H.B. No. 2868 introduces a new section, Section 36.068, to the Utilities Code, which focuses on the consideration of long-term debt and equity capitalization in setting rates for electric utilities operating solely within the Electric Reliability Council of Texas (ERCOT). The bill establishes that when determining a utility's capitalization ratio, the regulatory authority will presume the utility's proposed proportion of debt and equity is reasonable if it is based on the utility's actual financial records from the most recent quarter prior to the rate proceeding and aligns with the methodology in earnings monitoring reports. If the regulatory authority deems this ratio unreasonable, it will instead use an equity capitalization ratio that reflects the national average for electric utility companies.

The provisions of this new section apply only to rate establishment proceedings that have not yet received a final order or decision from the regulatory authority before the bill's effective date. For proceedings that have already been concluded, the existing law prior to this bill will remain in effect. The act will take effect immediately upon receiving a two-thirds majority vote from both houses of the legislature; otherwise, it will become effective on September 1, 2025.

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