79R4658 JJT-F
By: Armbrister S.B. No. 765
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of water and sewer utility services.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 13, Water Code, is amended
by adding Section 13.004 to read as follows:
Sec. 13.004. LEGISLATIVE FINDINGS AND POLICY REGARDING
REGIONALIZATION OF SERVICES. (a) The legislature finds that
regionalization of retail water or sewer utility services delivery
promotes continuous, adequate, affordable, and reliable water and
sewer utility services.
(b) Regionalization of retail water or sewer utility
services may take the form of:
(1) a single retail public utility serving a service
area that is composed of different communities or different
subdivisions or portions of more than one county;
(2) a single retail public utility serving several
isolated systems with each system providing services to one or more
communities or subdivisions;
(3) several retail public utilities with the
individual systems of the utilities operated through a centrally
coordinated operating system;
(4) one or more retail public utilities served by a
central wholesale provider; or
(5) permanent emergency interconnections between two
or more retail public utilities.
SECTION 2. Sections 13.244(a) and (b), Water Code, are
amended to read as follows:
(a) To obtain a certificate of public convenience and
necessity or an amendment to a certificate, a retail [A] public
utility must [or water supply or sewer service corporation shall]
submit to the commission an application for the [to obtain a]
certificate [of public convenience and necessity] or [an] amendment
[of a certificate].
(b) On request by the commission, each retail 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. The service area boundary defined by the
map may be described by a metes and bounds survey, by lot and block
number, or by verifiable landmarks such as roads, creeks, or
railroads.
SECTION 3. Subchapter G, Chapter 13, Water Code, is amended
by adding Section 13.245 to read as follows:
Sec. 13.245. EXTENSIONS OF CERTIFICATED AREA FOR
MUNICIPALITIES WITH A POPULATION GREATER THAN 750,000. (a) The
commission shall amend a municipality's certificate of public
convenience and necessity on the application of the municipality to
extend the certificated area to match the municipality's extensions
of its extraterritorial jurisdiction.
(b) To qualify for the extension under Subsection (a), the
municipality must:
(1) have a population greater than 750,000;
(2) hold a certificate of public convenience and
necessity for all or a portion of the municipality's
extraterritorial jurisdiction; and
(3) include with the municipality's application for
the amendment a map, following property boundaries identified by
county tax appraisal records, that defines the area proposed to be
certificated.
(c) An extension of the certificated area granted under
Subsection (a) may not include any area that is included in a
certificate of public convenience and necessity held by another
retail public utility.
(d) The commission shall issue the amended certificate of
public convenience and necessity extending the certificated area as
provided by this section not later than the 180th day after the
commission receives the municipality's application.
SECTION 4. Section 13.246, Water Code, is amended by adding
Subsection (a-1) and amending Subsections (b) and (c) to read as
follows:
(a-1) In addition to the notice required by Subsection (a),
the commission by rule shall require notice to be mailed to each
owner of a tract of land included in the area proposed to be
certificated that is 100 acres or larger in size. Notice required
under this subsection must be mailed by first class mail to the
owners of the tracts according to the most current tax appraisal
rolls at the time the commission received the application for the
certificate. Notice under this subsection is not required for a
matter filed with the commission under:
(1) Section 13.248, 13.255, or 13.301; or
(2) Chapter 65.
(b) The commission may grant applications and issue
certificates only if the commission finds that a certificate is
necessary for the service, accommodation, convenience, or safety of
the public. The commission may issue a certificate as requested, or
refuse to issue it, or issue it for the construction of only a
portion of the contemplated system or facility or extension, or for
the partial exercise only of the right or privilege and may impose
special conditions necessary to ensure that continuous and adequate
service is provided. The commission may not grant to more than one
retail public utility serving or proposing to serve an area a
certificate authorizing service to the area unless all retail
public utilities serving and proposing to serve the area consent to
that action.
