customer associations, with the explicit limitation that aggregation may not permit customers to avoid nonbypassable charges or fees (Sec. 31.002(3)(A)-(B)).

Mechanically, being included in a defined category matters because the statute imposes duties and programs on those classes (for example, being in the class of entities that "shall consider" customer-option programs, Sec. 31.005), sets eligibility for regulatory treatment (for example, not being an "electric utility" if the entity meets specified exclusions, Sec. 31.002(6)(A)-(J)), and defines the applicability of the cybersecurity program (Sec. 31.051; Sec. 31.052). The commission’s discretion to exempt charging-service providers by rule (Sec. 31.0021) gives regulated entities a route to change their statutory status, subject to administrative action.

The statutory text creates a mix of mandatory duties, permissive authorities, and rights-like definitions that shape market behavior. Key statutory duties and rights are:

Duties imposed on the commission or other public agencies

• Establish comprehensive regulatory system: The legislative findings instruct that a comprehensive and adequate regulatory system for electric utilities be established to assure just and reasonable rates, operations, and services (Sec. 31.001(a)). That is a policy foundation requiring regulatory action by public agencies, which the statute frames as the appropriate response to monopoly features of utilities (Sec. 31.001(b)).
• Cybersecurity coordination program: The commission shall establish a program to monitor cybersecurity efforts among utilities in the state, to provide guidance on best practices, and to facilitate the sharing of cybersecurity information. The program must include guidance on supply chain risk management best practices, addressing software integrity and authenticity, vendor risk management and procurement controls (including vendor incident notification), and vendor remote access (Sec. 31.052(a)(1)-(2)). The commission may collaborate with the state cybersecurity coordinator and cybersecurity council in implementing the program (Sec. 31.052(b)). The use of "shall" imposes a duty on the commission to create and operate this program.
• Rulemaking authority for charging-service classification: The commission may exempt, by rule, providers who own or operate equipment used solely to provide electricity charging service for a mode of transportation from the definitions of "electric utility" or "retail electric provider" (Sec. 31.0021). This is an explicit delegation of rulemaking power that creates the mechanism for reclassifying certain EV charging operators or similar businesses.
• Resource-center functions for schools (permissive): The commission may serve as a resource center to assist school districts in developing energy-efficient facilities and, in that role, present programs, provide technical assistance, collect and distribute information, offer workshops, and provide information regarding financing the installation of solar panels (Sec. 31.004(a)-(c)). These are discretionary authorities the commission may choose to exercise.
• Consideration of customer-option programs: The statute mandates that a set of specified entities "shall consider" establishing customer-option programs that encourage reduction of air contaminant emissions and lists program options such as appliance retirement and recycling, solar water heating market transformation, on-site energy storage eligibility, advanced meter deployment, distributed energy generation programs, and others (Sec. 31.005(a)-(b)). The language "shall consider" is a statutory requirement to evaluate, but it does not compel implementation; it places a procedural expectation on the named entities.

Rights and constraints for private actors

• Customer choice and aggregation: "Customer choice" is defined as the freedom of retail customers to purchase electric services from providers of their choice, either individually or via voluntary aggregation, and to choose among fuel types, efficiency programs, and renewable suppliers (Sec. 31.002(4)). The aggregation definition permits aggregation for multi-site customers and voluntary associations but expressly limits aggregation so that it cannot be used to avoid nonbypassable charges or fees (Sec. 31.002(3)). These provisions give retail customers a statutory framing of choice while setting a constraint on aggregation use.
• Nonownership limitation on retail electric providers: The statute explicitly states that a retail electric provider "may not own or operate generation assets" but may aggregate distributed energy resources under a separate statutory provision (Sec. 31.002(17)). This is a structural right/constraint: retail providers can compete at the retail level but are barred by statute from owning generation assets, which shapes vertical separation in the market structure.
• Exemptions and exclusions: Several categories are statutorily excluded from the definition of "electric utility," including municipal corporations, qualifying facilities, power generation companies, exempt wholesale generators, power marketers, corporations under Sec. 32.053 to the extent they sell exclusively at wholesale, electric cooperatives, retail electric providers, the state or state agencies, and persons who furnish electricity only to themselves or in limited tenant/employee contexts, among others (Sec. 31.002(6)(A)-(J)). These exclusions create rights to noncoverage under the subtitle for these categories, subject to the precise criteria in the statute.
• Electric generation equipment lessor/operator exclusion: A person who rents or operates certain on-site generation equipment is permitted to be treated as not an electric utility if the equipment is used on the third party’s site until the third party obtains service, produces on-site electricity for the third party and is not resold, and does not interconnect with the transmission or distribution system (Sec. 31.002(4-b); Sec. 31.002(6)(J)(v)). That creates a definitional right for certain leasing arrangements to avoid utility regulation, conditional on functional behavior.
• Definitions that shape entitlements: Definitions such as "separately metered" (Sec. 31.002(18)), "transmission service" and its later exclusions after customer choice implementation (Sec. 31.002(20)), and the freeze period dates (Sec. 31.002(8)) affect rights and obligations by determining when and how services are charged, metered, and regulated.

