By Counts H.B. No. 1281
77R5689 JJT-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to water and sewer utility rates and tariffs.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 13.144, Water Code, is amended to read as
1-5 follows:
1-6 Sec. 13.144. NOTICE OF WHOLESALE WATER SUPPLY CONTRACT. A
1-7 district or authority created under Section 52, Article III, or
1-8 Section 59, Article XVI, Texas Constitution, a retail public
1-9 utility, a wholesale water service, or other person providing a
1-10 retail public utility with a wholesale water supply shall provide
1-11 the commission with a certified copy of any wholesale water supply
1-12 contract with a retail public utility within 30 days after the date
1-13 of the execution of the contract. The submission must include the
1-14 amount of water being supplied, term of the contract, consideration
1-15 being given for the water, purpose of use, location of use, source
1-16 of supply, point of delivery, limitations on the reuse of water, a
1-17 disclosure of any affiliated interest between the parties to the
1-18 contract, and any other condition or agreement relating to the
1-19 contract.
1-20 SECTION 2. Subchapter E, Chapter 13, Water Code, is amended
1-21 by adding Section 13.145 to read as follows:
1-22 Sec. 13.145. MULTIPLE SYSTEMS CONSOLIDATED UNDER TARIFF. (a)
1-23 A utility may consolidate more than one system under a single
1-24 tariff only if:
2-1 (1) the tariff includes not more than 20 systems;
2-2 (2) the systems under the tariff serve contiguous
2-3 areas or are interconnected;
2-4 (3) the systems under the tariff are substantially
2-5 similar in terms of facilities, quality of service, and cost of
2-6 service; and
2-7 (4) for a tariff that relates to more than five
2-8 systems, the tariff provides for rates that promote water
2-9 conservation for single-family residences.
2-10 (b) The commission by rule shall ensure that a utility may
2-11 not consolidate systems under multiple tariffs in a manner that
2-12 would violate Subsection (a) if the systems were consolidated under
2-13 a single tariff.
2-14 SECTION 3. Section 13.183, Water Code, is amended by
2-15 amending Subsection (c) and adding Subsections (d) and (e) to read
2-16 as follows:
2-17 (c) To ensure that retail customers receive a higher
2-18 quality, more affordable, or more reliable water or sewer service,
2-19 to encourage regionalization, or to maintain financially stable and
2-20 technically sound utilities, the regulatory authority, by rule or
2-21 ordinance, as appropriate, may adopt specific alternative [may
2-22 develop] methodologies for water or sewer rates based on factors
2-23 other than rate of return and those specified in Section 13.185.
2-24 Overall revenues determined according [pursuant] to an alternative
2-25 [alternate] methodology adopted [developed] under this section must
2-26 provide revenues to the utility that satisfy the requirements of
2-27 Subsection (a). The regulatory authority may not approve rates
3-1 under an alternative methodology unless the regulatory authority
3-2 adopts the methodology before the beginning of the rate proceeding
3-3 in which the methodology is applied.
3-4 (d) A regulatory authority that uses an alternative
3-5 methodology to determine rates [In determining to use alternate
3-6 ratemaking methodologies, the regulatory authority] shall assure
3-7 that rates, operations, and services are just and reasonable to the
3-8 consumers and to the utilities. The regulatory authority may not
3-9 authorize the use of a uniform rate across unconnected systems or
3-10 another alternative methodology that would allow revenues from
3-11 customers of a system with a lower cost of service or higher
3-12 quality of service to subsidize the costs of service of or
3-13 improvements to an unconnected system.
3-14 (e) Except as provided by this subsection, the regulatory
3-15 authority shall base rates under an alternative methodology on the
3-16 original cost, as defined by Section 13.185(b), including
3-17 construction work in progress as provided by that section, used and
3-18 useful to the utility in providing service. An alternative
3-19 methodology may provide for a rate to enable a utility that
3-20 purchased a system from another utility to recover an amount equal
3-21 to the lesser of the fair market value of or price the utility paid
3-22 for the system, but greater than the original cost, plus any
3-23 included construction work in progress only if the utility shows by
3-24 clear and convincing evidence that:
3-25 (1) a rate based on that original cost would endanger
3-26 the financial integrity of the utility; and
3-27 (2) a rate based on the fair market value of or price
4-1 paid for the system would ensure the financial integrity of the
4-2 system.
4-3 SECTION 4. Section 13.187(c), Water Code, is amended to read
4-4 as follows:
4-5 (c) The regulatory authority, pending final action in a rate
4-6 proceeding, may order the utility to deposit all or part of the
4-7 rate increase received or to be received into an escrow account
4-8 with a financial institution approved by the regulatory authority.
4-9 The [Unless otherwise agreed to by the parties to the rate
4-10 proceeding, the] utility shall refund or credit against future
4-11 bills all sums collected during the pendency of the rate proceeding
4-12 in excess of the rate finally ordered plus interest as determined
4-13 by the regulatory authority. For good cause shown, the regulatory
4-14 authority may authorize the release of funds to the utility from
4-15 the escrow account during the pendency of the proceeding. At any
4-16 time during the pendency of the rate proceeding the regulatory
4-17 authority may fix interim rates to remain in effect until a final
4-18 determination is made. If the regulatory authority sets a final
4-19 rate that is higher than the interim rate, the utility shall be
4-20 allowed to collect the difference between the interim rate and
4-21 final rate unless otherwise agreed to by the parties to the rate
4-22 proceeding. If the regulatory authority establishes interim rates
4-23 or an escrow account, the regulatory authority must make a final
4-24 determination on the rates not later than the first anniversary of
4-25 [within 335 days after] the effective date of the interim rates or
4-26 escrowed rates or the rates are automatically approved as requested
4-27 by the utility.
5-1 SECTION 5. Subchapter I, Chapter 13, Water Code, is amended
5-2 by adding Section 13.343 to read as follows:
5-3 Sec. 13.343. WHOLESALE WATER CONTRACTS BETWEEN CERTAIN
5-4 AFFILIATES. (a) This section applies only to the owner of more
5-5 than 50 systems.
5-6 (b) An owner that is an affiliate of a utility that supplies
5-7 retail water or sewer service through any of the owner's systems
5-8 may not provide wholesale water supply service to that utility
5-9 unless:
5-10 (1) the wholesale service is provided for not more
5-11 than 30 days to remedy an emergency condition, as defined by
5-12 commission rule; or
5-13 (2) the commission finds, after a hearing, that the
5-14 utility cannot obtain wholesale water service from another source
5-15 at a lower cost than from the affiliate.
5-16 SECTION 6. (a) This Act takes effect immediately if it
5-17 receives a vote of two-thirds of all the members elected to each
5-18 house, as provided by Section 39, Article III, Texas Constitution.
5-19 If this Act does not receive the vote necessary for immediate
5-20 effect, this Act takes effect September 1, 2001.
5-21 (b) The changes in law made by this Act apply to a
5-22 proceeding in which the Texas Natural Resource Conservation
5-23 Commission has not issued a final order before the effective date
5-24 of this Act.
5-25 (c) Section 13.343, Water Code, as added by this Act, does
5-26 not apply to a contract executed before the effective date of this
5-27 Act. A contract executed before the effective date of this Act is
6-1 governed by the law in effect on the date it was executed, and that
6-2 law is continued in effect for that purpose.