By: Keffer of Eastland H.B. No. 821
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of transportation services for natural
gas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 3, Utilities Code, is amended by adding
Chapter 125 to read as follows:
Chapter 125. Transportation and Market Access
Sec. 125.001. Short Title
This Chapter may be cited as the Texas Competitive Gas Market
Act.
Sec. 125.002. Findings and Purpose
(a) Findings:
(1) A free market economy is central to the freedoms
and economic well-being of the citizens of Texas. Access to the
benefits of choice and market competition is essential to a free
market economy. Any entity with monopoly power over a portion of
the journey of natural gas from the wellhead to its point of end use
has the power to deprive producers, marketers and consumers of
natural gas of the economic benefits of free market competition.
For this reason the drafters of the Texas Constitution declared in
Article I, Section 26, that "monopolies are contrary to the genius
of a free government and shall never be allowed."
(2) To that end, the Legislature has previously
established the Railroad Commission of Texas and provided by
statute a system for regulating gas utilities and protecting
producers, marketers and consumers of natural gas from the abuse of
monopoly power. Such regulation is especially appropriate in light
of the public nature of gas utilities who have been given the
extraordinary power of eminent domain and rights to use public
rights of way in order to lay and operate pipelines in the public
interest.
(3) At present, natural gas markets are not
competitive in many areas of the state because of pipeline monopoly
power. In many situations, producers, marketers, and purchasers
have only one available means of transportation for natural gas and
are thereby prevented from access to competitive markets. This
lack of competition in natural gas markets results in higher costs
to residential, commercial, and industrial customers, reduced
transportation, reduced drilling and production for oil and gas,
waste, and the impairment of correlative rights in oil and gas. It
is costly to the Texas economy, to the State of Texas, and to local
taxing authorities, and imposes an undue and unnecessary burden on
the citizens of Texas.
(4) It is desirable to clarify and strengthen the
power of the Railroad Commission, acting in tandem with the courts
of Texas, to require fair, reasonable, and nondiscriminatory
transportation of natural gas by those pipelines that possess
monopoly power over all or any portion of the journey from wellhead
to place of end use, so that the full benefits of free and open
competitive markets in the production, marketing and consumption of
natural gas may be obtained by the citizens of Texas. Clarification
will also promote efficiency and cost savings in the administrative
and court legal processes.
(5) The public interest in free market competition
will be well-served by clarifying the rights of producers,
marketers and consumers of natural gas to seek and obtain relief
from the exercise of monopoly power by natural gas pipelines.
(b) Purpose. This Chapter is enacted to provide more clear
and explicit authority on the part of the Railroad Commission of
Texas and the courts of Texas to curb the abuse of monopoly power by
natural gas pipelines and thereby promote the free market and
competition in the purchase and sale of natural gas.
Sec. 125.003. Transportation required
A gas utility shall transport natural gas on behalf of any
person requesting transportation. Such transportation shall be on
reasonable terms and conditions, is required whether or not the gas
utility is transporting on behalf of parties other than itself, and
shall be without discrimination in favor of any person or place, and
without any unreasonable preference or advantage concerning the
rates or services to any person or classification. The
transportation component included within any transportation by a
gas utility of gas owned by the utility shall be considered
"transportation" for purposes of assessing any rate,
discrimination, unreasonable preference, or advantage.
Sec. 125.004. Rates and tariffs
(a) The transportation rates and services of gas utilities
are subject to regulation. For purposes of this Chapter, "rates"
and "services" have the meanings defined in Sec. 101.003 of this
Title and specifically include all services required by a gas
utility to undertake transportation of gas between any two points
whether those services are provided by the gas utility, its
affiliates, or a third party designated by the gas utility to the
extent such services are required as a condition for the
transportation of natural gas.
(b) A gas utility shall file with the railroad commission
schedules for all of its transportation rates, including the
transportation rates available to any person who may request
transportation. The information on such schedules shall include,
but not be limited to, the geographical identity of receipt and
delivery points, the identity of the persons for whom gas is
transported, and the nature or type of service to which it applies.
