1-1 By: Counts, et al. (Senate Sponsor - Wentworth) H.B. No. 1281
1-2 (In the Senate - Received from the House April 24, 2001;
1-3 April 25, 2001, read first time and referred to Committee on
1-4 Natural Resources; May 11, 2001, reported favorably by the
1-5 following vote: Yeas 6, Nays 1; May 11, 2001, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to water utility services, rates, and tariffs.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 SECTION 1. Section 13.137, Water Code, is amended to read as
1-11 follows:
1-12 Sec. 13.137. OFFICE AND OTHER BUSINESS LOCATIONS OF UTILITY;
1-13 RECORDS; REMOVAL FROM STATE. (a) Every utility shall:
1-14 (1) make available and notify its customers of a
1-15 business location where its customers may make payments to prevent
1-16 disconnection of or to restore service:
1-17 (A) in each county in which the utility provides
1-18 service; or
1-19 (B) not more than 20 miles from the residence of
1-20 any residential customer if there is no location to receive
1-21 payments in the county; and
1-22 (2) have an office in a county of this state or in the
1-23 immediate area in which its property or some part of its property
1-24 is located in which it shall keep all books, accounts, records, and
1-25 memoranda required by the commission to be kept in this state.
1-26 (b) The commission by rule may provide for waiving the
1-27 requirements of Subsection (a)(1) for a utility for which meeting
1-28 those requirements would cause a rate increase or otherwise harm or
1-29 inconvenience customers. The rules must provide for an additional
1-30 14 days to be given for a customer to pay before a utility that is
1-31 granted a waiver may disconnect service for late payment.
1-32 (c) Books, accounts, records, or memoranda required by the
1-33 regulatory authority to be kept in the state may not be removed
1-34 from the state, except on conditions prescribed by the commission.
1-35 SECTION 2. Section 13.144, Water Code, is amended to read as
1-36 follows:
1-37 Sec. 13.144. NOTICE OF WHOLESALE WATER SUPPLY CONTRACT. A
1-38 district or authority created under Section 52, Article III, or
1-39 Section 59, Article XVI, Texas Constitution, a retail public
1-40 utility, a wholesale water service, or other person providing a
1-41 retail public utility with a wholesale water supply shall provide
1-42 the commission with a certified copy of any wholesale water supply
1-43 contract with a retail public utility within 30 days after the date
1-44 of the execution of the contract. The submission must include the
1-45 amount of water being supplied, term of the contract, consideration
1-46 being given for the water, purpose of use, location of use, source
1-47 of supply, point of delivery, limitations on the reuse of water, a
1-48 disclosure of any affiliated interest between the parties to the
1-49 contract, and any other condition or agreement relating to the
1-50 contract.
1-51 SECTION 3. Subchapter E, Chapter 13, Water Code, is amended
1-52 by adding Section 13.145 to read as follows:
1-53 Sec. 13.145. MULTIPLE SYSTEMS CONSOLIDATED UNDER TARIFF. A
1-54 utility may consolidate more than one system under a single tariff
1-55 only if:
1-56 (1) the systems under the tariff are substantially
1-57 similar in terms of facilities, quality of service, and cost of
1-58 service; and
1-59 (2) the tariff provides for rates that promote water
1-60 conservation for single-family residences and landscape irrigation.
1-61 SECTION 4. Section 13.182, Water Code, is amended to read as
1-62 follows:
1-63 Sec. 13.182. JUST AND REASONABLE RATES. (a) The regulatory
1-64 authority shall ensure that every rate made, demanded, or received
2-1 by any utility or by any two or more utilities jointly shall be
2-2 just and reasonable.
2-3 (b) Rates shall not be unreasonably preferential,
2-4 prejudicial, or discriminatory but shall be sufficient, equitable,
2-5 and consistent in application to each class of consumers.
2-6 (c) For ratemaking purposes, the commission may treat two or
2-7 more municipalities served by a utility as a single class wherever
2-8 the commission considers that treatment to be appropriate.
2-9 (d) The commission by rule shall establish a preference that
2-10 rates under a consolidated tariff be consolidated by region.
2-11 The regions under consolidated tariffs must be determined on a
2-12 case-by-case basis.