Procedural mechanisms and rulemaking

• Rulemaking on charging-service classification: The commission's authority to exempt charging-service providers rests on a rulemaking process ("by rule may exempt," Sec. 31.0021). That creates an administrative path and associated procedural discretion.
• Cybersecurity program content guidance: While the cybersecurity coordination program is mandated, the statute leaves the precise content and operational details to the commission, subject to the enumerated areas of guidance (Sec. 31.052(a)). The commission’s collaboration authority with state cybersecurity entities (Sec. 31.052(b)) further embeds administrative discretion.

Overall, the statutory duties mix mandatory program creation (cybersecurity), discretionary assistance and exemptions (school resource center; charging-service exemption), and soft-law obligations to consider program adoption (customer-option programs). Rights are largely defined through definitional exclusions and the customer-choice language, while structural constraints appear in prohibitions on retail providers owning generation assets and anti-avoidance language regarding aggregation.

The provided sections of the statute do not set out explicit penalties, fines, or a detailed enforcement regime within their text. The provisions describe regulatory objectives, definitional rules, programmatic duties, and certain mandatory or permissive administrative actions, but they do not include express statutory sanctions or specify enforcement procedures in the portions supplied.

Notable enforcement-relevant features and their statutory mechanics:

• Regulatory oversight premise: The findings state that public agencies regulate electric utility rates, operations, and services except as otherwise provided by the subtitle (Sec. 31.001(b)). This locates enforcement and regulatory authority in public agencies but does not itself enumerate enforcement tools or penalties.
• Commission duties and rulemaking: The statute grants the commission mandatory and discretionary duties, for example, to establish a cybersecurity coordination program (Sec. 31.052) and to exempt charging-service providers by rule (Sec. 31.0021). Those duties imply the commission can promulgate rules, and rules typically carry enforcement mechanisms in administrative law, but the text itself does not specify what penalties the commission may impose for rule violations.
• Obligations to consider programs: Entities are required to "consider" establishing customer-option programs (Sec. 31.005). The statutory language is procedural and hortatory; it does not establish an enforcement mechanism or penalty for failing to implement the programs or to reach particular outcomes.
• Exclusions and definitions as compliance gates: The statute’s carefully drawn exclusions (for example, for electric generation equipment lessors/operators who meet precise functional criteria, Sec. 31.002(4-b); Sec. 31.002(6)(J)(v)) set compliance thresholds that entities must meet to avoid being classified as an electric utility. Failure to meet those definitional criteria may lead to classification as an electric utility and exposure to whatever regulatory duties and enforcement mechanisms exist elsewhere in the subtitle or in other law, but those downstream enforcement provisions are not included in the supplied text.
• Cybersecurity guidance and monitoring: Sec. 31.052 requires the commission to establish a program to monitor cybersecurity efforts and to provide guidance on best practices, including supply chain risk management for cybersecurity systems used by utilities. The statutory language does not attach penalties to noncompliance with the guidance; rather, it imposes a duty on the commission to provide and facilitate guidance and information sharing. Any enforcement related to cybersecurity performance or failure to adopt suggested practices would rest on rules or other statutory provisions not included in the segments provided.
• Commission discretion and process: Where the commission is granted discretionary authority (for example, to serve as a resource center, Sec. 31.004, or to exempt charging-service providers, Sec. 31.0021), the text gives no statutory enforcement mechanism associated with those discretionary acts. Administrative law doctrines and procedural rules will govern how such rulemakings and guidance occur, but those procedures and potential penalties for violating resulting rules are not set out in the provided text.

