74(R) HB 3164 Senate Committee Report

BILL ANALYSIS

H.B. 3164
By: Seidlits (Armbrister)
State Affairs
5-23-95
Senate Committee Report (Amended)
BACKGROUND

The Public Utility Commission of Texas (PUC) was created in 1975
and is responsible for regulating electric and telephone utilities
in Texas. The key functions of the PUC include certifying a
utility's initial operation, reviewing any new construction or
changes to existing facilities, setting rates, and monitoring and
auditing the operations of utilities under its jurisdiction.
Currently, the PUC has oversight of investor-owned utilities,
electric cooperatives, river authorities, and local telephone
companies. Cities have retained original ratemaking authority for
electric utilities and cooperatives operating within their
boundaries, but the commission reviews these rates on an appellate
basis. The commission also reviews on appeal the rates of city
utilities.

The Office of Public Utility Counsel (OPUC) was created in 1983 to
represent residential and small business consumers before the PUC.
OPUC participates in many proceedings before PUC but concentrates
its efforts on telephone and electric utility rate cases having the
greatest impact on residential and small business consumers. The
OPUC has participated in major rate cases, but only a percentage of
all cases before the PUC since 1983.

The PUC and OPUC are subject to the Sunset Act and will be
abolished September 1, 1995 unless continued by the legislature.

PURPOSE

As proposed, H.B. 3164 continues and revises the functions of the
Public Utility Commission of Texas and the Office of Public Utility
Counsel, provides an administrative penalty.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is granted
to the Public Utility Commission in SECTION 14 (Section 1.036(b),
PURA 1995), SECTION 21 (Section 1.101(b), PURA 1995), SECTION 23
(Section 1.104(a), PURA 1995), and SECTION 31 (Sections 1.407(a)
and (c), PURA) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 1.003, Public Utility Regulatory Act,
as enacted by S.B. 319, 74th Legislature, Regular Session (PURA
1995), by amending Subsection 13A and by adding Subdivision (18),
to redefine "ratemaking proceeding" and define "trade association."

SECTION 2. Amends Section 1.005, PURA 1995, as follows:

Sec. 1.005. New heading: APPLICABILITY OF ADMINISTRATIVE
PROCEDURE ACT AND OPEN MEETINGS LAW. Subjects the Public
Utility Commission (commission) to Chapter 551, Government
Code.
SECTION 3. Amends Title IA, PURA 1995, by adding Section 1.006,
as follows:

Sec. 1006. ENTITY, COMPETITOR, OR SUPPLIER AFFECTED IN MANNER
OTHER THAN BY SETTING OF RATES. Provides that an entity,
utility competitor, or utility supplier is considered to be
affected in a manner other than by the setting of rates if
during a relevant year the entity provides fuel, or utility-related goods, products, or services to a provider of
telecommunications or electric services or to an affiliated
interest valued at the greater of $10,000 or 10 percent of the
person's business.

SECTION 4. Amends Sections 1.021(c) and (d), PURA 1995, to
require the governor to designate a member of the commission as
presiding officer of the commission to serve in that capacity at
the pleasure of the governor, rather than requiring the commission
to elect a chairman. Makes nonsubstantive changes.

SECTION 5. Amends Section 1.022, PURA 1995, to provide that the
commission and the Office of Public Utility Counsel (office) are
subject to the Texas Sunset Act and, unless continued, are
abolished and this Act expires September 1, 2001, rather than 1995.

SECTION 6. Amends Section 1.023, PURA 1995, as follows:

Sec. 1.023. New heading: QUALIFICATIONS; OATH; PROHIBITED
ACTIVITIES. (a) Deletes a provision requiring a commissioner
to be older than 30 years old. Requires a commissioner to be
a representative of the general public.

(b) Deletes a provision requiring a commissioner to execute
a bond for $5,000 payable to the state and conditioned on
the faithful performance of the commissioner's duties.

(c) Includes people associated for two years before
appointment with direct competitors of public utilities in
the list of individuals who are ineligible to serve as
commissioner.

(d) Prohibits a person who is required to register as a
lobbyist because of the person's activities for compensation
on behalf of a profession related to the operation of the
commission from serving as a commissioner member or public
utility counsel or act as the general counsel to the
commission.

