OPTION TO REDIRECT DEPRECIATION

(a) For the calendar years of 1998, 1999, 2000, and 2001, an electric utility described by Section 39.254 may redirect all or a part of the depreciation expense relating to transmission and distribution assets to its net generation plant assets. (b) The electric utility shall report a decision under Subsection (a) to the commission and any other applicable regulatory authority. (c) Any adjustments made to the book value of transmission and distribution assets or the creation of any related regulatory assets resulting from the redirection under this section shall be accepted and applied by the commission for establishing net invested capital and transmission and distribution rates for retail customers in all future proceedings. (d) Notwithstanding Subsection (c), the design of post-freeze-period retail rates may not: (1) shift the allocation of responsibility for stranded costs; (2) include the adjusted costs in wholesale transmission and distribution rates; or (3) apply the adjustments for the purpose of establishing net invested capital and transmission and distribution rates for wholesale customers.