By:  Puente                                                       H.B. No. 3367


A BILL TO BE ENTITLED
AN ACT
relating to requiring water utilities to adopt water rates that encourage conservation and dedicating revenue for conservation programs. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS SECTION 1. Chapter 430 Local Government Code, is amended by adding Section 430.003 to read as follows: 430.003 Water Rates for Municipal and County Utilities a) When setting rates for all classes of customers, no volume credit shall be included in the minimum charge for water or sewer. All connections shall be metered and water rates shall include a gallonage charge. b) For municipally and county owned water utilities with 3300 or more connections, water rates for residential customers shall include at least three rate blocks based on the amount of water used. The rate blocks shall increase in cost per gallon or cubic feet of water consumed as the total volume of consumption increases. Blocks shall be set so that average indoor water use is included in the first block, or the first and second blocks if there is a lifeline rate. The rate structure shall be applied either year round or seasonally but shall include water usage from June 1 through September 30 of each year. c) For municipally and county owned water utilities with less than 3300 connections, the rate structure shall be a tiered rate structure for residential customers. The rate blocks shall increase in cost per gallon or cubic feet of water consumed as the total volume of consumption increases. The rate structure shall be applied either year round or seasonally but shall include water usage from June 1 through September 30 of each year. d) The rate structures for nonresidential customers shall be a tiered rate structure or be a seasonal structure with higher rates charged each year from at least June 1 through September 30 than during the rest of the year. e) In no event shall any rate structure be a declining block rate structure. f) At least two (2) percent of gross annual water system revenue should be dedicated to implementing water efficiency programs. g) Rates and charges for water and sewer service shall be adequate to recover the full cost of operation, maintenance, debt retirement including coverages necessary to comply with bond covenants, the replacement of annual depreciation of all infrastructure assets necessary to provide timely and adequate service delivery, a leak detection and water audit program, and a water efficiency program. h) Any rate change after the effective date of this bill shall comply with this section. i) If the provisions of this section are not implemented, the Commission on Environmental Quality or its successor agency shall take this into account in any enforcement action. SECTION 2. Subchapter E, Chapter 13, Water Code, is amended by adding Section 13.1365 to read as follows: Sec. 13.1365. CONSERVATION ORIENTED RATE STRUCTURES a) When setting rates for all classes of customers, no volume credit shall be included in the minimum charge for water or sewer. All connections shall be metered and water rates must include a gallonage charge. b) For water utilities with 3300 or more connection, water rates for the residential class of customers will include at least three rate blocks based on the volume of water used. The rate blocks shall increase in cost per gallon or cubic feet of water consumed as the total volume of consumption increases. Blocks shall be set so that average indoor water use is included in the first block, or the first and second blocks if there is a lifeline rate. The rate structure shall be applied either year round or seasonally but must include water usage from June 1 through September 30 of each year. c) For water utilities with less than 3300 customers, the rate structure shall be a tiered rate structure for residential customers. The rate blocks shall increase in cost per gallon or cubic feet of water consumed as the total volume of consumption increases. The rate structure shall be applied either year round or seasonally but shall include water usage from June 1 through September 30 of each year. d) The rate structures for nonresidential customers shall be a tiered rate structure or be a seasonal structure with higher rates charged each year from at least June 1 through September 30 than during the rest of the year. e) In no event shall any rate structure be a declining block rate structure. f) At least two (2) percent of gross annual water system revenue should be dedicated to implementing water efficiency programs. g) All revenues in excess of test year costs due to an inclining block rate shall be placed in a special account and used for water efficiency programs, leak detection and repair, meter testing, and system improvements. h) Any rate change after the effective date of this bill shall comply with this section i) If the provisions of this section are not implemented, the Commission shall take this into account in any enforcement action. SECTION 3. Chapter 15.106(b), Water Code, is amended to read as follows: Sec 15.106(b) Before the board grants the application or provides any financial assistance under an application, it shall require an applicant to adopt or to have already implemented a program of water conservation for the more efficient use of water that incorporates the practices, techniques, or technology prescribed by Subdivision (9)(B), Section 15.001, of this code and that the board determines will meet reasonably anticipated local needs and conditions. The program [may] shall include but is not limited to [any or all of] the following: (1) restrictions on discretionary water uses, such as lawn watering; (2) plumbing code standards for water conservation in new building construction; (3) retrofit programs to improve water-use efficiency in existing buildings; (4) educational programs; (5) universal