By:  Parker                                             S.B. No. 83
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to utility service and related service provided by or to
    1-2  the state, a state agency or institution, or a local government.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Subsection (c), Section 3, Public Utility
    1-5  Regulatory Act (Article 1446c, Vernon's Texas Civil Statutes), is
    1-6  amended to read as follows:
    1-7        (c)  The term "public utility" or "utility," when used in
    1-8  this Act, includes any person, corporation, river authority,
    1-9  cooperative corporation, or any combination thereof, other than a
   1-10  municipal corporation or a water supply or sewer service
   1-11  corporation, or their lessees, trustees, and receivers, now or
   1-12  hereafter owning or operating for compensation in this state
   1-13  equipment or facilities for:
   1-14              (1)  producing, generating, transmitting, distributing,
   1-15  selling, or furnishing electricity ("electric utilities"
   1-16  hereinafter) provided, however, that this definition shall not be
   1-17  construed to apply to or include a qualifying small power producer
   1-18  or qualifying cogenerator, as defined in Sections 3(17)(D) and
   1-19  3(18)(C) of the Federal Power Act, as amended (16 U.S.C. Sections
   1-20  796(17)(D) and 796(18)(C));
   1-21              (2)(A)  the conveyance, transmission, or reception of
   1-22  communications over a telephone system as a dominant carrier as
   1-23  hereinafter defined ("telecommunications utilities" hereinafter);
   1-24  provided that no person or corporation not otherwise a public
    2-1  utility within the meaning of this Act shall be deemed such solely
    2-2  because of the furnishing or furnishing and maintenance of a
    2-3  private system or the manufacture, distribution, installation, or
    2-4  maintenance of customer premise communications equipment and
    2-5  accessories; and provided further that nothing in this Act shall be
    2-6  construed to apply to telegraph services, television stations,
    2-7  radio stations, community antenna television services, or
    2-8  radio-telephone services that may be authorized under the Public
    2-9  Mobile Radio Services rules of the Federal Communications
   2-10  Commission, other than such radio-telephone services provided by
   2-11  wire-line telephone companies under the Domestic Public Land Mobile
   2-12  Radio Service and Rural Radio Service rules of the Federal
   2-13  Communications Commission; and provided further that interexchange
   2-14  telecommunications carriers (including resellers of interexchange
   2-15  telecommunications services), specialized communications common
   2-16  carriers, other resellers of communications, other communications
   2-17  carriers who convey, transmit, or receive communications in whole
   2-18  or in part over a telephone system, and providers of operator
   2-19  services as defined in Section 18A(a) of this Act (except that
   2-20  subscribers to customer-owned pay telephone service shall not be
   2-21  deemed to be telecommunications utilities) who are not dominant
   2-22  carriers are also telecommunications utilities, but the
   2-23  commission's regulatory authority as to them is only as hereinafter
   2-24  defined;
   2-25                    (B)  "dominant carrier" when used in this Act
   2-26  means (i) a provider of any particular communication service which
   2-27  is provided in whole or in part over a telephone system who as to
    3-1  such service has sufficient market power in a telecommunications
    3-2  market as determined by the commission to enable such provider to
    3-3  control prices in a manner adverse to the public interest for such
    3-4  service in such market; and (ii) any provider of local exchange
    3-5  telephone service within a certificated exchange area as to such
    3-6  service.  A telecommunications market shall be statewide until
    3-7  January 1, 1985.  After this date the commission may, if it
    3-8  determines that the public interest will be served, establish
    3-9  separate markets within the state.  Prior to January 1, 1985, the
   3-10  commission shall hold such hearings and require such evidence as is
   3-11  necessary to carry out the public purpose of this Act and to
   3-12  determine the need and effect of establishing separate markets.
   3-13  Any such provider determined to be a dominant carrier as to a
   3-14  particular telecommunications service in a market shall not be
   3-15  presumed to be a dominant carrier of a different telecommunications
   3-16  service in that market.
   3-17                    (C)  Access to or use of the state
   3-18  telecommunications network by an office, board, department,
   3-19  institution, commission, or agency of the state, by a house of the
   3-20  legislature, or by a county, municipality, district, or other
   3-21  political subdivision or agency does not constitute the resale of
   3-22  telecommunications services used by the network or cause the state
   3-23  telecommunications network to be considered a carrier or public
   3-24  utility under this Act.  For the purposes of this paragraph, "state
   3-25  telecommunications network" means the intercity consolidated
   3-26  telecommunications system authorized by Article 10, State
   3-27  Purchasing and General Services Act (Article 601b, Vernon's Texas
    4-1  Civil Statutes), and its subsequent amendments.
    4-2              (3)  The term "public utility" or "utility" shall not
    4-3  include any person or corporation not otherwise a public utility
    4-4  that furnishes the services or commodity described in any paragraph
    4-5  of this subsection only to itself, its employees, or tenants as an
    4-6  incident of such employee service or tenancy, when such service or
    4-7  commodity is not resold to or used by others.  The term "electric
    4-8  utility" shall not include any person or corporation not otherwise
    4-9  a public utility that owns or operates in this state equipment or
   4-10  facilities for producing, generating, transmitting, distributing,
   4-11  selling, or furnishing electric energy to an electric utility, if
   4-12  the equipment or facilities are used primarily for the production
   4-13  and generation of electric energy for consumption by the person or
   4-14  corporation. The term "public utility," "utility," or "electric
   4-15  utility" shall not include any person or corporation not otherwise
   4-16  a public utility that owns or operates in this state a recreational
   4-17  vehicle park that provides metered electric service in accordance
   4-18  with Article 1446d-2, Revised Statutes.  A recreational vehicle
   4-19  park owner is considered a public utility if the owner fails to
   4-20  comply with Article 1446d-2, Revised Statutes, with regard to the
   4-21  metered sale of electricity at the recreational vehicle park.
