77R10927 JJT-D
By Counts, Ellis, Hilderbran, Hope, H.B. No. 1281
Turner of Harris
Substitute the following for H.B. No. 1281:
By Counts C.S.H.B. No. 1281
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to water utility services, rates, and tariffs.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 13.137, Water Code, is amended to read as
1-5 follows:
1-6 Sec. 13.137. OFFICE AND OTHER BUSINESS LOCATIONS OF UTILITY;
1-7 RECORDS; REMOVAL FROM STATE. (a) Every utility shall:
1-8 (1) make available and notify its customers of a
1-9 business location where its customers may make payments to prevent
1-10 disconnection of or to restore service:
1-11 (A) in each county in which the utility provides
1-12 service; or
1-13 (B) not more than 20 miles from the residence of
1-14 any residential customer if there is no location to receive
1-15 payments in the county; and
1-16 (2) have an office in a county of this state or in the
1-17 immediate area in which its property or some part of its property
1-18 is located in which it shall keep all books, accounts, records, and
1-19 memoranda required by the commission to be kept in this state.
1-20 (b) The commission by rule may provide for waiving the
1-21 requirements of Subsection (a)(1) for a utility for which meeting
1-22 those requirements would cause a rate increase or otherwise harm or
1-23 inconvenience customers. The rules must provide for an additional
1-24 14 days to be given for a customer to pay before a utility that is
2-1 granted a waiver may disconnect service for late payment.
2-2 (c) Books, accounts, records, or memoranda required by the
2-3 regulatory authority to be kept in the state may not be removed
2-4 from the state, except on conditions prescribed by the commission.
2-5 SECTION 2. Section 13.144, Water Code, is amended to read as
2-6 follows:
2-7 Sec. 13.144. NOTICE OF WHOLESALE WATER SUPPLY CONTRACT. A
2-8 district or authority created under Section 52, Article III, or
2-9 Section 59, Article XVI, Texas Constitution, a retail public
2-10 utility, a wholesale water service, or other person providing a
2-11 retail public utility with a wholesale water supply shall provide
2-12 the commission with a certified copy of any wholesale water supply
2-13 contract with a retail public utility within 30 days after the date
2-14 of the execution of the contract. The submission must include the
2-15 amount of water being supplied, term of the contract, consideration
2-16 being given for the water, purpose of use, location of use, source
2-17 of supply, point of delivery, limitations on the reuse of water, a
2-18 disclosure of any affiliated interest between the parties to the
2-19 contract, and any other condition or agreement relating to the
2-20 contract.
2-21 SECTION 3. Subchapter E, Chapter 13, Water Code, is amended
2-22 by adding Section 13.145 to read as follows:
2-23 Sec. 13.145. MULTIPLE SYSTEMS CONSOLIDATED UNDER TARIFF. A
2-24 utility may consolidate more than one system under a single tariff
2-25 only if:
2-26 (1) the systems under the tariff are substantially
2-27 similar in terms of facilities, quality of service, and cost of
3-1 service; and
3-2 (2) the tariff provides for rates that promote water
3-3 conservation for single-family residences and landscape irrigation.
3-4 SECTION 4. Section 13.182, Water Code, is amended to read as
3-5 follows:
3-6 Sec. 13.182. JUST AND REASONABLE RATES. (a) The regulatory
3-7 authority shall ensure that every rate made, demanded, or received
3-8 by any utility or by any two or more utilities jointly shall be
3-9 just and reasonable.
3-10 (b) Rates shall not be unreasonably preferential,
3-11 prejudicial, or discriminatory but shall be sufficient, equitable,
3-12 and consistent in application to each class of consumers.
3-13 (c) For ratemaking purposes, the commission may treat two or
3-14 more municipalities served by a utility as a single class wherever
3-15 the commission considers that treatment to be appropriate.
3-16 (d) The commission by rule shall establish a preference that
3-17 rates under a consolidated tariff be consolidated by region.
3-18 The regions under consolidated tariffs must be determined on a
3-19 case-by-case basis.
