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79R9829 T
By: Callegari H.B. No. 2876
A BILL TO BE ENTITLED
AN ACT
relating to certificates of public convenience and necessity for
water service and sewer service.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 13.241 (a) and (d), Water Code, are
amended to read as follows:
(a) In determining whether to grant or amend a certificate
of public convenience and necessity, the commission shall ensure
that the applicant possesses the financial, managerial, and
technical capability to provide continuous and adequate service.
(d) Before the commission grants or amends a [new]
certificate of convenience and necessity [for an area which would
require construction of a physically separate water or sewer
system], the applicant must demonstrate that regionalization or
consolidation with another retail public utility is not
economically feasible.
SECTION 2. Sections 13.244(b) and (c), Water Code, are
amended, and Section 13.244, Water Code, is amended by adding
Subsection (d), to read as follows:
(b) Each [On request by the commission, each] public utility
and water supply or sewer service corporation shall file with the
commission a map or maps showing all its facilities and
illustrating separately facilities for production, transmission,
and distribution of its services, and each certificated retail
public utility shall file with the commission a map or maps showing
any facilities, customers, or area currently being served outside
its certificated areas.
(c) Each applicant for a certificate shall file with the
commission evidence required by the commission to show that the
applicant has received the required consent, franchise, or permit
of the proper municipality or other public authority. Each
applicant for a certificate to serve an area all or part of which is
located in the corporate limits or extraterritorial jurisdiction of
a municipality shall file with the commission a certified copy of an
ordinance or resolution of the municipality consenting to the
certificate or amendment to the certificate.
(d) Applications for certificates of convenience and
necessity or for an amendment to a certificate shall minimally
contain:
(1) a boundary description of the proposed service
area by a metes and bounds survey certified by a Texas registered
professional land surveyor or, if there is a recorded plat of the
area, by lot and block number;
(2) a description of the requests for service made by
landowners, tenants or residents in the proposed service area and
copies of all written service requests;
(3) a capital improvements plan, including budgets and
estimated timelines for construction of all facilities necessary to
provide full service to the entire proposed service area;
(4) a description of the sources of funding for all
facilities necessary to provide full service to the entire proposed
service area other than funding from landowners or the dedication
of facilities from landowners;
(5) a certificate of the central appraisal district
indicating the owners of the real property within the proposed
service area as reflected on the tax rolls of the central appraisal
district as of the date of the application or any amended
application; and
(6) written consent to be included in the certificated
area executed by each and every owner of real property within the
proposed service area as indicated by the certificate of the
central appraisal district.
SECTION 3. Sections 13.246(a) and (c), Water Code, are
amended, and Section 13.246, Water Code, is amended by adding
Subsections (h), (i) and (j), to read as follows:
(a) If an application for a certificate of public
convenience and necessity is filed, the commission shall cause
notice of the application to be given to affected parties and, if
requested, shall fix a time and place for a hearing and give notice
of the hearing. Notice of an application must be mailed to every
owner of land within the proposed service area as reflected on the
tax rolls of the central appraisal district. Any person affected by
the application may intervene at the hearing.
(c) Certificates of convenience and necessity shall be
granted on a nondiscriminatory basis after consideration by the
commission of:
(1) the adequacy of service currently provided to the
requested area;[,]
(2) the need for additional service in the requested
area, including whether any landowners, tenants, or residents have
requested service;[,]
(3) the effect of the granting of a certificate on the
recipient of the certificate, on the landowners in the area, and on
any retail public utility of the same kind already serving the
proximate area;[,]
(4) the ability of the applicant to provide adequate
service, including fire suppression service;
(5) the feasibility of obtaining service from an
adjacent retail public utility;[,]
(6) the financial ability of the applicant to pay for
the facilities, including fire suppression facilities, necessary
to provide continuous and adequate service and the financial
stability of the applicant, including, if applicable, the adequacy
of the applicant's debt-equity ratio;[,]
(7) environmental integrity;[, and]
(8) the probable improvement of service or lowering of
cost to consumers in that area resulting from the granting of the
certificate; and
(9) the effect on the land to be included in the
certificated area.
(h) No real property may be included in the territory of a
certificate of convenience and necessity without the written
consent of the owner of the real property.
(i) No real property within the corporate limits or
extraterritorial jurisdiction of a municipality may be included in
the territory of a certificate of convenience and necessity without
the written consent of the municipality. The municipality may
require, as a condition of such consent, that all water and sewer
facilities be designed and constructed to its municipal standards.