   4-22        SECTION 2.  Section 41, Public Utility Regulatory Act
   4-23  (Article 1446c, Vernon's Texas Civil Statutes), is amended to read
   4-24  as follows:
   4-25        Sec. 41.  The components of invested capital and net income
   4-26  shall be determined according to the following rules:
   4-27              (a)  Invested Capital.  Utility rates shall be based
    5-1  upon the original cost of property used by and useful to the public
    5-2  utility in providing service including construction work in
    5-3  progress at cost as recorded on the books of the utility.  The
    5-4  inclusion of construction work in progress is an exceptional form
    5-5  of rate relief to be granted only upon the demonstration by the
    5-6  utility that such inclusion is necessary to the financial integrity
    5-7  of the utility.  Construction work in progress shall not be
    5-8  included in the rate base for major projects under construction to
    5-9  the extent that such projects have been inefficiently or
   5-10  imprudently planned or managed.  Original cost shall be the actual
   5-11  money cost, or the actual money value of any consideration paid
   5-12  other than money, of the property at the time it shall have been
   5-13  dedicated to public use, whether by the utility which is the
   5-14  present owner or by a predecessor, less depreciation.
   5-15              (b)  Separations and Allocations.  Costs of facilities,
   5-16  revenues, expenses, taxes, and reserves shall be separated or
   5-17  allocated as prescribed by the regulatory authority.
   5-18              (c)  Net Income.  By "net income" is meant the total
   5-19  revenues of the public utility less all reasonable and necessary
   5-20  expenses as determined by the regulatory authority.  The regulatory
   5-21  authority shall determine expenses and revenues in a manner
   5-22  consistent with the following:
   5-23                    (1)  Transactions with Affiliated Interests.
   5-24  Payment to affiliated interests for costs of any services, or any
   5-25  property, right or thing, or for interest expense shall not be
   5-26  allowed either as capital cost or as expense except to the extent
   5-27  that the regulatory authority shall find such payment to be
    6-1  reasonable and necessary for each item or class of items as
    6-2  determined by the commission.  Any such finding shall include
    6-3  specific findings of the reasonableness and necessity of each item
    6-4  or class of items allowed and a finding that the price to the
    6-5  utility is no higher than prices charged by the supplying affiliate
    6-6  to its other affiliates or divisions for the same item or class of
    6-7  items, or to unaffiliated persons or corporations.  The price paid
    6-8  by gas utilities to affiliated interests for natural gas from Outer
    6-9  Continental Shelf lands shall be subject to a rebuttable
   6-10  presumption that such price is reasonable if the price paid does
   6-11  not exceed the price permitted by federal regulation if such gas is
   6-12  regulated by any federal agency or if not regulated by a federal
   6-13  agency does not exceed the price paid by nonaffiliated parties for
   6-14  natural gas from Outer Continental Shelf lands.  The burden of
   6-15  establishing that such a price paid is not reasonable shall be on
   6-16  any party challenging the reasonableness of such price.
   6-17                    (2)  Income Taxes.  If the public utility is a
   6-18  member of an affiliated group that is eligible to file a
   6-19  consolidated income tax return, and if it is advantageous to the
   6-20  public utility to do so, income taxes shall be computed as though a
   6-21  consolidated return had been so filed and the utility had realized
   6-22  its fair share of the savings resulting from the consolidated
   6-23  return, unless it is shown to the satisfaction of the regulatory
   6-24  authority that it was reasonable to choose not to consolidate
   6-25  returns.  The amounts of income taxes saved by a consolidated group
   6-26  of which a public utility is a member by reason of the elimination
   6-27  in the consolidated return of the intercompany profit on purchases
    7-1  by the public utility from an affiliate shall be applied to reduce
    7-2  the cost of the property or services so purchased.  The investment
    7-3  tax credit allowed against federal income taxes, to the extent
    7-4  retained by the utility, shall be applied as a reduction in the
    7-5  rate based contribution of the assets to which such credit applies,
    7-6  to the extent and at such rate as allowed by the Internal Revenue
    7-7  Code.
    7-8                    (3)  Expenses Disallowed.  The regulatory
    7-9  authority shall not consider for ratemaking purposes the following
   7-10  expenses:
   7-11                          (A)  legislative advocacy expenses, whether
   7-12  made directly or indirectly, including but not limited to
   7-13  legislative advocacy expenses included in trade association dues;
   7-14                          (B)  payments, except those made under an
   7-15  insurance or risk-sharing arrangement executed before the date of
   7-16  loss, made to cover costs of an accident, equipment failure, or
   7-17  negligence at a utility facility owned by a person or governmental
   7-18  body not selling power inside the State of Texas;
   7-19                          (C)  Costs of processing a refund or credit
   7-20  under Subsection (e) of Section 43 of this Act; or
   7-21                          (D)  any expenditure found by the
   7-22  regulatory authority to be unreasonable, unnecessary, or not in the
   7-23  public interest, including but not limited to executive salaries,
   7-24  advertising expenses, legal expenses, and civil penalties or fines.
   7-25        The regulatory authority may promulgate reasonable rules and
   7-26  regulations with respect to the allowance or disallowance of any
   7-27  expenses for ratemaking purposes.
    8-1              (d)  Rates Charged State.  The rates that a utility or
    8-2  municipally owned utility charges the state or a state agency or
    8-3  institution may not include an amount representing a gross receipts
    8-4  assessment, regulatory assessment, or other similar expense.  A
    8-5  regulatory authority may adopt reasonable rules specifying similar
    8-6  expenses to be excluded.