3-20 SECTION 5. Section 13.183, Water Code, is amended by
3-21 amending Subsection (c) and adding Subsections (d) and (e) to read
3-22 as follows:
3-23 (c) To ensure that retail customers receive a higher
3-24 quality, more affordable, or more reliable water or sewer service,
3-25 to encourage regionalization, or to maintain financially stable and
3-26 technically sound utilities, the regulatory authority, by rule or
3-27 ordinance, as appropriate, may adopt specific alternative
4-1 ratemaking [may develop] methodologies for water or sewer rates
4-2 based on factors other than rate of return and those specified in
4-3 Section 13.185. Overall revenues determined according [pursuant] to
4-4 an alternative ratemaking [alternate] methodology adopted
4-5 [developed] under this section must provide revenues to the utility
4-6 that satisfy the requirements of Subsection (a). The regulatory
4-7 authority may not approve rates under an alternative ratemaking
4-8 methodology unless the regulatory authority adopts the methodology
4-9 before the date the rate application was administratively complete.
4-10 (d) A regulatory authority other than the commission may not
4-11 approve an acquisition adjustment for a system purchased before the
4-12 effective date of an ordinance authorizing acquisition adjustments.
4-13 (e) In determining to use an alternative ratemaking
4-14 methodology [alternate ratemaking methodologies], the regulatory
4-15 authority shall assure that rates, operations, and services are
4-16 just and reasonable to the consumers and to the utilities.
4-17 SECTION 6. Section 13.187, Water Code, is amended to read as
4-18 follows:
4-19 Sec. 13.187. STATEMENT OF INTENT TO CHANGE RATES; HEARING;
4-20 DETERMINATION OF RATE LEVEL. (a) A utility may not make changes in
4-21 its rates except by delivering a statement of intent to each
4-22 ratepayer and with the regulatory authority having original
4-23 jurisdiction at least 60 [30] days before the effective date of the
4-24 proposed change. The effective date of the new rates must be the
4-25 first day of a billing period, and the new rates may not apply to
4-26 service received before the effective date of the new rates. The
4-27 statement of intent must include:
5-1 (1) the information required by the regulatory
5-2 authority's rules;
5-3 (2) a billing comparison regarding the existing water
5-4 rate and the new water rate computed for the use of:
5-5 (A) 10,000 gallons of water; and
5-6 (B) 30,000 gallons of water; and
5-7 (3) a billing comparison regarding the existing sewer
5-8 rate and the new sewer rate computed for the use of 10,000 gallons,
5-9 unless the utility proposes a flat rate for sewer services.
5-10 (b) A copy of the statement of intent shall be mailed or
5-11 delivered to the appropriate offices of each affected municipality,
5-12 and to any other affected persons as required by the regulatory
5-13 authority's rules.
5-14 (c) When the statement of intent is delivered, the utility
5-15 shall file with the regulatory authority an application to change
5-16 rates. The application must include information the regulatory
5-17 authority requires by rule. If the utility fails to provide within
5-18 a reasonable time after the application is filed the necessary
5-19 documentation or other evidence that supports the costs and
5-20 expenses that are shown in the application, the regulatory
5-21 authority may disallow the nonsupported expenses.
5-22 (d) If the application or the statement of intent is not
5-23 substantially complete or does not comply with the regulatory
5-24 authority's rules, it may be rejected and the effective date of the
5-25 rate change may be suspended until a properly completed application
5-26 is accepted by the regulatory authority and a proper statement of
5-27 intent is provided. The commission may also suspend the effective
6-1 date of any rate change if the utility does not have a certificate
6-2 of public convenience and necessity or a completed application for
6-3 a certificate or to transfer a certificate pending before the
6-4 commission or if the utility is delinquent in paying the assessment
6-5 and any applicable penalties or interest required by Section
6-6 5.235(n) of this code.
6-7 (e) [(b)] If, before the 91st day [within 60 days] after the
6-8 effective date of the rate change, the regulatory authority
6-9 receives a complaint from any affected municipality, or from the
6-10 lesser of 1,000 or 10 percent of the ratepayers of the utility over
6-11 whose rates the regulatory authority has original jurisdiction, the
6-12 regulatory authority shall set the matter for hearing.
6-13 (f) The regulatory authority may set the matter for hearing
6-14 on its own motion at any time within 120 days after the effective
6-15 date of the rate change. If more than half of the ratepayers of
6-16 the utility receive service in a county with a population of more
6-17 than 2.5 million, the hearing must be held at a location in that
6-18 county.
6-19 (g) The hearing may be informal.
6-20 (h) If, after hearing, the regulatory authority finds the
6-21 rates currently being charged or those proposed to be charged are
6-22 unreasonable or in violation of law, the regulatory authority shall
6-23 determine the rates to be charged by the utility and shall fix the
6-24 rates by order served on the utility.
