LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          March 13, 1995



 TO:     Honorable Steve Holzheauser, Chair     IN RE:  House Bill No. 1715
         Committee on Energy Resources                  By: Craddick
         House of Representatives
         Austin, Texas






FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
1715 (Relating to the determination of electric rates for certain
marginal wells.) this office has determined the following:

The bill would allow operators of certain oil wells certified as
"marginal wells" to apply to an electric utility for a reduced
electric rate.  The application would include supporting
documentation that would establish the property as an eligible
well. In a dispute over a utility's decision as to the property's
eligibility for a reduced rate, the case would be brought to the
Railroad Commission for resolution. If the commission decides
that the property does not qualify, the operator would pay all
legal and administrative costs, including the commission's costs. 
If it is determined that the property does qualify, the utility
would pay the legal and administrative costs involved. 
Therefore, the RRC would not assume any additional costs under
this legislation so long as the responsible party (operator or
utility) reimburses expenses. The Public Utility Commission would
be required to adopt a rule and process tariff applications of
utilities that provide service for marginal wells, but does not
anticipate any additional administrative costs in conjunction
with this activity.

Gross receipts taxes paid by electric utilities on all revenues
earned could be decreased if a utility's revenue were reduced
through the lower electric rates paid by marginal well operators. 
However, the amount of the potential decrease cannot be
determined at this time.  In the long run, if electric
cooperatives lost revenue, these losses might have to be spread
to other rate classes, which would have the effect of shifting    




any costs from state revenues (gross receipts taxes) to electric 
rate payers.

The bill could also have an  impact on the Railroad Commission's
strategic plan by lowering the production costs of marginal
properties and allowing them to remain in production, thus
decreasing the state's oil production decline.


No fiscal implication to units of local government is
anticipated.

The fiscal implication to  the State cannot be determined.


Source:   Railroad Commission, Public Utility Commission
          LBB Staff: JK, KW, DF