S.B. No. 2780 introduces a new section, 104.302, to the Utilities Code, which allows gas utilities to recover certain costs associated with their gross plant that has been placed in service but is not yet being recovered in rates. The bill defines "gross plant," "post in-service carrying costs," and "unrecovered gross plant," establishing a framework for gas utilities to defer costs related to unrecovered gross plant as a regulatory asset. Specifically, utilities can defer post in-service carrying costs, depreciation, ad valorem taxes, and incremental operations and maintenance expenses associated with the unrecovered gross plant.

Additionally, the bill mandates that the regulatory asset created under this new section must be included in the cost recovery mechanism authorized by the Railroad Commission. Upon recovery of the regulatory asset in rates, gas utilities are required to make appropriate accounting adjustments. The costs included in the regulatory asset will be subject to review by the Railroad Commission during general rate proceedings and may be refunded if disallowed. The Railroad Commission is tasked with adopting rules to implement this section within 180 days of the bill's effective date, which will apply only to cost recovery proceedings initiated after the bill's enactment.

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