metering; (6) conservation-oriented water rate structures. The Board shall ensure that a program that includes conservation-oriented water rate structures is designed so that: a) When setting rates for all classes of customers, no volume credit shall be included in the minimum charge for water or sewer. All connections shall be metered and water rates must include a gallonage charge. b) For water utilities with 3300 or more connections, water rates for the residential class of customers shall include at least three rate blocks based on the amount of water used. The rate blocks shall increase in cost per gallon or cubic feet of water consumed as the total volume of consumption increases. Blocks shall be set so that average indoor water use is included in the first block, or the first and second blocks if there is a lifeline rate. The rate structure shall be applied either year round or seasonally but shall include water usage from June 1 through September 30 of each year. c) For water utilities with less than 3300 connections, the rate structure shall be a tiered rate structure for residential customers. The rate blocks shall increase in cost per gallon or cubic feet of water consumed as the total volume of consumption increases. The rate structure can be applied either year round or seasonally but shall include water usage from June 1 through September 30 of each year. d) The rate structures for nonresidential customers shall be a tiered rate structure or be a seasonal structure with higher rates charged each year from at least June 1 through September 30 than during the rest of the year. In no event shall any rate structure be a declining block rate structure. e) At least two (2) percent of cross annual water system revenue should be dedicated to implementing water efficiency programs. f) Any rate change after the effective date of this bill shall comply with this section. g) If the provisions of this section are not implemented, the Commission shall take this into account in any enforcement action. (7) drought contingency plans; and (8) distribution system leak detection and repair. SECTION 4. Chapter 49, Water Code, is amended by adding Section 49.236 as to read as follows: 49.236 Water Rates a) When setting rates for all classes of customers, no volume credit shall be included in the minimum charge for water or sewer. b) For water districts with 3300 or more connections, water rates for the residential class of customers shall include at least three rate blocks based on the amount of water used. The rate blocks shall increase in cost per gallon or cubic feet of water consumed as the total volume of consumption increases. Blocks shall be set so that average indoor water use is included in the first block, or the first and second blocks if there is a lifeline rate. The rate structure can be applied either year round or seasonally but shall include water usage from June 1 through September 30 of each year. c) For water districts with less than 3300 connections, the rate structure shall be a tiered rate structure for residential customers. The rate blocks shall increase in cost per gallon or cubic feet of water consumed as the total volume of consumption increases. The rate structure can be applied either year round or seasonally but shall include water usage from June 1 through September 30 of each year. d) The rate structures for nonresidential customers shall be a tiered rate structure or be a seasonal structure with higher rates charged each year from at least June 1 through September 30 than during the rest of the year. e) In no event shall any rate structure be a declining block rate structure. f) At least two (2) percent of gross annual water system revenue should be dedicated to implementing water efficiency programs. g) Any rate change after the effective date of this bill shall comply with this section h) If the provisions of this section are not implemented, the Commission shall take this into account in any enforcement action. SECTION 5. Chapter 67, Water Code, is amended by adding Section 67.018 to read as follows: 67.018 Water Rates i) When setting rates for all classes of customers, no volume credit shall be included in the minimum charge for water or sewer. j) For corporations with 3300 or more connections, water rates for the residential class of customers shall include at least three rate blocks based on the amount of water used. The rate blocks shall increase in cost per gallon or cubic feet of water consumed as the total volume of consumption increases. Blocks shall be set so that average indoor water use is included in the first block, or the first and second blocks if there is a lifeline rate. The rate structure can be applied either year round or seasonally but shall include water usage from June 1 through September 30 of each year. k) For corporations with less than 3300 customers, the rate structure shall be a tiered rate structure for residential customers. The rate blocks shall increase in cost per gallon or cubic feet of water consumed as the total volume of consumption increases. The rate structure can be applied either year round or seasonally but shall include water usage from June 1 through September 30 of each year. l) The rate structures for nonresidential customers shall be a tiered rate structure or be a seasonal structure with higher rates charged each year from at least June 1 through September 30 than during the rest of the year. m) In no event shall any rate structure be a declining block rate structure. n) At least two (2) percent of gross annual water system revenue should be dedicated to implementing water efficiency programs. o) Any rate change after the effective date of this bill shall comply with this section p) If the provisions of this section are not implemented, the Commission shall take this into account in any enforcement action. SECTION 6 This Act take effect September 1, 2003.