78R7179 CBH-D

By:  West                                                         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.  COST RECOVERY AND RATE ADJUSTMENT
	Sec. 104.301.  ADJUSTMENT FOR NEW INVESTMENT.  (a)  A gas 
utility may file with the regulatory authority a tariff or rate 
schedule that provides for an adjustment in the utility's monthly 
customer charge or initial block rate to recover the cost of a new 
investment placed in service for gas utility services.  The gas 
utility may implement the tariff or rate schedule without action by 
the regulatory authority.
	(b)  The amount the utility is allowed to recover 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)  A gas utility may recover under the tariff or rate 
schedule only 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 gas utility's latest effective rates approved by a 
regulatory authority for the area in which the tariff or rate 
schedule is implemented under this section.
	(d)  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.
	(e)  In addition to the report required under Subsection (d), 
the gas utility shall file with the regulatory authority an annual 
earnings monitoring report demonstrating the utility's earnings 
during the preceding calendar year.  If a tariff or rate schedule 
implemented under this section does not affect all of the utility's 
classes of customers, the utility shall adjust the earnings 
monitoring report to reflect the allocations among customer classes 
used in the latest effective rates approved by a regulatory 
authority for the area in which the tariff or schedule is 
implemented.
	(f)  If the gas utility is earning a return on invested 
capital, as demonstrated by the report filed under Subsection (e), 
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.
	(g)  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.
	SECTION 2.  This Act takes effect September 1, 2003.