(a) In this section, “significant power outage” means an event that:
(1) results in a loss of electric power that:
(A) affects a significant number of distribution customers of a transmission and distribution utility and has lasted or is expected to last for at least six hours;
(B) affects distribution customers of a transmission and distribution utility in an area for which the governor has issued a disaster or emergency declaration;
(C) affects distribution customers served by a radial transmission or distribution facility, creates a risk to public health or safety, and has lasted or is expected to last for at least 12 hours; or
(D) creates a risk to public health or safety because it affects a critical infrastructure facility that serves the public such as a hospital, health care facility, law enforcement facility, fire station, or water or wastewater facility; or
(2) causes the independent system operator to order a transmission and distribution utility to shed load.
(a-1) The Texas Division of Emergency Management, the independent organization certified under § 39.151 for the ERCOT power region, or the executive director of the commission may determine that a power outage other than an outage described by Subsection (a) is a significant power outage for the purposes of this section.

(b) Notwithstanding any other provision of this subtitle, a transmission and distribution utility may:
(1) lease and operate facilities that provide temporary emergency electric energy to aid in restoring power to the utility’s distribution customers during a significant power outage in which:
(A) the independent system operator has ordered the utility to shed load; or
(B) the utility’s distribution facilities are not being fully served by the bulk power system under normal operations; and
(2) procure, own, and operate, or enter into a cooperative agreement with other transmission and distribution utilities to procure, own, and operate jointly, transmission and distribution facilities that have a lead time of at least six months and would aid in restoring power to the utility’s distribution customers following a significant power outage. In this section, long lead time facilities may not be electric energy storage equipment or facilities under Chapter 35.
(c) A transmission and distribution utility that leases and operates facilities under Subsection (b)(1) may not sell electric energy or ancillary services from those facilities.
(d) Facilities described by Subsection (b)(1):
(1) must be operated in isolation from the bulk power system; and
(2) may not be included in independent system operator:
(A) locational marginal pricing calculations;
(B) pricing; or
(C) reliability models.
(e) A transmission and distribution utility that leases and operates facilities under Subsection (b)(1) shall ensure, to the extent reasonably practicable, that retail customer usage during operation of those facilities is adjusted out of the usage reported for billing purposes by the retail customer’s retail electric provider.
(f) A transmission and distribution utility shall, when reasonably practicable, use a competitive bidding process to lease facilities under Subsection (b)(1).
(g) A transmission and distribution utility that leases and operates facilities under Subsection (b)(1) or that procures, owns, and operates facilities under Subsection (b)(2) shall include in the utility’s emergency operations plan filed with the commission, as described by § 186.007, a detailed plan on the utility’s use of those facilities.
(h) The commission shall permit:
(1) a transmission and distribution utility that leases and operates facilities under Subsection (b)(1) to recover the reasonable and necessary costs of leasing and operating the facilities, including the present value of future payments required under the lease, using the rate of return on investment established in the commission’s final order in the utility’s most recent base rate proceeding; and
(2) a transmission and distribution utility that procures, owns, and operates facilities under Subsection (b)(2) to recover the reasonable and necessary costs of procuring, owning, and operating the facilities, using the rate of return on investment established in the commission’s final order in the utility’s most recent base rate proceeding.
(i) The commission shall authorize a transmission and distribution utility to defer for recovery in a future ratemaking proceeding the incremental operations and maintenance expenses and the return, not otherwise recovered in a rate proceeding, associated with the leasing or procurement, ownership, and operation of the facilities.
(j) A transmission and distribution utility may request recovery of the reasonable and necessary costs of leasing or procuring, owning, and operating facilities under this section, including any deferred expenses, through a proceeding under § 36.210 or in another ratemaking proceeding. A lease under Subsection (b)(1) must be treated as a capital lease or finance lease for ratemaking purposes.
(k) Repealed by Acts 2023, 88th Leg., R.S., Ch. 410 (H.B. 1500), Sec. 46(a)(6), eff. September 1, 2023.