Consequences for noncompliance are therefore not expressly set forth in these sections. The regulatory and enforcement effects will depend on the rules the commission promulgates under the authorities granted here and on other provisions of the subtitle and related statutes that were not included in the supplied text. Practically, the absence of penalties in the provided sections means that the statutory text supplies definitional and programmatic structure and delegates implementation to the commission rather than prescribing sanctioning specifics within these paragraphs.

The statute expressly cross-references several other statutory provisions and federal processes, embedding interaction points where other statutory regimes and federal administrative processes will matter. The text also allocates functions that necessarily operate in the broader regulatory and administrative ecosystem.

Express cross-references and interaction channels

• Federal Energy Regulatory Commission (FERC) processes: The definition of "exempt wholesale generator" requires either application to FERC under 15 U.S.C. Section 79z-5a or registration as an exempt wholesale generator as required by Section 35.032 (Sec. 31.002(7)(B)). The statute therefore integrates federal FERC determinations and federal registration processes into the state definitional framework; entities seeking exempt wholesale generator status must engage with FERC or the specified state registration process.
• Cross-reference to Section 35.032: Both the "exempt wholesale generator" and "power marketer" definitions depend on registration or authority under Section 35.032 (Sec. 31.002(7)(B)(ii); Sec. 31.002(11)(D)(ii)). That indicates an administrative interaction with whatever registration framework Section 35.032 provides (not included in the supplied text).
• Cross-reference to Section 39.3515: The definition of "retail electric provider" states that a retail electric provider may not own or operate generation assets but may aggregate distributed energy resources under Section 39.3515 (Sec. 31.002(17)). That cross-reference brings another statutory provision into play for the operational ability of retail providers to aggregate distributed resources.
• Cross-reference to Section 32.053: The electric-utility exclusion includes "a corporation described by Section 32.053 to the extent the corporation sells electricity exclusively at wholesale and not to the ultimate consumer" (Sec. 31.002(6)(F)). This ties the definition to the wholesale-only status as treated in Section 32.053.
• Cross-reference to Chapter 184 Subchapter C: The definition of electric utility includes recreational vehicle park owners who do not comply with Subchapter C, Chapter 184, with respect to metered sales (Sec. 31.002(6), last clause). Compliance with Chapter 184 Subchapter C therefore affects whether such a park owner is treated as an electric utility.
• Cross-reference to Transportation Code Section 502.004: The definition excludes from "electric utility" a person who owns or operates equipment solely to provide electricity charging service for consumption by an alternatively fueled vehicle as defined by Section 502.004, Transportation Code (Sec. 31.002(6)(J)(iv); Sec. 31.002(17), last clause). The interaction with Transportation Code definitions shapes the boundary for charging-service providers.
• Cross-reference to Chapter 35 Subchapter E: The definition of power generation company specifically includes owners or operators of electric energy storage equipment or facilities to which Subchapter E, Chapter 35, applies (Sec. 31.002(10)(A)). Thus state law treatment of energy storage under Chapter 35 influences whether such assets count the entity as a power generation company.
• Interaction with ERCOT: The definition of "Electric Reliability Council of Texas" or "ERCOT" identifies the geographic area served by utilities not synchronously interconnected with electric utilities outside the state (Sec. 31.002(5)). This ties the statute's definitions and obligations to the exceptional market structure within ERCOT and marks the statute as sensitive to interconnection geography and market regions.
• Interaction with North American Electric Reliability Council (NERC) regional structures: The statute defines "power region" as a contiguous geographical area that is a distinct region of the North American Electric Reliability Council, which anchors some statutory concepts within NERC-defined regions (Sec. 31.002(12)).