2-13 SECTION 5. Section 13.183, Water Code, is amended by
2-14 amending Subsection (c) and adding Subsections (d) and (e) to read
2-15 as follows:
2-16 (c) To ensure that retail customers receive a higher
2-17 quality, more affordable, or more reliable water or sewer service,
2-18 to encourage regionalization, or to maintain financially stable and
2-19 technically sound utilities, the regulatory authority, by rule or
2-20 ordinance, as appropriate, may adopt specific alternative
2-21 ratemaking [may develop] methodologies for water or sewer rates
2-22 based on factors other than rate of return and those specified in
2-23 Section 13.185. Overall revenues determined according [pursuant] to
2-24 an alternative ratemaking [alternate] methodology adopted
2-25 [developed] under this section must provide revenues to the utility
2-26 that satisfy the requirements of Subsection (a). The regulatory
2-27 authority may not approve rates under an alternative ratemaking
2-28 methodology unless the regulatory authority adopts the methodology
2-29 before the date the rate application was administratively complete.
2-30 (d) A regulatory authority other than the commission may not
2-31 approve an acquisition adjustment for a system purchased before the
2-32 effective date of an ordinance authorizing acquisition adjustments.
2-33 (e) In determining to use an alternative ratemaking
2-34 methodology [alternate ratemaking methodologies], the regulatory
2-35 authority shall assure that rates, operations, and services are
2-36 just and reasonable to the consumers and to the utilities.
2-37 SECTION 6. Section 13.187, Water Code, is amended to read as
2-38 follows:
2-39 Sec. 13.187. STATEMENT OF INTENT TO CHANGE RATES; HEARING;
2-40 DETERMINATION OF RATE LEVEL. (a) A utility may not make changes in
2-41 its rates except by delivering a statement of intent to each
2-42 ratepayer and with the regulatory authority having original
2-43 jurisdiction at least 60 [30] days before the effective date of the
2-44 proposed change. The effective date of the new rates must be the
2-45 first day of a billing period, and the new rates may not apply to
2-46 service received before the effective date of the new rates. The
2-47 statement of intent must include:
2-48 (1) the information required by the regulatory
2-49 authority's rules;
2-50 (2) a billing comparison regarding the existing water
2-51 rate and the new water rate computed for the use of:
2-52 (A) 10,000 gallons of water; and
2-53 (B) 30,000 gallons of water; and
2-54 (3) a billing comparison regarding the existing sewer
2-55 rate and the new sewer rate computed for the use of 10,000 gallons,
2-56 unless the utility proposes a flat rate for sewer services.
2-57 (b) A copy of the statement of intent shall be mailed or
2-58 delivered to the appropriate offices of each affected municipality,
2-59 and to any other affected persons as required by the regulatory
2-60 authority's rules.
2-61 (c) When the statement of intent is delivered, the utility
2-62 shall file with the regulatory authority an application to change
2-63 rates. The application must include information the regulatory
2-64 authority requires by rule. If the utility fails to provide within
2-65 a reasonable time after the application is filed the necessary
2-66 documentation or other evidence that supports the costs and
2-67 expenses that are shown in the application, the regulatory
2-68 authority may disallow the nonsupported expenses.
2-69 (d) If the application or the statement of intent is not
3-1 substantially complete or does not comply with the regulatory
3-2 authority's rules, it may be rejected and the effective date of the
3-3 rate change may be suspended until a properly completed application
3-4 is accepted by the regulatory authority and a proper statement of
3-5 intent is provided. The commission may also suspend the effective
3-6 date of any rate change if the utility does not have a certificate
3-7 of public convenience and necessity or a completed application for
3-8 a certificate or to transfer a certificate pending before the
3-9 commission or if the utility is delinquent in paying the assessment
3-10 and any applicable penalties or interest required by Section
3-11 5.235(n) of this code.
3-12 (e) [(b)] If, before the 91st day [within 60 days] after the
3-13 effective date of the rate change, the regulatory authority
3-14 receives a complaint from any affected municipality, or from the
3-15 lesser of 1,000 or 10 percent of the ratepayers of the utility over
3-16 whose rates the regulatory authority has original jurisdiction, the
3-17 regulatory authority shall set the matter for hearing.
3-18 (f) The regulatory authority may set the matter for hearing
3-19 on its own motion at any time within 120 days after the effective
3-20 date of the rate change. If more than half of the ratepayers of
3-21 the utility receive service in a county with a population of more
3-22 than 2.5 million, the hearing must be held at a location in that
3-23 county.
3-24 (g) The hearing may be informal.
3-25 (h) If, after hearing, the regulatory authority finds the
3-26 rates currently being charged or those proposed to be charged are
3-27 unreasonable or in violation of law, the regulatory authority shall
3-28 determine the rates to be charged by the utility and shall fix the
3-29 rates by order served on the utility.