6-25 (i) [(c)] The regulatory authority, pending final action in
6-26 a rate proceeding, may order the utility to deposit all or part of
6-27 the rate increase received or to be received into an escrow account
7-1 with a financial institution approved by the regulatory authority.
7-2 Unless otherwise agreed to by the parties to the rate proceeding,
7-3 the utility shall refund or credit against future bills all sums
7-4 collected during the pendency of the rate proceeding in excess of
7-5 the rate finally ordered plus interest as determined by the
7-6 regulatory authority.
7-7 (j) For good cause shown, the regulatory authority may
7-8 authorize the release of funds to the utility from the escrow
7-9 account during the pendency of the proceeding.
7-10 (k) If the regulatory authority receives at least the number
7-11 of complaints from ratepayers required for the regulatory authority
7-12 to set a hearing under Subsection (e), the regulatory authority
7-13 may, pending the hearing and a decision, suspend the date the rate
7-14 change would otherwise be effective. The proposed rate may not be
7-15 suspended for longer than:
7-16 (1) 90 days by a local regulatory authority; or
7-17 (2) 150 days by the commission.
7-18 (l) At any time during the pendency of the rate proceeding
7-19 the regulatory authority may fix interim rates to remain in effect
7-20 until a final determination is made on the proposed rate.
7-21 (m) If the regulatory authority sets a final rate that is
7-22 higher than the interim rate, the utility shall be allowed to
7-23 collect the difference between the interim rate and final rate
7-24 unless otherwise agreed to by the parties to the rate proceeding.
7-25 (n) For good cause shown, the regulatory authority may at
7-26 any time during the proceeding require the utility to refund money
7-27 collected under a proposed rate before the rate was suspended or an
8-1 interim rate was established to the extent the proposed rate
8-2 exceeds the existing rate or the interim rate.
8-3 (o) If a [the] regulatory authority other than the
8-4 commission establishes interim rates or an escrow account, the
8-5 regulatory authority must make a final determination on the rates
8-6 not later than the first anniversary of [within 335 days after] the
8-7 effective date of the interim rates or escrowed rates or the rates
8-8 are automatically approved as requested by the utility.
8-9 (p) [(d)] Except to implement a rate adjustment provision
8-10 approved by the regulatory authority by rule or ordinance, as
8-11 applicable, or to adjust the rates of a newly acquired utility
8-12 system, a utility or two or more utilities under common control and
8-13 ownership may not file a statement of intent to increase its rates
8-14 more than once in a 12-month period, unless the regulatory
8-15 authority determines that a financial hardship exists. If the
8-16 regulatory authority requires the utility to deliver a corrected
8-17 statement of intent, the utility is not considered to be in
8-18 violation of the 12-month filing requirement.
8-19 SECTION 7. Subchapter I, Chapter 13, Water Code, is amended
8-20 by adding Section 13.343 to read as follows:
8-21 Sec. 13.343. WHOLESALE WATER CONTRACTS BETWEEN CERTAIN
8-22 AFFILIATES. (a) The owner of a utility that supplies retail water
8-23 service may not contract to purchase from an affiliated supplier
8-24 wholesale water service for any of that owner's systems unless:
8-25 (1) the wholesale service is provided for not more
8-26 than 90 days to remedy an emergency condition, as defined by
8-27 commission rule; or
9-1 (2) the executive director determines that the utility
9-2 cannot obtain wholesale water service from another source at a
9-3 lower cost than from the affiliate.
9-4 (b) The utility may not purchase groundwater from any
9-5 provider if:
9-6 (1) the source of the groundwater is located in a
9-7 priority groundwater management area; and
9-8 (2) a wholesale supply of surface water is available.
9-9 SECTION 8. (a) This Act takes effect immediately if it
9-10 receives a vote of two-thirds of all the members elected to each
9-11 house, as provided by Section 39, Article III, Texas Constitution.
9-12 If this Act does not receive the vote necessary for immediate
9-13 effect, this Act takes effect September 1, 2001.
9-14 (b) The changes in law made by this Act apply to a
9-15 proceeding in which the Texas Natural Resource Conservation
9-16 Commission has not issued a final order before the effective date
9-17 of this Act.
9-18 (c) Section 13.343, Water Code, as added by this Act, does
9-19 not apply to a contract executed before the effective date of this
9-20 Act. A contract executed before the effective date of this Act is
9-21 governed by the law in effect on the date it was executed, and that
9-22 law is continued in effect for that purpose.