(e) Provides that a person is ineligible for appointment as
a public member of the commission or for employment as the
general counsel or executive director (director) if the
person or the person's spouse meet certain criteria.

(f) Authorizes a person otherwise ineligible because of the
application of Subsection (e)(2)(B) to be appointed to the
commission and serve as commissioner or be employed as the
general counsel or director if the person meets certain
criteria.

(g)-(h) Prohibit an officer, employee, or paid consultant of
a trade association in the field of public utilities or
spouse of an officer, manager, or paid consultant from being
a member or employee of the commission who is exempt from
the state's position classification plan or is compensated
at or above the amount prescribed for step 1, salary group
17, of the position classification salary schedule.

SECTION 7. Amends Sections 1.024(a), (d), and (e), PURA 1995,
as follows:

(a) Prohibits a commissioner or an employee from having
certain pecuniary interests in a trade association, owning or
controlling any securities of a direct competitor of a public
utility, or accepting gifts from parties closely associated
with direct competitors.

(d) Prohibits a direct competitor of a public utility or any
parties closely associated from furnishing gifts to commission
members or employees or aiding any person to violate this
subsection or Subsection (a)(3).

(e) Makes conforming changes.
SECTION 8. Amends Section 1.025, PURA 1995, as follows:

Sec. 1.025. PROHIBITION OF EMPLOYMENT OR REPRESENTATION. (a)
Includes an employee of the commission or of the State Office
of Administrative Hearings (hearing office) involved in
hearing utility cases among those prohibited from being
employed by a public utility or affiliate in the scope of the
commissioner's or employee's official responsibility while the
commissioner or employee was associated with the commission or
hearing office.

(b) Prohibits an employee of the hearing office from
representing a business entity before the commission or
hearing office at any time.

(c) Requires the commission to provide its members and
employees information regarding their qualifications for
office or employment.
SECTION 9. Amends Section 1.026, PURA 1995, as follows:

Sec. 1.026. GROUNDS FOR REMOVAL; VALIDITY OF ACTIONS. (a)
Adds to the list of grounds for removing a member from the
commission.

(b) Makes nonsubstantive changes.

(c) Requires the director to notify the presiding officer,
or the next highest officer if the potential ground involves
the presiding officer, if a potential ground for removal
exists. Requires the presiding officer to notify the
governor and the attorney general that a potential ground
for removal exists.

(d) Requires a member to complete a training program before
a member may assume the member's duties or be confirmed.

(e) Requires the training program to provide certain
information to the member.
SECTION 10. Amends Sections 1.028(a), (b), and (e), PURA 1995,
as follows:

(a) Requires the commission to employ a director, a general
counsel, and other officers and employees, rather than
specifying employees, to carry out this Act. Requires the
commission to develop and implement policies that define the
responsibilities of the commission and the staff.

(b) Provides that the director is responsible for the
operations of the commission and shall coordinate employee
activities. Deletes provisions specifying positions the
commission is required to hire.

(e) Deletes existing subsection.

SECTION 11. Amends Section 1.029, PURA 1995, as follows:

Sec. 1.029. PERSONNEL POLICIES. (a) Requires the director or
a designee to develop an intra-agency career ladder program
that addresses opportunities for employee mobility and to post
all positions, rather than only nonentry level positions
concurrently with any public posting, rather than in advance.
Makes nonsubstantive changes.

(b) Requires an equal opportunity policy statement to
include certain elements.

(c) Requires the statement to be reviewed annually by the
Texas Commission on Human Rights, but does not specify a
time frame.

(d) Requires the governor's office to deliver a biennial
report to the legislature based on the statement.
Authorizes the report to be made separately or as a part of
other biennial reports.
SECTION 12. Amends Section 1.031, PURA 1995, to require the
commission to develop policies to provide the public with an
opportunity to appear before the commission and speak on any issue
under the commission's jurisdiction.

SECTION 13. Amends Section 1.035(a), PURA 1995, to require the
commission to prepare annually a report accounting for all funds
received and disbursed by the commission during the preceding
fiscal year. Requires the report to meet the applicable financial
reporting requirements.