The information on such schedules shall not be confidential and
shall be available for public inspection.
(c) Upon the request for transportation services required
to be provided under this Chapter, a utility that does not have a
tariff on file for such services shall provide transportation to
the person requesting the transportation at the lowest rate charged
by the utility for any transportation provided to any person, which
rate shall be the valid and lawful rate until such time at it is
changed by final decision and order of the Railroad Commission.
(d) Upon complaint or on its own motion, the railroad
commission shall establish the just and reasonable rates and terms
of service applicable to transportation by a gas utility.
(1) The rates shall be established under the cost of
service standards in this Title for ratesetting. For purposes of
ratesetting, the rate base and depreciation allowance shall be
based on the lesser of the purchase price or the original cost of
the property when first placed into service.
(2) Upon complaint by any affected person, the
provisions of Section 104.003(b) of this Title (insulating certain
rates from review on a cost of service basis) shall not apply, and
the rate or rates complained of shall be established under the cost
of service standards in this Title for ratemaking.
(3) If the rate so established is less than the rate
charged by the gas utility, it shall be effective from and after the
filing of the complaint.
(4) If the rate otherwise found to be just and
reasonable does not exceed one hundred and ten percent (110%) of the
applicable transportation rate on file and available prior to the
filing of the complaint, the rate on file shall be deemed to be just
and reasonable.
(e) Upon the establishment of a just and reasonable
transportation rate that is less than the rate that has been
charged, the railroad commission shall order the gas utility to
make a refund. The refund shall be equal to three times the
difference between the rate charged and the rate determined to be
reasonable, from and after the filing of the complaint, plus
reasonable interest.
Sec. 125.005. Interim relief
The railroad commission shall provide relief to affected
persons through the granting of interim orders where necessary and
appropriate to effectuate transportation under this Chapter.
Sec. 125.006. Limited jurisdiction over certain pipelines
(a) Upon complaint, a person or river authority not
otherwise a "gas utility" under Sections 101.003(7)(B)(i),
121.004, or 121.005 of this Chapter (related to certain gathering
or gathering-type transportation) shall be considered to be a gas
utility under this Title for the limited purpose and only as
necessary to effectuate the purposes of this Chapter.
(b) A person or river authority not otherwise a "gas
utility" under Sections 101.003(7)(B)(i), 121.004, or 121.005 of
this Chapter shall be entitled to the safe harbor protection of
Section 125.003(c)(2) of this Chapter if it has filed rates and
tariffs for gas transportation under Section 125.003 as if it were a
gas utility and acted in conformance with such rates and tariffs.
Sec. 125.007. Waivers and Contracts
Waivers of the protections of this Chapter are against public
policy and shall not be enforceable. Contracts may not be used to
defeat the policies set forth in this Chapter.
Sec. 125.008. Governmental entities, agencies, and
municipalities included Governmental entities, state and federal
agencies, and municipalities shall be considered to be "persons"
entitled to the protections set forth in this Chapter.
Sec. 125.009. Cost Reimbursement
(a) To the extent the regulatory authority determines the
costs are reasonable, a gas utility shall reimburse the costs a
complainant in a proceeding filed under this Title, if the
complainant is wholly or partially successful in prosecuting the
complaint before a regulatory authority or a court.
(b) Costs for which a successful complainant may receive
reimbursement under this section include any reasonable expenses
related to the investigation, preparation, prosecution and
litigation of the matter before any regulatory authority or court,
including the reasonable costs of consultants, accountants,
auditors, attorneys, expert witnesses, and engineers, including
costs not yet paid because payment has been deferred pending
reimbursement by a gas utility.
(c) Notwithstanding any other provision of this Title, a gas
utility may not recover as or through a charge to the gas utility's
customers any amounts paid as reimbursement under this section or
any expenses incurred in defending against a claim for which
reimbursement under this section is ordered.
