By: Armbrister S.B. No. 1227 A BILL TO BE ENTITLED AN ACT 1-1 relating to the regulation of electric cooperative corporations. 1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-3 SECTION 1. Article VI, Public Utility Regulatory Act 1-4 (Article 1446c, Vernon's Texas Civil Statutes), is amended by 1-5 adding Section 37A to read as follows: 1-6 Sec. 37A. (a) An electric cooperative corporation that 1-7 provides retail electric utility service at distribution voltage is 1-8 exempt from rate regulation if a majority of the members voting in 1-9 an election on the deregulation of the electric cooperative vote to 1-10 approve the exemption and the electric cooperative sends notice of 1-11 the action to each applicable regulatory authority. An electric 1-12 cooperative that wants to hold an election under this section shall 1-13 send a ballot by mail to each electric cooperative member. The 1-14 electric cooperative may include the ballot in a monthly billing. 1-15 The ballot shall provide for voting for or against rate 1-16 deregulation of the electric cooperative. If the proposition is 1-17 approved, the electric cooperative shall send each ballot to the 1-18 commission not later than the 10th day after the date the electric 1-19 cooperative counts the ballots. Based on the ballots received, the 1-20 commission shall administratively certify that the electric 1-21 cooperative is or is not deregulated for ratemaking purposes. An 1-22 electric cooperative may not hold another election on the issue of 1-23 being exempt from rate regulation before the first anniversary of 1-24 the most recent election on the issue. Subsections (b) through (n) 2-1 of this section apply to an electric cooperative that has elected 2-2 to be exempt from rate regulation. 2-3 (b) No regulatory authority shall fix and regulate the rates 2-4 of an electric cooperative that has made an election under this 2-5 section to be exempt from rate regulation except as provided for 2-6 the commission in Subsections (g) and (i) of this section. 2-7 Notwithstanding Section 17(a) of this Act, the commission has 2-8 exclusive original jurisdiction in all of the electric 2-9 cooperative's service area in a proceeding initiated under 2-10 Subsection (g) or (i) of this section. 2-11 (c) An electric cooperative may change its rates by: 2-12 (1) adopting a resolution approving the proposed 2-13 change; 2-14 (2) mailing notice of the proposed change to: 2-15 (A) the commission; 2-16 (B) each affected municipality; 2-17 (C) each affected customer, which notice may be 2-18 included in a monthly billing; and 2-19 (D) each electric utility providing retail 2-20 service in the electric cooperative's service area or in the 2-21 adjoining service area; and 2-22 (3) making available at each of the electric 2-23 cooperative's business offices for review by all interested persons 2-24 a cost-of-service study that: 2-25 (A) is not more than five years old at the time 2-26 the electric cooperative adopts rates under this subsection; and 2-27 (B) bears the certification of a professional 3-1 engineer or certified public accountant. 3-2 (d)(1) The notice required by Subsection (c) of this section 3-3 must contain the following information: 3-4 (A) the increase or decrease in total operating 3-5 revenues over actual test year revenues or over test year revenues 3-6 adjusted to annualize the recovery of changes in the cost of 3-7 purchased electricity, stated both as a dollar amount and as a 3-8 percentage; 3-9 (B) the classes of utility customers affected 3-10 and the creation and application of any new rate classes; 3-11 (C) the increase or decrease for each class 3-12 stated as a percentage of actual test year revenues for the class 3-13 or of test year revenues for the class adjusted to annualize the 3-14 recovery of changes in the cost of purchased electricity; 3-15 (D) a statement that the commission may review 3-16 the rate change if the commission receives a petition within 60 3-17 days in accordance with Subsection (g) of this section; 3-18 (E) the address and telephone number of the 3-19 commission; 3-20 (F) a statement that a customer opposed to the 3-21 rate change should notify the electric cooperative in writing of 3-22 the person's opposition and should provide a return address; and 3-23 (G) a statement that members may review a copy 3-24 of any written opposition the electric cooperative receives. 3-25 (2) The electric cooperative may not be required to 3-26 include additional information in the notice. 3-27 (e) The electric cooperative shall make available for review 4-1 by a member of the cooperative at each of the electric 4-2 cooperative's business offices a copy of any written opposition to 4-3 the rate change the electric cooperative receives. 4-4 (f) The electric cooperative shall file tariffs with the 4-5 commission. If the electric cooperative complies with Subsection 4-6 (c) of this section, the commission shall approve the tariffs not 4-7 later than the 10th day after the 60-day period prescribed by 4-8 Subsection (g) of this section expires unless a review is required 4-9 under Subsection (g) or (i) of this section. If the tariffs are 4-10 approved or if a review is not required and the commission fails to 4-11 act during the period prescribed by this subsection, the change in 4-12 rates takes effect on the 70th day after the date on which the 4-13 electric cooperative first complies with all requirements of 4-14 Subsection (c) of this section or on a later date determined by the 4-15 electric cooperative. Except as provided by Subsections (g) and 4-16 (i) of this section, the rates of the electric cooperative are not 4-17 subject to review. 