1-1        By:  Seidlits (Senate Sponsor - Armbrister)     H.B. No. 3164
    1-2        (In the Senate - Received from the House May 15, 1995;
    1-3  May 17, 1995, read first time and referred to Committee on State
    1-4  Affairs; May 22, 1995, reported favorably, as amended, by the
    1-5  following vote:  Yeas 9, Nays 0; May 22, 1995, sent to printer.)
    1-6  COMMITTEE AMENDMENT NO. 1                           By:  Armbrister
    1-7  Amend H.B. 3164 by deleting SECTION 31.
    1-8  COMMITTEE AMENDMENT NO. 2                               By:  Rosson
    1-9  Amend SECTION 1.0 of H.B. 3164 by amending Subsection 13A of
   1-10  Section 1.003 of the Public Utility Regulatory Act of 1995, as
   1-11  follows:
   1-12        (13A)  The term "ratemaking proceeding" is limited to those
   1-13  proceedings in which rates are changed, except the term shall
   1-14  include proceedings initiated under Section 2.051 of this Act.
   1-15                         A BILL TO BE ENTITLED
   1-16                                AN ACT
   1-17  relating to the continuation, operations, and functions of the
   1-18  Public Utility Commission of Texas and the Office of Public Utility
   1-19  Counsel; providing penalties.
   1-20        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-21        SECTION 1.  Section 1.003, Public Utility Regulatory Act of
   1-22  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   1-23  Regular Session, 1995, is amended by adding Subdivision (18) to
   1-24  read as follows:
   1-25              (18)  "Trade association" means a nonprofit,
   1-26  cooperative, and voluntarily joined association of business or
   1-27  professional persons who are employed by public utilities or
   1-28  utility competitors to assist the public utility industry, a
   1-29  utility competitor, or the industry's or competitor's employees in
   1-30  dealing with mutual business or professional problems and in
   1-31  promoting their common interest.
   1-32        SECTION 2.  Section 1.005, Public Utility Regulatory Act of
   1-33  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   1-34  Regular Session, 1995, is amended to read as follows:
   1-35        Sec. 1.005.  APPLICABILITY OF ADMINISTRATIVE PROCEDURE ACT
   1-36  AND OPEN MEETINGS LAW.  (a)  Chapter 2001, Government Code, applies
   1-37  to all proceedings under this Act except to the extent inconsistent
   1-38  with this Act.  Communications of members and employees of the
   1-39  commission with a party, a party's representative, or other persons
   1-40  are governed by Section 2001.061, Government Code.
   1-41        (b)  The commission is subject to Chapter 551, Government
   1-42  Code.
   1-43        SECTION 3.  Subtitle A, Title I, Public Utility Regulatory
   1-44  Act of 1995, as enacted by S.B.  No. 319, Acts of the 74th
   1-45  Legislature, Regular Session, 1995, is amended by adding Section
   1-46  1.006 to read as follows:
   1-47        Sec. 1.006.  ENTITY, COMPETITOR, OR SUPPLIER AFFECTED IN
   1-48  MANNER OTHER THAN BY SETTING OF RATES.  In this Act, an entity,
   1-49  utility competitor, or utility supplier is considered to be
   1-50  affected in a manner other than by the setting of rates for that
   1-51  class of customer if during a relevant calendar year the entity
   1-52  provides fuel, utility-related goods, utility-related products, or
   1-53  utility-related services to a regulated or unregulated provider of
   1-54  telecommunications or electric services or to an affiliated
   1-55  interest in an amount equal to the greater of $10,000 or 10 percent
   1-56  of the person's business.
   1-57        SECTION 4.  Subsections (c) and (d), Section 1.021, Public
   1-58  Utility Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of
   1-59  the 74th Legislature, Regular Session, 1995, are amended to read as
   1-60  follows:
   1-61        (c)  The governor shall designate a member of the commission
   1-62  as presiding officer of the commission to serve in that capacity at
   1-63  the pleasure of the governor.  <At its first meeting following the
   1-64  biennial appointment and qualification of a commissioner, the
   1-65  commission shall elect one of the commissioners chairman.>
   1-66        (d)  Appointments to the commission shall be made without
   1-67  regard to the race, color, disability <creed>, sex, religion, age,
   1-68  or national origin of the appointees.
    2-1        SECTION 5.  Section 1.022, Public Utility Regulatory Act of
    2-2  1995, as enacted by S.B. 319, Acts of the 74th Legislature, Regular
    2-3  Session, 1995, is amended to read as follows:
    2-4        Sec. 1.022.  SUNSET PROVISION.  The Public Utility Commission
    2-5  of Texas and the Office of Public Utility Counsel are subject to
    2-6  Chapter 325, Government Code (Texas Sunset Act).  Unless continued
    2-7  in existence as provided by that chapter, the commission and the
    2-8  office are abolished and this Act expires September 1, 2001 <1995>.
    2-9        SECTION 6.  Section 1.023, Public Utility Regulatory Act of
   2-10  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   2-11  Regular Session, 1995, is amended to read as follows:
   2-12        Sec. 1.023.  QUALIFICATIONS; OATH <AND BOND>; PROHIBITED
   2-13  ACTIVITIES.  (a)  To be eligible for appointment as a commissioner,
   2-14  a person must be a qualified voter, <not less than 30 years of
   2-15  age,> a citizen of the United States, <and> a resident of the State
   2-16  of Texas, and a representative of the general public.
   2-17        (b)  Each commissioner shall qualify for office by taking the
   2-18  oath prescribed for other state officers <and shall execute a bond
   2-19  for $5,000 payable to the state and conditioned on the faithful
   2-20  performance of his duties>.
   2-21        (c)  A person is not eligible for appointment as a
   2-22  commissioner if at any time during the two-year period immediately
   2-23  preceding his appointment he personally served as an officer,
   2-24  director, owner, employee, partner, or legal representative of any
   2-25  public utility, <or any> affiliated interest, or direct competitor
   2-26  of a public utility or he owned or controlled, directly or
   2-27  indirectly, stocks or bonds of any class with a value of $10,000 or
   2-28  more in a public utility, <or any> affiliated interest, or direct
   2-29  competitor of a public utility.
   2-30        (d)  A person who is required to register as a lobbyist under
   2-31  Chapter 305, Government Code, because of the person's activities
   2-32  for compensation on behalf of a profession related to the operation
   2-33  of the commission may not serve as a member of the commission or
   2-34  public utility counsel or act as the general counsel to the
   2-35  commission.
   2-36        (e)  A person is not eligible for appointment as a public
   2-37  member of the commission or for employment as the general counsel
   2-38  or executive director of the commission if:
   2-39              (1)  the person serves on the board of directors of a
   2-40  company that supplies fuel, utility-related services, or
   2-41  utility-related products to regulated or unregulated electric or
   2-42  telecommunications utilities; or
   2-43              (2)  the person or the person's spouse:
   2-44                    (A)  is employed by or participates in the
   2-45  management of a business entity or other organization regulated by
   2-46  the commission or receiving funds from the commission;
   2-47                    (B)  owns or controls, directly or indirectly,
   2-48  more than a 10 percent interest or a pecuniary interest with a
   2-49  value exceeding $10,000 in:
   2-50                          (i)  a business entity or other
   2-51  organization regulated by the commission or receiving funds from
   2-52  the commission; or
   2-53                          (ii)  any utility competitor, utility
   2-54  supplier, or other entity affected by a commission decision in a
   2-55  manner other than by the setting of rates for that class of
   2-56  customer;
   2-57                    (C)  uses or receives a substantial amount of
   2-58  tangible goods, services, or funds from the commission, other than
   2-59  compensation or reimbursement authorized by law for commission
   2-60  membership, attendance, or expenses; or
   2-61                    (D)  notwithstanding Paragraph (B) of this
   2-62  subdivision, has an interest in a mutual fund or retirement fund in
   2-63  which more than 10 percent of the fund's holdings at the time of
   2-64  appointment is in a single utility, utility competitor, or utility
   2-65  supplier in this state and the person does not disclose this
   2-66  information to the governor, senate, commission, or other entity,
   2-67  as appropriate.
   2-68        (f)  Notwithstanding any other provision of this Act, a
   2-69  person otherwise ineligible because of the application of
   2-70  Subsection (e)(2)(B) of this section may be appointed to the
    3-1  commission and serve as a commissioner or may be employed as the
    3-2  general counsel or executive director if the person:
    3-3              (1)  notifies the attorney general and commission that
    3-4  the person is ineligible because of the application of Subsection
    3-5  (e)(2)(B) of this section; and
    3-6              (2)  divests the person or the person's spouse of the
    3-7  ownership or control before beginning service or employment, or
    3-8  within a reasonable time if the person is already serving or
    3-9  employed at the time Subsection (e)(2)(B) of this section first
   3-10  applies to the person.
   3-11        (g)  An officer, employee, or paid consultant of a trade
   3-12  association in the field of public utilities may not be a member or
   3-13  employee of the commission who is exempt from the state's position
   3-14  classification plan or is compensated at or above the amount
   3-15  prescribed by the General Appropriations Act for step 1, salary
   3-16  group 17, of the position classification salary schedule.
