SRC-JLB S.B. 326 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 326
78R3808 JJT-DBy: Shapleigh
Natural Resources
2/24/2003
As Filed


DIGEST AND PURPOSE 

Currently, there is no legislation regulating the sale of water being
transported by pipeline.  With certain regions in the state projected to
run out of water soon, transporting water from one region or water basin
to another is anticipated for some cities and may attract entrepreneurs.
The water utilities or municipalities that might possibly be buying water
from these business entities do not have any leverage that will enable
them to protect the consumer's interest as they negotiate the price of
water.  As proposed, S.B. 326 gives the Texas Commission on Environmental
Quality the authority to regulate the price of water transported at least
50 miles, ensuring that purchases are protected while allowing private
businesses to get a fair rate of return on their investment.   

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Texas Commission on
Environmental Quality 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
only to the sale of raw or potable groundwater or surface water if the
water, before or after the sale, is to be transported by pipeline 50 miles
or more or from one river basin in this state to another river basin in
this state. 

(b) Provides that this subchapter applies to a sale of water by an
individual or a business entity. 

Sec. 13.552.  POWER TO ENSURE COMPLIANCE; RATE REGULATION.  Provides that
the Texas Commission on Environmental Quality (TCEQ) has all authority and
power of the state to ensure that persons who supply or receive water, the
sale of which is subject to this subchapter, comply with their obligations
under this subchapter.  Authorizes TCEQ, for this purpose, to fix and
regulate the rates for sales of that water and to adopt rules for
determining the classification of customers and services and the
applicability of rates. 

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

Sec. 13.554.  FIXING OVERALL REVENUES.  Requires TCEQ to fix the seller's
revenues at a level that will permit the seller a reasonable opportunity
to earn a reasonable return on the seller's invested capital used and
useful in supplying water to the purchaser over and above the seller's
reasonable and necessary operating expenses and that will preserve the
financial  integrity of the seller. 

Sec.  13.555.  FAIR RETURN.  Prohibits TCEQ from prescribing any rate for
a sale of water 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, the sale of which
is subject to 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, the sale of which is subject to
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.  (a) Prohibits a person who
supplies water, the sale of which is subject to 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 person's
schedule of rates as properly applied to the person to whom the water is
supplied. 

(b) Prohibits a person from knowingly receiving or accepting water from a
person for a compensation greater or less than that prescribed in the
supplier's schedule of rates as properly applied to the person to whom the
water is supplied. 

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

(b) Requires a person who supplies water, the sale of which is subject to
this subchapter, by a pipeline owned or operated by the person to receive
and transport water delivered to the person by other water suppliers and
perform the person's other related duties without discrimination.
Prohibits a person who supplies water, the sale of which is subject to
this subchapter, by a pipeline owned or operated by the person from
discriminating in the transportation of water, the sale of which is
subject to this subchapter, among or against other water suppliers with
regard to facilities provided, services rendered, or rates charged under
the same or similar circumstances or discriminating in the transportation
of water produced or purchased by the person directly or indirectly. 

(c) Authorizes a person to refuse to transport raw water in a pipeline
owned or operated by the person if the pipeline is being used to transport
potable water or potable water in a pipeline owned or operated by the
person if the pipeline is being used to transport raw water. 

Sec.  13.559.  CERTIFICATE OF CONVENIENCE AND NECESSITY.  (a) Prohibits a
person from supplying to another person water, the sale of which is
subject to 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 TCEQ, 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 issued under Section 13.559 to render continuous and
adequate service. 

Sec.  13.561.  APPROVAL OF WATER SUPPLY CONTRACT.  Provides that a
contract to supply water, the sale of which is subject to this subchapter,
is enforceable only if the contract is approved by TCEQ after public
notice and hearing. 

SECTION 2.  Makes application of this Act prospective.

SECTION 3.  Effective date:  upon passage or September 1, 2003.