(d) Nothing in this Section is intended to diminish or
restrict the right of municipalities to obtain rate assistance and
receive cost reimbursement under Section 103.022 of this Title.
Sec. 125.010. Mediation
In any proceeding under this Chapter, the parties shall
attempt to resolve their differences by participating in an
informal confidential mediation prior to a hearing on the merits.
Sec. 125.011. Railroad Commission Enforcement and Actions
The railroad commission shall actively enforce the
provisions of this Chapter in order to promote and protect
competitive gas markets. In fulfilling its enforcement duties, the
railroad commission shall not rely solely or primarily on the
filing of complaints before taking action. The railroad commission
shall also monitor and study gas markets and gas transportation to
determine and report the extent to which market choices are
available at the wellhead and the extent to which markets in
different parts of the state are competitive.
Sec. 125.012. Coordination with Common Purchaser Act
The requirements for the non-discriminatory taking of gas by
common purchasers under the Texas Common Purchaser Act, Chapter
111, Subchapter D, Texas Natural Resources Code, are important to
preventing waste and protecting correlative rights in oil and gas.
By facilitating gas transportation and open gas markets, the
provisions of this Chapter are intended to complement and
strengthen the requirements for the nondiscriminatory taking of gas
by common purchasers, and these provisions shall be so administered
and applied.
Sec. 125.013. Damages and penalty recoverable by aggrieved
party
(a) In addition to remedies available before the Railroad
Commission, any person aggrieved by a violation of the provision of
this Chapter is entitled to recover treble civil damages in a civil
suit in a district court of Texas.
(b) In addition to damages, if any, a penalty of not less
than $100 and not more than $1,000 for each violation is recoverable
against a transporter of natural gas by any person aggrieved by a
violation of the provisions of this Chapter.
(c) Each violation and each day that the violation continues
is subject to a separate penalty as to each delivery point into the
pipeline, each well behind any delivery point, or redelivery point
out of the pipeline, whichever is greater, for transportation under
this Chapter.
(d) A person who recovers a penalty or damages under this
section is also entitled to reasonable litigation expenses,
including, but not limited to, attorney's fees, expert witness and
consultant fees, and costs of court.
(e) A suit to collect a penalty under this section must be
brought in the name of and for the benefit of a person or persons
aggrieved. In addition to the counties in which suit may be brought
pursuant to Chapter 15, Tex. Civ. Prac. Rem. Code, suit may be
brought in any county in which an aggrieved person resides.
(f) A finding of violation of the provisions of this Chapter
may be made by any court of competent jurisdiction.
(g) The penalty under this section is in addition to any
other penalty or damages recoverable under the laws of the State of
Texas.
Sec. 125.014. Condemnation and Use of Public Properties
In recognition of the paramount importance that there be a
public use and public interest to justify the condemnation of
private property or the use of public properties for pipeline
rights of way, a gas utility or pipeline that does not comply with
the provisions of this Chapter shall not have the rights of
condemnation under Sec. 181.004 of Title 4 of this Code and shall
not have the authority to maintain facilities along, across, or
over any public highway, public road, public street and alley, or
public water under Sec. 181.022 of Title 4 of this Code
Sec. 125.015. Construction With Federal Authority
This Chapter shall be construed to apply so as not to conflict
with any authority of the United States.
Sec. 125.016. Cumulative Effect
(a) This Chapter is cumulative of laws relating to the
jurisdiction, power, or authority of the railroad commission over
gas pipelines and gas utilities and, except as specifically in
conflict with this Chapter, that jurisdiction, power, and authority
are not limited by this Chapter.
(b) This Chapter applies to all gas utilities, including gas
utilities that are under the jurisdiction, power, or authority of
the railroad commission in accordance with a law other than this
Chapter.
Sec. 125.017. Liberal Construction
This Chapter shall be construed liberally to promote the
effectiveness and efficiency of regulation of gas utilities and to
promote competitive natural gas markets.
SECTION 2. This Act takes effect September 1, 2005.