SECTION 14. Amends Section 1.036, PURA 1995, as follows:

Sec. 1.036. New heading: INFORMATION; ACCESSIBILITY. (a)
Makes nonsubstantive changes.

(b) Requires the commission, by rule, to establish methods
by which consumers and service recipients are notified of
the name, address and telephone number of the commission for
the purpose of directing complaints.

(c) Requires the commission to comply with laws related to
program and facility accessibility. Requires the commission
to prepare a plan that describes how a non-English speaker
can be provided access to the commission's programs.
SECTION 15. Amends Section 1.051, PURA 1995, as follows:

Sec. 1.051. OFFICE OF PUBLIC UTILITY COUNSEL. (a) Makes no
changes.

(b) Requires the appointment of the public utility counsel
(counsellor) to be made without regard to certain personal
characteristics.

(d) Provides that a person is ineligible for appointment as
counsellor if the person or the person's spouse meets
certain criteria.

(e) Prohibits a person from serving as counsellor or acting
as the general counsel for the office if the person is
required to register as a lobbyist because of the person's
activities for compensation related to the operation of the
commission or the office.

(f) Prohibits an officer, employee, or paid consultant of a
trade association in the field of public utilities or the
spouse of an officer, manager, or paid consultant of a
related trade association, from serving as counsellor or
being an office employee who is exempt from the state's
position classification plan or is compensated at or above
the amount prescribed for step 1, salary group 17, of the
position classification salary schedule.

(g) Authorizes a person otherwise ineligible to be appointed
as counsellor to serve if the person meets certain
qualifications.
SECTION 16. Amends Title IC, PURA 1995, by adding Section
1.0511, as follows:

Sec. 1.0511. GROUNDS FOR REMOVAL. (a) Sets forth grounds for
removing the counsellor from office.

(b) Provides that the validity of an office action is not
affected by the fact that it is taken when a ground for
removal of the counsellor exists.
SECTION 17. Amends Title IC, PURA 1995, by adding Section
1.0512, as follows:

Sec. 1.0512. PROHIBITION OF EMPLOYMENT OR REPRESENTATION.
(a) Prohibits the counsellor within two years, and an office
employee within one year after employment with the office has
ceased, from being employed by a public utility which was in
the scope of the counsellor's or employee's official
responsibility.

(b) Prohibits the counsellor or employee from representing
a business entity before the commission or a court in a
matter in which the person was involved or within the
person's responsibility.
SECTION 18. Amends Title IC, PURA 1995, by adding Section
1.0513, as follows:

Sec. 1.0513. INFORMATION; ACCESSIBILITY. (a) Requires the
office to prepare annually a report accounting for all funds
received and disbursed by the office during the preceding
fiscal year. Requires the report to meet the financial
reporting requirements.

(b) Requires the office to prepare information of public
interest describing the office functions to be made
available to the public and appropriate state agencies.

(c) Requires the office to comply with federal and state
laws related to program and facility accessibility.
Requires the office to prepare a plan describing how a non-English speaker can be provided reasonable access to the
office's programs.
SECTION 19. Amends Section 1.052, PURA 1995, to provide that it
is unlawful for a period of two years following employment for any
counsellor to have an interest in, provide legal services to, or to
be employed by a utility competitor, utility supplier, among other
entities affected in a manner other than by the setting of rates
for that class of customer.

SECTION 20. Amends Section 1.053, PURA 1995, as follows:

Sec. 1.053. EMPLOYEES. (a) Makes no changes.

(b) Requires the counsellor or a designee to develop an
intra-agency career ladder program that addresses
opportunities for mobility for employees within the
commission. Requires the program to post all intra-agency
positions concurrently with any public posting. Requires
the counsellor or a designee to develop a system of annual
performance evaluations. Requires all merit pay to be based
on the system established under this subsection. Requires
the counsellor or a designee to provide to the public
utility counsel and its employees information regarding
their qualification for office or employment and their
responsibilities relating to standards of conduct.

(c) Requires the counsellor or a designee to prepare a
policy statement to assure implementation of a program of
equal employment opportunity. Sets forth requirements to be
included in the statement.