(j) An applicant may not demonstrate its financial ability
to pay for the facilities necessary to provide continuous and
adequate service by relying on a plan to require landowners to pay
the capital cost for, or construct at the landowners' expense and
dedicate, the facilities necessary to provide continuous and
adequate service to their property.
SECTION 4. Section 13.247 is amended to read as follows:
Sec. 13.247. AREA [INCLUDED] WITHIN MUNICIPALITY [CITY,
TOWN, OR VILLAGE]. (a) If an area [has been or] is [included]
within the corporate limits or extraterritorial jurisdiction
[boundaries] of a municipality [city as the result of annexation,
incorporation, or otherwise], all retail public utilities
certified or entitled to certification under this chapter to
provide service or operate facilities in that area [before the
inclusion] may continue and extend service in its area of public
convenience and necessity within the [annexed or incorporated] area
pursuant to the rights granted by its certificate and this chapter,
unless and until the municipality exercises its power of eminent
domain to acquire the property of the retail public utility
pursuant to subsection (d). Except as provided by Section 13.255 of
this code, a municipally owned or operated utility may not provide
retail water and sewer utility service within the area certificated
to another retail public utility without first having obtained from
the commission a certificate of public convenience and necessity
that includes the areas to be served.
(b) Notwithstanding any other provision of law, a retail
public utility may continue and extend service within its area of
public convenience and necessity and utilize the roads, streets,
highways, alleys, and public property to furnish retail utility
service, subject to the authority of the governing body of a
municipality to require any retail public utility, at its own
expense, to relocate its facilities to permit the widening or
straightening of streets, by giving to the retail public utility 30
days' notice and specifying the new location for the facilities
along the right-of-way of the street or streets.
(c) This section may not be construed as limiting the power
of municipalities [cities] to incorporate or extend their
boundaries by annexation, or as prohibiting any municipality [city]
from levying taxes and other special charges for the use of the
streets as are authorized by Section 182.025, Tax Code.
(d) Upon petition of the majority of residents in a retail
public utility, a municipality may exercise its power of eminent
domain to acquire by condemnation the property of a retail public
utility located within its corporate limits or extraterritorial
jurisdiction. The municipality shall pay just and adequate
compensation in accordance with the Texas Constitution and the
federal constitution for such property. This right of eminent
domain shall be exercised in the manner provided in Chapter 21,
Property Code.
SECTION 5. Sections 13.2502(b), (c), (d) and (e), Water
Code, are amended to read as follows:
(b) Notice pursuant to this section shall be mailed to every
owner of land within the area of the certificate as reflected on the
tax rolls of the central appraisal district. [Publication of
notice in a newspaper of general circulation in each county in which
the corporation or special utility district is certificated for
utility service of the requirement to comply with the subdivision
service extension policy constitutes notice under this section.
The notice must be published once a week for two consecutive weeks
on a biennial basis and must contain information describing the
subdivision service extension policy of the corporation or special
utility district. The corporation or special utility district must
be able to provide proof of publication through an affidavit of the
publisher of the newspaper that specifies each county in which the
newspaper is generally circulated.]
(c) [As an alternative to publication of notice as provided
by Subsection (b), a corporation or special utility district may
demonstrate by any reasonable means that a developer has been
notified for purposes of this section, including: (1) an agreement
executed by the developer; (2) correspondence with the developer
that sets forth the subdivision service extension policy; or (3)
any other documentation that reasonably establishes that the
developer should be aware of the subdivision service extension
policy.
(d)] This section does not limit or extend the jurisdiction
of the commission under Section 13.043(g).
(d) [(e)] For purposes of this section:
(1) "Developer" means a person who subdivides land or
requests more than two water or sewer service connections on a
single contiguous tract of land.
(2) "Service applicant" means a person, other than a
developer, who applies for retail water or sewer utility service.
SECTION 6. Section 13.251, Water Code, is amended to read as
follows:
Sec. 13.251. SALE, ASSIGNMENT, OR LEASE OF CERTIFICATE.
(a) Except as provided by Section 13.255 of this code, a utility or
a water supply or sewer service corporation may not sell, assign, or
lease a certificate of public convenience and necessity or any
right obtained under a certificate unless the commission has
determined that the purchaser, assignee, or lessee is capable of
rendering adequate and continuous service to every consumer within
the certified area, after considering the factors under Section
13.246(c) of this code. The sale, assignment, or lease shall be on
the conditions prescribed by the commission.