   3-17        (h)  A person who is a spouse of an officer, manager, or paid
   3-18  consultant of a trade association in the field of public utilities
   3-19  may not be a commission member and may not be a commission employee
   3-20  who is exempt from the state's position classification plan or is
   3-21  compensated at or above the amount prescribed by the General
   3-22  Appropriations Act for step 1, salary group 17, of the position
   3-23  classification salary schedule.
   3-24        SECTION 7.  Subsections (a), (d), and (e), Section 1.024,
   3-25  Public Utility Regulatory Act of 1995, as enacted by S.B. No. 319,
   3-26  Acts of the 74th Legislature, Regular Session, 1995, are amended to
   3-27  read as follows:
   3-28        (a)  A commissioner or employee of the commission may not do
   3-29  any of the following during his period of service with the
   3-30  commission:
   3-31              (1)  have any pecuniary interest, either as an officer,
   3-32  director, partner, owner, employee, attorney, consultant, or
   3-33  otherwise, in any public utility or affiliated interest, or in any
   3-34  person or corporation or other business entity a significant
   3-35  portion of whose business consists of furnishing goods or services
   3-36  to public utilities or affiliated interests, but not including a
   3-37  nonprofit group or association solely supported by gratuitous
   3-38  contributions of money, property or services, other than a trade
   3-39  association;
   3-40              (2)  own or control any securities in a public utility,
   3-41  <or> affiliated interest, or direct competitor of a public utility,
   3-42  either directly or indirectly; or
   3-43              (3)  accept any gift, gratuity, or entertainment
   3-44  whatsoever from any public utility, <or> affiliated interest, or
   3-45  direct competitor of a public utility, or from any person,
   3-46  corporation, agent, representative, employee, or other business
   3-47  entity a significant portion of whose business consists of
   3-48  furnishing goods or services to public utilities, <or> affiliated
   3-49  interests, or direct competitors of public utilities, or from any
   3-50  agent, representative, attorney, employee, officer, owner,
   3-51  director, or partner of any such business entity or of any public
   3-52  utility, <or> affiliated interest, or direct competitor of a public
   3-53  utility; provided, however, that the receipt and acceptance of any
   3-54  gifts, gratuities, or entertainment after termination of service
   3-55  with the commission whose cumulative value in any one-year period
   3-56  is less than $100 does not constitute a violation of this Act.
   3-57        (d)  A public utility, <or> affiliated interest, or direct
   3-58  competitor of a public utility, or any person, corporation, firm,
   3-59  association, or business that furnishes goods or services to any
   3-60  public utility, <or> affiliated interest, or direct competitor of a
   3-61  public utility, or any agent, representative, attorney, employee,
   3-62  officer, owner, director, or partner of any public utility, <or>
   3-63  affiliated interest, or direct competitor of a public utility, or
   3-64  any person, corporation, firm, association, or business furnishing
   3-65  goods or services to any public utility, <or> affiliated interest,
   3-66  or direct competitor of a public utility may not give or offer to
   3-67  give any gift, gratuity, employment, or entertainment whatsoever to
   3-68  any member or employee of the commission except as allowed by
   3-69  Subdivision (3) of Subsection (a) of this section, nor may any such
   3-70  public utility, <or> affiliated interest, or direct competitor of a
    4-1  public utility or any such person, corporation, firm, association,
    4-2  or business aid, abet, or participate with any member, employee, or
    4-3  former employee of the commission in any activity or conduct that
    4-4  would constitute a violation of this subsection or Subdivision (3)
    4-5  of Subsection (a) of this section.
    4-6        (e)  It is not a violation of this section if a member of the
    4-7  commission or a person employed by the commission, upon becoming
    4-8  the owner of any stocks or bonds or other pecuniary interest in a
    4-9  public utility, <or> affiliated interest, or direct competitor of a
   4-10  public utility <under the jurisdiction of the commission> otherwise
   4-11  than voluntarily, informs the commission and the attorney general
   4-12  of such ownership and divests himself of the ownership or interest
   4-13  within a reasonable time.  In this section, a "pecuniary interest"
   4-14  includes income, compensation, and payment of any kind, in addition
   4-15  to ownership interests.  It is not a violation of this section if
   4-16  such a pecuniary interest is held indirectly by ownership of an
   4-17  interest in a retirement system, institution, or fund which in the
   4-18  normal course of business invests in diverse securities
   4-19  independently of the control of the commissioner or employee.
   4-20        SECTION 8.  Section 1.025, Public Utility Regulatory Act of
   4-21  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   4-22  Regular Session, 1995, is amended to read as follows:
   4-23        Sec. 1.025.  PROHIBITION OF EMPLOYMENT OR REPRESENTATION.
   4-24  (a)  A commissioner may not within two years, and an employee of
   4-25  the commission or an employee of the State Office of Administrative
   4-26  Hearings involved in hearing utility cases may not, within one year
   4-27  after his employment with the commission or the State Office of
   4-28  Administrative Hearings has ceased, be employed by a public utility
   4-29  which was in the scope of the commissioner's or employee's official
   4-30  responsibility while the commissioner or employee was associated
   4-31  with the commission or the State Office of Administrative Hearings.
   4-32        (b)  During the time a commissioner or employee of the
   4-33  commission or an employee of the State Office of Administrative
   4-34  Hearings involved in hearing utility cases is associated with the
   4-35  commission or State Office of Administrative Hearings or at any
   4-36  time after, the commissioner or employee may not represent a
   4-37  person, corporation, or other business entity before the commission
   4-38  or State Office of Administrative Hearings or a court in a matter
   4-39  in which the commissioner or employee was personally involved while
   4-40  associated with the commission or State Office of Administrative
   4-41  Hearings or a matter that was within the commissioner's or
   4-42  employee's official responsibility while the commissioner or
   4-43  employee was associated with the commission or State Office of
   4-44  Administrative Hearings.
   4-45        (c)  The commission shall require its members and employees
   4-46  to read this section and Section 1.024 of this Act and as often as
   4-47  necessary shall provide information regarding their qualifications
   4-48  for office or employment under this Act and their responsibilities
   4-49  under applicable laws relating to standards of conduct for state
   4-50  officers and employees.
   4-51        SECTION 9.  Section 1.026, Public Utility Regulatory Act of
   4-52  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   4-53  Regular Session, 1995, is amended to read as follows:
   4-54        Sec. 1.026.  GROUNDS FOR REMOVAL; VALIDITY OF ACTIONS.
   4-55  (a)  It is a ground for removal from the commission if a member:
   4-56              (1)  does not have at the time of appointment the
   4-57  qualifications required by Section 1.023 of this Act <for
   4-58  appointment to the commission>; <or>
   4-59              (2)  does not maintain during <the> service on the
   4-60  commission the qualifications required by Section 1.023 of this
   4-61  Act;
   4-62              (3)  violates a prohibition established by Section
   4-63  1.023, 1.024, or 1.025 of this Act;
   4-64              (4)  cannot discharge the member's duties for a
   4-65  substantial part of the term for which the member is appointed
   4-66  because of illness or disability; or
   4-67              (5)  is absent from more than half of the regularly
   4-68  scheduled commission meetings that the member is eligible to attend
   4-69  during a calendar year unless the absence is excused by majority
   4-70  vote of <for appointment to> the commission.
    5-1        (b)  The validity of an action of the commission is not
    5-2  affected by the fact that it is <was> taken when a ground for
    5-3  removal of a commission member exists <of the commission existed>.
    5-4        (c)  If the executive director has knowledge that a potential
    5-5  ground for removal exists, the executive director shall notify the
    5-6  presiding officer of the commission of the potential ground.  The
    5-7  presiding officer shall then notify the governor and the attorney
    5-8  general that a potential ground for removal exists.  If the
    5-9  potential ground for removal involves the presiding officer of the
   5-10  commission, the executive director shall notify the next highest
   5-11  officer of the commission, who shall notify the governor and the
   5-12  attorney general that a potential ground for removal exists.
   5-13        (d)  Before a member of the commission may assume the
   5-14  member's duties and before the member may be confirmed by the
   5-15  senate, the member must complete at least one course of the
   5-16  training program established under this section.
   5-17        (e)  A training program established under this section shall
   5-18  provide information to the member regarding:
   5-19              (1)  the enabling legislation that created the
   5-20  commission and its policymaking body to which the member is
   5-21  appointed to serve;
   5-22              (2)  the programs operated by the commission;
   5-23              (3)  the role and functions of the commission;
   5-24              (4)  the rules of the commission with an emphasis on
   5-25  the rules that relate to disciplinary and investigatory authority;
   5-26              (5)  the current budget for the commission;
   5-27              (6)  the results of the most recent formal audit of the
   5-28  commission;
   5-29              (7)  the requirements of Chapters 551, 552, and 2001,
   5-30  Government Code;
   5-31              (8)  the requirements of the conflict of interest laws
   5-32  and other laws relating to public officials; and
   5-33              (9)  any applicable ethics policies adopted by the
   5-34  commission or the Texas Ethics Commission.