    8-7        SECTION 3.  Section 87B, Public Utility Regulatory Act
    8-8  (Article 1446c, Vernon's Texas Civil Statutes), is amended to read
    8-9  as follows:
   8-10        Sec. 87B.  (a)  A telecommunications utility providing
   8-11  dedicated line long distance service (TEXAN) to the state on August
   8-12  31, 1987, shall continue to have this type of service available to
   8-13  the state on a month-to-month contract basis until September 1,
   8-14  1988.  The contract will become effective on September 1, 1987, and
   8-15  shall be under terms and conditions negotiated by the state and the
   8-16  utility in accordance with the amounts appropriated by the General
   8-17  Appropriations Act for this purpose.  The <State Purchasing and>
   8-18  General Services Commission shall perform all actions necessary to
   8-19  insure that one or more contracts for telecommunications services
   8-20  as provided in Article 10 of the State Purchasing and General
   8-21  Services Act (Article 601b, Vernon's Texas Civil Statutes) (TEXAN
   8-22  II) are awarded pursuant to the requirements of the State
   8-23  Purchasing and General Services Act (Article 601b, Vernon's Texas
   8-24  Civil Statutes) by October 15, 1987, and that TEXAN II is
   8-25  operational no later than August 31, 1988.  Those funds
   8-26  appropriated by the General Appropriations Act for extending the
   8-27  existing TEXAN contract which are not expended in fiscal year 1988
    9-1  shall be transferred to the <State Purchasing and> General Services
    9-2  Commission for the sole purpose of offsetting the expenses
    9-3  associated with the administration of the TEXAN II network.  If,
    9-4  during the period of time this section is in effect, any
    9-5  supplemental or other telecommunications service is required by the
    9-6  state, it may be acquired from vendors other than the utility or
    9-7  utilities providing TEXAN or TEXAN II service.
    9-8        (b)  The state's TEXAN network is not required to subscribe
    9-9  to switched access service if the technical requirements of the
   9-10  TEXAN network may be satisfied by less expensive service.  A
   9-11  restriction on the availability or use of the less expensive
   9-12  service based on location or distance of calls does not apply to
   9-13  the TEXAN network or to a user of the TEXAN network.
   9-14        (c)  A telecommunications utility or a regulatory authority
   9-15  may not prohibit the state's TEXAN network or a state agency or
   9-16  institution from sharing TEXAN service.  The TEXAN network may
   9-17  provide service to a state agency or institution, house of the
   9-18  legislature, county, municipality, special district, or other
   9-19  political subdivision of the state.
   9-20        (d)  If the state's TEXAN network or a state agency or
   9-21  institution uses a telecommunications utility's switched access
   9-22  service, the utility may not charge the state or the state agency
   9-23  or institution an amount for the service that exceeds the utility's
   9-24  direct costs in providing the service.
   9-25        SECTION 4.  Article XIII, Public Utility Regulatory Act
   9-26  (Article 1446c, Vernon's Texas Civil Statutes), is amended by
   9-27  adding Section 88 to read as follows:
   10-1        Sec. 88.  (a)  The commission shall determine the just and
   10-2  reasonable rates a local exchange company may charge an educational
   10-3  institution in accordance with this section.  In any rate case
   10-4  before the commission, the commission shall treat an educational
   10-5  institution as a separate class in allocating costs and designing
   10-6  rates.
   10-7        (b)  The commission shall establish a flat rate for single
   10-8  line local exchange services, including services used to access the
   10-9  Texas Education Network, its successor or assigns, or any other
  10-10  data or voice network that assists in or is related to education.
  10-11  The flat rate shall be set in an amount not greater than the rate
  10-12  established for that utility's residential customers in each rate
  10-13  group.
  10-14        (c)  The commission may not establish or allow a local
  10-15  exchange company to charge a rate for service using dedicated
  10-16  private lines operating at 56 kilobits per second or greater and
  10-17  used to access the Texas Education Network, its successor or
  10-18  assigns, or any other data or voice network that assists in or is
  10-19  related to education, in an amount greater than 2.5 times the rate
  10-20  available to the utility's residential customers in each rate
  10-21  group.
  10-22        (d)  The commission may not establish or allow a local
  10-23  exchange company to charge a rate for service using dedicated
  10-24  private lines operating at 1.5 megabits per second or greater and
  10-25  used to access the Texas Education Network, its successor or
  10-26  assigns, or any other data or voice network that assists in or is
  10-27  related to education,  in an amount greater than 7.5 times the rate
   11-1  available to the utility's residential customers in each rate
   11-2  group.
   11-3        (e)  The commission may not establish or allow a local
   11-4  exchange company to charge a rate for multiline business service,
   11-5  PBX service, or central office based PBX-type services in an amount
   11-6  greater than 50 percent of the utility's otherwise applicable rate
   11-7  for each type of service.
   11-8        (f)  In establishing a rate under this section, the
   11-9  commission shall follow sound ratemaking principles and may not
  11-10  establish a rate that is less than the utility's long-run
  11-11  incremental costs for providing that service to an educational
  11-12  institution.
  11-13        (g)  In this section, "educational institution" includes:
  11-14              (1)  an institution of higher education, as defined by
  11-15  Section 61.003, Education Code, and its subsequent amendments;
  11-16              (2)  the Central Education Agency and its successors
  11-17  and assigns; and
  11-18              (3)  the Texas Higher Education Coordinating Board and
  11-19  its successors and assigns.
  11-20        SECTION 5.  Article XIII, Public Utility Regulatory Act
  11-21  (Article 1446c, Vernon's Texas Civil Statutes), is amended by
  11-22  adding Sections 93C and 93D to read as follows:
  11-23        Sec. 93C.  A utility or municipally owned utility may not
  11-24  bill or otherwise require the state or a state agency or
  11-25  institution to pay for service before the service is rendered.