4-18 (g) The commission shall review a change in rates under this 4-19 section if, not later than the 60th day after the date the electric 4-20 cooperative first complies with all requirements of Subsection (c) 4-21 of this section, the commission receives a petition requesting 4-22 review signed by: 4-23 (1) at least 10 percent of the members of the electric 4-24 cooperative; 4-25 (2) members of the electric cooperative who purchased 4-26 more than 50 percent of the electric cooperative's annual energy 4-27 sales to a customer class in the test year, provided that the 5-1 petition includes a certification of the purchases; or 5-2 (3) an executive officer of an affected electric 5-3 utility, provided that the petition prescribes the particular class 5-4 or classes for which a review is requested. 5-5 (h) When a person files a petition under Subsection (g) of 5-6 this section, the person shall notify the electric cooperative in 5-7 writing of the action. 5-8 (i) The commission may on its own motion review the rates of 5-9 an electric cooperative if the commission first finds that there is 5-10 good cause to believe that the electric cooperative is earning more 5-11 than a reasonable return on overall system revenues or on revenue 5-12 from a rate class. 5-13 (j) The commission shall conduct a review under Subsection 5-14 (g)(1) or (2) of this section or under Subsection (i) of this 5-15 section in accordance with Section 43 of this Act and the other 5-16 applicable rate-setting principles of Article VI of this Act, 5-17 except that: 5-18 (1) the period for review does not begin until the 5-19 electric cooperative files a rate-filing package as required by 5-20 commission rules; 5-21 (2) the proposed change may not be suspended during 5-22 the pendency of the review; however, the electric cooperative shall 5-23 refund or credit against future bills all sums collected in excess 5-24 of the rate finally set by the commission, if the commission so 5-25 orders; and 5-26 (3) the electric cooperative shall observe the rates 5-27 set by the commission until the rates are changed as provided by 6-1 this section or by other sections of this Act. 6-2 (k) For a review conducted under Subsection (g)(3) of this 6-3 section, the electric cooperative shall file with the commission a 6-4 copy of the cost-of-service study required under Subsection (c)(3) 6-5 of this section not later than the 10th day after the date the 6-6 electric cooperative receives from the affected electric utility 6-7 notice that a petition has been filed. The commission shall 6-8 determine for each class for which review has been requested the 6-9 annual cost of providing service to the class, as stated in the 6-10 electric cooperative's cost-of-service study, and the revenues for 6-11 the class that would be produced by multiplying the rate set by the 6-12 electric cooperative by the annual billing units for the class, as 6-13 stated in the cost-of-service study. If the electric cooperative 6-14 proposes a rate class solely for a new customer, the electric 6-15 cooperative shall estimate the reasonable annual cost of providing 6-16 service to the class, and the electric cooperative shall base class 6-17 revenues on reasonable estimates of billing units. 6-18 (l) The rate for each class for which review has been 6-19 requested under Subsection (g)(3) of this section is suspended 6-20 during the pendency of the review. The commission shall dismiss 6-21 the petition and approve the rates if the revenues for the class 6-22 are equal to or greater than the cost of providing service to the 6-23 class. The commission shall disapprove the rate if the revenues 6-24 for the class are less than the cost of providing service to the 6-25 class; however, this action does not affect reconsideration of the 6-26 rate as a part of any subsequent ratemaking proceeding. The rate 6-27 adopted by the electric cooperative is deemed approved and may be 7-1 placed into effect if the commission fails to make its final 7-2 determination administratively not later than the 45th day after 7-3 the date the electric cooperative files its cost-of-service study. 7-4 (m) Except as provided by Subsection (a) of this section, 7-5 the members of an electric cooperative may at any time revoke the 7-6 electric cooperative's election to be exempt from rate regulation 7-7 or elect to again be exempt from rate regulation by majority vote 7-8 of the members voting. 7-9 (n) This section does not affect the application of other 7-10 provisions of this Act not directly related to rates or to the 7-11 authority of the commission to require an electric cooperative to 7-12 file reports required under this Act or rules adopted by the 7-13 commission. A service fee or a service rule or regulation set by 7-14 the electric cooperative under this section must comply with 7-15 commission rules applicable to all electric utilities. The 7-16 commission may determine whether an electric cooperative has 7-17 unlawfully charged, collected, or received a rate for electric 7-18 utility service. 7-19 (o) A single customer may seek a review of the rates of an 7-20 electric cooperative pursuant to Section 42 of this Act if the 7-21 customer consumes more than 250,000,000 kwh and purchases more than 7-22 10 percent of the total energy sales or more than 7-1/2 percent of 7-23 the total revenues of the electric cooperative in any period of 12 7-24 consecutive months within the 36 months preceding the date on which 7-25 that customer initiates a proceeding under Section 42 of this Act. 7-26 The rights under this subsection shall be in addition to rights 7-27 that a customer has under Subsection (g) of this section, and not 8-1 in limitation or in lieu of rights under Subsection (g) of this 8-2 section. 8-3 SECTION 2. The importance of this legislation and the 8-4 crowded condition of the calendars in both houses create an 8-5 emergency and an imperative public necessity that the 8-6 constitutional rule requiring bills to be read on three several 8-7 days in each house be suspended, and this rule is hereby suspended, 8-8 and that this Act take effect and be in force from and after its 8-9 passage, and it is so enacted.