   5-35        SECTION 10.  Subsections (a), (b), and (e), Section 1.028,
   5-36  Public Utility Regulatory Act of 1995, as enacted by S.B. No. 319,
   5-37  Acts of the 74th Legislature, Regular Session, 1995, are amended to
   5-38  read as follows:
   5-39        (a)  The commission shall employ an executive director, a
   5-40  general counsel, and such officers<, administrative law judges,
   5-41  hearing examiners, investigators, lawyers, engineers, economists,
   5-42  consultants, statisticians, accountants, administrative assistants,
   5-43  inspectors, clerical staff,> and other employees as it deems
   5-44  necessary to carry out the provisions of this Act.  All employees
   5-45  receive such compensation as is fixed by the legislature.  The
   5-46  commission shall develop and implement policies that clearly define
   5-47  the respective responsibilities of the commission and the staff of
   5-48  the commission.
   5-49        (b)  The executive director is responsible for the day-to-day
   5-50  operations of the commission and shall coordinate the activities of
   5-51  commission employees <commission shall employ the following:>
   5-52              <(1)  an executive director;>
   5-53              <(2)  a director of hearings who has wide experience in
   5-54  utility regulation and rate determination;>
   5-55              <(3)  a chief engineer who is a registered engineer and
   5-56  an expert in public utility engineering and rate matters;>
   5-57              <(4)  a chief accountant who is a certified public
   5-58  accountant, experienced in public utility accounting;>
   5-59              <(5)  a director of research who is experienced in the
   5-60  conduct of analyses of industry, economics, energy, fuel, and other
   5-61  related matters that the commission may want to undertake;>
   5-62              <(6)  a director of consumer affairs and public
   5-63  information;>
   5-64              <(7)  a director of utility evaluation;>
   5-65              <(8)  a director of energy conservation; and>
   5-66              <(9)  a general counsel>.
   5-67        <(e)  The commission shall employ administrative law judges
   5-68  to preside at hearings of major importance before the commission.
   5-69  An administrative law judge must be a licensed attorney with not
   5-70  less than five years' general experience or three years' experience
    6-1  in utility regulatory law.  The administrative law judge shall
    6-2  perform his duties independently from the commission.>
    6-3        SECTION 11.  Section 1.029, Public Utility Regulatory Act of
    6-4  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
    6-5  Regular Session, 1995, is amended to read as follows:
    6-6        Sec. 1.029.  PERSONNEL POLICIES.  (a)  The executive director
    6-7  or the executive director's <his> designee shall develop an
    6-8  intra-agency career ladder program that addresses opportunities for
    6-9  mobility and advancement for employees of the commission.  The
   6-10  program shall require intra-agency posting of all positions
   6-11  concurrently with<, one part of which shall be the intra-agency
   6-12  posting of all nonentry level positions for at least 10 days
   6-13  before> any public posting.  The executive director or the
   6-14  executive director's <his> designee shall develop a system of
   6-15  annual performance evaluations that are based on documented
   6-16  employee performance <measurable job tasks>.  All merit pay for
   6-17  commission employees must be based on the system established under
   6-18  this section.
   6-19        (b)  The executive director or the executive director's
   6-20  <his/her> designee shall prepare and maintain a written policy
   6-21  statement <plan> to assure implementation of a program of equal
   6-22  employment opportunity under which <whereby> all personnel
   6-23  transactions are made without regard to race, color, disability,
   6-24  sex, religion, age, or national origin.  The policy statement must
   6-25  <plan shall> include:
   6-26              (1)  personnel policies that comply with Chapter 21,
   6-27  Labor Code, including policies relating to recruitment, evaluation,
   6-28  selection, appointment, training, and promotion of personnel;
   6-29              (2)  a comprehensive analysis of the commission
   6-30  workforce that meets federal and state guidelines;
   6-31              (3)  procedures by which a determination can be made
   6-32  about the extent of underuse in the commission workforce of all
   6-33  persons for whom federal or state guidelines encourage a more
   6-34  equitable balance; and
   6-35              (4)  reasonable methods to appropriately address the
   6-36  underuse.  <a comprehensive analysis of all the agency's workforce
   6-37  by race, sex, ethnic origin, class of position, and salary or wage;>
   6-38              <(2)  plans for recruitment, evaluation, selection,
   6-39  appointment, training, promotion, and other personnel policies;>
   6-40              <(3)  steps reasonably designed to overcome any
   6-41  identified underutilization of minorities and women in the agency's
   6-42  workforce; and>
   6-43              <(4)  objectives and goals, timetables for the
   6-44  achievement of the objectives and goals, and assignments of
   6-45  responsibility for their achievement.>
   6-46        (c)  The policy statement <plan> required under Subsection
   6-47  (b) of this section must <shall be filed with the governor's office
   6-48  within 60 days of the effective date of this Act,> cover an annual
   6-49  period, <and> be updated at least annually and reviewed by the
   6-50  Commission on Human Rights for compliance with Subsection (b)(1) of
   6-51  this section, and<.  Progress reports shall> be filed with
   6-52  <submitted to> the governor's office <within 30 days of November 1
   6-53  and April 1 of each year and shall include the steps the agency has
   6-54  taken within the reporting period to comply with these
   6-55  requirements>.
   6-56        (d)  The governor's office shall deliver a biennial report to
   6-57  the legislature based on the information received under Subsection
   6-58  (c) of this section.  The report may be made separately or as a
   6-59  part of other biennial reports made to the legislature.
   6-60        SECTION 12.  Section 1.031, Public Utility Regulatory Act of
   6-61  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   6-62  Regular Session, 1995, is amended to read as follows:
   6-63        Sec. 1.031.  OFFICE; MEETINGS.  (a)  The principal office of
   6-64  the commission shall be located in the City of Austin, Texas, and
   6-65  shall be open daily during the usual business hours, Saturdays,
   6-66  Sundays, and legal holidays excepted.  The commission shall hold
   6-67  meetings at its office and at such other convenient places in the
   6-68  state as shall be expedient and necessary for the proper
   6-69  performance of its duties.
   6-70        (b)  The commission shall develop and implement policies that
    7-1  provide the public with a reasonable opportunity to appear before
    7-2  the commission and to speak on any issue under the jurisdiction of
    7-3  the commission.
    7-4        SECTION 13.  Subsection (a), Section 1.035, Public Utility
    7-5  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
    7-6  74th Legislature, Regular Session, 1995, is amended to read as
    7-7  follows:
    7-8        (a)  The commission shall prepare annually a complete and
    7-9  detailed written report accounting for all funds received and
   7-10  disbursed by the commission during the preceding fiscal year.  The
   7-11  annual report must meet the reporting requirements applicable to
   7-12  financial reporting in the General Appropriations Act <publish an
   7-13  annual report to the governor, summarizing its proceedings, listing
   7-14  its receipts and the sources of its receipts, listing its
   7-15  expenditures and the nature of such expenditures, and setting forth
   7-16  such other information concerning the operations of the commission
   7-17  and the public utility industry as it considers of general
   7-18  interest>.
   7-19        SECTION 14.  Section 1.036, Public Utility Regulatory Act of
   7-20  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   7-21  Regular Session, 1995, is amended to read as follows:
   7-22        Sec. 1.036.  <CONSUMER> INFORMATION; ACCESSIBILITY.  (a)  The
   7-23  commission shall prepare information of public <consumer> interest
   7-24  describing the <regulatory> functions of the commission and
   7-25  <describing> the commission's procedures by which <consumer>
   7-26  complaints are filed with and resolved by the commission.  The
   7-27  commission shall make the information available to the <general>
   7-28  public and appropriate state agencies.
   7-29        (b)  The commission by rule shall establish methods by which
   7-30  consumers and service recipients are notified of the name, mailing
   7-31  address, and telephone number of the commission for the purpose of
   7-32  directing complaints to the commission.
   7-33        (c)  The commission shall comply with federal and state laws
   7-34  related to program and facility accessibility.  The commission
   7-35  shall also prepare and maintain a written plan that describes how a
   7-36  person who does not speak English can be provided reasonable access
   7-37  to the commission's programs and services.
   7-38        SECTION 15.  Section 1.051, Public Utility Regulatory Act of
   7-39  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   7-40  Regular Session, 1995, is amended to read as follows:
   7-41        Sec. 1.051.  OFFICE OF PUBLIC UTILITY COUNSEL.  (a)  The
   7-42  independent Office of Public Utility Counsel represents the
   7-43  interests of residential and small commercial consumers.
   7-44        (b)  The chief executive of the office <Office of Public
   7-45  Utility Counsel> is the public utility counsel, hereinafter
   7-46  referred to as counsellor.  The counsellor is appointed by the
   7-47  governor with the advice and consent of the senate to a two-year
   7-48  term that expires on February 1 of the final year of the term.
   7-49  Appointment of the counsellor shall be made without regard to the
   7-50  race, color, disability, sex, religion, age, or national origin of
   7-51  the appointee.