  11-26        Sec. 93D.  (a)  In this section, "utility" includes a
  11-27  municipally owned utility.
   12-1        (b)  The commission shall adopt rules concerning payment of
   12-2  utility bills that are consistent with Chapter 82, Acts of the 69th
   12-3  Legislature, Regular Session, 1985 (Article 601f, Vernon's Texas
   12-4  Civil Statutes), and its subsequent amendments.  However, that Act
   12-5  and the rules adopted under this section do not apply to
   12-6  telecommunications service authorized by Article 10, State
   12-7  Purchasing and General Services Act (Article 601b, Vernon's Texas
   12-8  Civil Statutes).
   12-9        (c)  This Act does not prohibit a utility from entering into
  12-10  an agreement with the state or a state agency to establish a
  12-11  levelized or average monthly service billing plan.  The agreement
  12-12  must require reconciliation of the levelized or equalized bills
  12-13  quarterly.
  12-14        SECTION 6.  Subdivision (3), Section 1.03, Gas Utility
  12-15  Regulatory Act (Article 1446e, Vernon's Texas Civil Statutes), is
  12-16  amended to read as follows:
  12-17              (3)  "Gas utility" or "utility" includes any person,
  12-18  corporation, river authority, cooperative corporation, or any
  12-19  combination thereof, other than a municipal corporation, or their
  12-20  lessees, trustees, and receivers, now or hereafter owning or
  12-21  operating for compensation in this state equipment or facilities
  12-22  for transmitting or distributing combustible hydrocarbon natural or
  12-23  synthetic natural gas for sale or resale in a manner which is not
  12-24  subject to the jurisdiction of the Federal Energy Regulatory
  12-25  Commission under the Natural Gas Act (15 U.S.C.A., Section 717, et
  12-26  seq.) provided that the production, gathering, transportation, or
  12-27  sale of natural gas or synthetic gas under Section 4, Article 6050,
   13-1  Revised Statutes, the distribution or sale of liquefied petroleum
   13-2  gas, and the transportation, delivery, or sale of natural gas for
   13-3  fuel for irrigation wells or any other direct use in agricultural
   13-4  activities is not included.  The term "gas utility" or "utility"
   13-5  does not include:
   13-6                    (A)  a <any> person or corporation not otherwise
   13-7  a gas utility that furnishes gas or gas service only to itself, its
   13-8  employees, or tenants as an incident of that employee service or
   13-9  tenancy, when the gas or gas service is not resold to or used by
  13-10  others;
  13-11                    (B)<.  The term also does not include> a person
  13-12  to the extent the person sells natural gas for use as vehicle fuel,
  13-13  sells natural gas to a person who later sells the natural gas for
  13-14  use as vehicle fuel, or owns or operates equipment or facilities to
  13-15  sell or transport the natural gas for ultimate use as vehicle fuel;
  13-16  or
  13-17                    (C)  a person or corporation not otherwise a gas
  13-18  utility that transports gas on behalf of the state or a state
  13-19  agency or institution.
  13-20        SECTION 7.  Section 4.09, Gas Utility Regulatory Act (Article
  13-21  1446e, Vernon's Texas Civil Statutes), is amended by adding
  13-22  Subsection (d) to read as follows:
  13-23        (d)  A utility or municipally owned utility may not refuse to
  13-24  provide service to the state or a state agency or institution if
  13-25  pipeline capacity is available.
  13-26        SECTION 8.  The Gas Utility Regulatory Act (Article 1446e,
  13-27  Vernon's Texas Civil Statutes) is amended by adding Section 5.061
   14-1  to read as follows:
   14-2        Sec. 5.061.  RATES CHARGED STATE.  The rates that a utility
   14-3  or municipally owned utility charges the state or a state agency or
   14-4  institution may not include an amount representing a gross receipts
   14-5  assessment, regulatory assessment, or other similar expense.  A
   14-6  regulatory authority may adopt reasonable rules specifying similar
   14-7  expenses to be excluded.
   14-8        SECTION 9.  Section 5.02, Gas Utility Regulatory Act (Article
   14-9  1446e, Vernon's Texas Civil Statutes), is amended to read as
  14-10  follows:
  14-11        Sec. 5.02.  Just and Reasonable Rates.  (a)  It shall be the
  14-12  duty of the regulatory authority to ensure that every rate made,
  14-13  demanded, or received by any gas utility, or by any two or more gas
  14-14  utilities jointly, is just and reasonable.  Rates may not be
  14-15  unreasonably preferential, prejudicial, or discriminatory, but must
  14-16  be sufficient, equitable, and consistent in application to each
  14-17  class of consumers.  For ratemaking purposes, the railroad
  14-18  commission may treat two or more municipalities served by a gas
  14-19  utility as a single class if the railroad commission considers that
  14-20  treatment to be appropriate.
  14-21        (b)  Rates charged or offered to be charged by a gas utility
  14-22  for pipeline-to-pipeline transactions and to transportation,
  14-23  industrial, and other similar large volume contract customers, but
  14-24  excluding direct sales-for-resale to gas distribution utilities at
  14-25  city gates, are considered to be just and reasonable and otherwise
  14-26  to comply with this section, and shall be approved by the
  14-27  regulatory authority, if:
   15-1              (1)  neither the gas utility nor the customer had an
   15-2  unfair advantage during the negotiations;
   15-3              (2)  the rates are substantially the same as rates
   15-4  between the gas utility and two or more of those customers under
   15-5  the same or similar conditions of service; or
   15-6              (3)  competition does or did exist either with another
   15-7  gas utility, another supplier of natural gas, or with a supplier of
   15-8  an alternative form of energy.
