BILL ANALYSIS
S.B. 1227
By: Armbrister (Duncan)
05-14-95
Committee Report (Unamended)
BACKGROUND
Cooperatives are nonprofit companies and are owned by the customers
of the co-op. Most co-op rate cases are not contested and
requested rate increases are usually granted by the Public Utility
Commission with little or no changes. This may suggest that less
regulatory protection is needed for the companies' customers.
Also, costs associated with rate cases can be very expensive on a
per-customer basis for smaller co-ops. A majority of other states
have adopted similar proposals with minimal, if any, impact on
rates.
PURPOSE
As proposed, S.B. 1227 sets forth the procedure for the exemption
of an electric cooperative corporation from rate regulation and
requirements for the cooperative to change its rates.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Article 1446c, V.T.C.S. (Public Utility
Regulatory Act) by adding Section 37A, as follows:
Sec. 37A. (a) Exempts an electric cooperative corporation
(cooperative) that provides retail electric utility service at
distribution voltage from rate regulation if a majority of the
members voting in an election on the deregulation of the
cooperative vote to approve the exemption (exemption election)
and the cooperative sends notice of the action to each
applicable regulatory authority. Sets forth required
procedure for a cooperative that wants to hold an exemption
election. Requires the cooperative to send each ballot to the
Public Utility Commission (commission) within 10 days after
the cooperative counts the ballots. Requires the commission
to administratively certify that the cooperative is or is not
deregulated for rate-making purposes. Prohibits a cooperative
from holding another exemption election before the first
anniversary of the most recent exemption election. Applies
Subsections (b) through (n) to a cooperative that has elected
to be exempt from rate regulation.
(b) Prohibits any regulatory authority from fixing and
regulating the rates of a cooperative that has made an
exemption election except as provided for the commission in
Subsections (g) and (i). Provides that the commission has
exclusive original jurisdiction in all of the cooperative's
service area in a proceeding initiated under Subsection (g)
or (i).
(c) Sets forth authorized methods for a cooperative to
change its rates.
(d)(1) Sets forth requirements for the notice of a rate
change sent to affected parties.
(2) Prohibits requiring a cooperative to include
additional information in the notice.
(e) Requires the cooperative to make available for review by
a member of the cooperative at each business office a copy
of any written opposition to the rate change the cooperative
receives.
(f) Requires the cooperative to file tariffs with the
commission. Requires the commission to approve the tariffs
within a certain time period if the cooperative complies
with Subsection (c) of this section, unless a review is
required under Subsection (g) or (i). Provides that the
rate change takes effect on the 70th day after the
cooperative complies with all requirements of Subsection (c)
or later, at the cooperative's determination if the tariffs
are approved or if a review is not required and the
commission fails to act during the prescribed period.
Provides that the rates of the cooperative are not subject
to review, except as provided by Subsections (g) and (i).
(g) Requires the commission to review a rate change if,
within a certain time period, the commission receives a
petition requesting review signed by at least 10 percent of
the cooperative members, members of the cooperative who
purchased more than 50 percent of the cooperative's annual
energy sales to a customer class in the test year, with a
proviso, or an executive officer of an affected electric
utility, with a proviso.
(h) Requires a person to notify the cooperative when a
person files a petition.
(i) Authorizes the commission on its own motion to review
the cooperative's rates if the commission finds that there
is good cause to believe that the cooperative is earning
more than a reasonable return on the system or certain
classes.
(j) Requires the commission to conduct a review in
accordance with Section 43 of this Act and the other
applicable rate-setting principles of Article VI, with
exceptions.
(k) Requires the cooperative to file with the commission a
copy of the cost-of-service study (study) required under
Subsection (c)(3) within 10 days after the cooperative
receives notice that a petition has been filed. Requires
the petition to determine for each class for which review
has been requested the annual cost of providing service to
the class and the revenues for the class that would be
produced by multiplying the rate set by the cooperative by
the annual billing units for the class. Requires the
cooperative to base class revenues on estimates of billing
units if the cooperative proposes a rate class solely for a
new customer.
(l) Provides that the rate for each class for which review
has been requested is suspended during the review. Requires
the commission to dismiss the petition and approve the rates
if the revenues for the class are equal to or greater than
the cost of providing service to the class. Requires the
commission to disapprove the rate if the revenues for the
class are less than the cost of providing service to the
class; however, this action does not affect reconsideration
of the rate as any subsequent proceeding. Provides that the
rate adopted by the cooperative is deemed approved and may
be placed into effect if the commission fails to make its
final determination administratively within 45 days after
the cooperative files its study.
(m) Authorizes the cooperative to revoke the exemption
election from rate regulation or elect to again be exempt by
majority vote, except as provided by Subsection (a).
(n) Provides that this section does not affect the
application of other provisions of this Act not directly
related to rates or to the authority of the commission to
require a cooperative to file reports. Requires a service
fee, rule, or regulation set by the cooperative to comply
with commission rules applicable to all electric utilities.
Authorizes the commission to determine whether a cooperative
has unlawfully charged, collected, or received a rate.
(o) A customer that consumes more than 250,000,000 kwh and
purchases more than 10 percent of the total energy sales or
7.5 percent of the total revenues of a co-op in any period
of 12 consecutive months within the preceding 36 months may
seek a review of the rates of an electric cooperative
pursuant to Section 42 of this act.
SECTION 2. Emergency clause.
Effective date: upon passage.
SUMMARY OF COMMITTEE ACTION
SB 1227 was considered by the Committee on State Affairs in a
formal meeting on May 4, 1995. The Chair laid out SB 1227. The
bill was reported favorably without amendment, with the
recommendation that it do pass and be printed, by a record vote of:
12 ayes; 0 nays; 1 pnv; and 2 absent.