   7-52        (c)  The counsellor shall be a resident of Texas and admitted
   7-53  to the practice of law in this state who has demonstrated a strong
   7-54  commitment and involvement in efforts to safeguard the rights of
   7-55  the public and possesses the knowledge and experience necessary to
   7-56  practice effectively in utility proceedings.
   7-57        (d)  A person is not eligible for appointment as counsellor
   7-58  if the person or the person's spouse:
   7-59              (1)  is employed by or participates in the management
   7-60  of a business entity or other organization regulated by the
   7-61  commission or receiving funds from the commission;
   7-62              (2)  owns or controls, directly or indirectly, more
   7-63  than a 10 percent interest or a pecuniary interest with a value
   7-64  exceeding $10,000 in:
   7-65                    (A)  a business entity or other organization
   7-66  regulated by the commission or receiving funds from the commission
   7-67  or the office; or
   7-68                    (B)  any utility competitor, utility supplier, or
   7-69  other entity affected by a commission decision in a manner other
   7-70  than by the setting of rates for that class of customer;
    8-1              (3)  uses or receives a substantial amount of tangible
    8-2  goods, services, or funds from the commission or the office, other
    8-3  than compensation or reimbursement authorized by law for counsellor
    8-4  or commission membership, attendance, or expenses; or
    8-5              (4)  notwithstanding Subdivision (2) of this
    8-6  subsection, has an interest in a mutual fund or retirement fund in
    8-7  which more than 10 percent of the fund's holdings is in a single
    8-8  utility, utility competitor, or utility supplier in this state and
    8-9  the person does not disclose this information to the governor,
   8-10  senate, or other entity, as appropriate.
   8-11        (e)  A person may not serve as counsellor or act as the
   8-12  general counsel for the office if the person is required to
   8-13  register as a lobbyist under Chapter 305, Government Code, because
   8-14  of the person's activities for compensation related to the
   8-15  operation of the commission or the office.
   8-16        (f)  An officer, employee, or paid consultant of a trade
   8-17  association in the field of public utilities may not serve as
   8-18  counsellor or be an employee of the office who is exempt from the
   8-19  state's position classification plan or is compensated at or above
   8-20  the amount prescribed by the General Appropriations Act for step 1,
   8-21  salary group 17, of the position classification salary schedule.  A
   8-22  person who is the spouse of an officer, manager, or paid consultant
   8-23  of a trade association in the field of public utilities may not
   8-24  serve as counsellor and may not be an office employee who is exempt
   8-25  from the state's position classification plan or is compensated at
   8-26  or above the amount prescribed by the General Appropriations Act
   8-27  for step 1, salary group 17, of the position classification salary
   8-28  schedule.
   8-29        (g)  Notwithstanding any other provision of this Act, a
   8-30  person otherwise ineligible because of the application of
   8-31  Subsection (d)(2) of this section may be appointed as counsellor
   8-32  and may serve as counsellor if the person:
   8-33              (1)  notifies the attorney general and commission that
   8-34  the person is ineligible because of the application of Subsection
   8-35  (d)(2) of this section; and
   8-36              (2)  divests the person or the person's spouse of the
   8-37  ownership or control before appointment, or within a reasonable
   8-38  time if the person is already serving at the time Subsection (d)(2)
   8-39  of this section first applies to the person.
   8-40        SECTION 16.  Subtitle C, Title I, Public Utility Regulatory
   8-41  Act of 1995, as enacted by S.B. No. 319, Acts of the 74th
   8-42  Legislature, Regular Session, 1995, is amended by adding Section
   8-43  1.0511 to read as follows:
   8-44        Sec. 1.0511.  GROUNDS FOR REMOVAL.  (a)  It is a ground for
   8-45  removal from office if the counsellor:
   8-46              (1)  does not have at the time of appointment the
   8-47  qualifications required by Section 1.051 of this Act;
   8-48              (2)  does not maintain during service as counsellor the
   8-49  qualifications required by Section 1.051 of this Act;
   8-50              (3)  violates a prohibition established by Section
   8-51  1.051 or 1.0512 of this Act; or
   8-52              (4)  cannot discharge the counsellor's duties for a
   8-53  substantial part of the term for which the counsellor is appointed
   8-54  because of illness or disability.
   8-55        (b)  The validity of an action of the office is not affected
   8-56  by the fact that it is taken when a ground for removal of the
   8-57  counsellor exists.
   8-58        SECTION 17.  Subtitle C, Title I, Public Utility Regulatory
   8-59  Act of 1995, as enacted by S.B. No. 319, Acts of the 74th
   8-60  Legislature, Regular Session, 1995, is amended by adding Section
   8-61  1.0512 to read as follows:
   8-62        Sec. 1.0512.  PROHIBITION OF EMPLOYMENT OR REPRESENTATION.
   8-63  (a)  The counsellor may not within two years, and an employee of
   8-64  the office may not, within one year after his employment with the
   8-65  office has ceased, be employed by a public utility which was in the
   8-66  scope of the counsellor's or employee's official responsibility
   8-67  while the counsellor or employee was associated with the office.
   8-68        (b)  During the time the counsellor or an employee of the
   8-69  office is associated with the office or at any time after, the
   8-70  counsellor or employee may not represent a person, corporation, or
    9-1  other business entity before the commission or a court in a matter
    9-2  in which the counsellor or employee was personally involved while
    9-3  associated with the office or a matter that was within the
    9-4  counsellor's or employee's official responsibility while the
    9-5  counsellor or employee was associated with the office.
    9-6        SECTION 18.  Subtitle C, Title I, Public Utility Regulatory
    9-7  Act of 1995, as enacted by S.B. No. 319, Acts of the 74th
    9-8  Legislature, Regular Session, 1995, is amended by adding Section
    9-9  1.0513 to read as follows:
   9-10        Sec. 1.0513.  INFORMATION; ACCESSIBILITY.  (a)  The office
   9-11  shall prepare annually a complete and detailed written report
   9-12  accounting for all funds received and disbursed by the office
   9-13  during the preceding fiscal year.  The annual report must meet the
   9-14  reporting requirements applicable to financial reporting provided
   9-15  in the General Appropriations Act.
   9-16        (b)  The office shall prepare information of public interest
   9-17  describing the functions of the office.  The office shall make the
   9-18  information available to the public and appropriate state agencies.
   9-19        (c)  The office shall comply with federal and state laws
   9-20  related to program and facility accessibility.  The office shall
   9-21  also prepare and maintain a written plan that describes how a
   9-22  person who does not speak English can be provided reasonable access
   9-23  to the office's programs and services.
   9-24        SECTION 19.  Section 1.052, Public Utility Regulatory Act of
   9-25  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   9-26  Regular Session, 1995, is amended to read as follows:
   9-27        Sec. 1.052.  INTEREST PROHIBITED.  During the period of the
   9-28  counsellor's employment and for a period of two years following the
   9-29  termination of employment, it shall be unlawful for any person
   9-30  employed as counsellor to have a direct or indirect interest in any
   9-31  utility company regulated under this Act, to provide legal services
   9-32  directly or indirectly to or be employed in any capacity by a
   9-33  utility company regulated under this Act, its parent, or its
   9-34  subsidiary companies, corporations, or cooperatives or a utility
   9-35  competitor, utility supplier, or other entity affected in a manner
   9-36  other than by the setting of rates for that class of customer; but
   9-37  such person may otherwise engage in the private practice of law
   9-38  after the termination of employment as counsellor.
   9-39        SECTION 20.  Section 1.053, Public Utility Regulatory Act of
   9-40  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   9-41  Regular Session, 1995, is amended to read as follows:
   9-42        Sec. 1.053.  EMPLOYEES.  (a)  The counsellor may employ such
   9-43  lawyers, economists, engineers, consultants, statisticians,
   9-44  accountants, clerical staff, and other employees as he or she deems
   9-45  necessary to carry out the provisions of this section.  All
   9-46  employees shall receive such compensation as is fixed by the
   9-47  legislature from the assessment imposed by Section 1.351 of this
   9-48  Act.
   9-49        (b)  The counsellor or the counsellor's designee shall
   9-50  develop an intra-agency career ladder program that addresses
   9-51  opportunities for mobility and advancement for employees within the
   9-52  commission.  The program shall require intra-agency postings of all
   9-53  positions concurrently with any public posting.  The counsellor or
   9-54  the counsellor's designee shall develop a system of annual
   9-55  performance evaluations that are based on documented employee
   9-56  performance.  All merit pay for office employees must be based on
   9-57  the system established under this subsection.  The counsellor or
   9-58  the counsellor's designee shall provide to the public utility
   9-59  counsel and its employees, as often as necessary, information
   9-60  regarding their qualification for office or employment under this
   9-61  Act and their responsibilities under applicable laws relating to
   9-62  standards of conduct for state officers or employees.