   15-9        (c)  Notwithstanding Subsection (b) of this section, the
  15-10  railroad commission shall approve gas transportation rates
  15-11  established under a contract between a utility or municipally owned
  15-12  utility and a state agency or institution.  Absent a contract
  15-13  between a utility or municipally owned utility and a state agency
  15-14  or institution, the railroad commission shall, not later than the
  15-15  120th day after the date either party files a request to set rates,
  15-16  establish rates not to exceed the cost-based transportation rate.
  15-17  The railroad commission shall base its determination of a
  15-18  cost-based transportation rate on the entire distribution system of
  15-19  the utility or municipally owned utility in this state.  The
  15-20  railroad commission has exclusive original jurisdiction to
  15-21  establish rates under this subsection.
  15-22        (d)  If a complaint is filed with the railroad commission by
  15-23  a transmission pipeline purchaser of gas sold or transported under
  15-24  any such pipeline-to-pipeline or transportation rate, then the
  15-25  provisions of Subsection (b) shall not apply.
  15-26        (e) <(d)>  Notwithstanding any provision in this Act to the
  15-27  contrary, the regulatory authority may approve administratively any
   16-1  decrease in rates proposed by the applicant and agreed upon by all
   16-2  parties directly affected, unless the regulatory authority finds
   16-3  the proposed decrease not to be in the public interest.
   16-4        (f) <(d)>  The standard contained in Subsection (b)(1) of
   16-5  this section shall not apply to rates charged or offered to be
   16-6  charged to an affiliated pipeline utility.  Gas purchase costs
   16-7  included in city gate rates proposed to be charged for
   16-8  sales-for-resale to gas distribution utilities at city gates may be
   16-9  reviewed as to reasonableness in city gate rate proceedings even
  16-10  though they have been previously approved as rates for other
  16-11  parties under Subsection (b) of this section.
  16-12        SECTION 10.  Article X, Gas Utility Regulatory Act (Article
  16-13  1446e, Vernon's Texas Civil Statutes), is amended by adding
  16-14  Sections 10.05 and 10.06 to read as follows:
  16-15        Sec. 10.05.  BILLING FOR SERVICE TO STATE.  A utility or
  16-16  municipally owned utility may not bill or otherwise require the
  16-17  state or a state agency or institution to pay for service before
  16-18  the service is rendered.
  16-19        Sec. 10.06.  TIME OF PAYMENT OF UTILITY BILLS BY STATE.
  16-20  (a)  In this section, "utility" includes a municipally owned
  16-21  utility.
  16-22        (b)  The commission shall adopt rules concerning payment of
  16-23  utility bills that are consistent with Chapter 82, Acts of the 69th
  16-24  Legislature, Regular Session, 1985 (Article 601f, Vernon's Texas
  16-25  Civil Statutes), and its subsequent amendments.
  16-26        (c)  This Act does not prohibit a utility from entering into
  16-27  an agreement with the state or a state agency to establish a
   17-1  levelized or average monthly service billing plan.  The agreement
   17-2  must require reconciliation of the levelized or equalized bills
   17-3  quarterly.
   17-4        SECTION 11.  Subchapter E, Chapter 13, Water Code, is amended
   17-5  by adding Sections 13.141 and 13.142 to read as follows:
   17-6        Sec. 13.141.  BILLING FOR SERVICE TO STATE.  A utility or
   17-7  municipally owned utility may not bill or otherwise require the
   17-8  state or a state agency or institution to pay for service before
   17-9  the service is rendered.
  17-10        Sec. 13.142.  TIME OF PAYMENT OF UTILITY BILLS BY STATE.
  17-11  (a)  In this section, "utility" includes a municipally owned
  17-12  utility.
  17-13        (b)  The commission shall adopt rules concerning payment of
  17-14  utility bills that are consistent with Chapter 82, Acts of the 69th
  17-15  Legislature, Regular Session, 1985 (Article 601f, Vernon's Texas
  17-16  Civil Statutes), and its subsequent amendments.
  17-17        (c)  This Act does not prohibit a utility from entering into
  17-18  an agreement with the state or a state agency to establish a
  17-19  levelized or average monthly service billing plan.  The agreement
  17-20  must require reconciliation of the levelized or equalized bills
  17-21  quarterly.
  17-22        SECTION 12.  Subchapter F, Chapter 13, Water Code, is amended
  17-23  by adding Section 13.1861 to read as follows:
  17-24        Sec. 13.1861.  RATES CHARGED STATE.  The rates that a utility
  17-25  or municipally owned utility charges the state or a state agency or
  17-26  institution may not include an amount representing a gross receipts
  17-27  assessment, regulatory assessment, or other similar expense.  A
   18-1  regulatory authority may adopt reasonable rules specifying similar
   18-2  expenses to be excluded.
   18-3        SECTION 13.  Section 403.056, Government Code, is amended by
   18-4  adding Subsection (e) to read as follows:
   18-5        (e)  Notwithstanding Subsection (c), the comptroller may
   18-6  deliver a warrant for payment of a bill for electric, telephone,
   18-7  gas, or water service provided to the state or a state agency
   18-8  directly to the utility that provided the service.  The comptroller
   18-9  may adopt rules to carry out this subsection, consistent with
  18-10  Chapter 82, Acts of the 69th Legislature, Regular Session, 1985
  18-11  (Article 601f, Vernon's Texas Civil Statutes).
  18-12        SECTION 14.  Subsections (b) and (c), Section 10.06, State
  18-13  Purchasing and General Services Act (Article 601b, Vernon's Texas
  18-14  Civil Statutes), are amended to read as follows:
  18-15        (b)  The comptroller of public accounts shall establish in
  18-16  the state treasury a revolving fund account for the administration
  18-17  of this article.  The account shall be used as a depository for
  18-18  funds received from entities served <and as a source of funds to
  18-19  purchase, lease, or otherwise acquire services, supplies, and
  18-20  equipment, and to pay salaries, wages, and other costs directly
  18-21  attributable to the provisions and operations of the system>.