(b) Public notice of any sale, acquisition, lease, rental,
merger, or consolidation shall include mailed notice to all current
customers and all owners of real property within the service area as
reflected on the tax rolls of the central appraisal district.
(c) A hearing regarding any sale, acquisition, lease,
rental, merger, or consolidation must be held if requested by an
owner of real property within the service area or any retail public
utility already serving the proximate area.
SECTION 7. Section 13.254, Water Code, is amended to read as
follows:
Sec. 13.254. REVOCATION OR AMENDMENT OF CERTIFICATE. (a)
The commission at any time after notice and hearing may revoke or
amend any certificate of public convenience and necessity with the
written consent of the certificate holder or if it finds that:
(1) the certificate holder has never provided, is no
longer providing, or has failed to provide continuous and adequate
service in the area, or part of the area, covered by the
certificate, at no cost to the landowner or customer other than the
standard rates for service charge by the certificate holder to all
of its customers;
(2) in an affected county as defined in Section
16.341, the cost of providing service by the certificate holder is
so prohibitively expensive as to constitute denial of service,
provided that, for commercial developments or for residential
developments started after September 1, 1997, in an affected county
as defined in Section 16.341, the fact that the cost of obtaining
service from the currently certificated retail public utility makes
the development economically unfeasible does not render such cost
prohibitively expensive in the absence of other relevant factors;
(3) the certificate holder has agreed in writing to
allow another retail public utility to provide service within its
service area, except for an interim period, without amending its
certificate; or
(4) the certificate holder has failed to file a cease
and desist action pursuant to Section 13.252 within 180 days of the
date that it became aware that another retail public utility was
providing service within its service area, unless the certificate
holder demonstrates good cause for its failure to file such action
within the 180 days.
(b) Upon written request of an owner of real property within
the certificated area, the commission shall amend the certificate
to remove the owner's property if the owner did not consent to or
request in writing inclusion in the certificated area. Such owner
of real property shall provide compensation for any actual costs
incurred in designing and constructing water and sewer facilities
to serve the owner's property.
(c) [(b)] Upon written request from the certificate holder,
the executive director may cancel the certificate of a utility or
water supply corporation authorized by rule to operate without a
certificate of public convenience and necessity under Section
13.242(c).
(d) [(c)] If the certificate of any retail public utility is
revoked or amended, the commission may require one or more retail
public utilities with their consent to provide service in the area
in question. The order of the commission shall not be effective to
transfer property.
(e) [(d)] A retail public utility may not in any way render
retail water or sewer service directly or indirectly to the public
in an area that has been decertified under subsection (a) [this
section] without providing compensation for any actual costs
incurred in designing and constructing water and sewer facilities
to serve the decertified area [any property that the commission
determines is rendered useless or valueless to the decertified
retail public utility as a result of the decertification].
[(e)] The determination of the monetary amount of such
compensation, if any, shall be determined at the time another
retail public utility seeks to provide service in the previously
decertified area and before service is actually provided.
(f) The monetary amount shall be determined by a qualified
individual or firm serving as independent appraiser agreed upon by
the decertified retail public utility and the retail public utility
seeking to serve the area or the landowner requesting
decertification pursuant to subsection (b). The determination of
compensation by the independent appraiser shall be binding on the
commission. [The costs of the independent appraiser shall be borne
by the retail public utility seeking to serve the area.]
(g) For the purpose of implementing this section, the value
of [real] property shall be determined according to the standards
set forth in Chapter 21, Property Code, governing actions in
eminent domain [and the value of personal property shall be
determined according to the factors in this subsection. The
factors ensuring that the compensation to a retail public utility
for the taking, damaging, or loss of personal property, including
the retail public utility's business, is just and adequate shall at
a minimum include: the impact on the existing indebtedness of the
retail public utility and its ability to repay that debt; the value
of the service facilities of the retail public utility located
within the area in question; the amount of any expenditures for
planning, design, or construction of service facilities that arc
allocable to service to the area in question; the amount of the
retail public utility's contractual obligations allocable to the
area in question; any demonstrated impairment of service or
increase of cost to consumers of the retail public utility
remaining after the decertification; the impact on future revenues
and expenses of the retail public utility; necessary and reasonable
legal expenses and professional fees; factors relevant to
maintaining the current financial integrity of the retail public
utility; and other relevant factors].