3-30 (i) [(c)] The regulatory authority, pending final action in
3-31 a rate proceeding, may order the utility to deposit all or part of
3-32 the rate increase received or to be received into an escrow account
3-33 with a financial institution approved by the regulatory authority.
3-34 Unless otherwise agreed to by the parties to the rate proceeding,
3-35 the utility shall refund or credit against future bills all sums
3-36 collected during the pendency of the rate proceeding in excess of
3-37 the rate finally ordered plus interest as determined by the
3-38 regulatory authority.
3-39 (j) For good cause shown, the regulatory authority may
3-40 authorize the release of funds to the utility from the escrow
3-41 account during the pendency of the proceeding.
3-42 (k) If the regulatory authority receives at least the number
3-43 of complaints from ratepayers required for the regulatory authority
3-44 to set a hearing under Subsection (e), the regulatory authority
3-45 may, pending the hearing and a decision, suspend the date the rate
3-46 change would otherwise be effective. The proposed rate may not be
3-47 suspended for longer than:
3-48 (1) 90 days by a local regulatory authority; or
3-49 (2) 150 days by the commission.
3-50 (l) At any time during the pendency of the rate proceeding
3-51 the regulatory authority may fix interim rates to remain in effect
3-52 until a final determination is made on the proposed rate.
3-53 (m) If the regulatory authority sets a final rate that is
3-54 higher than the interim rate, the utility shall be allowed to
3-55 collect the difference between the interim rate and final rate
3-56 unless otherwise agreed to by the parties to the rate proceeding.
3-57 (n) For good cause shown, the regulatory authority may at
3-58 any time during the proceeding require the utility to refund money
3-59 collected under a proposed rate before the rate was suspended or an
3-60 interim rate was established to the extent the proposed rate
3-61 exceeds the existing rate or the interim rate.
3-62 (o) If a [the] regulatory authority other than the
3-63 commission establishes interim rates or an escrow account, the
3-64 regulatory authority must make a final determination on the rates
3-65 not later than the first anniversary of [within 335 days after] the
3-66 effective date of the interim rates or escrowed rates or the rates
3-67 are automatically approved as requested by the utility.
3-68 (p) [(d)] Except to implement a rate adjustment provision
3-69 approved by the regulatory authority by rule or ordinance, as
4-1 applicable, or to adjust the rates of a newly acquired utility
4-2 system, a utility or two or more utilities under common control and
4-3 ownership may not file a statement of intent to increase its rates
4-4 more than once in a 12-month period, unless the regulatory
4-5 authority determines that a financial hardship exists. If the
4-6 regulatory authority requires the utility to deliver a corrected
4-7 statement of intent, the utility is not considered to be in
4-8 violation of the 12-month filing requirement.
4-9 SECTION 7. Subchapter I, Chapter 13, Water Code, is amended
4-10 by adding Section 13.343 to read as follows:
4-11 Sec. 13.343. WHOLESALE WATER CONTRACTS BETWEEN CERTAIN
4-12 AFFILIATES. (a) The owner of a utility that supplies retail water
4-13 service may not contract to purchase from an affiliated supplier
4-14 wholesale water service for any of that owner's systems unless:
4-15 (1) the wholesale service is provided for not more
4-16 than 90 days to remedy an emergency condition, as defined by
4-17 commission rule; or
4-18 (2) the executive director determines that the utility
4-19 cannot obtain wholesale water service from another source at a
4-20 lower cost than from the affiliate.
4-21 (b) The utility may not purchase groundwater from any
4-22 provider if:
4-23 (1) the source of the groundwater is located in a
4-24 priority groundwater management area; and
4-25 (2) a wholesale supply of surface water is available.
4-26 SECTION 8. (a) This Act takes effect immediately if it
4-27 receives a vote of two-thirds of all the members elected to each
4-28 house, as provided by Section 39, Article III, Texas Constitution.
4-29 If this Act does not receive the vote necessary for immediate
4-30 effect, this Act takes effect September 1, 2001.
4-31 (b) The changes in law made by this Act apply to a
4-32 proceeding in which the Texas Natural Resource Conservation
4-33 Commission has not issued a final order before the effective date
4-34 of this Act.
4-35 (c) Section 13.343, Water Code, as added by this Act, does
4-36 not apply to a contract executed before the effective date of this
4-37 Act. A contract executed before the effective date of this Act is
4-38 governed by the law in effect on the date it was executed, and that
4-39 law is continued in effect for that purpose.
4-40 * * * * *