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.