S.B. No. 421
AN ACT
1-1 relating to the rates of a gas utility.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Subsection (e), Section 3.05, Gas Utility
1-4 Regulatory Act (Article 1446e, Vernon's Texas Civil Statutes), is
1-5 amended to read as follows:
1-6 (e) The railroad commission shall hear the appeal de novo
1-7 based on the test year presented to the municipality, adjusted for
1-8 known changes and conditions that are measurable with reasonable
1-9 accuracy, and by its final order, which shall be entered not more
1-10 than 210 <185> days from the date the appeal is perfected, the
1-11 railroad commission shall fix such rates that the municipality
1-12 should have fixed in the ordinance from which the appeal was taken.
1-13 In the event that the railroad commission fails to enter its final
1-14 order within 210 <185> days from the date the appeal is perfected,
1-15 the schedule of rates proposed by the utility shall be deemed to
1-16 have been approved by the commission and effective upon the
1-17 expiration of the 210-day <185-day> period. Any rates, whether
1-18 temporary or permanent, set by the railroad commission shall be
1-19 prospective and observed from and after the applicable order of the
1-20 railroad commission. However, <except> interim <rate> orders
1-21 establishing temporary rates necessary to provide the utility the
1-22 opportunity to avoid confiscation during the 210-day period may be
1-23 made effective <beginning> on the date of filing of the <a>
2-1 petition for review with the railroad commission <and ending on the
2-2 date of a final order setting rates>. The railroad commission may
2-3 order a refund with interest of amounts collected under temporary
2-4 rates through a payment to customers from whom those amounts were
2-5 collected or through a payment or credit to each affected class of
2-6 customers.
2-7 SECTION 2. Section 5.06, Gas Utility Regulatory Act (Article
2-8 1446e, Vernon's Texas Civil Statutes), is amended to read as
2-9 follows:
2-10 Sec. 5.06. Components of Net Income. (a) The components of
2-11 net income used to establish just and reasonable rates shall be
2-12 determined in accordance with this section.
2-13 (b) "Net income" means the total revenues of the gas utility
2-14 from gas utility service less all reasonable and necessary expenses
2-15 related to that gas utility service as determined by the regulatory
2-16 authority. The regulatory authority shall determine those expenses
2-17 and revenues in a manner consistent with Subsections (c)-(e)
2-18 <(b)-(d)> of this section.
2-19 (c) <(b)> Payment to affiliated interests for costs of any
2-20 services, or any property, right, or thing, or for interest expense
2-21 may not be used to establish just and reasonable rates for gas
2-22 utility service <allowed> either as capital costs or as expense
2-23 related to gas utility service except to the extent that the
2-24 regulatory authority shall find such payment to be reasonable and
2-25 necessary for each item or class of items as determined by the
3-1 regulatory authority <railroad commission>. Any such finding shall
3-2 include specific findings of the reasonableness and necessity of
3-3 each item or class of items included in the establishment of the
3-4 rates <allowed> and a finding that the price to the gas utility is
3-5 no higher than prices charged by the supplying affiliate to its
3-6 other affiliates or divisions for the same item or class of items,
3-7 or to unaffiliated persons or corporations.
3-8 (d) If an expense is allowed to be included in utility rates
3-9 or an investment is included in the utility rate base, the related
3-10 income tax deduction or benefit shall be included in the
3-11 computation of income tax expense to reduce the rates. If an
3-12 expense is disallowed or not included in utility rates or an
3-13 investment is not included in the utility rate base, the related
3-14 income tax deduction or benefit may not be included in the
3-15 computation of income tax expense to reduce the rates. The income
3-16 tax expense shall be computed using the statutory income tax rates.
3-17 This subsection expires September 1, 1995.
3-18 (e) <(c) If the gas utility is a member of an affiliated
3-19 group that is eligible to file a consolidated income tax return,
3-20 and if it is advantageous to the gas utility to do so, income taxes
3-21 shall be computed as though a consolidated return had been so filed
3-22 and the utility had realized its fair share of the savings
3-23 resulting from the consolidated return, unless it is shown to the
3-24 satisfaction of the regulatory authority that it was reasonable to
3-25 choose not to consolidate returns. The amounts of income taxes
4-1 saved by a consolidated group of which a gas utility is a member by
4-2 reason of the elimination in the consolidated return of the
4-3 intercompany profit on purchases by the gas utility from an
4-4 affiliate shall be applied to reduce the cost of the property or
4-5 services so purchased. The investment tax credit allowed against
4-6 federal income taxes, to the extent retained by the utility, shall
4-7 be applied as a reduction in the rate based contribution of the
4-8 assets to which the credit applies, to the extent and at the rate
4-9 allowed by the Internal Revenue Code.>
4-10 <(d)> The regulatory authority may promulgate reasonable
4-11 rules and regulations complying with this section with respect to
4-12 including and not including <the allowance or disallowance of>
4-13 certain expenses in the computation of the rates to be established
4-14 <for ratemaking purposes>.