(d) Requires the statement to cover an annual period, be
updated and reviewed annually by the Texas Commission on
Human Rights, and be filed with the governor's office.
Requires the governor's office to deliver a biennial report
to the legislature based on the statement, to be made
separately or as a part of other biennial reports.

(e) Requires the office to provide to its employees
information regarding their qualification for office or
employment and their responsibilities relating to standards
of conduct.
SECTION 21. Amends Section 1.101, PURA 1995, as follows:

Sec. 1.101. GENERAL POWER; RULES; HEARINGS; AUDITS. (a)
Makes no changes.

(b) Requires the commission to make rules regarding practice
and procedure before the utility division of the hearing
office. Requires the office to adopt rules authorizing an
administrative law judge (judge) to perform certain actions.

(d) Redesignates existing text.

(e) Requires hearings in contested cases not conducted by
one or more commissioners to be conducted by the utility
division of the hearing office. Authorizes the commission
to delegate to the utility division the authority to make a
final decision and to issue certain findings or orders in a
proceeding in which there is no contested issue of fact or
law. Deletes a provision providing that the final decision
of the hearings examiner has the same effect as a final
decision of the commission unless a commissioner requests
formal review of the decision.
SECTION 22. Amends Section 1.102(b), PURA 1995, to delete the
requirement that the commission audit each utility at least once
every 10 years.

SECTION 23. Amends Title ID, PURA 1995, by adding Section 1.104,
as follows:

Sec. 1.104. SETTLEMENTS. (a) Requires the commission, by
rule, to adopt procedures governing the use of settlements to
resolve contested cases.

(b) Requires the rules to ensure certain conditions are met.
SECTION 24. Amends Section 1.202, PURA 1995, as follows:

Sec. 1.202. POWERS OF COMMISSION. (a) Makes no change.

(b) Deletes a provision requiring the railroad commission to
have the power to review and approve applications by gas
utilities for the purchase of natural gas from producing
affiliates. Redesignates existing Subsection (c).
SECTION 25. Amends Section 1.251(b), PURA 1995, to require the
commission to take into consideration the reasonable value of the
property, facilities, or securities to be acquired, disposed of,
merged, transferred, or consolidated and whether such a transaction
will adversely affect the health or safety of customers or
employees, result in the transfer of jobs of Texas citizens to
workers domiciled outside of Texas, or result in the decline of
service, whether the utility will receive consideration equal to
the reasonable value of the assets when it sells, leases, or
transfers assets, and whether the transaction is consistent with
the public interest.

SECTION 26. Amends Subtitle I, Title I, PURA 1995, by adding
Section 1.3215, as follows:

Sec. 1.3215. ADMINISTRATIVE PENALTY. (a) Authorizes the
commission to impose an administrative penalty against a
person regulated under this Act who violates it or a rule or
order adopted under it.

(b) Authorizes the penalty to be up to $5,000. Provides
that each day of violation is a separate violation.

(d) Authorizes the director to issue to the commission a
report that states the facts on which the determination is
based and the director's recommendation on the imposition of
a penalty.

(e) Requires the director to give notice of the report to
the person within 14 days after issuing the report.
Authorizes the notice to be given by certified mail.
Requires the notice to include a summary of the violation,
a recommended penalty, and a statement informing the person
of the person's right to a hearing. Requires the notice to
inform the person that a penalty will not be imposed if the
violation was accidental or inadvertent and the person has
previously corrected the violation or corrects the violation
not later than the 30th day after the date the person
receives the notice under this subsection. Prohibits the
commission from imposing a penalty under this section if the
person has previously corrected the violation or corrects
the violation before the end of the 30-day period. Provides
that the person against whom the penalty to be assessed has
the burden of proving to the commission that the violation
was accidental or inadvertent.

(f) Authorizes the person to accept the determination and
penalty or to make a request for a hearing, or to notify the
commission in writing that the person has corrected or
intends to correct the violation as provided by Subsection
(e) of this section and request a hearing.

(g) Requires the commission, by order, to approve the
determination and impose the penalty if the person accepts
the determination and penalty.

(h) Requires the director to set and give notice to the
person of a hearing if the person requests a hearing or
fails to respond to the notice. Sets forth requirements for
conducting the hearing and imposing penalties.