  18-22        (c)  In order to provide an adequate cash flow as may be
  18-23  necessary for purposes of this article, using state agencies and
  18-24  other entities, upon proper notification, shall make monthly
  18-25  payments into the telecommunications revolving fund account from
  18-26  appropriated or other available funds.  The legislature may
  18-27  appropriate funds for the operation of the system directly to the
   19-1  commission.  In that case the revolving fund account shall be used
   19-2  to receive funds due from local government entities and other
   19-3  agencies to the extent that their funds are not subject to
   19-4  legislative appropriation.  The commission shall maintain in the
   19-5  revolving fund account sufficient amounts to pay the bills of the
   19-6  consolidated telecommunications systems and the centralized Capitol
   19-7  Complex telephone system.  The commission shall certify amounts
   19-8  that exceed this amount to the comptroller, and the comptroller
   19-9  shall transfer the excess amounts to the credit of the statewide
  19-10  network applications account established by Section 22A,
  19-11  Information Resources Management Act (Article 4413(32j), Revised
  19-12  Statutes), and its subsequent amendments.
  19-13        SECTION 15.  Section 1, Chapter 82, Acts of the 69th
  19-14  Legislature, Regular Session, 1985 (Article 601f, Vernon's Texas
  19-15  Civil Statutes), is amended to read as follows:
  19-16        Sec. 1.  Definitions.  In this Act:
  19-17              (1)  "State agency" means:
  19-18                    (A)  a board, commission, department, office, or
  19-19  other agency in the executive branch of state government that was
  19-20  created under the constitution or a statute of the state, including
  19-21  an institution of higher education as defined by Section 61.003,
  19-22  Education Code, and a river authority;
  19-23                    (B)  the legislature or a legislative agency; or
  19-24                    (C)  the supreme court, the court of criminal
  19-25  appeals, a court of appeals, a state judicial agency, or the State
  19-26  Bar of Texas.
  19-27              (2)  "Political subdivision" means:
   20-1                    (A)  a county;
   20-2                    (B)  an incorporated city or town;
   20-3                    (C)  a public school district; or
   20-4                    (D)  a special purpose district or authority.
   20-5              (3)  "Governmental entity" means a state agency or a
   20-6  political subdivision of this state.
   20-7              (4)  "Payment" means money owed to a vendor from whom a
   20-8  governmental entity acquires property or services.
   20-9              (5)  "Commission" means the State Purchasing and
  20-10  General Services Commission.
  20-11              (6)  "Vendor" means a person, corporation, association,
  20-12  partnership, or other legal entity that supplies goods and/or
  20-13  services to a governmental entity.
  20-14              (7)  "Services" includes electric, telephone, gas, and
  20-15  water utility service.
  20-16              (8)  "Subcontractor" means a person who contracts with
  20-17  a vendor to work, or has contracted with a vendor to contribute
  20-18  toward the completion of work done, for a governmental entity.
  20-19        SECTION 16.  Section 7, Chapter 82, Acts of the 69th
  20-20  Legislature, Regular Session, 1985 (Article 601f, Vernon's Texas
  20-21  Civil Statutes), is amended by adding Subsection (c) to read as
  20-22  follows:
  20-23        (c)  Notwithstanding Subsection (a) of this section, this Act
  20-24  applies to payments made by a state agency for electric, telephone,
  20-25  gas, and water utility service regardless of any contractual
  20-26  provision.
  20-27        SECTION 17.  The Information Resources Management Act
   21-1  (Article 4413(32j), Revised Statutes) is amended by adding Section
   21-2  22A to read as follows:
   21-3        Sec. 22A.  STATEWIDE NETWORK APPLICATIONS ACCOUNT.  The
   21-4  statewide network applications account is established in the
   21-5  general revenue fund.  Money credited to the account is from
   21-6  transfers of excess balances in the telecommunications revolving
   21-7  fund account as provided by Section 10.06(c), State Purchasing and
   21-8  General Services Act (Article 601b, Vernon's Texas Civil Statutes),
   21-9  and its subsequent amendments.  Amounts credited to the statewide
  21-10  network applications account may be appropriated only for the
  21-11  purchase, improvement, or maintenance of information resources,
  21-12  information resources technologies or applications, or related
  21-13  services and other items for use by a network of state agencies
  21-14  which may include agencies in the legislative branch of government.
  21-15        SECTION 18.  Section 1, Article 6050, Revised Statutes, is
  21-16  amended to read as follows:
  21-17        Sec. 1.  In this article, "person" means an individual,
  21-18  company, or private corporation, or their lessees, trustees, and
  21-19  receivers.  In Articles 6050-6066, Revised Civil Statutes of Texas,
  21-20  1925, as amended, "gas utility," "public utility," or "utility"
  21-21  means a person owning, managing, operating, leasing or controlling
  21-22  within this State any pipe lines, plant, property, equipment,
  21-23  facility, franchise, license, or permit for either one or more of
  21-24  the following kinds of business:
  21-25              (a)  Transporting, conveying, distributing or
  21-26  delivering natural gas:  (1) for public use or service for
  21-27  compensation; (2) for sale to municipalities or persons or
   22-1  companies, in those cases referred to in Subsection (c) hereof,
   22-2  engaged in distributing or selling natural gas to the public; (3)
   22-3  for sale or delivery of natural gas to any person operating under
   22-4  franchise or a contract with any municipality or other legal
   22-5  subdivision of this State; or, (4) for sale or delivery of natural
   22-6  gas to the public for domestic or other use.
