1-1 By: Johnson (Senate Sponsor - Ratliff) H.B. No. 2387
1-2 (In the Senate - Received from the House May 1, 1995;
1-3 May 2, 1995, read first time and referred to Committee on Natural
1-4 Resources; May 5, 1995, reported favorably by the following vote:
1-5 Yeas 8, Nays 0; May 5, 1995, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the regulation of retail water or sewer service
1-9 utilities.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Subdivisions (11) and (24), Section 13.002, Water
1-12 Code, are amended to read as follows:
1-13 (11) "Member" means a person who holds a membership in
1-14 a water supply or sewer service corporation and who either receives
1-15 water or sewer utility service from the corporation or <and who> is
1-16 a record owner of a fee simple title to property in an area served
1-17 by a water supply or sewer service corporation. <The term does not
1-18 include a person or entity that holds an interest in property
1-19 solely as security for the performance of an obligation, or that
1-20 only builds on or develops the property for sale to others.> In
1-21 determining member control of a water supply or sewer service
1-22 corporation, a person is entitled to only one vote regardless of
1-23 the number of memberships the person owns.
1-24 (24) "Water supply or sewer service corporation" means
1-25 a nonprofit, member-owned, member-controlled corporation organized
1-26 and operating under Chapter 76, Acts of the 43rd Legislature, 1st
1-27 Called Session, 1933 (Article 1434a, Vernon's Texas Civil Statutes)
1-28 that provides potable water service or sewer service for
1-29 compensation. The term does not include a corporation that
1-30 provides retail water or sewer service to a person who is not a
1-31 member, except that the corporation may provide retail water or
1-32 sewer service to a person who is not a member if the person only
1-33 builds on or develops property to sell to another and the service
1-34 is provided on an interim basis before the property is sold.
1-35 SECTION 2. Section 13.043(g), Water Code, is amended to read
1-36 as follows:
1-37 (g) An applicant for service from a water supply or sewer
1-38 service corporation may appeal to the commission a decision of the
1-39 water supply or sewer service corporation affecting the amount to
1-40 be paid to obtain service other than <in addition to> the regular
1-41 membership or tap fees. In addition to the factors specified under
1-42 Subsection (j), in an appeal brought under this subsection the
1-43 commission shall determine whether the amount paid by the applicant
1-44 is consistent with the tariff of the water supply or sewer service
1-45 corporation and is reasonably related to the cost of installing
1-46 on-site and off-site facilities to provide service to that
1-47 applicant. If the commission finds the amount charged to be
1-48 clearly unreasonable, it shall establish the fee to be paid for
1-49 that applicant. An appeal under this subsection must be initiated
1-50 within 90 days after the date written notice is provided to the
1-51 applicant or member of the water supply or sewer service
1-52 corporation's decision relating to the applicant's initial request
1-53 for that service. A determination made by the commission on an
1-54 appeal under this subsection is binding on all similarly situated
1-55 applicants for service, and the commission may not consider other
1-56 appeals on the same issue until the applicable provisions of the
1-57 tariff of the water supply or sewer service corporation are
1-58 amended.
1-59 SECTION 3. Section 13.139(d), Water Code, is amended to read
1-60 as follows:
1-61 (d) Not later than the 90th day after the date on which a
1-62 retail public utility that has a certificate of public convenience
1-63 and necessity reaches 85 percent of its capacity, as compared to
1-64 the <Texas Department of Health's> minimum capacity requirements
1-65 for a public drinking water system, the retail public utility shall
1-66 submit to the executive director a planning report that includes
1-67 details on how the retail public utility will provide the expected
1-68 service to the remaining areas within the boundaries of its
2-1 certificated area. The executive director may waive the reporting
2-2 requirement if the executive director finds that the projected
2-3 growth of the area will not require the utility to exceed its
2-4 capacity. The commission by rule may require the submission of
2-5 revised reports at specified intervals.
2-6 SECTION 4. Section 13.187(d), Water Code, is amended to read
2-7 as follows:
2-8 (d) Except to implement a rate <an approved purchased water
2-9 pass through> adjustment provision approved by the regulatory
2-10 authority by rule or ordinance, as applicable, or to adjust the
2-11 rates of a newly acquired utility system, a utility or two or more
2-12 utilities under common control and ownership may not file a
2-13 statement of intent to increase its rates more than once in a
2-14 12-month period, unless the regulatory authority determines that a
2-15 financial hardship exists. If the regulatory authority requires
2-16 the utility to deliver a corrected statement of intent, the utility
2-17 is not considered to be in violation of the 12-month filing
2-18 requirement.
2-19 SECTION 5. Section 13.250(b), Water Code, is amended to read
2-20 as follows:
2-21 (b) Unless the commission issues a certificate that neither
2-22 the present nor future convenience and necessity will be adversely
2-23 affected, the holder of a certificate or a person who possesses
2-24 facilities used to provide utility service shall not discontinue,
2-25 reduce, or impair service to a certified service area or part of a
2-26 certified service area except for:
2-27 (1) nonpayment of charges for services provided by the
2-28 certificate holder or a person who possesses facilities used to
2-29 provide utility service;
2-30 (2) nonpayment of charges for sewer service provided
2-31 by another retail public utility under an agreement between the
2-32 retail public utility and the certificate holder or a person who
2-33 possesses facilities used to provide utility service or under a
2-34 commission-ordered arrangement between the two service providers
2-35 <commission order>;
2-36 (3) nonuse; or
2-37 (4) other similar reasons in the usual course of
2-38 business.