(i) Requires the notice of the commission's order to include
a statement of the right of the person to judicial review of
the order.

(j) Requires the person to take certain actions within 30
days after the commission's order is final.

(k) Sets forth authorized actions for a person who files a
petition for judicial review without paying the amount of
the penalty.

(l) Authorizes the director, on receipt of a copy of an
affidavit requesting the court to stay the penalty, to file
a contest to the affidavit. Requires the court to hold a
hearing on the facts alleged in the affidavit as soon as
possible and to stay the enforcement of the penalty on
finding that the alleged facts are true. Provides that the
person who files an affidavit has the burden of providing
that the person is financially unable to pay the amount of
the penalty and to give a supersedeas bond.

(m) Authorizes the director to refer the matter to the
attorney general for collection if the person does not pay
the penalty and the enforcement is not stayed.

(n) Provides that judicial review of the order is instituted
by filing a petition and is under the substantial evidence
rule.

(o) Authorizes the court to uphold or reduce the amount of
the penalty and to order the person to pay that amount.
Requires the court to order that no penalty is owed if the
court does not sustain the occurrence of the violation.

(p) Requires the court to proceed under this subsection when
the judgment of the court becomes final. Requires the court
to order that the penalty plus accrued interest be remitted
or the supersedeas bond released if the person paid a
penalty that was reduced or not upheld. Sets forth the
procedure for determining the rate of interest.

(q) Requires the penalty to be remitted to the comptroller
for the general revenue fund.

(r) Subjects all proceedings under this section to Chapter
2001, Government Code.

(s) Authorizes the executive director to delegate to a
person that the executive director designates any power or
duty given the executive director by this section.
SECTION 27. Amends Section 1.351(b), PURA 1995, to authorize the
legislature, rather than requiring the commission with the
legislature's approval, to adjust an assessment to provide a level
of income sufficient to fund the commission and the office.

SECTION 28. Amends Section 1.354, PURA 1995, to make conforming
changes. Deletes a provision requiring the commission to notify
the comptroller of any adjustment of the assessment imposed.
Subjects all money paid to the commission or to the office to
Chapter 404F, Government Code.

SECTION 29. Amends Title IJ, PURA 1995, by adding Section 1.357,
as follows:

Sec. 1.357. GRANTS OF FEDERAL FUNDS. (a) Authorizes the
commission to apply to any appropriate agency or officer of
the United States to receive and spend federal funds which it
may obtain from grants or other similar forms of financial
assistance. Provides that nothing in this section shall
inhibit the commission's ability to contract with or otherwise
receive assistance from any state, local, or other authorized
source of funds.

(b) Provides that Sections 403.094 and 403.095, Government
Code, do not apply to the special account established under
this section.
SECTION 30. Amends Sections 1.401(a) and (b), PURA 1995, as
follows:

(a) Sets forth requirements for the information the commission
is required to keep regarding complaints.

(b) Requires the commission to keep a file about each
complaint filed with the commission. Requires the commission
to provide to the person filing the complaint and to the
persons or entities complained about the commission's
procedures pertaining to complaint investigation and
resolution. Makes conforming changes.
SECTION 31. Amends Chapter 2003C, Government Code, by adding
Section 2003.047, as follows:

Sec. 2003.047. UTILITY DIVISION. (a) Requires the office to
establish a utility division to perform the contested case
hearings for the commission.

(b) Authorizes the commission, by rule, to delegate the
responsibility to hear any other matter before the
commission if consistent with the commission's duties and
responsibilities. Makes conforming changes.

(c) Authorizes only a judge in the utility division to
conduct a hearing on behalf of the commission. Authorizes
the judge to conduct hearings for other state agencies as
time allows. Authorizes the office to transfer a judge into
the utility division on a temporary or permanent basis and
to contract with individuals to serve as temporary judges.

(d) Requires a judge to be licensed to practice law in this
state and have a certain amount of experience to preside at
a hearing.

(e) Requires the commission to provide to the judge a list
of issues or areas that must be addressed at the time the
office receives jurisdiction of a proceeding. Authorizes
the commission to identify and provide to the judge at any
time additional issues to be addressed.

