1-1 By: Armbrister S.B. No. 1227 1-2 (In the Senate - Filed March 10, 1995; March 16, 1995, read 1-3 first time and referred to Committee on State Affairs; 1-4 March 27, 1995, reported favorably by the following vote: Yeas 10, 1-5 Nays 0; March 27, 1995, sent to printer.) 1-6 A BILL TO BE ENTITLED 1-7 AN ACT 1-8 relating to the regulation of electric cooperative corporations. 1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-10 SECTION 1. Article VI, Public Utility Regulatory Act 1-11 (Article 1446c, Vernon's Texas Civil Statutes), is amended by 1-12 adding Section 37A to read as follows: 1-13 Sec. 37A. (a) An electric cooperative corporation that 1-14 provides retail electric utility service at distribution voltage is 1-15 exempt from rate regulation if a majority of the members voting in 1-16 an election on the deregulation of the electric cooperative vote to 1-17 approve the exemption and the electric cooperative sends notice of 1-18 the action to each applicable regulatory authority. An electric 1-19 cooperative that wants to hold an election under this section shall 1-20 send a ballot by mail to each electric cooperative member. The 1-21 electric cooperative may include the ballot in a monthly billing. 1-22 The ballot shall provide for voting for or against rate 1-23 deregulation of the electric cooperative. If the proposition is 1-24 approved, the electric cooperative shall send each ballot to the 1-25 commission not later than the 10th day after the date the electric 1-26 cooperative counts the ballots. Based on the ballots received, the 1-27 commission shall administratively certify that the electric 1-28 cooperative is or is not deregulated for ratemaking purposes. An 1-29 electric cooperative may not hold another election on the issue of 1-30 being exempt from rate regulation before the first anniversary of 1-31 the most recent election on the issue. Subsections (b) through (n) 1-32 of this section apply to an electric cooperative that has elected 1-33 to be exempt from rate regulation. 1-34 (b) No regulatory authority shall fix and regulate the rates 1-35 of an electric cooperative that has made an election under this 1-36 section to be exempt from rate regulation except as provided for 1-37 the commission in Subsections (g) and (i) of this section. 1-38 Notwithstanding Section 17(a) of this Act, the commission has 1-39 exclusive original jurisdiction in all of the electric 1-40 cooperative's service area in a proceeding initiated under 1-41 Subsection (g) or (i) of this section. 1-42 (c) An electric cooperative may change its rates by: 1-43 (1) adopting a resolution approving the proposed 1-44 change; 1-45 (2) mailing notice of the proposed change to: 1-46 (A) the commission; 1-47 (B) each affected municipality; 1-48 (C) each affected customer, which notice may be 1-49 included in a monthly billing; and 1-50 (D) each electric utility providing retail 1-51 service in the electric cooperative's service area or in the 1-52 adjoining service area; and 1-53 (3) making available at each of the electric 1-54 cooperative's business offices for review by all interested persons 1-55 a cost-of-service study that: 1-56 (A) is not more than five years old at the time 1-57 the electric cooperative adopts rates under this subsection; and 1-58 (B) bears the certification of a professional 1-59 engineer or certified public accountant. 1-60 (d)(1) The notice required by Subsection (c) of this section 1-61 must contain the following information: 1-62 (A) the increase or decrease in total operating 1-63 revenues over actual test year revenues or over test year revenues 1-64 adjusted to annualize the recovery of changes in the cost of 1-65 purchased electricity, stated both as a dollar amount and as a 1-66 percentage; 1-67 (B) the classes of utility customers affected 1-68 and the creation and application of any new rate classes; 2-1 (C) the increase or decrease for each class 2-2 stated as a percentage of actual test year revenues for the class 2-3 or of test year revenues for the class adjusted to annualize the 2-4 recovery of changes in the cost of purchased electricity; 2-5 (D) a statement that the commission may review 2-6 the rate change if the commission receives a petition within 60 2-7 days in accordance with Subsection (g) of this section; 2-8 (E) the address and telephone number of the 2-9 commission; 2-10 (F) a statement that a customer opposed to the 2-11 rate change should notify the electric cooperative in writing of 2-12 the person's opposition and should provide a return address; and 2-13 (G) a statement that members may review a copy 2-14 of any written opposition the electric cooperative receives. 2-15 (2) The electric cooperative may not be required to 2-16 include additional information in the notice. 2-17 (e) The electric cooperative shall make available for review 2-18 by a member of the cooperative at each of the electric 2-19 cooperative's business offices a copy of any written opposition to 2-20 the rate change the electric cooperative receives. 2-21 (f) The electric cooperative shall file tariffs with the 2-22 commission. If the electric cooperative complies with Subsection 2-23 (c) of this section, the commission shall approve the tariffs not 2-24 later than the 10th day after the 60-day period prescribed by 2-25 Subsection (g) of this section expires unless a review is required 2-26 under Subsection (g) or (i) of this section. If the tariffs are 2-27 approved or if a review is not required and the commission fails to 2-28 act during the period prescribed by this subsection, the change in 2-29 rates takes effect on the 70th day after the date on which the 2-30 electric cooperative first complies with all requirements of 2-31 Subsection (c) of this section or on a later date determined by the 2-32 electric cooperative. Except as provided by Subsections (g) and 2-33 (i) of this section, the rates of the electric cooperative are not 2-34 subject to review. 