Mechanisms of interaction

• Definitions as connectors: Many interactions are implemented by definition. If an entity meets criteria tied to an external law or federal process (for example, FERC determinations, Section 35.032 registration), the entity’s classification under this subtitle changes, thereby changing which state rules or programs apply (Sec. 31.002(7); Sec. 31.002(11)).
• Delegated rulemaking and collaborative authority: The commission’s authority to exempt charging-service providers "by rule" (Sec. 31.0021) and to collaborate with the state cybersecurity coordinator and cybersecurity council (Sec. 31.052(b)) creates administrative channels for coordinated rulemaking and program implementation that involve other state entities and potentially federal frameworks.
• Programmatic overlap: The cybersecurity coordination program requires guidance on vendor procurement, software integrity, and remote access and authorizes collaboration with state cybersecurity bodies (Sec. 31.052). That creates an operational overlap with other state cybersecurity policy and operational frameworks in Chapter 2054, Government Code (cited by reference), implying coordinated implementation where state-level cybersecurity standards and the commission’s guidance will need harmonization.
• Market-structure alignment: The statute’s recognition that wholesale markets are becoming more competitive (Sec. 31.001(c)) suggests its policies are designed to work in tandem with federal deregulatory or market-based frameworks that affect wholesale transactions. The statute’s references to FERC processes and to market participants such as power marketers and exempt wholesale generators make those federal-state interactions explicit.

Limitations of interaction in the supplied text

• The provided text does not include the content of the referenced sections (e.g., Section 35.032, Section 39.3515, Section 32.053) or federal statutes beyond the brief references, so the specifics of how obligations and rights flow from those cross-references are outside the supplied text. The statute nevertheless creates the legal requirement to consult and coordinate with those other statutory and federal processes where defined.

In sum, the statute establishes definitional interfaces with federal regulatory processes (FERC) and several other state statutory provisions, and it mandates or authorizes administrative interactions (rulemaking, program collaboration) that require coordination with other laws and agencies.

The provided text includes explicit amendment and enactment dates for various sections. These entries document the statutory changes and effective dates supplied in the text:

• Original enactments and effective dates:

  • Sec. 31.001 and the initial subtitle: Enacted by Acts 1997, 75th Legislature, chapter 166, section 1, effective September 1, 1997 (Sec. 31.001 endnote).
  • Sec. 31.002: Also enacted by Acts 1997, 75th Legislature, chapter 166, section 1, effective September 1, 1997 (Sec. 31.002 endnote).

• Amendments to Sec. 31.002 (definitions):

  • Amended by Acts 1999, 76th Legislature, chapter 405, section 11, effective September 1, 1999. (This amendment is noted in the Sec. 31.002 endnote.)
  • Amended by Acts 2011, 82nd Legislature, Regular Session, Chapter 890 (S.B. 365), section 1, effective September 1, 2011. (Listed in the Sec. 31.002 endnote.)
  • Amended by Acts 2011, 82nd Legislature, Regular Session, Chapter 1069 (S.B. 943), section 1, effective September 1, 2011. (Listed in the Sec. 31.002 endnote.)
  • Amended by Acts 2013, 83rd Legislature, Regular Session, Chapter 979 (H.B. 2049), section 1, effective September 1, 2013. (Listed in the Sec. 31.002 endnote.)
  • Amended by Acts 2021, 87th Legislature, Regular Session, Chapter 255 (H.B. 1572), section 1, effective September 1, 2021. (Listed in the Sec. 31.002 endnote.)
  • Amended by Acts 2021, 87th Legislature, Regular Session, Chapter 389 (S.B. 1202), section 1, effective September 1, 2021. (Listed in the Sec. 31.002 endnote.)
  • Amended by Acts 2023, 88th Legislature, Regular Session, Chapter 768 (H.B. 4595), section 22.001, effective September 1, 2023. (Listed in the Sec. 31.002 endnote.)
  • Amended by Acts 2023, 88th Legislature, Regular Session, Chapter 945 (S.B. 1699), section 1, effective September 1, 2023. (Listed in the Sec. 31.002 endnote.)

• Additions and enactments for other sections:

  • Sec. 31.0021 (Charging service): Added by Acts 2021, 87th Legislature, Regular Session, Chapter 389 (S.B. 1202), section 2, effective September 1, 2021.
  • Sec. 31.004 (Energy-efficient school facilities): Enacted in 1997 with the subtitle, and later amended by Acts 2007, 80th Legislature, Regular Session, Chapter 939 (H.B. 3693), section 18, effective September 1, 2007.
  • Sec. 31.005 (Customer-option programs): Added by Acts 2005, 79th Legislature, Chapter 1095 (H.B. 2129), section 6, effective September 1, 2005.
  • Sec. 31.051 (Definition of "utility"): Added by Acts 2019, 86th Legislature, Regular Session, Chapter 509 (S.B. 64), section 22, effective September 1, 2019.
  • Sec. 31.052 (Cybersecurity coordination program for utilities): Added by Acts 2019, 86th Legislature, Regular Session, Chapter 509 (S.B. 64), section 22, effective September 1, 2019.

