By Counts H.B. No. 1541
75R4439 JJT-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to regulation of water and sewer rates and services
1-3 provided by retail public utilities.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 13.002(21), Water Code, is amended to
1-6 read as follows:
1-7 (21) "Service" means any act [done, rendered, or]
1-8 performed, anything furnished or supplied, and any facility or line
1-9 dedicated or used[, furnished, or supplied] by a retail public
1-10 utility in the performance of its duties under this chapter to its
1-11 patrons, employees, other retail public utilities, and the public,
1-12 as well as the interchange of facilities between two or more retail
1-13 public utilities.
1-14 SECTION 2. Section 13.246, Water Code, is amended by
1-15 amending Subsection (c) and by adding Subsections (d)-(j) to read
1-16 as follows:
1-17 (c) Certificates of convenience and necessity shall be
1-18 granted or amended on a nondiscriminatory basis after consideration
1-19 by the commission of the adequacy of service currently provided to
1-20 the requested area, the need for additional service in the
1-21 requested area, the effect of the granting of a certificate on the
1-22 recipient of the certificate and on any retail public utility of
1-23 the same kind already serving the proximate area, the ability of
1-24 the applicant to provide adequate service, the feasibility of
2-1 obtaining service from an adjacent retail public utility, the
2-2 financial stability of the applicant, including, if applicable, the
2-3 adequacy of the applicant's debt-equity ratio, environmental
2-4 integrity, and the probable improvement of service or lowering of
2-5 cost to consumers in that area resulting from the granting of the
2-6 certificate.
2-7 (d) The commission may not issue or amend a certificate of
2-8 public convenience and necessity unless the commission finds that:
2-9 (1) the applicant has the financial, managerial, and
2-10 technical capabilities to provide continuous and adequate service;
2-11 and
2-12 (2) at the time of the application and in the
2-13 reasonably foreseeable future, the provision of services regionally
2-14 or the consolidation with another retail public utility is not
2-15 feasible.
2-16 (e) In addition to the findings required under Subsection
2-17 (d), the commission may not issue or amend a certificate of public
2-18 convenience and necessity for water utility service unless the
2-19 commission finds that:
2-20 (1) the applicant can provide drinking water that
2-21 meets the drinking water requirements of this code and Chapter 341,
2-22 Health and Safety Code;
2-23 (2) the applicant has access to an adequate supply of
2-24 water; and
2-25 (3) groundwater supplies are adequately protected from
2-26 potential contamination.
2-27 (f) In addition to the findings required under Subsection
3-1 (d), the commission may not issue or amend a certificate of public
3-2 convenience and necessity for sewer utility service unless the
3-3 commission finds that the applicant can meet the commission's
3-4 design criteria for sewage treatment plants.
3-5 (g) In considering competing applications, in addition to
3-6 the factors prescribed by Subsection (c), the commission shall
3-7 consider each competing applicant's efforts to extend service to
3-8 economically distressed areas, as defined by Section 15.001,
3-9 located in an area for which the applicant holds a certificate.
3-10 (h) The commission may require an applicant for a new or
3-11 amended certificate to present to the commission a business plan
3-12 that demonstrates that the applicant has adequate managerial,
3-13 technical, and financial capabilities to provide continuous and
3-14 adequate service to:
3-15 (1) the requested area; and
3-16 (2) any other areas under a certificate the applicant
3-17 holds.
3-18 (i) The commission may require an applicant to provide
3-19 financial assurance in a form and an amount determined by the
3-20 commission to ensure that the applicant will provide continuous,
3-21 safe, and adequate service.
3-22 (j) The commission may include conditions in a certificate
3-23 designed to ensure that the certificate holder will comply with the
3-24 business plan presented under Subsection (h).
3-25 SECTION 3. Section 13.253, Water Code, is amended to read as
3-26 follows:
3-27 Sec. 13.253. IMPROVEMENTS IN SERVICE; INTERCONNECTING
4-1 SERVICE. (a) After notice and hearing, the commission may:
4-2 (1) order a [any] retail public utility that possesses
4-3 or is required by law to possess a certificate of public
4-4 convenience and necessity, or that has facilities located in or has
4-5 a certificated service area that includes an economically
4-6 distressed area, as defined by Section 15.001, to:
4-7 (A) provide specified improvements in the
4-8 utility's [its] service in a defined area if the commission finds
4-9 that service in that area is inadequate or is substantially
4-10 inferior to service in a comparable area and it is reasonable to
4-11 require the [retail public] utility to provide the improved
4-12 service; and
4-13 (B) present to the commission a business plan
4-14 that demonstrates that the utility has adequate financial,
4-15 managerial, and technical capabilities to provide continuous and
4-16 adequate service to the requested area and areas for which the
4-17 utility holds a certificate;
4-18 (2) order two or more retail public utilities that
4-19 hold or are required to hold a certificate of public convenience
4-20 and necessity [or water supply or sewer service corporations] to
4-21 establish specified facilities for the interconnecting service;
4-22 [or]
4-23 (3) if the commission finds that service in the
4-24 utility's service area is inadequate or substantially inferior to
4-25 service in a comparable area, require a retail public utility that
4-26 possesses or is required to possess a certificate of public
4-27 convenience and necessity to provide financial assurance in a form
5-1 and an amount determined by the commission to ensure that the
5-2 utility will provide continuous and adequate service; or
5-3 (4) issue an emergency order, with or without a
5-4 hearing, under Section 13.041 of this code.
