SRC-MKV S.B. 1744 77(R)   BILL ANALYSIS


Senate Research Center   S.B. 1744
By: Shapleigh
Natural Resources
4/2/2001
As Filed


DIGEST AND PURPOSE 

Currently, certain regions or municipalities in the state are projected to
run out of water in the future. Transporting water from one region or water
basin to another will be a necessity.  Pipelines will need to be
constructed and operated to transport this water and this could be done by
either governmental entities or by individuals and business entities.  It
is unlikely, however, that it will be economical or prudent for multiple
and competing pipelines to be built to transport the same water supply.  If
these pipelines are built and owned by private individuals or business
entities, it is feared these entities as sellers of water could obtain an
effective monopoly or other control over a scarce resource.  This could
result in an advantage and leverage for private sellers of water that would
be beyond any public accountability or regulatory control under current
law.  As proposed, S.B. 1744 allows the Texas Natural Resource Conservation
Commission to regulate rates associated with an individual or business
entity selling water from a pipeline that transports water at least 50
miles or from one river basin in this state to another.  The regulation
will balance the public need and access to the transported water and the
pipeline with the investment-backed expectations of the individual or
business entity and will ensure a fair return to invested capital over and
above operating expenses. 

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Texas Natural Resource
Conservation Commission in SECTION 1 (Section 13.552, Water Code), of this
bill. 

SECTION BY SECTION ANALYSIS
 
SECTION 1.  Amends Chapter 13, Water Code, by adding Subchapter O, as
follows: 

SUBCHAPTER O.  REGULATION OF CERTAIN SALES OF WATER TO BE
TRANSPORTED BY PIPELINE

Sec. 13.551.  APPLICABILITY.  (a)  Provides that this subchapter applies to
the sale of raw or potable water by an individual or business entity if the
water is to be transported by pipeline at least 50 miles or from one river
basin in this state to another river basin in this state. 
 
  (b)  Provides that this section applies to the sale of surface water and
groundwater. 

Sec. 13.552.  POWER TO ENSURE COMPLIANCE; RATE REGULATION.   Provides that
the Texas Natural Resource Conservation Commission (commission) has all
authority and power of the state to ensure that persons who supply water
under this subchapter comply with their obligations under this subchapter.
Authorizes the commission, for that purpose, to fix and regulate the rates
of water suppliers under this subchapter and to adopt rules for determining
the classification of customers and services and for determining the
applicability of rates. 

Sec. 13.553.  JUST AND REASONABLE RATES.  Requires the commission to ensure
that the rate for water sold under this subchapter is just and reasonable. 

 Sec. 13.554.  FIXING OVERALL REVENUES.  Requires the commission, in fixing
the rate for water sold under this subchapter, to fix the seller's revenues
at a level that will meet certain requirements. 

Sec. 13.555.  FAIR RETURN.  Prohibits the commission from prescribing any
rate for water sold under this subchapter that will yield more than a fair
return on the invested capital used and useful in supplying water to the
purchaser. 

Sec. 13.556.  UNREASONABLE PREFERENCE OR PREJUDICE AS TO RATES OR SERVICES.
(a)  Prohibits a person who supplies water under this subchapter from
making or granting any unreasonable preference or advantage to any person
within any classification or subject any person within any classification
to any unreasonable prejudice or disadvantage. 

(b)  Prohibits a person who supplies water under this subchapter from
establishing or maintaining any unreasonable differences as to rates for
water either as between localities or as between classes of service. 

Sec. 13.557.  EQUALITY OF RATES AND SERVICES.  Prohibits a person who
supplies water under this subchapter from directly or indirectly by any
device or in any manner charging, demanding, collecting, or receiving from
any person a greater or lesser compensation for any water supplied by the
person than that prescribed in the schedule of rates of the person
applicable to the supply of water by that person, and prohibits a person
from knowingly receiving or accepting water from a person for a
compensation greater or less than that prescribed in the schedule. 

Sec. 13.558.  DISCRIMINATION; RESTRICTION ON COMPETITION.  (a)  Prohibits a
person who supplies water under this subchapter from discriminating against
any person that provides water in competition with the person or from
engaging in any other practice that tends to restrict or impair that
competition. 

(b)  Provides that a person who supplies water under this subchapter by a
pipeline owned or operated by the person: 

(1)  is required to receive and transport water delivered to the person by
other water suppliers and perform the person's other related duties without
discrimination; and 
  
   (2)  is prohibited from:
   
(A)  discriminating between or against other water suppliers with regard to
facilities provided, services rendered, or rates charged under the same or
similar circumstances in the transportation of water; or 
   
(B)  discriminating in the transportation of water produced or purchased by
the person directly or indirectly. 

(c)  Authorizes a person, notwithstanding the other provisions of this
section, to refuse to transport certain water under certain conditions. 

Sec.13.559.  CERTIFICATE OF CONVENIENCE AND NECESSITY.  (a)  Prohibits a
person from supplying water to another person under this subchapter unless
the person supplying the water obtains from the commission a certificate
that the present or future public convenience and necessity require that
the water be supplied. 
 
(b)  Requires the commission, in determining whether to grant a certificate
of public  convenience and necessity, to ensure that the person supplying
the water possesses the financial, managerial, and technical capability to
provide continuous and adequate service. 

Sec. 13.560.  CONTINUOUS AND ADEQUATE SERVICE.  Requires a person that
possesses or is required to possess a certificate of public convenience and
necessity to render continuous and adequate service. 

Sec. 13.561.  APPROVAL OF WATER SUPPLY CONTRACT.  Provides that a contract
to supply water under this subchapter is enforceable only if the contract
is approved by the commission after public notice and hearing. 

SECTION 2.  Makes application of this Act prospective.

SECTION 3.  Effective date: upon passage or September 1, 2001.