2-35 (g) The commission shall review a change in rates under this 2-36 section if, not later than the 60th day after the date the electric 2-37 cooperative first complies with all requirements of Subsection (c) 2-38 of this section, the commission receives a petition requesting 2-39 review signed by: 2-40 (1) at least 10 percent of the members of the electric 2-41 cooperative; 2-42 (2) members of the electric cooperative who purchased 2-43 more than 50 percent of the electric cooperative's annual energy 2-44 sales to a customer class in the test year, provided that the 2-45 petition includes a certification of the purchases; or 2-46 (3) an executive officer of an affected electric 2-47 utility, provided that the petition prescribes the particular class 2-48 or classes for which a review is requested. 2-49 (h) When a person files a petition under Subsection (g) of 2-50 this section, the person shall notify the electric cooperative in 2-51 writing of the action. 2-52 (i) The commission may on its own motion review the rates of 2-53 an electric cooperative if the commission first finds that there is 2-54 good cause to believe that the electric cooperative is earning more 2-55 than a reasonable return on overall system revenues or on revenue 2-56 from a rate class. 2-57 (j) The commission shall conduct a review under Subsection 2-58 (g)(1) or (2) of this section or under Subsection (i) of this 2-59 section in accordance with Section 43 of this Act and the other 2-60 applicable rate-setting principles of Article VI of this Act, 2-61 except that: 2-62 (1) the period for review does not begin until the 2-63 electric cooperative files a rate-filing package as required by 2-64 commission rules; 2-65 (2) the proposed change may not be suspended during 2-66 the pendency of the review; however, the electric cooperative shall 2-67 refund or credit against future bills all sums collected in excess 2-68 of the rate finally set by the commission, if the commission so 2-69 orders; and 2-70 (3) the electric cooperative shall observe the rates 3-1 set by the commission until the rates are changed as provided by 3-2 this section or by other sections of this Act. 3-3 (k) For a review conducted under Subsection (g)(3) of this 3-4 section, the electric cooperative shall file with the commission a 3-5 copy of the cost-of-service study required under Subsection (c)(3) 3-6 of this section not later than the 10th day after the date the 3-7 electric cooperative receives from the affected electric utility 3-8 notice that a petition has been filed. The commission shall 3-9 determine for each class for which review has been requested the 3-10 annual cost of providing service to the class, as stated in the 3-11 electric cooperative's cost-of-service study, and the revenues for 3-12 the class that would be produced by multiplying the rate set by the 3-13 electric cooperative by the annual billing units for the class, as 3-14 stated in the cost-of-service study. If the electric cooperative 3-15 proposes a rate class solely for a new customer, the electric 3-16 cooperative shall estimate the reasonable annual cost of providing 3-17 service to the class, and the electric cooperative shall base class 3-18 revenues on reasonable estimates of billing units. 3-19 (l) The rate for each class for which review has been 3-20 requested under Subsection (g)(3) of this section is suspended 3-21 during the pendency of the review. The commission shall dismiss 3-22 the petition and approve the rates if the revenues for the class 3-23 are equal to or greater than the cost of providing service to the 3-24 class. The commission shall disapprove the rate if the revenues 3-25 for the class are less than the cost of providing service to the 3-26 class; however, this action does not affect reconsideration of the 3-27 rate as a part of any subsequent ratemaking proceeding. The rate 3-28 adopted by the electric cooperative is deemed approved and may be 3-29 placed into effect if the commission fails to make its final 3-30 determination administratively not later than the 45th day after 3-31 the date the electric cooperative files its cost-of-service study. 3-32 (m) Except as provided by Subsection (a) of this section, 3-33 the members of an electric cooperative may at any time revoke the 3-34 electric cooperative's election to be exempt from rate regulation 3-35 or elect to again be exempt from rate regulation by majority vote 3-36 of the members voting. 3-37 (n) This section does not affect the application of other 3-38 provisions of this Act not directly related to rates or to the 3-39 authority of the commission to require an electric cooperative to 3-40 file reports required under this Act or rules adopted by the 3-41 commission. A service fee or a service rule or regulation set by 3-42 the electric cooperative under this section must comply with 3-43 commission rules applicable to all electric utilities. The 3-44 commission may determine whether an electric cooperative has 3-45 unlawfully charged, collected, or received a rate for electric 3-46 utility service. 3-47 SECTION 2. The importance of this legislation and the 3-48 crowded condition of the calendars in both houses create an 3-49 emergency and an imperative public necessity that the 3-50 constitutional rule requiring bills to be read on three several 3-51 days in each house be suspended, and this rule is hereby suspended, 3-52 and that this Act take effect and be in force from and after its 3-53 passage, and it is so enacted. 3-54 * * * * *