By Brown                                         S.B. No. 640

      75R6410 T                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the definition of invested capital for determining gas

 1-3     utility rates.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Section 5.04(a) of the Gas Utility Regulatory

 1-6     Act, Article 1446(e), Vernon's Texas Civil Statutes is amended to

 1-7     read as follows:

 1-8           (a)  The regulatory authority may not prescribe any rate that

 1-9     will yield more than a fair return on the [adjusted value of the]

1-10     invested capital used and useful in rendering service to the

1-11     public.

1-12           SECTION 2.  Section 5.05 of GURA is amended to read as

1-13     follows:

1-14           Sec. 5.05.  COMPONENTS OF [ADJUSTED VALUE OF] INVESTED

1-15     CAPITAL.  (a)  The components of [adjusted value of] invested

1-16     capital shall be determined in accordance with this section.

1-17           (b)  Utility rates shall be based on the original cost less

1-18     accumulated depreciation [adjusted value] of property used by and

1-19     useful to the gas utility in providing service including, if

1-20     necessary to the financial integrity of the utility, construction

1-21     work in progress at cost as recorded on the books of the utility.

1-22     The original cost [adjusted value] of the property shall be [a

1-23     reasonable balance between original cost less depreciation and

1-24     current cost less an adjustment for both present age and condition.

 2-1     The regulatory authority has discretion to determine a reasonable

 2-2     balance that reflects not less than 60 percent nor more than 75

 2-3     percent of the original cost (that is,] the actual money cost or

 2-4     the actual money value of any consideration paid other than

 2-5     money[)] of the property at the time it was dedicated to public

 2-6     use, whether by the utility that is the present owner or by a

 2-7     predecessor.[, less depreciation, and not less than 25 percent nor

 2-8     more than 40 percent of the current cost less an adjustment for

 2-9     both present age and condition.  The regulatory authority may

2-10     consider inflation, deflation, quality of service being provided,

2-11     the growth rate of the service area, and the need for the gas

2-12     utility to attract new capital in determining a reasonable

2-13     balance.]

2-14           (c)  Costs of facilities, revenues, expenses, taxes, and

2-15     reserves shall be separated or allocated as prescribed by the

2-16     regulatory authority.

2-17           SECTION 3.  This Act takes effect on September 1, 1997.

2-18           SECTION 4.  The importance of this legislation and the

2-19     crowded condition of the calendars in both houses create an

2-20     emergency and an imperative public necessity that the

2-21     constitutional rule requiring bills to be read on three several

2-22     days in each house be suspended, and this rule is hereby suspended.