   22-7              (b)  Owning or operating or managing a pipe line for
   22-8  the transportation or carriage of natural gas, whether for public
   22-9  hire or not, if any part of the right of way for said line has been
  22-10  acquired, or is hereafter acquired by the exercise of the right of
  22-11  eminent domain.
  22-12              (c)  Producing or purchasing natural gas and
  22-13  transporting or causing the same to be transported by pipe lines to
  22-14  or near the limits of any municipality in which said gas is
  22-15  received and distributed or sold to the public by another public
  22-16  utility or by said municipality, in all cases where such business
  22-17  is in fact the only or practically exclusive agency of supply of
  22-18  natural gas to such utility or municipality, is hereby declared to
  22-19  be virtual monopoly and a business and calling affected with a
  22-20  public interest, and the said business and property employed
  22-21  therein within this State shall be subject to the provisions of
  22-22  this law and to the jurisdiction and regulation of the Commission
  22-23  as a gas utility.
  22-24              (d)  No person shall be deemed to be a "gas utility,"
  22-25  "public utility," or "utility" solely because such person is an
  22-26  affiliate of such an entity.  The term "gas utility," "public
  22-27  utility," or "utility" does not include a person not otherwise a
   23-1  gas utility that transports gas on behalf of the state or a state
   23-2  agency or institution.
   23-3              (e)  Every such gas utility is hereby declared to be
   23-4  affected with a public interest and subject to the jurisdiction,
   23-5  control and regulation of the Commission as provided herein.
   23-6        SECTION 19.  Article 6050, Revised Statutes, is amended by
   23-7  adding Section 6 to read as follows:
   23-8        Sec. 6.  (a)  A gas utility may not refuse to provide service
   23-9  to the state or a state agency or institution if pipeline capacity
  23-10  is available.
  23-11        (b)  In this section, "gas utility" includes a municipally
  23-12  owned utility as that term is defined by Section 1.03, Gas Utility
  23-13  Regulatory Act (Article 1446e, Vernon's Texas Civil Statutes), and
  23-14  its subsequent amendments.
  23-15        SECTION 20.  Section 1, Article 6053, Revised Statutes, is
  23-16  amended to read as follows:
  23-17        Sec. 1. (a)  The Commission after due notice shall fix and
  23-18  establish and enforce the adequate and reasonable price of gas and
  23-19  fair and reasonable rates of charges and regulations for
  23-20  transporting, producing, distributing, buying, selling, and
  23-21  delivering gas by such pipe lines in this State; and shall
  23-22  establish fair and equitable rules and regulations for the full
  23-23  control and supervision of said gas pipe lines and all their
  23-24  holdings pertaining to the gas business in all their relations to
  23-25  the public, as the Commission may from time to time deem proper;
  23-26  and establish a fair and equitable division of the proceeds of the
  23-27  sale of gas between the companies transporting or producing the gas
   24-1  and the companies distributing or selling it; and prescribe and
   24-2  enforce rules and regulations for the government and control of
   24-3  such pipe lines in respect to their gas pipe lines and producing,
   24-4  receiving, transporting, and distributing facilities; and regulate
   24-5  and apportion the supply of gas between towns, cities, and
   24-6  corporations, and when the supply of gas controlled by any gas pipe
   24-7  line shall be inadequate, the Commission shall prescribe fair and
   24-8  reasonable rules and regulations requiring such gas pipe lines to
   24-9  augment their supply of gas, when in the judgment of the Commission
  24-10  it is practicable to do so; and it shall exercise its power,
  24-11  whether upon its own motion or upon petition by any person,
  24-12  corporation, municipal corporation, county, or Commissioners
  24-13  precinct showing a substantial interest in the subject, or upon
  24-14  petition of the Attorney General, or of any County or District
  24-15  Attorney in any county wherein such business or any part thereof
  24-16  may be carried on.
  24-17        (b)  Notwithstanding Subsection (a) of this section, the
  24-18  Commission shall approve rates established under a contract between
  24-19  a gas utility or gas supplier and a State agency or institution.
  24-20  Absent a contract between a gas utility or gas supplier and a State
  24-21  agency or institution, the Commission shall, not later than the
  24-22  120th day after the date either party files a request to set rates,
  24-23  establish rates not to exceed the gas utility's or gas supplier's
  24-24  cost-based transportation rate.  The Commission shall base its
  24-25  determination of a cost-based transportation rate on the entire
  24-26  distribution system of the gas utility or gas supplier in this
  24-27  State.  The Commission has exclusive original jurisdiction to
   25-1  establish rates under this subsection.  In this subsection, the
   25-2  term "gas utility" or "gas supplier" includes a municipally owned
   25-3  utility as that term is defined by Section 1.03, Gas Utility
   25-4  Regulatory Act (Article 1446e, Vernon's Texas Civil Statutes), and
   25-5  its subsequent amendments.
   25-6        (c)  If any transportation, industrial, or other similar
   25-7  large-volume contract customer who is an end-use customer of a gas
   25-8  utility (i) reduces or ceases purchases of natural gas or of
   25-9  natural gas service from the gas utility and (ii) purchases natural
  25-10  gas or natural gas service from another supplier or purchases an
  25-11  alternate form of energy, then the gas utility thereafter shall
  25-12  have no obligation to serve or to maintain the gas supply or the
  25-13  physical capacity to serve such customer, except to the extent that
  25-14  such customer continues to purchase natural gas or natural gas
  25-15  service of any class from the gas utility or to the extent the gas
  25-16  utility has a written contract to provide natural gas or natural
  25-17  gas service of any class to the customer.  Nothing herein shall
  25-18  prevent the Railroad Commission from requiring that utilities
  25-19  comply with all orders of the Railroad Commission in apportioning
  25-20  gas under curtailment plans and orders.