(h) The commission shall conduct hearings, on an expedited
bases, to resolve any issues concerning the determination of the
monetary amount of compensation. The commission shall determine
whether payment of compensation shall be in a lump sum or paid out
over a specified period of time. If there were no current customers
in the area decertified and no immediate loss of revenues or if
there are other valid reasons determined by the commission,
installment payments as new customers are added in the decertified
area shall [may] be an acceptable method of payment.
SECTION 8. Section 13.2541, Water Code, is amended to read
as follows:
Sec. 13.2541. REVOCATION OF CERTIFICATE WHEN SERVICE
PROVIDED TO A MUNICIPALITY. (a) Upon petition of the majority of
the residents in a public utility, [This section applies only to a
municipality with a population of more than 1.3 million. (b) On
request of] a municipality served by a public utility may request
that the commission revoke, and the commission shall [at any time
after notice and hearing may] revoke the public utility's
certificate of public convenience and necessity [if it finds that
the public utility: (1) has never provided, is no longer providing,
or has failed to provide continuous and adequate service in the
municipality requesting the revocation; or (2) has been grossly or
continuously mismanaged or has grossly or continuously not complied
with this chapter, commission rules, or commission orders].
(b) [(c)] If the certificate of a public utility is revoked
under Subsection (a)[(b)], the municipality that requested the
revocation shall [operate the decertified public utility for an
interim period prescribed by commission rule and shall request
commission approval to] acquire the decertified public utility's
facilities and the commission shall [to] transfer the decertified
public utility's certificate of convenience and necessity to the
municipality. [The municipality must apply in accordance with
Subchapter H.]
(c) [(d)] The compensation paid to the decertified public
utility for its facilities shall be just and adequate in accordance
with the Texas Constitution and the federal constitution and shall
be determined by a qualified individual or firm serving as
independent appraiser agreed upon by the decertified public utility
and the municipality. The determination of compensation by the
independent appraiser shall be binding on the commission. [The
municipality shall pay the costs of the independent appraiser.]
For the purpose of implementing this section, the value of [real]
property shall be determined according to the standards prescribed
by Chapter 21, Property Code, governing actions in eminent domain.
(d) [(e)] The commission shall determine whether the
municipality shall pay the compensation in a lump sum or over a
specified period.
SECTION 9. Section 13.255(g), Water Code, is amended to
read as follows:
(g) For the purpose of implementing this section, the value
of [real] property shall be determined according to the standards
set forth in Chapter 21, Property Code, governing actions in
eminent domain[; the value of personal property shall be determined
according to the factors in this subsection. The factors ensuring
that the compensation to a retail public utility for the taking,
damaging, and/or loss of personal property, including the retail
public utility's business, is just and adequate, shall, at a
minimum, include: impact on the existing indebtedness of the
retail public utility and its ability to repay that debt, the value
of the service facilities of the retail public utility located
within the area in question, the amount of any expenditures for
planning, design, or construction of service facilities outside the
incorporated or annexed area that are allocable to service to the
area in question, the amount of the retail public utility's
contractual obligations allocable to the area in question, any
demonstrated impairment of service or increase of cost to consumers
of the retail public utility remaining after the single
certification, the impact on future revenues and expenses of the
retail public utility, necessary and reasonable legal expenses and
professional fees, factors relevant to maintaining the current
financial integrity of the retail public utility, and other
relevant factors].
SECTION 10. Subchapter G, Chapter 13, Water Code, is
amended by adding Section 13.258 to read as follows:
Sec. 13.258. RECORDING REQUIREMENTS WITH REAL PROPERTY
RECORDS. (a) All certificate holders must record a certified copy
of their certificate of convenience and necessity and any amendment
thereto in the real property records of each county in which the
service area or a portion of the service area lies and shall submit
to the executive director evidence of such recording. The recorded
certificate must include a boundary description by metes and bounds
survey certified by a Texas registered professional land surveyor
or, if there is a recorded plat of the area, by lot and block number.
(b) The recordation required by this section must be
completed by September 1, 2005, for all certificates then in
existence and within 30 days of receipt of an order from the
commission granting an application for a new service area or an
amendment to an existing service area.
SECTION 11. EFFECTIVE DATE. This Act takes effect
immediately if it receives a vote of two-thirds of all the members
elected to each house, as provided by Section 39, Article III, Texas
Constitution. If this Act does not receive the vote necessary for
immediate effect, this Act takes effect September 1, 2005.