By: West H.B. No. 1942
Substitute the following for H.B. No. 1942:
By: Baxter C.S.H.B. No. 1942
A BILL TO BE ENTITLED
AN ACT
relating to incentives to encourage gas utilities to invest in new
infrastructure.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 104, Utilities Code, is amended by
adding Subchapter G to read as follows:
SUBCHAPTER G. INTERIM COST RECOVERY AND RATE ADJUSTMENT
Sec. 104.301. INTERIM ADJUSTMENT FOR CHANGES IN INVESTMENT.
(a) A gas utility that has filed a rate case under Subchapter C
within the preceding two years may file with the regulatory
authority a tariff or rate schedule that provides for an interim
adjustment in the utility's monthly customer charge or initial
block rate to recover the cost of changes in the investment in
service for gas utility services. The adjustment shall be
allocated among the gas utility's classes of customers in the same
manner as the cost of service was allocated among classes of
customers in the utility's latest effective rates for the area in
which the tariff or rate schedule is implemented. The gas utility
shall file the tariff or rate schedule, or the annual adjustment
under Subsection (c), with the regulatory authority at least 60
days before the proposed implementation date of the tariff, rate
schedule, or annual adjustment. The gas utility shall provide
notice of the tariff, rate schedule, or annual adjustment to
affected customers by bill insert or direct mail not later than the
45th day after the date the utility files the tariff, rate schedule,
or annual adjustment with the regulatory authority. During the
60-day period, the regulatory authority may act to suspend the
implementation of the tariff, rate schedule, or annual adjustment.
After the issuance of a final order or decision by a regulatory
authority in a rate case that is filed after the implementation of a
tariff or rate schedule under this section, any change in
investment that has been included in an interim adjustment in
accordance with the tariff or rate schedule under this section
shall no longer be subject to subsequent review for reasonableness
or prudence. Until the issuance of a final order or decision by a
regulatory authority in a rate case that is filed after the
implementation of a tariff or rate schedule under this section, all
amounts collected under the tariff or rate schedule before the
filing of the rate case are subject to refund.
(b) The amount the gas utility shall adjust the utility's
rates upward or downward under the tariff or rate schedule each
calendar year is based on the difference between the value of the
invested capital for the preceding calendar year and the value of
the invested capital for the calendar year preceding that calendar
year. The value of the invested capital is equal to the original
cost of the investment at the time the investment was first
dedicated to public use minus the accumulated depreciation related
to that investment.
(c) The interim adjustment shall be recalculated on an
annual basis in accordance with the requirements of Subsection (b).
The gas utility may file a request with the regulatory authority to
suspend the operation of the tariff or rate schedule for any year.
The request must be in writing and state the reasons why the
suspension is justified. The regulatory authority may grant the
suspension on a showing by the utility of reasonable justification.
(d) A gas utility may only adjust the utility's rates under
the tariff or rate schedule for the return on investment,
depreciation expense, ad valorem taxes, revenue related taxes, and
incremental federal income taxes related to the difference in the
value of the invested capital as determined under Subsection (b).
The return on investment, depreciation, and incremental federal
income tax factors used in the computation must be the same as the
factors reflected in the final order issued by or settlement
agreement approved by the regulatory authority establishing the gas
utility's latest effective rates for the area in which the tariff or
rate schedule is implemented.
(e) A gas utility that implements a tariff or rate schedule
under this section shall file with the regulatory authority an
annual report describing the investment projects completed and
placed in service during the preceding calendar year and the
investments retired or abandoned during the preceding calendar
year. The annual report shall also state the cost, need, and
customers benefited by the change in investment.
(f) In addition to the report required under Subsection (e),
the gas utility shall file with the regulatory authority an annual
earnings monitoring report demonstrating the utility's earnings
during the preceding calendar year.
(g) If the gas utility is earning a return on invested
capital, as demonstrated by the report filed under Subsection (f),
of more than 75 basis points above the return established in the
latest effective rates approved by a regulatory authority for the
area in which the tariff or rate schedule is implemented under this
section, the gas utility shall file a statement with that report
stating the reasons why the rates are not unreasonable or in
violation of law.
(h) If a gas utility that implements a tariff or rate
schedule under this section does not file a rate case under
Subchapter C before the fifth anniversary of the date on which the
tariff or rate schedule takes effect, the gas utility shall file a
rate case under that subchapter not later than the 180th day after
that anniversary in relation to any rates subject to the tariff or
rate schedule.
(i) This section does not limit the power of a regulatory
authority under Section 104.151.
SECTION 2. This Act takes effect September 1, 2003.