(f) Requires the office or the commission to jointly adopt
rules providing for the certification to the commission of
an issue that involves an ultimate finding of compliance
with a statutory standard the determination of which is
committed to the discretion or judgment of the commission by
law. Requires the rules to address the issues that are
appropriate for certification and procedure to be used in
certifying the issue. Requires each agency to publish the
jointly adopted rules.

(g) Authorizes the commission to change a finding or
conclusion made by the judge or vacate or modify an order
issued by the judge only in certain circumstances.

(h) Requires the commission to state the reason and legal
basis for its determination.

(i) Authorizes a judge, on the judge's or a notified party's
motion, to impose appropriate sanctions against a party or
its representative for certain actions.

(j) Authorizes a sanction to include issuance of certain
orders.

(k) Requires hearings conducted for the commission by the
office to be held in hearing rooms provided by the
commission. Requires the commission to also provide the
utility division access to its computer systems, databases,
and library resources.

(l) Requires the office to charge the commission a fixed
annual fee rather than an hourly rate for services rendered
by the utility division to the commission. Requires the
office and the commission to negotiate the amount of the
fixed fee biennially, subject to the approval of the
governor, to coincide with the commission's legislative
appropriations request.
SECTION 32. Amends Chapter 166. Article 1435a, V.T.C.S., by
adding Section 4c, as follows:

Sec. 4c. (a) Authorizes an electric cooperative corporation,
subject to the approval of the commission, to form a joint
powers agency with one or more public entities and participate
in an existing joint powers agency in which at least one
public entity is a member and participant, as if the electric
cooperative corporation were a public entity.

(b) Requires the commission to approve participation by an
electric cooperative corporation if the commission
determines that the participation meets the requirements of
law.

(d) Prohibits this section from being construed to
authorize or entitle an electric cooperative corporation to
issue bonds or other securities that are exempt from
taxation under federal law.

SECTION 33. Amends Section 4A, Article 1528b, V.T.C.S., to
delete the authority of a corporation to sell, furnish, and
dispose of the electric energy to a political subdivision of the
state which is engaged in the generation, transmission, or
distribution of electricity for resale and to which the corporation
was selling and furnishing electric energy on December 31, 1982.
Makes conforming and nonsubstantive changes.

SECTION 34. Amends Section 171.079, Tax Code, to make a
conforming change.

SECTION 35. (a) Establishes a task force to administer the
transfer of the hearings division from the commission to the
hearing office. Sets forth persons who compose the task force.

(b) Provides that the governor or a designee is the presiding
officer of the task force.

(d) Requires the task force to prepare a report detailing the
specifics of the transfers and submit it to the governor and
the legislature.

(e) Requires the task force to ensure the transfer does not
adversely affect a proceeding before the commission or the
rights of the parties to the proceeding.

(f) Provides that this section takes effect immediately.
SECTION 36. (a) Transfers all personnel and items of the
hearings division of the commission other than the items of the
central records office to the utility division of the hearing
office on September 1, 1995.

(b) Requires the hearings examiners or judge transferred from
the commission to the hearing office to continue to hear any
case assigned to the person.

(c) Makes application of this Act prospective regarding
procedures governing a hearing before the utility division of
the hearing office.

(d) Provides that the commission is not required to adopt new
rules governing practice and procedure before the commission
or the utility division of the hearing office. Provides that
the rules remain in effect until amended or repealed as
required by law. Requires any rules adopted after the
effective date governing practice before the utility division
of the hearing office to be adopted jointly by that office and
the commission.
SECTION 37. Makes application of Section 1.3215, PURA 1995,
prospective.

SECTION 38. Applies Section 1.104, PURA 1995, only to a
proceeding for which a final order has not been issued before the
effective date and does not apply Section 1.104 to an electric
utility merger proceeding filed before January 1, 1995, in which a
final order has not been issued. Prohibits the commission from
approving a settlement unless the settlement has been reached in
accordance with rules adopted under Section 1.104.

SECTION 39. Makes application of this Act prospective regarding
personnel requirements. Provides that the changes do not affect
the entitlement of a commission member, counsellor, director, or
general counsellor serving on August 31, 1995, to hold office.

SECTION 40. Effective date: September 1, 1995.

SECTION 41. Emergency clause.
Effective date: upon passage.