   9-63        (c)  The counsellor or the counsellor's designee shall
   9-64  prepare and maintain a written policy statement to assure
   9-65  implementation of a program of equal employment opportunity under
   9-66  which all personnel transactions are made without regard to race,
   9-67  color, disability, sex, religion, age, or national origin.  The
   9-68  policy statement must include:
   9-69              (1)  personnel policies that comply with Chapter 21,
   9-70  Labor Code, including policies relating to recruitment, evaluation,
   10-1  selection, appointment, training, and promotion of personnel;
   10-2              (2)  a comprehensive analysis of the office workforce
   10-3  that meets federal and state guidelines;
   10-4              (3)  procedures by which a determination can be made
   10-5  about the extent of underuse in the office workforce of all persons
   10-6  for whom federal or state guidelines encourage a more equitable
   10-7  balance; and
   10-8              (4)  reasonable methods to appropriately address the
   10-9  underuse.
  10-10        (d)  A policy statement prepared under Subsection (c) of this
  10-11  section must cover an annual period, be updated at least annually
  10-12  and reviewed by the Commission on Human Rights for compliance with
  10-13  Subsection (c)(1) of this section, and be filed with the governor's
  10-14  office.  The governor's office shall deliver a biennial report to
  10-15  the legislature based on the information received under this
  10-16  subsection.  The report may be made separately or as a part of
  10-17  other biennial reports made to the legislature.
  10-18        (e)  The office shall provide to its employees, as often as
  10-19  necessary, information regarding their qualification for office or
  10-20  employment under this Act and their responsibilities under
  10-21  applicable laws relating to standards of conduct for state officers
  10-22  or employees.
  10-23        SECTION 21.  Section 1.101, Public Utility Regulatory Act of
  10-24  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  10-25  Regular Session, 1995, is amended to read as follows:
  10-26        Sec. 1.101.  GENERAL POWER; RULES; HEARINGS; AUDITS.
  10-27  (a)  The commission has the general power to regulate and supervise
  10-28  the business of every public utility within its jurisdiction and to
  10-29  do all things, whether specifically designated in this Act or
  10-30  implied herein, necessary and convenient to the exercise of this
  10-31  power and jurisdiction.
  10-32        (b)  The commission shall make and enforce rules reasonably
  10-33  required in the exercise of its powers and jurisdiction, including
  10-34  rules governing practice and procedure before the commission and,
  10-35  as applicable, practice and procedure before the utility division
  10-36  of the State Office of Administrative Hearings.  The commission
  10-37  shall adopt rules authorizing an administrative law judge to:
  10-38              (1)  limit the amount of time that a party may have to
  10-39  present its case;
  10-40              (2)  limit the number of requests for information that
  10-41  a party may make in a contested case;
  10-42              (3)  require a party to a contested case to identify
  10-43  contested issues and facts before the hearing begins and to limit
  10-44  cross-examination to only those issues and facts and to any new
  10-45  issues that may arise as a result of the discovery process; or
  10-46              (4)  group parties, other than the office, that have
  10-47  the same position on an issue to facilitate cross-examination on
  10-48  that issue, provided that each party in a group is entitled to
  10-49  present that party's witnesses for cross-examination during the
  10-50  hearing.
  10-51        (c)  Rules adopted under Subsection (b) of this section must
  10-52  ensure that all parties receive due process.
  10-53        (d)  The commission may call and hold hearings, administer
  10-54  oaths, receive evidence at hearings, issue subpoenas to compel the
  10-55  attendance of witnesses and the production of papers and documents,
  10-56  and make findings of fact and decisions with respect to
  10-57  administering the provisions of this Act or the rules, orders, or
  10-58  other actions of the commission.
  10-59        (e)  Hearings in contested cases not conducted by one or more
  10-60  commissioners shall be conducted by the utility division of the
  10-61  State Office of Administrative Hearings.  The <(d)  Notwithstanding
  10-62  any other provision of this Act or other law, in proceedings other
  10-63  than those involving major rate changes, the> commission may
  10-64  delegate to the utility division of the State Office of
  10-65  Administrative Hearings <an administrative law judge or hearings
  10-66  examiner> the authority to make a final decision and to issue
  10-67  findings of fact, conclusions of law, and other necessary orders in
  10-68  a proceeding in which there is no contested issue of fact or law.
  10-69  The commission by rule shall define the procedures by which it
  10-70  delegates final decision-making authority authorized by this
   11-1  section.  For review purposes the final decision of the
   11-2  administrative law judge <or hearings examiner> has the same effect
   11-3  as a final decision of the commission unless a commissioner
   11-4  requests formal review of the decision.
   11-5        SECTION 22.  Subsection (b), Section 1.102, Public Utility
   11-6  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
   11-7  74th Legislature, Regular Session, 1995, is amended to read as
   11-8  follows:
   11-9        (b)  The commission may audit each utility under the
  11-10  jurisdiction of the commission as frequently as needed<, but shall
  11-11  audit each utility at least once every 10 years>.  Six months after
  11-12  any audit, the utility shall report to the commission on the status
  11-13  of the implementation of the recommendations of the audit and shall
  11-14  file subsequent reports at such times as the commission deems
  11-15  appropriate.
  11-16        SECTION 23.  Subtitle D, Title I, Public Utility Regulatory
  11-17  Act of 1995, as enacted by S.B. No. 319, Acts of the 74th
  11-18  Legislature, Regular Session, 1995, is amended by adding Section
  11-19  1.104 to read as follows:
  11-20        Sec. 1.104.  SETTLEMENTS.  (a)  The commission by rule shall
  11-21  adopt procedures governing the use of settlements to resolve
  11-22  contested cases.
  11-23        (b)  The rules shall ensure that:
  11-24              (1)  each party retains the right to:
  11-25                    (A)  have a full hearing before the commission on
  11-26  issues that remain in dispute; and
  11-27                    (B)  judicial review of issues that remain in
  11-28  dispute;
  11-29              (2)  an issue of fact raised by a nonsettling party
  11-30  cannot be waived by a settlement or stipulation of the other
  11-31  parties; and
  11-32              (3)  the nonsettling party may use the issue of fact
  11-33  raised by that party as the basis for judicial review.
  11-34        SECTION 24.  Section 1.202, Public Utility Regulatory Act of
  11-35  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  11-36  Regular Session, 1995, is amended to read as follows:
  11-37        Sec. 1.202.  POWERS OF COMMISSION.  (a)  The commission shall
  11-38  have the power to:
  11-39              (1)  require that public utilities report to it such
  11-40  information relating to themselves and affiliated interests both
  11-41  within and without the State of Texas as it may consider useful in
  11-42  the administration of this Act;
  11-43              (2)  establish forms for all reports;
  11-44              (3)  determine the time for reports and the frequency
  11-45  with which any reports are to be made;
  11-46              (4)  require that any reports be made under oath;
  11-47              (5)  require that a copy of any contract or arrangement
  11-48  between any public utility and any affiliated interest be filed
  11-49  with it.  It may require any such contract or arrangement not in
  11-50  writing to be reduced to writing and filed with it;
  11-51              (6)  require that a copy of any report filed with any
  11-52  federal agency or any governmental agency or body of any other
  11-53  state be filed with it; and
  11-54              (7)  require that a copy of annual reports showing all
  11-55  payments of compensation (other than salary or wages subject to the
  11-56  withholding of federal income tax) to residents of Texas, or with
  11-57  respect to legal, administrative, or legislative matters in Texas,
  11-58  or for representation before the Texas Legislature or any
  11-59  governmental agency or body be filed with it.
  11-60        (b)  <The railroad commission shall have the power to review
  11-61  and approve, for purposes of the Outer Continental Shelf Lands Act
  11-62  Amendments of 1978  and any other federal authorities, applications
  11-63  by gas utilities for the purchase of natural gas from producing
  11-64  affiliates.>
  11-65        <(c)>  On the request of the governing body of any
  11-66  municipality, the commission may provide sufficient staff members
  11-67  to advise and consult with such municipality on any pending matter.
  11-68        SECTION 25.  Subsection (b), Section 1.251, Public Utility
  11-69  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  11-70  74th Legislature, Regular Session, 1995, is amended to read as
   12-1  follows:
   12-2        (b)  All transactions involving the sale of 50 percent or
   12-3  more of the stock of a public utility shall also be reported to the
   12-4  commission within a reasonable time.  On the filing of a report
   12-5  with the commission, the commission shall investigate the same with
   12-6  or without public hearing to determine whether the action is
   12-7  consistent with the public interest.  In reaching its
   12-8  determination, the commission shall take into consideration the
   12-9  reasonable value of the property, facilities, or securities to be
  12-10  acquired, disposed of, merged, transferred, or consolidated and
  12-11  whether such a transaction will adversely affect the health or
  12-12  safety of customers or employees, result in the transfer of jobs of
  12-13  Texas citizens to workers domiciled outside the State of Texas, or
  12-14  result in the decline of service, whether the public utility will
  12-15  receive consideration equal to the reasonable value of the assets
  12-16  when it sells, leases, or transfers assets, and whether the
  12-17  transaction is consistent with the public interest.
  12-18        SECTION 26.  Subtitle I, Title I, Public Utility Regulatory
  12-19  Act of 1995, as enacted by S.B. No. 319, Acts of the 74th
  12-20  Legislature, Regular Session, 1995, is amended by adding Section
  12-21  1.3215 to read as follows:
  12-22        Sec. 1.3215.  ADMINISTRATIVE PENALTY.  (a)  The commission
  12-23  may impose an administrative penalty against a person regulated
  12-24  under this Act who violates this Act or a rule or order adopted
  12-25  under this Act.