How to read the amendment history mechanically

• The endnotes included in the text identify which legislative sessions and bills added or amended each section and the effective date for each change. Several later amendments to Sec. 31.002 between 1999 and 2023 indicate iterative statutory adjustments to the definitions, which are central to statutory application.
• Several substantive provisions are recent additions: the cybersecurity coordination program and the separate "utility" definition for the subchapter were both added in 2019 (S.B. 64), and the charging-service exemption was added in 2021 (S.B. 1202), suggesting legislative attention to cybersecurity and to the classification of charging infrastructure post-2018.
• The addition of customer-option programs in 2005 and the school-facilities resource role earlier indicate legislative encouragement of energy-efficiency measures in public institutions and utilities for a number of years.

The amendment history in the supplied text is an authoritative map of how the definitions and programmatic responsibilities evolved, but the text does not provide the legislative text of each amending bill or the precise amendment language except as reflected by the current section language and the listed source bills and effective dates.

The supplied statutory excerpts do not include any litigation history, recorded judicial interpretations, or named cases. There are no court decisions, contested-administration entries, or judicial references contained in the text provided. Accordingly:

• The statute as supplied contains no judicial decisions, no citations to cases, and no summaries of litigation involving these sections. Any assessment of how courts have interpreted the definitions, the commission's discretionary authority, "shall consider" obligations, or the cybersecurity program cannot be based on the supplied text because it contains no such litigation or interpretative guidance.
• Because the definitions and program mandates are detailed and include discretionary rulemaking authority and mandatory duties, these subjects are plausibly litigation-prone in practice (for example, disputes over classification, over whether an entity meets the functional criteria for an exclusion, or over the substance or process of commission rulemaking). However, the supplied text does not provide any litigation examples or guidance on how courts have resolved such disputes.
• Practitioners seeking litigation history or judicial interpretation must consult case law databases or the administrative record outside the supplied statute text. The statute itself contains cross-references to federal processes (e.g., FERC) and other state provisions; litigation interpreting those cross-referenced provisions or the interplay between federal determinations and state classification could be relevant, but such material is not present in the provided sections.

In short, the provided statute contains no litigation history. Any analysis of judicial outcomes, precedents, or litigation trends that relate to these sections lies outside the source text and therefore is not included here.

The statute contains several precise definitional thresholds, discretionary delegation points, and nonobvious limits that can create compliance traps or operational risks if not carefully monitored. Below are concrete "gotchas" grounded in the statutory text:

• Classification turns on precise functional criteria: Whether an entity is treated as an "electric utility," "retail electric provider," "power generation company," "exempt wholesale generator," or "power marketer" depends on narrowly worded functional criteria and exclusions (Sec. 31.002(6), (7), (10), (11), (17)). For example, a person renting generation equipment to a third party may avoid being an "electric utility" only if the three statutory conditions are met, including that the equipment does not interconnect with the transmission or distribution system (Sec. 31.002(4-b); Sec. 31.002(6)(J)(v)). Small differences in practice (e.g., interconnection, resale, duration of use) can change classification and regulatory exposure.
• Retail electric providers may not own or operate generation assets: The statute flatly states that a retail electric provider "may not own or operate generation assets" (Sec. 31.002(17)). Entities that operate retail-facing businesses while also holding generation could be outside this definition, but the text places a constraint on retail electric providers. The permitted aggregation of distributed energy resources under Section 39.3515 is an exception, but the content of that exception requires consulting the cross-referenced provision (Sec. 31.002(17)).
• Aggregation cannot avoid nonbypassable charges: Aggregation is defined but expressly barred from being used to avoid nonbypassable charges or fees (Sec. 31.002(3)(A)-(B)). Entities contemplating aggregation strategies must ensure that aggregated arrangements do not function to evade such charges; the statute signals an anti-avoidance limitation without detailing mechanisms here.
• Charging-service exemption is discretionary and rulebound: Providers of charging service for modes of transportation are not automatically outside the "electric utility" or "retail electric provider" definitions; the commission must exempt them by rule (Sec. 31.0021). That means an EV charging operator cannot assume noncoverage; it must either operate within the statutory exclusions (for example the separate clause in Sec. 31.002(6)(J)(iv) for equipment used solely to provide charging for alternatively fueled vehicles as defined by the Transportation Code) or seek and obtain a rule-based exemption from the commission. The procedural timeline and content of any exemption rule are matters for commission rulemaking.
• "Transmission service" exclusion after customer choice implementation: The definition of "transmission service" includes many elements but also states that, on and after the implementation of customer choice, certain generation-provided services are not "transmission service" (Sec. 31.002(20)). The timing and scope of "implementation of customer choice" will affect what services count as transmission service, potentially changing tariff design and service responsibilities. The statute leaves the operational definition of that implementation to the broader regulatory process.
• Cybersecurity program scope includes supply chain specifics: The cybersecurity coordination program must provide guidance on software integrity and authenticity, vendor risk management and procurement controls (including vendor incident notification), and vendor remote access (Sec. 31.052(a)(2)(A)-(C)). Utilities and their vendors must be prepared for guidance addressing fairly granular supply-chain controls; vendors will be included through the guidance even though the statute does not itself create binding obligations in the sections provided.
• "Separately metered" matters for retail customer status: The statute defines "retail customer" as the separately metered end-use customer who purchases and ultimately consumes electricity (Sec. 31.002(16); Sec. 31.002(18)). Entities that provide master-metered services or bill through submetering structures need to examine that definition to determine whether end-users qualify as retail customers and what rights or protections flow from that status.
• Definitions hinge on other statutory provisions and federal registrations: Several definitions depend on external regulatory steps,e.g., FERC applications for exempt wholesale generators or registration under Section 35.032 (Sec. 31.002(7)(B)), or the authority to sell at market-based rates for power marketers (Sec. 31.002(11)(D)). An entity’s state classification can depend on whether the entity has obtained the relevant federal authorization or state registration.
• Temporal artifacts remain: The statute defines a "freeze period" as January 1, 1999 through December 31, 2001 (Sec. 31.002(8)). Although historically relevant, this is an explicit temporal definition embedded in the statute and might show up in legacy compliance contexts; parties addressing historical contract or regulatory disputes should note the statutory presence of that freeze period.
• The mandate to "consider" does not equal a mandate to act: The customer-option programs provision requires entities to "consider" establishing several programs (Sec. 31.005(a)-(b)). That statutory language creates an obligation to evaluate and consider but does not impose a direct duty to implement the enumerated programs; however, failure to document consideration could be problematic administratively depending on how the commission or other oversight entities treat the "consideration" requirement.

Each of these points is derived from the statutory text itself and highlights places where precise operational or factual differences can change regulatory classification, obligations, or exposure. Entities and counsel should map operational facts (e.g., interconnection, who bills whom, ownership of generation assets, vendor access) against the statutory criteria in Sec. 31.002 to determine correct classification and applicable duties.

Compliance under these sections depends first on correct classification under the statute’s definitions, then on following the specific duties and processes allocated to affected actors. Below are concrete compliance steps and practices grounded in the statutory text:

1. Conduct a definitional status analysis (Sec. 31.002)

   • Map the entity’s actual business practices to the statutory definitions in Sec. 31.002. Key factual issues include:
     • Does the entity own or operate generation, transmission, or distribution facilities for compensation in the state? (Sec. 31.002(6), (10), (19))
     • Does the entity sell at retail to separately metered end-users? Are customers separately metered? (Sec. 31.002(16), (18))
     • Does any rented or leased generation equipment interconnect with the transmission/distribution system, produce electricity for resale, or remain on-site only temporarily? (Sec. 31.002(4-b); Sec. 31.002(6)(J)(v))
     • Is the entity engaged exclusively in wholesale sales and registered or authorized with FERC or Section 35.032 as required? (Sec. 31.002(7); Sec. 31.002(11))
   • Document factual findings and preserve records that demonstrate compliance with the specific exclusion criteria (for example, evidence that leased equipment does not interconnect and is used solely for on-site consumption).