  25-21        SECTION 21.  Title 110A, Revised Statutes, is amended by
  25-22  adding Article 6252-5g to read as follows:
  25-23        Art. 6252-5g.  UTILITY BILLING AUDIT
  25-24        Sec. 1.  Except as provided by Section 3 of this article,
  25-25  every four years each state agency and institution of higher
  25-26  education shall perform an audit of its electric, telephone, gas,
  25-27  and water utility billing during the preceding four years or the
   26-1  maximum recovery period.  The agency or institution may contract
   26-2  with a private consultant in the performance of the audit.
   26-3        Sec. 2.  The audit must provide information to allow the
   26-4  agency or institution to ensure that it is properly classified and
   26-5  subscribed and that the amounts paid for service are proper.
   26-6        Sec. 3.  Before the agency or institution conducts an audit
   26-7  it shall analyze the potential benefit of the audit.  The agency or
   26-8  institution is not required to perform the audit if it determines
   26-9  that the savings and refunds provided by the audit will not exceed
  26-10  its cost.
  26-11        Sec. 4.  The audit must be funded from refunds received as a
  26-12  result of the audit.  The agency or institution shall take
  26-13  appropriate action to recover any refund due.  The attorney general
  26-14  may assist in recovering a refund.  The amount of any refunds
  26-15  received shall be deposited in the state treasury to the credit of
  26-16  the general revenue fund.  The costs of the audit shall be paid
  26-17  from amounts appropriated from those funds for that purpose.
  26-18        Sec. 5.  During January and June of each year during which an
  26-19  audit is being conducted, the agency or institution shall submit to
  26-20  the governor, Legislative Budget Board, and comptroller a report on
  26-21  the status of the audit.  The report must include a summary of the
  26-22  costs of the audit, current audit activity, a schedule of future
  26-23  activity, audit recommendations and results, pending refunds, and
  26-24  recovered refunds.  Not later than the 30th day after the date an
  26-25  audit is completed, the agency or institution shall submit to the
  26-26  governor, Legislative Budget Board, and comptroller a report on the
  26-27  savings resulting from the audit, including their source, and the
   27-1  costs of the audit.
   27-2        SECTION 22.  Subchapter B, Chapter 23, Education Code, is
   27-3  amended by adding Section 23.34 to read as follows:
   27-4        Sec. 23.34.  UTILITY BILLING AUDIT.  (a)  Except as provided
   27-5  by Subsection (c) of this section, every four years each school
   27-6  district shall perform an audit of its electric, telephone, gas,
   27-7  and water utility billing during the preceding four years.  The
   27-8  school district may contract with a private consultant in the
   27-9  performance of the audit.
  27-10        (b)  The audit must provide information to allow the school
  27-11  district to ensure that it is properly classified and subscribed
  27-12  and that the amounts paid for service are proper.
  27-13        (c)  Before the school district conducts an audit it shall
  27-14  analyze the potential benefit of the audit.  The school district is
  27-15  not required to perform the audit if it determines that the savings
  27-16  and refunds provided by the audit will not exceed its cost.
  27-17        (d)  The audit must be funded from refunds received as a
  27-18  result of the audit.  The school district shall take appropriate
  27-19  action to recover any refund due.  The attorney general may assist
  27-20  in recovering a refund.
  27-21        (e)  During January and June of each year during which an
  27-22  audit is being conducted, the school district shall submit to the
  27-23  State Board of Education a report on the status of the audit.  The
  27-24  report must include a summary of the costs of the audit, current
  27-25  audit activity, a schedule of future activity, audit
  27-26  recommendations and results, pending refunds, and recovered
  27-27  refunds.  The State Board of Education shall submit a summary of
   28-1  the report to the governor, Legislative Budget Board, and
   28-2  comptroller.  Not later than the 30th day after the date an audit
   28-3  is completed, the school district shall submit to the State Board
   28-4  of Education a report on the savings resulting from the audit,
   28-5  including their source, and the costs of the audit.  The State
   28-6  Board of Education shall submit a copy of this report to the
   28-7  governor, Legislative Budget Board, and comptroller.
   28-8        SECTION 23.  The attorney general shall coordinate with the
   28-9  Public Utility Commission of Texas and the Railroad Commission of
  28-10  Texas in the development and maintenance of systems to publicly
  28-11  monitor and verify rates of the utilities regulated by each of
  28-12  those commissions.  The systems must provide for easy acquisition
  28-13  of information in a format that is easy to understand.  Before
  28-14  February 1, 1995, the attorney general and each commission shall
  28-15  submit a report of their activities under this section to the
  28-16  speaker of the house of representatives and lieutenant governor.
  28-17        SECTION 24.  Immediately after the effective date of this
  28-18  Act, the Public Utility Commission of Texas shall initiate rate
  28-19  proceedings under Section 42, Public Utility Regulatory Act
  28-20  (Article 1446c, Vernon's Texas Civil Statutes), to set just and
  28-21  reasonable rates in accordance with Section 88, Public Utility
  28-22  Regulatory Act (Article 1446c, Vernon's Texas Civil Statutes), as
  28-23  added by Section 4 of this Act.  The commission shall provide that
  28-24  the rates take effect September 1, 1993, regardless of the date on
  28-25  which a final order is issued.
  28-26        SECTION 25.  (a)  Except as provided by Subsection (b) of
  28-27  this section, this Act takes effect September 1, 1993.
   29-1        (b)  Sections 4 and 24 of this Act take effect immediately.
   29-2        SECTION 26.  The importance of this legislation and the
   29-3  crowded condition of the calendars in both houses create an
   29-4  emergency and an imperative public necessity that the
   29-5  constitutional rule requiring bills to be read on three several
   29-6  days in each house be suspended, and this rule is hereby suspended,
   29-7  and that this Act take effect and be in force according to its
   29-8  terms, and it is so enacted.