  12-26        (b)  The penalty for a violation may be in an amount not to
  12-27  exceed $5,000.  Each day a violation continues or occurs is a
  12-28  separate violation for purposes of imposing a penalty.
  12-29        (c)  The amount of the penalty shall be based on:
  12-30              (1)  the seriousness of the violation, including the
  12-31  nature, circumstances, extent, and gravity of any prohibited acts,
  12-32  and the hazard or potential hazard created to the health, safety,
  12-33  or economic welfare of the public;
  12-34              (2)  the economic harm to property or the environment
  12-35  caused by the violation;
  12-36              (3)  the history of previous violations;
  12-37              (4)  the amount necessary to deter future violations;
  12-38              (5)  efforts to correct the violation; and
  12-39              (6)  any other matter that justice may require.
  12-40        (d)  If the executive director determines that a violation
  12-41  has occurred, the executive director may issue to the commission a
  12-42  report that states the facts on which the determination is based
  12-43  and the director's recommendation on the imposition of a penalty,
  12-44  including a recommendation on the amount of the penalty.
  12-45        (e)  Within 14 days after the date the report is issued, the
  12-46  executive director shall give written notice of the report to the
  12-47  person.  The notice may be given by certified mail.  The notice
  12-48  must include a brief summary of the alleged violation and a
  12-49  statement of the amount of the recommended penalty and must inform
  12-50  the person that the person has a right to a hearing on the
  12-51  occurrence of the violation, the amount of the penalty, or both the
  12-52  occurrence of the violation and the amount of the penalty.  In
  12-53  addition, the notice must inform the person that a penalty will not
  12-54  be imposed if the violation was accidental or inadvertent and the
  12-55  person has previously corrected the violation or corrects the
  12-56  violation not later than the 30th day after the date the person
  12-57  receives the notice under this subsection.  The commission may not
  12-58  impose a penalty under this section if the person has previously
  12-59  corrected the violation or corrects the violation before the end of
  12-60  the 30-day period.  The person against whom the penalty may be
  12-61  assessed has the burden of proving to the commission that the
  12-62  person has corrected the violation and that the violation was
  12-63  accidental or inadvertent.
  12-64        (f)  Within 20 days after the date the person receives the
  12-65  notice, the person in writing may accept the determination and
  12-66  recommended penalty of the executive director, may make a written
  12-67  request for a hearing on the occurrence of the violation, the
  12-68  amount of the penalty, or both the occurrence of the violation and
  12-69  the amount of the penalty, or may notify the commission in writing
  12-70  that the person has corrected or intends to correct the violation
   13-1  as provided by Subsection (e) of this section and request a
   13-2  hearing.
   13-3        (g)  If the person accepts the determination and recommended
   13-4  penalty of the executive director, the commission by order shall
   13-5  approve the determination and impose the recommended penalty.
   13-6        (h)  If the person requests a hearing or fails to respond
   13-7  timely to the notice, the executive director shall set a hearing
   13-8  and give notice of the hearing to the person.  The hearing shall be
   13-9  held by an administrative law judge of the State Office of
  13-10  Administrative Hearings.   The administrative law judge shall make
  13-11  findings of fact and conclusions of law and promptly issue to the
  13-12  commission a proposal for a decision about the occurrence of the
  13-13  violation and the amount of a proposed penalty.  Based on the
  13-14  findings of fact, conclusions of law, and proposal for a decision,
  13-15  the commission by order may find that a violation has occurred and,
  13-16  if not corrected in accordance with Subsection (e) of this section,
  13-17  impose a penalty or may find that no violation occurred.
  13-18        (i)  The notice of the commission's order given to the person
  13-19  under Chapter 2001, Government Code, must include a statement of
  13-20  the right of the person to judicial review of the order.
  13-21        (j)  Within 30 days after the date the commission's order is
  13-22  final as provided by Section 2001.144, Government Code, the person
  13-23  shall:
  13-24              (1)  pay the amount of the penalty;
  13-25              (2)  pay the amount of the penalty and file a petition
  13-26  for judicial review contesting the occurrence of the violation, the
  13-27  amount of the penalty, or both the occurrence of the violation and
  13-28  the amount of the penalty; or
  13-29              (3)  without paying the amount of the penalty, file a
  13-30  petition for judicial review contesting the occurrence of the
  13-31  violation, the amount of the penalty, or both the occurrence of the
  13-32  violation and the amount of the penalty.
  13-33        (k)  Within the 30-day period, a person who acts under
  13-34  Subsection (j)(3) of this section may:
  13-35              (1)  stay enforcement of the penalty by:
  13-36                    (A)  paying the amount of the penalty to the
  13-37  court for placement in an escrow account; or
  13-38                    (B)  giving to the court a supersedeas bond that
  13-39  is approved by the court for the amount of the penalty and that is
  13-40  effective until all judicial review of the commission's order is
  13-41  final; or
  13-42              (2)  request the court to stay enforcement of the
  13-43  penalty by:
  13-44                    (A)  filing with the court a sworn affidavit of
  13-45  the person stating that the person is financially unable to pay the
  13-46  amount of the penalty and is financially unable to give the
  13-47  supersedeas bond; and
  13-48                    (B)  giving a copy of the affidavit to the
  13-49  executive director by certified mail.
  13-50        (l)  The executive director, on receipt of a copy of an
  13-51  affidavit under Subsection (k)(2) of this section, may file with
  13-52  the court, within five days after the date the copy is received, a
  13-53  contest to the affidavit.  The court shall hold a hearing on the
  13-54  facts alleged in the affidavit as soon as practicable and shall
  13-55  stay the enforcement of the penalty on finding that the alleged
  13-56  facts are true.  The person who files an affidavit has the burden
  13-57  of proving that the person is financially unable to pay the amount
  13-58  of the penalty and to give a supersedeas bond.
  13-59        (m)  If the person does not pay the amount of the penalty and
  13-60  the enforcement of the penalty is not stayed, the executive
  13-61  director may refer the matter to the attorney general for
  13-62  collection of the amount of the penalty.
  13-63        (n)  Judicial review of the order of the commission:
  13-64              (1)  is instituted by filing a petition as provided by
  13-65  Subchapter G, Chapter 2001, Government Code; and
  13-66              (2)  is under the substantial evidence rule.
  13-67        (o)  If the court sustains the occurrence of the violation,
  13-68  the court may uphold or reduce the amount of the penalty and order
  13-69  the person to pay the full or reduced amount of the penalty.  If
  13-70  the court does not sustain the occurrence of the violation, the
   14-1  court shall order that no penalty is owed.
   14-2        (p)  When the judgment of the court becomes final, the court
   14-3  shall proceed under this subsection.  If the person paid the amount
   14-4  of the penalty and if that amount is reduced or is not upheld by
   14-5  the court, the court shall order that the appropriate amount plus
   14-6  accrued interest be remitted to the person.  The rate of the
   14-7  interest is the rate charged on loans to depository institutions by
   14-8  the New York Federal Reserve Bank, and the interest shall be paid
   14-9  for the period beginning on the date the penalty was paid and
  14-10  ending on the date the penalty is remitted.  If the person gave a
  14-11  supersedeas bond and if the amount of the penalty is not upheld by
  14-12  the court, the court shall order the release of the bond.  If the
  14-13  person gave a supersedeas bond and if the amount of the penalty is
  14-14  reduced, the court shall order the release of the bond after the
  14-15  person pays the amount.
  14-16        (q)  A penalty collected under this section shall be remitted
  14-17  to the comptroller for deposit in the general revenue fund.
  14-18        (r)  All proceedings under this section are subject to
  14-19  Chapter 2001, Government Code.
  14-20        (s)  The executive director may delegate to a person that the
  14-21  executive director designates any power or duty given the executive
  14-22  director by this section.
  14-23        SECTION 27.  Subsection (b), Section 1.351, Public Utility
  14-24  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  14-25  74th Legislature, Regular Session, 1995, is amended to read as
  14-26  follows:
  14-27        (b)  The legislature may <commission shall, subject to the
  14-28  approval of the legislature,> adjust this assessment to provide a
  14-29  level of income sufficient to fund the commission and the office of
  14-30  public utility counsel.
  14-31        SECTION 28.  Section 1.354, Public Utility Regulatory Act of
  14-32  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  14-33  Regular Session, 1995, is amended to read as follows:
  14-34        Sec. 1.354.  COLLECTION AND PAYMENT INTO GENERAL REVENUE
  14-35  FUND.  (a)  All fees, penalties, and interest paid under the
  14-36  provisions of Sections 1.351, <and> 1.352, and 1.353 of this Act
  14-37  shall be collected by the comptroller of public accounts and paid
  14-38  into the general revenue fund.  <The commission shall notify the
  14-39  comptroller of public accounts of any adjustment of the assessment
  14-40  imposed in Section 1.351 when made.>
  14-41        (b)  All money paid to the commission or to the office under
  14-42  this Act is subject to Subchapter F, Chapter 404, Government Code.