2-39 SECTION 6. Subchapter G, Chapter 13, Water Code, is amended
2-40 by adding Section 13.2502 to read as follows:
2-41 Sec. 13.2502. SERVICE EXTENSIONS BY WATER SUPPLY AND SEWER
2-42 SERVICE CORPORATION OR SPECIAL UTILITY DISTRICT.
2-43 (a) Notwithstanding Section 13.250, a water supply or sewer
2-44 service corporation or a special utility district organized under
2-45 Chapter 65 is not required to extend retail water or sewer utility
2-46 service within the certificated area of the corporation or special
2-47 utility district to a service applicant in a subdivision if the
2-48 corporation or special utility district documents that:
2-49 (1) the developer of the subdivision has failed to
2-50 comply with the subdivision service extension policy of the
2-51 corporation or special utility district as set forth in the tariff
2-52 of the corporation or the policies of the special utility district;
2-53 and
2-54 (2) the service applicant purchased the property after
2-55 the corporation or special utility district gave notice as provided
2-56 by this section of the rules of the corporation or special utility
2-57 district applicable to service to subdivisions from the corporation
2-58 or special utility district.
2-59 (b) Publication of notice in a newspaper of general
2-60 circulation in each county in which the corporation or special
2-61 utility district is certificated for utility service of the
2-62 requirement to comply with the subdivision service extension policy
2-63 constitutes notice under this section. The notice must be
2-64 published once a week for two consecutive weeks on a biennial basis
2-65 and must contain information describing the subdivision service
2-66 extension policy of the corporation or special utility district.
2-67 The corporation or special utility district must be able to provide
2-68 proof of publication through an affidavit of the publisher of the
2-69 newspaper that specifies each county in which the newspaper is
2-70 generally circulated.
3-1 (c) As an alternative to publication of notice as provided
3-2 by Subsection (b), a corporation or special utility district may
3-3 demonstrate by any reasonable means that a developer has been
3-4 notified for purposes of this section, including:
3-5 (1) an agreement executed by the developer;
3-6 (2) correspondence with the developer that sets forth
3-7 the subdivision service extension policy; or
3-8 (3) any other documentation that reasonably
3-9 establishes that the developer should be aware of the subdivision
3-10 service extension policy.
3-11 (d) This section does not limit or extend the jurisdiction
3-12 of the commission under Section 13.043(g).
3-13 (e) For purposes of this section:
3-14 (1) "Developer" means a person who subdivides land or
3-15 requests more than two water or sewer service connections on a
3-16 single contiguous tract of land.
3-17 (2) "Service applicant" means a person, other than a
3-18 developer, who applies for retail water or sewer utility service.
3-19 SECTION 7. Section 13.301(c), Water Code, is amended to read
3-20 as follows:
3-21 (c) Before the expiration of the 120-day notification
3-22 period, the executive director shall notify all known parties to
3-23 the transaction of the executive director's decision whether to
3-24 request that the commission hold a public hearing to determine if
3-25 the transaction will serve the public interest. The executive
3-26 director may request a hearing if:
3-27 (1) the notification to the commission or the public
3-28 notice was improper;
3-29 (2) the person purchasing or acquiring the water or
3-30 sewer system is inexperienced as a utility service provider;
3-31 (3) the person or an affiliated interest of the person
3-32 purchasing or acquiring the water or sewer system has a history of
3-33 noncompliance with the requirements of the commission or the Texas
3-34 Department of Health or of continuing mismanagement or misuse of
3-35 revenues as a utility service provider; <or>
3-36 (4) the person purchasing or acquiring the water or
3-37 sewer system cannot demonstrate the financial ability to provide
3-38 the necessary capital investment to ensure the provision of
3-39 continuous and adequate service to the customers of the water or
3-40 sewer system; or
3-41 (5) there are concerns that the transaction may not
3-42 serve the public interest, after the application of the
3-43 considerations provided by Section 13.246(c) for determining
3-44 whether to grant a certificate of convenience and necessity.
3-45 SECTION 8. Section 13.304, Water Code, is amended to read as
3-46 follows:
3-47 Sec. 13.304. FORECLOSURE REPORT. (a) A utility that receives
3-48 notice that all or a portion of the utility's facilities or
3-49 property used to provide utility service are being posted for
3-50 foreclosure shall notify the commission in writing of that fact not
3-51 later than the 10th day after the date on which the utility
3-52 receives the notice.
3-53 (b) A financial institution that forecloses on a utility or
3-54 on any part of the utility's facilities or property that are used
3-55 to provide utility service is not required to provide the 120-day
3-56 notice prescribed by Section 13.301, but shall provide written
3-57 notice to the commission before the 30th day preceding the date on
3-58 which the foreclosure is completed.
3-59 (c) The financial institution may operate the utility for an
3-60 interim period prescribed by commission rule before transferring or
3-61 otherwise obtaining a certificate of convenience and necessity. A
3-62 financial institution that operates a utility during an interim
3-63 period under this subsection is subject to each commission rule to
3-64 which the utility was subject and in the same manner.
3-65 SECTION 9. This Act takes effect September 1, 1995.
3-66 SECTION 10. The importance of this legislation and the
3-67 crowded condition of the calendars in both houses create an
3-68 emergency and an imperative public necessity that the
3-69 constitutional rule requiring bills to be read on three several
3-70 days in each house be suspended, and this rule is hereby suspended.
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