1-1 By: Harris of Dallas S.B. No. 412
1-2 (In the Senate - Filed February 19, 1993; February 22, 1993,
1-3 read first time and referred to Committee on Economic Development;
1-4 March 9, 1993, reported favorably by the following vote: Yeas 10,
1-5 Nays 1; March 9, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Parker x
1-9 Lucio x
1-10 Ellis x
1-11 Haley x
1-12 Harris of Dallas x
1-13 Harris of Tarrant x
1-14 Leedom x
1-15 Madla x
1-16 Rosson x
1-17 Shapiro x
1-18 Wentworth x
1-19 A BILL TO BE ENTITLED
1-20 AN ACT
1-21 relating to components of net income used in establishing rates of
1-22 a gas utility.
1-23 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-24 SECTION 1. Section 5.06, Gas Utility Regulatory Act (Article
1-25 1446e, Vernon's Texas Civil Statutes), is amended to read as
1-26 follows:
1-27 Sec. 5.06. Components of Net Income. (a) The components of
1-28 net income used to establish just and reasonable rates shall be
1-29 determined in accordance with this section.
1-30 (b) "Net income" means the total revenues of the gas utility
1-31 from gas utility service less all reasonable and necessary expenses
1-32 related to that gas utility service as determined by the regulatory
1-33 authority. The regulatory authority shall determine those expenses
1-34 and revenues in a manner consistent with Subsections (c) through
1-35 (e) <(b)-(d)> of this section.
1-36 (c) <(b)> Payment to affiliated interests for costs of any
1-37 services, or any property, right, or thing, or for interest expense
1-38 may not be used to establish just and reasonable rates for gas
1-39 utility service <allowed> either as capital costs or as expense
1-40 related to gas utility service except to the extent that the
1-41 regulatory authority shall find such payment to be reasonable and
1-42 necessary for each item or class of items as determined by the
1-43 regulatory authority <railroad commission>. Any such finding shall
1-44 include specific findings of the reasonableness and necessity of
1-45 each item or class of items included in the establishment of the
1-46 rates <allowed> and a finding that the price to the gas utility is
1-47 no higher than prices charged by the supplying affiliate to its
1-48 other affiliates or divisions for the same item or class of items,
1-49 or to unaffiliated persons or corporations.
1-50 (d) If an expense is allowed to be included in utility rates
1-51 or an investment is included in the utility rate base, the related
1-52 income tax deduction or benefit shall be included in the
1-53 computation of income tax expense to reduce the rates. If an
1-54 expense is disallowed or not included in utility rates or an
1-55 investment is not included in the utility rate base, the related
1-56 income tax deduction or benefit may not be included in the
1-57 computation of income tax expense to reduce the rates. The income
1-58 tax expense shall be computed using the statutory income tax rates.
1-59 (e) <(c) If the gas utility is a member of an affiliated
1-60 group that is eligible to file a consolidated income tax return,
1-61 and if it is advantageous to the gas utility to do so, income taxes
1-62 shall be computed as though a consolidated return had been so filed
1-63 and the utility had realized its fair share of the savings
1-64 resulting from the consolidated return, unless it is shown to the
1-65 satisfaction of the regulatory authority that it was reasonable to
1-66 choose not to consolidate returns. The amounts of income taxes
1-67 saved by a consolidated group of which a gas utility is a member by
1-68 reason of the elimination in the consolidated return of the
2-1 intercompany profit on purchases by the gas utility from an
2-2 affiliate shall be applied to reduce the cost of the property or
2-3 services so purchased. The investment tax credit allowed against
2-4 federal income taxes, to the extent retained by the utility, shall
2-5 be applied as a reduction in the rate based contribution of the
2-6 assets to which the credit applies, to the extent and at the rate
2-7 allowed by the Internal Revenue Code.>
2-8 <(d)> The regulatory authority may promulgate reasonable
2-9 rules and regulations complying with this section with respect to
2-10 including and not including <the allowance or disallowance of>
2-11 certain expenses in the computation of the rates to be established
2-12 <for ratemaking purposes>.
2-13 SECTION 2. This Act applies only to a rate proceeding for
2-14 which the statement of intent is filed on or after the effective
2-15 date of this Act and to any appeal of that proceeding. A
2-16 proceeding for which the statement of intent is filed before the
2-17 effective date of this Act or an appeal of that proceeding is
2-18 governed by the law in effect when the statement of intent was
2-19 filed, and that law is continued in effect for that purpose.
2-20 SECTION 3. The importance of this legislation and the
2-21 crowded condition of the calendars in both houses create an
2-22 emergency and an imperative public necessity that the
2-23 constitutional rule requiring bills to be read on three several
2-24 days in each house be suspended, and this rule is hereby suspended,
2-25 and that this Act take effect and be in force from and after its
2-26 passage, and it is so enacted.
2-27 * * * * *
2-28 Austin,
2-29 Texas
2-30 March 9, 1993
2-31 Hon. Bob Bullock
2-32 President of the Senate
2-33 Sir:
2-34 We, your Committee on Economic Development to which was referred
2-35 S.B. No. 412, have had the same under consideration, and I am
2-36 instructed to report it back to the Senate with the recommendation
2-37 that it do pass and be printed.
2-38 Parker,
2-39 Chairman
2-40 * * * * *
2-41 WITNESSES
2-42 FOR AGAINST ON
2-43 ___________________________________________________________________
2-44 Name: James McNally x
2-45 Representing: TX Gas Assoc.
2-46 City: Austin
2-47 -------------------------------------------------------------------
2-48 Name: Tim Curtis x
2-49 Representing: TX Citizen Action
2-50 City: Austin
2-51 -------------------------------------------------------------------
2-52 Name: Janee Briesemeister x
2-53 Representing: Consumers Union
2-54 City: Austin
2-55 -------------------------------------------------------------------
2-56 Name: Connie Maxwell x
2-57 Representing: Cities Coalition Steering Com
2-58 City: Lewisville TX
2-59 -------------------------------------------------------------------
2-60 FOR AGAINST ON
2-61 ___________________________________________________________________
2-62 Name: Jay Doegey x
2-63 Representing: City of Arlington
2-64 City: Arlington
2-65 -------------------------------------------------------------------
2-66 Name: Russell Needler x
2-67 Representing: Office of Public Utility Coun
2-68 City: Austin
2-69 -------------------------------------------------------------------
2-70 Name: Jim Enloe x
3-1 Representing: Atmos Energy
3-2 City: Dallas
3-3 -------------------------------------------------------------------
3-4 Name: Joe McClendon x
3-5 Representing: Lone Star Gas
3-6 City: Dallas
3-7 -------------------------------------------------------------------
3-8 Name: Wesley Robertt x
3-9 Representing: Entex
3-10 City: Austin
3-11 -------------------------------------------------------------------
3-12 Name: Dennis Hartnett x
3-13 Representing: Rio Grande Valley Gas Co.
3-14 City: San Antonio
3-15 -------------------------------------------------------------------
3-16 Name: Pam McClennan x
3-17 Representing: Southern Union Gas Co.
3-18 City: Austin
3-19 -------------------------------------------------------------------
3-20 Name: Jo Campbell x
3-21 Representing: Self
3-22 City: Waco
3-23 -------------------------------------------------------------------
3-24 Name: Ellen Blumenthal x
3-25 Representing: Self
3-26 City: Austin
3-27 -------------------------------------------------------------------