5-5 (b) The commission may include in a certificate of public
5-6 convenience and necessity issued to a utility subject to an order
5-7 issued under Subdivision (1) conditions designed to ensure that the
5-8 certificate holder will comply with the business plan presented
5-9 under Subsection (a)(1)(B).
5-10 SECTION 4. Section 13.254, Water Code, is amended by
5-11 amending Subsections (a) and (c) and by adding Subsection (d) to
5-12 read as follows:
5-13 (a) The commission at any time after notice and hearing may
5-14 revoke or amend any certificate of public convenience and necessity
5-15 with the written consent of the certificate holder or if it finds
5-16 that:
5-17 (1) the certificate holder has never provided, is no
5-18 longer providing, or has failed to provide continuous and adequate
5-19 service in the area, or part of the area, covered by the
5-20 certificate;
5-21 (2) the certificate holder's cost of providing service
5-22 is expensive to a degree that constitutes denial of service;
5-23 (3) the certificate holder has agreed to allow another
5-24 retail public utility to provide service in the holder's
5-25 certificated area without obtaining an amendment to the
5-26 certificate; or
5-27 (4) the certificate holder has failed, without good
6-1 cause, to request an order under Section 13.252 before the 91st day
6-2 after the date the holder learns that another retail public utility
6-3 is providing service in the holder's service area.
6-4 (c) If the certificate of a retail [any] public utility is
6-5 revoked or amended, the commission may request one or more retail
6-6 public utilities, or may require one or more public utilities, to
6-7 provide service in the area in question.
6-8 (d) The commission may not find that the cost of a
6-9 certificate holder's service constitutes denial of service solely
6-10 because the cost of obtaining service from the certificate holder
6-11 makes a residential development with lot sizes of less than two
6-12 acres or a commercial development economically unfeasible.
6-13 SECTION 5. Subchapter G, Chapter 13, Water Code, is amended
6-14 by adding Section 13.2545 to read as follows:
6-15 Sec. 13.2545. RETAIL PUBLIC UTILITY SERVICE IN
6-16 DECERTIFICATED AREA. (a) A retail public utility must have a
6-17 certificate of public convenience and necessity to render, in any
6-18 way, retail water or sewer service in an area for which another
6-19 retail public utility's certificate has been revoked under Section
6-20 13.254 unless the retail public utility that served the area under
6-21 the revoked certificate consents to the service.
6-22 (b) If the commission, under Section 13.254, revokes a
6-23 retail public utility's certificate of public convenience and
6-24 necessity for an area without the utility's consent, the commission
6-25 shall determine:
6-26 (1) the extent to which the revocation will render
6-27 useless any of the utility's facilities used and useful for
7-1 providing service to the area or constructed for serving the area;
7-2 and
7-3 (2) the effect of the revocation on the utility's
7-4 ability to repay debts for facilities or services committed to
7-5 serve the area.
7-6 (c) The commission shall require a retail public utility to
7-7 which the commission grants a certificate of public convenience and
7-8 necessity for a decertificated area described by Subsection (a) to
7-9 compensate the retail public utility that held the revoked
7-10 certificate. The commission shall determine the amount of the
7-11 compensation after consideration of the potential for revenues that
7-12 would have been generated by serving customers in the area to the
7-13 extent that the revenues would have been used to pay a debt that
7-14 the utility incurred to construct facilities to serve the area and
7-15 that the utility owes to the state or federal government or a
7-16 person other than an affiliated interest. The commission shall
7-17 also consider, in determining the amount of compensation under this
7-18 subsection, the actual unrecovered investment in facilities of the
7-19 retail public utility that held the revoked certificate that will
7-20 not be useful to or needed by the utility in the foreseeable future
7-21 to serve its remaining service area, unless the commission revoked
7-22 the certificate of the retail public utility:
7-23 (1) because of the utility's failure to extend service
7-24 within a reasonable time to qualified applicants in the
7-25 certificated area; or
7-26 (2) because the cost of service to qualified
7-27 applicants in the certificated area is expensive to a degree that
8-1 constitutes denial of service.
8-2 (d) After considering the financial effects on the retail
8-3 public utility whose certificate has been revoked, the commission
8-4 may require compensation under Subsection (c) to be paid:
8-5 (1) in a lump sum; or
8-6 (2) on a per customer basis as new customers are added
8-7 in the decertificated area.
8-8 SECTION 6. This Act takes effect September 1, 1997.
8-9 SECTION 7. The importance of this legislation and the
8-10 crowded condition of the calendars in both houses create an
8-11 emergency and an imperative public necessity that the
8-12 constitutional rule requiring bills to be read on three several
8-13 days in each house be suspended, and this rule is hereby suspended.