  14-43        SECTION 29.  Subtitle J, Title I, Public Utility Regulatory
  14-44  Act of 1995, as enacted by S.B.  No. 319, Acts of the 74th
  14-45  Legislature, Regular Session, 1995, is amended by adding Section
  14-46  1.357 to read as follows:
  14-47        Sec. 1.357.  GRANTS OF FEDERAL FUNDS.  (a)  The commission
  14-48  may apply to any appropriate agency or officer of the United States
  14-49  to receive and spend federal funds which it may obtain from grants
  14-50  or other similar forms of financial assistance.  Nothing in this
  14-51  section shall inhibit the commission's ability to contract with or
  14-52  otherwise receive assistance from any state, local, or other
  14-53  authorized source of funds.
  14-54        (b)  Sections 403.094 and 403.095, Government Code, do not
  14-55  apply to the special account established under this section.
  14-56        SECTION 30.  Subsections (a) and (b), Section 1.401, Public
  14-57  Utility Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of
  14-58  the 74th Legislature, Regular Session, 1995, are amended to read as
  14-59  follows:
  14-60        (a)  Any affected person may complain to the regulatory
  14-61  authority in writing setting forth any act or thing done or omitted
  14-62  to be done by any public utility in violation or claimed violation
  14-63  of any law which the regulatory authority has jurisdiction to
  14-64  administer or of any order, ordinance, rule, or regulation of the
  14-65  regulatory authority.  The commission shall keep <an> information
  14-66  <file> about each complaint filed with the commission <relating to
  14-67  a utility>.  The commission shall retain the information <file> for
  14-68  a reasonable period.  The information shall include:
  14-69              (1)  the date the complaint is received;
  14-70              (2)  the name of the complainant;
   15-1              (3)  the subject matter of the complaint;
   15-2              (4)  a record of all persons contacted in relation to
   15-3  the complaint;
   15-4              (5)  a summary of the results of the review or
   15-5  investigation of the complaint; and
   15-6              (6)  for complaints for which the commission took no
   15-7  action, an explanation of the reason the complaint was closed
   15-8  without action.
   15-9        (b)  The commission shall keep a file about each <If a>
  15-10  written complaint <is> filed with the commission.  The commission
  15-11  shall provide to the person filing the complaint and to the persons
  15-12  or entities complained about the commission's policies and
  15-13  procedures pertaining to complaint investigation and resolution.
  15-14  The <relating to a utility, the> commission, at least <as
  15-15  frequently as> quarterly and until final disposition of the
  15-16  complaint, shall notify the person filing <parties to> the
  15-17  complaint and each person or entity complained about of the status
  15-18  of the complaint unless the notice would jeopardize an undercover
  15-19  investigation.
  15-20        SECTION 31.  Subtitle K, Title I, Public Utility Regulatory
  15-21  Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
  15-22  Regular Session, 1995, is amended by adding Section 1.407 to read
  15-23  as follows:
  15-24        Sec. 1.407.  HISTORICALLY UNDERUTILIZED BUSINESSES.  (a)  The
  15-25  commission by rule shall require each utility to make a good faith
  15-26  effort to overcome the underuse of historically underutilized
  15-27  businesses as shown for private industry by the disparity study
  15-28  conducted under H.B. 2626, Acts of the 73rd Legislature, 1993.
  15-29        (b)  The commission may conduct further research and analysis
  15-30  to adjust the results of the disparity study as necessary to
  15-31  account for specific underuse of historically underutilized
  15-32  businesses by the utility industry.
  15-33        (c)  The rules adopted under this section must require each
  15-34  utility to prepare and submit to the commission a strategic plan
  15-35  for use of historically underutilized businesses.
  15-36        SECTION 32.  Subchapter C, Chapter 2003, Government Code, is
  15-37  amended by adding Section 2003.047 to read as follows:
  15-38        Sec. 2003.047.  UTILITY DIVISION.  (a)  The office shall
  15-39  establish a utility division to perform the contested case hearings
  15-40  for the Public Utility Commission of Texas as prescribed by the
  15-41  Public Utility Regulatory Act of 1995 and other applicable law.
  15-42        (b)  The utility division shall conduct hearings relating to
  15-43  contested cases before the commission, other than a hearing
  15-44  conducted by one or more commissioners.  The commission by rule may
  15-45  delegate the responsibility to hear any other matter before the
  15-46  commission if consistent with the duties and responsibilities of
  15-47  the division.
  15-48        (c)  Only an administrative law judge in the utility division
  15-49  may conduct a hearing on behalf of the commission.  An
  15-50  administrative law judge in the utility division may conduct
  15-51  hearings for other state agencies as time allows.  The office may
  15-52  transfer an administrative law judge into the division on a
  15-53  temporary or permanent basis and may contract with qualified
  15-54  individuals to serve as temporary administrative law judges as
  15-55  necessary.
  15-56        (d)  To be eligible to preside at a hearing, an
  15-57  administrative law judge, regardless of temporary or permanent
  15-58  status, must be licensed to practice law in this state and have not
  15-59  less than five years of general experience or three years of
  15-60  experience in utility regulatory law.
  15-61        (e)  At the time the office receives jurisdiction of a
  15-62  proceeding, the commission shall provide to the administrative law
  15-63  judge a list of issues or areas that must be addressed.  In
  15-64  addition, the commission may identify and provide to the
  15-65  administrative law judge at any time additional issues or areas
  15-66  that must be addressed.
  15-67        (f)  The office and the commission shall jointly adopt rules
  15-68  providing for certification to the commission of an issue that
  15-69  involves an ultimate finding of compliance with or satisfaction of
  15-70  a statutory standard the determination of which is committed to the
   16-1  discretion or judgment of the commission by law.  The rules must
   16-2  address, at a minimum, the issues that are appropriate for
   16-3  certification and the procedure to be used in certifying the issue.
   16-4  Each agency shall publish the jointly adopted rules.
   16-5        (g)  Notwithstanding Section 2001.058, the commission may
   16-6  change a finding of fact or conclusion of law made by the
   16-7  administrative law judge or vacate or modify an order issued by the
   16-8  administrative law judge only if the commission:
   16-9              (1)  determines that the administrative law judge:
  16-10                    (A)  did not properly apply or interpret
  16-11  applicable law, commission rules or policies, or prior
  16-12  administrative decisions; or
  16-13                    (B)  issued a finding of fact that is not
  16-14  supported by a preponderance of the evidence; or
  16-15              (2)  determines that a commission policy or a prior
  16-16  administrative decision on which the administrative law judge
  16-17  relied is incorrect or should be changed.
  16-18        (h)  The commission shall state in writing the specific
  16-19  reason and legal basis for its determination under Subsection (g).
  16-20        (i)  An administrative law judge, on the judge's own motion
  16-21  or on motion of a party and after notice and an opportunity for a
  16-22  hearing, may impose appropriate sanctions as provided by Subsection
  16-23  (j) against a party or its representative for:
  16-24              (1)  filing a motion or pleading that is groundless and
  16-25  brought:
  16-26                    (A)  in bad faith;
  16-27                    (B)  for the purpose of harassment; or
  16-28                    (C)  for any other improper purpose, such as to
  16-29  cause unnecessary delay or needless increase in the cost of the
  16-30  proceeding;
  16-31              (2)  abuse of the discovery process in seeking, making,
  16-32  or resisting discovery; or
  16-33              (3)  failure to obey an order of the administrative law
  16-34  judge or the commission.
  16-35        (j)  A sanction imposed under Subsection (i) may include, as
  16-36  appropriate and justified, issuance of an order:
  16-37              (1)  disallowing further discovery of any kind or of a
  16-38  particular kind by the offending party;
  16-39              (2)  charging all or any part of the expenses of
  16-40  discovery against the offending party or its representative;
  16-41              (3)  holding that designated facts be deemed admitted
  16-42  for purposes of the proceeding;
  16-43              (4)  refusing to allow the offending party to support
  16-44  or oppose a designated claim or defense or prohibiting the party
  16-45  from introducing designated matters in evidence;
  16-46              (5)  disallowing in whole or in part requests for
  16-47  relief by the offending party and excluding evidence in support of
  16-48  such requests;
  16-49              (6)  punishing the offending party or its
  16-50  representative for contempt to the same extent as a district court;
  16-51              (7)  requiring the offending party or its
  16-52  representative to pay, at the time ordered by the administrative
  16-53  law judge, the reasonable expenses, including attorney's fees,
  16-54  incurred by other parties because of the sanctionable behavior; and
  16-55              (8)  striking pleadings or testimony, or both, in whole
  16-56  or in part, or staying further proceedings until the order is
  16-57  obeyed.
  16-58        (k)  Hearings conducted for the commission by the office
  16-59  shall be held in hearing rooms provided by the commission.  The
  16-60  commission shall also provide the utility division access to its
  16-61  computer systems, databases, and library resources.
  16-62        (l)  The office shall charge the commission a fixed annual
  16-63  fee rather than an hourly rate for services rendered by the utility
  16-64  division to the commission.  The office and the commission shall
  16-65  negotiate the amount of the fixed fee biennially, subject to the
  16-66  approval of the governor, to coincide with the commission's
  16-67  legislative appropriations request.
