73R10080 DWS-F
By Carriker S.B. No. 421
Substitute the following for S.B. No. 421:
By Cook C.S.S.B. No. 421
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the rates of a gas utility.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 3.05(e), Gas Utility Regulatory Act
1-5 (Article 1446e, Vernon's Texas Civil Statutes), is amended to read
1-6 as follows:
1-7 (e) The railroad commission shall hear the appeal de novo
1-8 based on the test year presented to the municipality, adjusted for
1-9 known changes and conditions that are measurable with reasonable
1-10 accuracy, and by its final order, which shall be entered not more
1-11 than 185 days from the date the appeal is perfected, the railroad
1-12 commission shall fix such rates that the municipality should have
1-13 fixed in the ordinance from which the appeal was taken. In the
1-14 event that the railroad commission fails to enter its final order
1-15 within 185 days from the date the appeal is perfected, the schedule
1-16 of rates proposed by the utility shall be deemed to have been
1-17 approved by the commission and effective upon the expiration of the
1-18 185-day period. Any rates, whether temporary or permanent, set by
1-19 the railroad commission shall be prospective and observed from and
1-20 after the applicable order of the railroad commission. However,
1-21 <except> interim <rate> orders establishing temporary rates
1-22 necessary to provide the utility the opportunity to avoid
1-23 confiscation during the 185-day period may be made effective
1-24 <beginning> on the date of filing of the <a> petition for review
2-1 with the railroad commission <and ending on the date of a final
2-2 order setting rates>. The railroad commission may order a refund
2-3 with interest of amounts collected under temporary rates through a
2-4 payment to customers from whom those amounts were collected or
2-5 through a payment or credit to each affected class of customers.
2-6 SECTION 2. Section 5.06, Gas Utility Regulatory Act (Article
2-7 1446e, Vernon's Texas Civil Statutes), is amended to read as
2-8 follows:
2-9 Sec. 5.06. Components of Net Income. (a) The components of
2-10 net income used to establish just and reasonable rates shall be
2-11 determined in accordance with this section.
2-12 (b) "Net income" means the total revenues of the gas utility
2-13 from gas utility service less all reasonable and necessary expenses
2-14 related to that gas utility service as determined by the regulatory
2-15 authority. The regulatory authority shall determine those expenses
2-16 and revenues in a manner consistent with Subsections (c)-(e)
2-17 <(b)-(d)> of this section.
2-18 (c) <(b)> Payment to affiliated interests for costs of any
2-19 services, or any property, right, or thing, or for interest expense
2-20 may not be used to establish just and reasonable rates for gas
2-21 utility service <allowed> either as capital costs or as expense
2-22 related to gas utility service except to the extent that the
2-23 regulatory authority shall find such payment to be reasonable and
2-24 necessary for each item or class of items as determined by the
2-25 regulatory authority <railroad commission>. Any such finding shall
2-26 include specific findings of the reasonableness and necessity of
2-27 each item or class of items included in the establishment of the
3-1 rates <allowed> and a finding that the price to the gas utility is
3-2 no higher than prices charged by the supplying affiliate to its
3-3 other affiliates or divisions for the same item or class of items,
3-4 or to unaffiliated persons or corporations.
3-5 (d) If an expense is allowed to be included in utility
3-6 rates, or an investment is included in the utility rate base, the
3-7 related income tax deduction or benefit shall be included in the
3-8 computation of income tax expense to reduce the rates. If an
3-9 expense is disallowed or not included in utility rates, or an
3-10 investment is not included in the utility rate base, the related
3-11 income tax deduction or benefit may not be included in the
3-12 computation of income tax expense to reduce the rates. The income
3-13 tax expense shall be computed using the statutory income tax rates.
3-14 <(c) If the gas utility is a member of an affiliated group
3-15 that is eligible to file a consolidated income tax return, and if
3-16 it is advantageous to the gas utility to do so, income taxes shall
3-17 be computed as though a consolidated return had been so filed and
3-18 the utility had realized its fair share of the savings resulting
3-19 from the consolidated return, unless it is shown to the
3-20 satisfaction of the regulatory authority that it was reasonable to
3-21 choose not to consolidate returns. The amounts of income taxes
3-22 saved by a consolidated group of which a gas utility is a member by
3-23 reason of the elimination in the consolidated return of the
3-24 intercompany profit on purchases by the gas utility from an
3-25 affiliate shall be applied to reduce the cost of the property or
3-26 services so purchased. The investment tax credit allowed against
3-27 federal income taxes, to the extent retained by the utility, shall
4-1 be applied as a reduction in the rate based contribution of the
4-2 assets to which the credit applies, to the extent and at the rate
4-3 allowed by the Internal Revenue Code.>
4-4 (e) <(d)> The regulatory authority may promulgate reasonable
4-5 rules and regulations complying with this section with respect to
4-6 including and not including <the allowance or disallowance of>
4-7 certain expenses in the computation of the rates to be established
4-8 <for ratemaking purposes>.
4-9 SECTION 3. Section 5.08(a), Gas Utility Regulatory Act
4-10 (Article 1446e, Vernon's Texas Civil Statutes), is amended to read
4-11 as follows:
4-12 (a) No utility may increase its rates except by filing a
4-13 statement of intent with the regulatory authority having original
4-14 jurisdiction at least 35 days prior to the effective date of the
4-15 proposed increase. The statement of intent shall include proposed
4-16 revisions of tariffs and schedules and a statement specifying in
4-17 detail each proposed increase, the effect the proposed increase is
4-18 expected to have on the revenues of the company, the classes and
4-19 numbers of utility consumers affected, and other information
4-20 required by the regulatory authority's rules and regulations. A
4-21 copy of the statement shall be mailed or delivered at the time of
4-22 filing to the appropriate officer of each affected municipality.
4-23 Notice<, and notice> shall also be given by publication of a notice
4-24 to the public in conspicuous form and place <by placing a notice to
4-25 the public of the proposed increase once in each week for four
4-26 successive weeks> in a newspaper having general circulation in each
4-27 county containing territory affected by the proposed increase. The
5-1 notice shall be published for four successive weeks before the
5-2 effective date of the proposed increase. In addition to newspaper
5-3 publication, the utility shall deliver notice of the proposed
5-4 increase to all affected utility customers by mail or bill insert
5-5 before the effective date of the proposed increase. Notice shall
5-6 also be given by delivery of notice <and> to such other affected
5-7 persons as required by the regulatory authority's rules and
5-8 regulations. The <However, notwithstanding the above, instead of
5-9 the> publication of newspaper notice is not required <contemplated
5-10 above, a gas utility may provide notice to the public> in areas
5-11 outside the limits of the municipalities<,> and within the limits
5-12 of municipalities with a population of less than 2,500 according to
5-13 the most recent federal census <by mailing such notice by United
5-14 States mail, postage prepaid, to the billing address of each
5-15 directly affected customer, or by including the notice in such
5-16 customer's bill in a conspicuous form>.
5-17 SECTION 4. The importance of this legislation and the
5-18 crowded condition of the calendars in both houses create an
5-19 emergency and an imperative public necessity that the
5-20 constitutional rule requiring bills to be read on three several
5-21 days in each house be suspended, and this rule is hereby suspended.