(a) An electric utility that does not have stranded costs described by § 39.254 shall be permitted to use any positive difference under the report required by § 39.257(b) on capital expenditures to improve or expand transmission or distribution facilities, or on capital expenditures to improve air quality, as approved by the commission. Any such capital expenditures shall be made in the calendar year immediately following the year for which the report required by § 39.257 is calculated. The capital expenditures shall be reflected in any future proceeding under this chapter to set transmission or distribution rates as a reduction to the utility’s transmission and distribution invested capital, as approved by the commission.
(b) To the extent that positive differences under the report required by § 39.257(b) are not used for capital expenditures, the amounts shall be flowed back to the electric utility’s Texas jurisdictional customers through the power cost recovery factor.

(c) This section applies only to the use of positive differences under the report required by § 39.257(b) for each year during the freeze period.