  16-68        SECTION 33.  Chapter 166, Acts of the 63rd Legislature,
  16-69  Regular Session, 1973 (Article 1435a, Vernon's Texas Civil
  16-70  Statutes), is amended by adding Section 4c to read as follows:
   17-1        Sec. 4c.  (a)  Subject to the approval of the Public Utility
   17-2  Commission of Texas, an electric cooperative corporation may form a
   17-3  joint powers agency with one or more public entities and
   17-4  participate in an existing joint powers agency in which at least
   17-5  one public entity is a member and participant, as if the electric
   17-6  cooperative corporation were a public entity.
   17-7        (b)  The Public Utility Commission of Texas shall approve
   17-8  participation by an electric cooperative corporation under this
   17-9  section if the commission determines that the participation meets
  17-10  the requirements of law.
  17-11        (c)  A joint powers agency in which an electric cooperative
  17-12  corporation participates under this section is a governmental body
  17-13  subject to Chapter 551, Government Code.
  17-14        (d)  This section may not be construed to authorize or
  17-15  entitle an electric cooperative corporation to issue bonds or other
  17-16  securities that are exempt from taxation under federal law.
  17-17        SECTION 34.  Section 4A, Electric Cooperative Corporation Act
  17-18  (Article 1528b, Vernon's Texas Civil Statutes), is amended to read
  17-19  as follows:
  17-20        Sec. 4A.  Additional Powers.  Notwithstanding any other
  17-21  provision of this Act, a corporation has authority to generate,
  17-22  manufacture, purchase, acquire, and accumulate electric energy and
  17-23  to transmit, distribute, sell, furnish, and dispose of such
  17-24  electric energy to the following entities if the same are engaged
  17-25  in the generation, <and> transmission, or distribution of
  17-26  electricity <for resale>:
  17-27              (1)  firms, associations, corporations, except those
  17-28  who meet the criteria for a small power production facility and/or
  17-29  a cogeneration facility under Section 201 of the Public Utility
  17-30  Regulatory Policies Act of 1978 (PURPA);
  17-31              (2)  federal agency;
  17-32              (3)  state or political subdivision of a state  <with
  17-33  an installed generation capacity in excess of 500 MW>; or
  17-34              (4)  a municipal power agency or political subdivision
  17-35  of a state which is a co-owner with such corporation of a jointly
  17-36  owned electric generation facility.
  17-37        <A corporation may also sell, furnish, and dispose of the
  17-38  electric energy to a political subdivision of the state which is
  17-39  engaged in the generation, transmission, or distribution of
  17-40  electricity for resale and to which the corporation was selling and
  17-41  furnishing electric energy on December 31, 1982.>
  17-42        The members-only requirement of Section 4(4) of this Act
  17-43  shall continue to apply to all sales by a corporation to other
  17-44  persons and entities.
  17-45        SECTION 35.  Section 171.079, Tax Code, is amended to read as
  17-46  follows:
  17-47        Sec. 171.079.  EXEMPTION--ELECTRIC COOPERATIVE CORPORATION.
  17-48  An electric cooperative corporation incorporated under the Electric
  17-49  Cooperative Corporation Act (Article 1528b, Vernon's Texas Civil
  17-50  Statutes) that is not a participant in a joint powers agency is
  17-51  exempted from the franchise tax.
  17-52        SECTION 36.  (a)  A task force is established to administer
  17-53  the transfer of the hearings division from the Public Utility
  17-54  Commission of Texas to the State Office of Administrative Hearings.
  17-55  The task force is composed of:
  17-56              (1)  the governor or the governor's designee;
  17-57              (2)  the Legislative Budget Board or the board's
  17-58  designee;
  17-59              (3)  the chairman of the Public Utility Commission of
  17-60  Texas;
  17-61              (4)  the public utility counsel; and
  17-62              (5)  the chief administrative law judge of the State
  17-63  Office of Administrative Hearings.
  17-64        (b)  The governor or the governor's designee is the presiding
  17-65  officer of the task force.
  17-66        (c)  The task force shall:
  17-67              (1)  determine the personnel, equipment, data,
  17-68  facilities, and other items that will be transferred under this Act
  17-69  and the schedule for the transfers; and
  17-70              (2)  mediate and resolve disputes between the
   18-1  respective agencies relating to a transfer.
   18-2        (d)  After the transfers have been completed, the task force
   18-3  shall prepare a written report detailing the specifics of the
   18-4  transfers and shall submit the report to the governor and the
   18-5  legislature.
   18-6        (e)  In determining a transfer under this Act, the task force
   18-7  shall ensure that the transfer does not adversely affect a
   18-8  proceeding before the Public Utility Commission of Texas or the
   18-9  rights of the parties to the proceeding.
  18-10        (f)  This section takes effect immediately.
  18-11        SECTION 37.  (a)  On September 1, 1995, all personnel,
  18-12  including hearings examiners and administrative law judges,
  18-13  equipment, data, facilities, and other items of the hearings
  18-14  division of the Public Utility Commission of Texas, other than the
  18-15  personnel, equipment, data, facilities, and other items of the
  18-16  central records office, are transferred to the utility division of
  18-17  the State Office of Administrative Hearings.  Until September 1,
  18-18  1996, an employee transferred to the utility division may be
  18-19  terminated or subject to salary reduction only for cause and only
  18-20  in relation to poor performance or unacceptable conduct.  A
  18-21  hearings examiner transferred to the State Office of Administrative
  18-22  Hearings becomes an administrative law judge on the date of
  18-23  transfer.
  18-24        (b)  A hearings examiner or administrative law judge
  18-25  transferred from the Public Utility Commission of Texas to the
  18-26  State Office of Administrative Hearings shall continue to hear any
  18-27  case assigned to the person as if the transfer had not occurred.
  18-28        (c)  The changes in law made by this Act that relate to the
  18-29  procedures governing a hearing before the utility division of the
  18-30  State Office of Administrative Hearings apply only to a case that
  18-31  is filed on or after September 1, 1995.  In addition, the
  18-32  procedures prescribed by the provisions amended by this Act shall
  18-33  continue to be used in a hearing as those provisions existed on
  18-34  August 31, 1995.  The former law is continued in effect for those
  18-35  purposes.
  18-36        (d)  The Public Utility Commission of Texas is not required
  18-37  by this Act or amendments made by this Act to adopt new rules
  18-38  governing practice and procedure before the Public Utility
  18-39  Commission of Texas or the utility division of the State Office of
  18-40  Administrative Hearings.  The rules in effect on the effective date
  18-41  of this Act remain in effect until amended or repealed as required
  18-42  by law.  Any rules adopted after the effective date of this Act
  18-43  governing practice and procedure before the utility division of the
  18-44  State Office of Administrative Hearings must be adopted jointly by
  18-45  that office and the commission.
  18-46        SECTION 38.  Section 1.3215, Public Utility Regulatory Act of
  18-47  1995, as added by this Act, applies only to a violation committed
  18-48  on or after the effective date of this Act.  A violation committed
  18-49  before the effective date of this Act is governed by the law in
  18-50  effect when the violation occurred, and that law is continued in
  18-51  effect for that purpose.
  18-52        SECTION 39.  Section 1.104, Public Utility Regulatory Act of
  18-53  1995, as added by this Act, applies only to a proceeding for which
  18-54  a final order has not been issued before the effective date of this
  18-55  Act and does not apply to an electric utility merger proceeding
  18-56  filed before January 1, 1995, in which a final order has not been
  18-57  issued.  Except as otherwise provided by this section, on or after
  18-58  the effective date of this Act, the Public Utility Commission of
  18-59  Texas may not approve a settlement unless the settlement has been
  18-60  reached in accordance with rules adopted under Section 1.104,
  18-61  Public Utility Regulatory Act of 1995, as added by this Act.
  18-62        SECTION 40.  The changes in law made by this Act relating to
  18-63  the requirements for membership on the Public Utility Commission of
  18-64  Texas, to the requirements for service as public utility counsel,
  18-65  or to employment as executive director or general counsel of the
  18-66  commission apply only to a person appointed or hired, as
  18-67  appropriate, on or after the effective date of this Act and do not
  18-68  affect the entitlement of a member serving on the commission on
  18-69  August 31, 1995, to continue to hold office for the remainder of
  18-70  the term for which the person was appointed or the ability of a
   19-1  person serving as public utility counsel, executive director, or
   19-2  general counsel on August 31, 1995, to continue to hold that
   19-3  position.
   19-4        SECTION 41.  Except as otherwise provided by this Act, this
   19-5  Act takes effect September 1, 1995.
   19-6        SECTION 42.  The importance of this legislation and the
   19-7  crowded condition of the calendars in both houses create an
   19-8  emergency and an imperative public necessity that the
   19-9  constitutional rule requiring bills to be read on three several
  19-10  days in each house be suspended, and this rule is hereby suspended,
  19-11  and that this Act take effect and be in force according to its
  19-12  terms, and it is so enacted.
  19-13                               * * * * *