HBA-SEB C.S.H.B. 1985 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 1985 By: Lewis, Ron Energy Resources 3/25/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Recently, many cities have undertaken renovations and improvements to existing infrastructure. Such projects often require the relocation of natural gas pipes, and the local distribution companies (LDCs) owning the pipes are not directly reimbursed by the city for costs incurred in moving them. C.S.H.B. 1985 authorizes a natural gas LDC, over a period of one to three years, to recover the unreimbursed costs of a mandated facility relocation through a surcharge on gas volumes sold and transported to customers in the service area where the relocation occurred. Since the surcharge is a visible cost to customers, LDCs and the municipalities may be more inclined to cooperate in order to fully plan facility relocations. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter C, Chapter 104, Utilities Code, by adding Section 104.112, as follows: Sec. 104.112. SURCHARGE TO RECOVER RELOCATION COSTS. (a) Provides that this section applies to a gas utility's costs of relocating a facility to accommodate construction or improvement of a highway, road, street, public way, or other public work by or on behalf of the United States, this state, a political subdivision of this state, or another entity having the power of eminent domain if the costs are not reimbursed by a source other than as provided by this section. (b) Authorizes a gas utility to recover its relocation costs through a surcharge on gas volumes sold and transported to customers in the service area where the relocation occurred by applying to each appropriate regulatory authority for a new rate schedule or tariff. Establishes that the gas utility is not required to file a statement of intent to increase rates to institute the surcharge. Provides that the other provisions of this subchapter (Rate Changes Proposed by Utility), other than appeal rights, do not apply to the institution of the surcharge. (c) Provides that an application must include sufficient documentation to demonstrate the requirement for each relocation, the entity requiring the relocation, costs incurred for relocation of comparable facilities, surcharge computations, and that reasonable efforts have been made to receive reimbursement from the entity requiring the relocation, if applicable. (d) Requires the regulatory authority to administratively grant or deny the application not later than the 30th day after receiving the documentation. Provides that denial of the application must be based on a finding that the relocation was not necessary or required, the costs of the relocation were excessive or not supported, the utility did not pursue reimbursement from the entity requiring the relocation, if applicable, the surcharge is unduly discriminatory among customers or classes of customers located in the service area, or the period over which the relocation costs are designed to be recovered is less than one or more than three years. SECTION 2. Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 3. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original in SECTION 1, by amending Sections 104.112(b), (c), and (d), Utilities Code, as follows: (b) Authorizes a gas utility to recover its relocation costs by applying to each appropriate regulatory authority for a new rate schedule or tariff, rather than by filing a new rate schedule with the appropriate regulatory authority. Specifies that recovery of relocation costs involves a surcharge on gas volumes sold and transported to customers in the service area, rather than in the jurisdiction, where the relocation occurred. Makes conforming and nonsubstantive changes. (c) Sets forth the documentation to be included in the application. (d) Redesignated from Subsection (c). Establishes the time frame for which the regulatory authority is required to grant or deny the application. Provides that denial of the application must be based on a finding that the relocation was not necessary or required, the costs of the relocation were excessive or not supported, or the utility did not pursue reimbursement from the entity requiring the relocation if applicable. Those three findings complement the other two findings in the proposed new language of the original. Redesignates Subdivisions (1)(2) to (4)-(5). Makes conforming and nonsubstantive changes. The substitute modifies the original in SECTION 2, to add a prospective clause.