4-15 SECTION 3. Subsection (a), Section 5.08, Gas Utility
4-16 Regulatory Act (Article 1446e, Vernon's Texas Civil Statutes), is
4-17 amended to read as follows:
4-18 (a) No utility may increase its rates except by filing a
4-19 statement of intent with the regulatory authority having original
4-20 jurisdiction at least 35 days prior to the effective date of the
4-21 proposed increase. The statement of intent shall include proposed
4-22 revisions of tariffs and schedules and a statement specifying in
4-23 detail each proposed increase, the effect the proposed increase is
4-24 expected to have on the revenues of the company, the classes and
4-25 numbers of utility consumers affected, and other information
5-1 required by the regulatory authority's rules and regulations. A
5-2 copy of the statement shall be mailed or delivered at the time of
5-3 filing to the appropriate officer of each affected municipality.
5-4 Notice<, and notice> shall also be given by publication of a notice
5-5 to the public in conspicuous form and place <by placing a notice to
5-6 the public of the proposed increase once in each week for four
5-7 successive weeks> in a newspaper having general circulation in each
5-8 county containing territory affected by the proposed increase. The
5-9 notice shall be published for four successive weeks before the
5-10 effective date of the proposed increase. In addition to newspaper
5-11 publication, the utility shall deliver notice of the proposed
5-12 increase to all affected utility customers by mail or bill insert
5-13 before the effective date of the proposed increase. Notice shall
5-14 also be given by delivery of notice <and> to such other affected
5-15 persons as required by the regulatory authority's rules and
5-16 regulations. The <However, notwithstanding the above, instead of
5-17 the> publication of newspaper notice is not required <contemplated
5-18 above, a gas utility may provide notice to the public> in areas
5-19 outside the limits of the municipalities<,> and within the limits
5-20 of municipalities with a population of less than 2,500 according to
5-21 the most recent federal census <by mailing such notice by United
5-22 States mail, postage prepaid, to the billing address of each
5-23 directly affected customer, or by including the notice in such
5-24 customer's bill in a conspicuous form>.
5-25 SECTION 4. Effective September 1, 1995, Section 5.06, Gas
6-1 Utility Regulatory Act (Article 1446e, Vernon's Texas Civil
6-2 Statutes), as amended by Section 2 of this Act, is amended to read
6-3 as follows:
6-4 Sec. 5.06. Components of Net Income. (a) The components of
6-5 net income used to establish just and reasonable rates shall be
6-6 determined in accordance with this section.
6-7 (b) "Net income" means the total revenues of the gas utility
6-8 from gas utility service less all reasonable and necessary expenses
6-9 related to that gas utility service as determined by the regulatory
6-10 authority. The regulatory authority shall determine those expenses
6-11 and revenues in a manner consistent with Subsections (c)-(e) of
6-12 this section.
6-13 (c) Payment to affiliated interests for costs of any
6-14 services, or any property, right, or thing, or for interest expense
6-15 may not be used to establish just and reasonable rates for gas
6-16 utility service either as capital costs or as expense related to
6-17 gas utility service except to the extent that the regulatory
6-18 authority shall find such payment to be reasonable and necessary
6-19 for each item or class of items as determined by the regulatory
6-20 authority. Any such finding shall include specific findings of the
6-21 reasonableness and necessity of each item or class of items
6-22 included in the establishment of the rates and a finding that the
6-23 price to the gas utility is no higher than prices charged by the
6-24 supplying affiliate to its other affiliates or divisions for the
6-25 same item or class of items, or to unaffiliated persons or
7-1 corporations.
7-2 (d) If the gas utility is a member of an affiliated group
7-3 that is eligible to file a consolidated income tax return, and if
7-4 it is advantageous to the gas utility to do so, income taxes shall
7-5 be computed as though a consolidated return had been so filed and
7-6 the utility had realized its fair share of the savings resulting
7-7 from the consolidated return, unless it is shown to the
7-8 satisfaction of the regulatory authority that it was reasonable to
7-9 choose not to consolidate returns. The amounts of income taxes
7-10 saved by a consolidated group of which a gas utility is a member by
7-11 reason of the elimination in the consolidated return of the
7-12 intercompany profit on purchases by the gas utility from an
7-13 affiliate shall be applied to reduce the cost of the property or
7-14 services so purchased. The investment tax credit allowed against
7-15 federal income taxes, to the extent retained by the utility, shall
7-16 be applied as a reduction in the rate-based contribution of the
7-17 assets to which the credit applies, to the extent and at the rate
7-18 allowed by the Internal Revenue Code.
7-19 (e) The regulatory authority may promulgate reasonable rules
7-20 and regulations complying with this section with respect to
7-21 including and not including certain expenses in the computation of
7-22 the rates to be established.
7-23 SECTION 5. The changes made by Section 2 of this Act to
7-24 Section 5.06, Gas Utility Regulatory Act (Article 1446e, Vernon's
7-25 Texas Civil Statutes), apply only to a rate proceeding for which
8-1 the statement of intent is filed on or after the effective date of
8-2 this Act. A rate proceeding for which the statement of intent was
8-3 filed before the effective date of this Act is governed by Section
8-4 5.06, Gas Utility Regulatory Act (Article 1446e, Vernon's Texas
8-5 Civil Statutes), as it existed when the statement of intent was
8-6 filed, and that law is continued in effect for that purpose.
8-7 SECTION 6. The importance of this legislation and the
8-8 crowded condition of the calendars in both houses create an
8-9 emergency and an imperative public necessity that the
8-10 constitutional rule requiring bills to be read on three several
8-11 days in each house be suspended, and this rule is hereby suspended,
8-12 and that this Act take effect and be in force from and after its
8-13 passage, and it is so enacted.