2. If providing vehicle charging services, pursue classification clarity (Sec. 31.0021; Sec. 31.002(6)(J)(iv))

   • Determine whether the charging equipment is "used solely to provide electricity charging service for consumption by an alternatively fueled vehicle" as the Transportation Code defines that term. If so, the entity may be excluded by statute, but if not, it should seek an exemption.
   • If exclusion is not automatic, petition the commission for a rule-based exemption under Sec. 31.0021. Be prepared to participate in administrative rulemaking and to demonstrate how the equipment and services meet the statutory criteria for exemption.

3. For retail electric providers and market participants, observe vertical separation rules (Sec. 31.002(17))

   • Retail electric providers may not own or operate generation assets. If an entity’s structure involves both retail and generation ownership, legal and structural steps should be taken to separate ownership or adjust corporate arrangements to avoid statutory conflict.
   • If aggregation or distributed resource aggregation is part of the business model, ensure compliance with Section 39.3515 and the anti-avoidance constraint that aggregation must not be used to avoid nonbypassable charges (Sec. 31.002(3); Sec. 31.002(17)).

4. When engaging in aggregation or voluntary associations, document charge treatment (Sec. 31.002(3))

   • Maintain clear billing and contractual documentation to show that aggregation does not permit avoidance of nonbypassable charges or fees. If necessary, seek commission guidance or a declaratory ruling where aggregation structures are novel.

5. For entities subject to the cybersecurity coordination program, adopt supply-chain and vendor controls aligned with commission guidance (Sec. 31.052)

   • Monitor the commission’s cybersecurity guidance and incorporate recommended practices, including:
     • Software integrity and authenticity checks (Sec. 31.052(a)(2)(A)),
     • Vendor risk management and procurement controls and vendor incident notification procedures (Sec. 31.052(a)(2)(B)),
     • Controls on vendor remote access (Sec. 31.052(a)(2)(C)).
   • Participate in information-sharing initiatives the commission facilitates and collaborate with the state cybersecurity coordinator and cybersecurity council where appropriate (Sec. 31.052(b)).

6. For utilities and public entities, follow the "consideration" process for customer-option programs (Sec. 31.005)

   • For each enumerated program (appliance retirement and recycling, solar water heating programs, air-conditioning tune-ups, on-site energy storage eligibility, advanced meters, cool roofing, lighting limits, distributed generation technology programs, high-efficiency transformers and variable air volume fan controls), document a formal consideration process:
     • Evaluate the feasibility, costs, and expected emissions reductions for each program,
     • Create internal records of the consideration, including board or management determinations, feasibility studies, and stakeholder engagement,
     • Where appropriate, pilot programs or prepare to integrate program elements into broader energy-efficiency plans.
   • Maintain any required or customary filings related to such program consideration in regulatory dockets in case administrative oversight requires evidence of statutory compliance.

7. For school districts seeking energy-efficiency assistance, engage the commission as a resource (Sec. 31.004)

   • Request program presentations, technical assistance, or workshop participation from the commission and obtain information on financing options for solar panels for school district buildings. Document interactions and use supplied guidance in procurement and project planning.

8. Preserve documentary evidence and administrative records

   • Because classification often depends on operational facts (interconnection, resales, metering, etc.), preserve contracts, interconnection agreements, meter-reading data, invoices, and vendor access logs to substantiate compliance with the statutory definitions and program expectations.

9. Monitor commission rulemaking and guidance

   • The commission has mandatory and discretionary rulemaking authority under these sections (e.g., Sec. 31.0021; Sec. 31.052). Entities should monitor rulemaking dockets for exemption rules for charging providers, cybersecurity guidance, and any implementing rules that could convert "consider" obligations into more prescriptive regulatory requirements.

10. Seek declaratory or advisory action where classification is uncertain

    • When factual conditions are near an exclusion threshold (for example, leased equipment that might or might not interconnect), pursue a declaratory order or guidance from the commission to reduce regulatory uncertainty. The statutory text creates administrative pathways, but the specific procedures for seeking such rulings are outside the supplied text.

Following these steps aligns operational practices with the functional tests embedded in the statute and prepares entities to respond to commission guidance, rulemaking, or administrative inquiries. The central compliance principle is precise fact-to-text mapping on the definitional criteria in Sec. 31.002 and proactive engagement with the commission around discretionary mechanisms such as the charging-service exemption and the cybersecurity coordination program.