(c) Certificates of convenience and necessity shall be
granted on a nondiscriminatory basis after consideration by the
commission of the adequacy of service currently provided to the
requested area, the need for additional service in the requested
area, the effect of the granting of a certificate on the recipient
of the certificate and on any retail public utility of the same kind
already serving the proximate area, the ability of the applicant to
provide adequate service, the feasibility of obtaining service from
an adjacent retail public utility, the financial stability of the
applicant, including, if applicable, the adequacy of the
applicant's debt-equity ratio, environmental integrity, and the
probable improvement of service or lowering of cost to consumers in
that area resulting from the granting of the certificate. In
determining the need for additional service in a requested area
under this subsection, the commission shall consider projected
growth in service demand, the benefits of regionalization of
service to present and projected customers by incorporation of the
requested area into an existing certificated area, and the
potential that denial of the certificate for the requested area may
increase the costs of and delays in providing service to the area.
The commission may consider documentary evidence of the current
demand for service in the requested area, but the absence of
documentation of current demand does not preclude certification of
the requested area.
SECTION 5. Section 13.254, Water Code, is amended by
amending Subsections (a), (e), (f), and (g) and adding Subsections
(a-1) and (g-1) to read as follows:
(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, is incapable of providing, or has failed to
provide continuous and adequate service in the area, or part of the
area, covered by the certificate;
(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.
(a-1) In determining whether the certificate holder is
incapable of providing continuous and adequate service, the
commission shall consider:
(1) whether the certificate holder demonstrates
adequate financial, managerial, and technical capability;
(2) whether the certificate holder has responded
appropriately to requests for service;
(3) whether the certificate holder maintains an
adequate supply of water or sewer treatment and disposal capacity
for current and projected service demands;
(4) the effects on regionalization of service that
revocation or amendment of the certificate may have; and
(5) other relevant factors.
(e) The determination of the monetary amount of
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. The
commission shall ensure that the monetary amount of compensation is
determined not later than the 90th day after the date on which a
retail public utility notifies the commission of its intent to
provide service to the decertified area.
(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, if the retail public utilities do not
agree, by an independent appraiser designated by the commission.
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 and the retail public
utility's business 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 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 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.
(g-1) The commission shall adopt rules governing the
evaluation of the factors considered in determining the monetary
value of personal property and a retail public utility's business
under Subsection (g).
SECTION 6. Section 13.2541(d), Water Code, is amended to
read as follows:
(d) The compensation paid to the decertified public utility
for its facilities shall be determined by a qualified individual or
firm serving as independent appraiser agreed upon by the
decertified public utility and the municipality, or, if the retail
public utilities do not agree, by an independent appraiser
designated by the commission. 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.
SECTION 7. Section 13.255, Water Code, is amended by
amending Subsection (g) and adding Subsection (g-1) 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 and the retail public
utility's business 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.
(g-1) The commission shall adopt rules governing the
evaluation of the factors to be considered in determining the
monetary value of personal property and a retail public utility's
business under Subsection (g). The commission by rule shall adopt
procedures to ensure that the determination of the total
compensation to be paid to a retail public utility under Subsection
(g) is paid not later than the 90th day after the date on which the
commission determines that the municipality's application is
administratively complete.
SECTION 8. Section 13.257, Water Code, is amended by
amending Subsections (a) and (b) and adding Subsection (r) to read
as follows:
(a) In this section, "utility service provider" means a
retail public utility [, a water supply or sewer service
corporation, or a special utility district organized and operating
under Chapter 65].
(b) If a person proposes to sell or convey [unimproved] real
property located in a certificated service area of a utility
service provider, the person must give to the purchaser written
notice as prescribed by this section. An executory contract for the
purchase and sale of real property that has a performance period of
more than six months is considered a sale of real property under
this section.
(r) A utility service provider must file a copy of its
current certificated service area map, as contained in the
commission's records, in the real property records of all counties
in which any part of the certificated service area is located. Each
county shall accept and file in its real property records a utility
service provider's map presented to the county clerk under this
subsection.
SECTION 9. The changes in law made by this Act apply only
to:
(1) an application for a certificate of public
convenience and necessity or for an amendment to a certificate of
public convenience and necessity presented to the Public Utility
Commission of Texas on or after January 1, 2006;
(2) a proceeding to amend or revoke a certificate of
public convenience and necessity initiated on or after January 1,
2006; and
(3) a proposal to sell or convey real property that
occurs on or after January 1, 2006.
SECTION 10. This Act takes effect September 1, 2005.