By Yost                                               H.B. No. 2677
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the requirement of water utilities to obtain a
    1-3  certificate of convenience and necessity.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Section 13.181, Water Code, is amended to read as
    1-6  follows:
    1-7        Sec. 13.181.  Power to Ensure Compliance; Rate Regulation.
    1-8  Subject to this chapter, the commission has all authority and power
    1-9  of the state to ensure compliance with the obligations of utilities
   1-10  under this chapter.  For this purpose the regulatory authority may
   1-11  fix and regulate rates of utilities, including rules and
   1-12  regulations for determining the classification of customers and
   1-13  services and for determining the applicability of rates.  A rule or
   1-14  order of the regulatory authority may not conflict with the rulings
   1-15  of any federal regulatory body.  Except Section 13.192, this
   1-16  subchapter shall apply only to a utility and shall not be applied
   1-17  to municipalities, districts, or water supply or sewer service
   1-18  corporations.  The commission may adopt rules which authorize a
   1-19  utility which is permitted under Section 13.242(c) to provide
   1-20  service without a certificate of public convenience and necessity
   1-21  to request or implement a rate increase and operate according to
   1-22  rules, regulations, and standards of service other than those
   1-23  otherwise required under this chapter provided that rates are just
    2-1  and reasonable for customers and the utility and that service is
    2-2  safe, adequate, efficient, and reasonable.
    2-3        SECTION 2.  Section 13.242, Water Code, is amended to read as
    2-4  follows:
    2-5        Sec. 13.242.  Certificate Required.  (a)  Unless otherwise
    2-6  specified, a utility or water supply or sewer service corporation
    2-7  may not in any way render retail water or sewer utility service
    2-8  directly or indirectly to the public without first having obtained
    2-9  from the commission a certificate that the present or future public
   2-10  convenience and necessity will require that installation,
   2-11  operation, or extension, and except as otherwise provided by this
   2-12  subchapter, a retail public utility may not furnish, make
   2-13  available, render, or extend retail water or sewer utility service
   2-14  to any area to which retail water or sewer utility service is being
   2-15  lawfully furnished by another retail public utility without first
   2-16  having obtained a certificate of public convenience and necessity
   2-17  that includes the area in which the consuming facility is located.
   2-18        (b)  A person that is not a retail public utility or a
   2-19  utility or water supply corporation that is operating under
   2-20  provisions pursuant to Subsection (c) may not construct facilities
   2-21  to provide water or sewer service to more than one service
   2-22  connection not on the property owned by the person and that are
   2-23  within the certificated area of a retail public utility without
   2-24  first obtaining written consent from the retail public utility.  A
   2-25  person that violates this section or the reasonable and legal terms
    3-1  and conditions of any written consent is subject to the
    3-2  administrative penalties described by Section 13.4151 of this code.
    3-3        (c)  The commission may by rule allow a utility or water
    3-4  supply corporation to render retail water service without a
    3-5  certificate of public convenience and necessity if the utility or
    3-6  water supply corporation has less than 15 potential connections and
    3-7  is not within the certificated area of another retail public
    3-8  utility.  <Not later than September 1, 1990, a utility or water
    3-9  supply or sewer service corporation that has been previously
   3-10  exempted from the certificate requirements because of operations,
   3-11  extensions, or service in progress on September 1, 1975, shall
   3-12  submit to the commission a completed application to obtain a
   3-13  certificate of public convenience and necessity for the service
   3-14  being provided on September 1, 1975.  The commission shall grant a
   3-15  certificate of public convenience and necessity to the customer
   3-16  locations currently being served by the utility or water supply or
   3-17  sewer service corporation that were also being served on September
   3-18  1, 1975.>
   3-19        SECTION 3.  Section 13.250(d), Water Code, is amended to read
   3-20  as follows:
   3-21        (d)  Except as provided by this subsection, a <A> retail
   3-22  public utility that has not been granted a certificate of public
   3-23  convenience and necessity may not discontinue, reduce, or impair
   3-24  retail water or sewer service to any ratepayer without approval of
   3-25  the regulatory authority.  Except as provided by this subsection, a
    4-1  utility or water supply corporation that is allowed to operate
    4-2  without a certificate of public convenience and necessity under
    4-3  Section 13.242(c) may not discontinue, reduce, or impair retail
    4-4  water or sewer service to any ratepayer without the approval of the
    4-5  regulatory authority.  Subject to rules of the regulatory
    4-6  authority, a retail public utility, utility, or water supply
    4-7  corporation described in this subsection may discontinue, reduce,
    4-8  or impair retail water or sewer service <except> for:
    4-9              (1)  nonpayment of charges;
   4-10              (2)  nonuse; or
   4-11              (3)  other similar reasons in the usual course of
   4-12  business.
   4-13        SECTION 4.  Section 13.254, Water Code, is amended to read as
   4-14  follows:
   4-15        Sec. 13.254.  Revocation or Amendment of Certificate.
   4-16  (a)  The commission at any time after notice and hearing may revoke
   4-17  or amend any certificate of public convenience and necessity with
   4-18  the written consent of the certificate holder or if it finds that
   4-19  the certificate holder has never provided, is no longer providing,
   4-20  or has failed to provide continuous and adequate service in the
   4-21  area, or part of the area, covered by the certificate.
   4-22        (b)  Upon written request from the certificate holder, the
   4-23  executive director may cancel the certificate of a utility or water
   4-24  supply corporation authorized by rule to operate without a
   4-25  certificate of public convenience and necessity under Section
    5-1  13.242(c).
    5-2        (c)  If the certificate of any public utility is revoked or
    5-3  amended, the commission may require one or more public utilities to
    5-4  provide service in the area in question.
    5-5        SECTION 5.  The importance of this legislation and the
    5-6  crowded condition of the calendars in both houses create an
    5-7  emergency and an imperative public necessity that the
    5-8  constitutional rule requiring bills to be read on three several
    5-9  days in each house be suspended, and this rule is hereby suspended.
   5-10                       COMMITTEE AMENDMENT NO. 1
   5-11        Amend H.B. 2677, SECTION 2, subsection (c), on Page 3, Line
   5-12  1, after the word "a" and before the word "utility" add the
   5-13  following language "municipality or".
   5-14        Amend H.B. 2677, SECTION 2, subsection (c), on Page 3, Line
   5-15  3, after the word "the" and before the word "utility" add the
   5-16  following language "municipality has given notice under Section
   5-17  13.255 of this code that it intends to provide retail water service
   5-18  to an area or if the".
   5-19                                                                 Yost