Amend CSHB 3693 (Senate committee printing) by inserting the 
following appropriately numbered SECTION to read as follows and 
renumbering subsequent SECTIONS accordingly:
	SECTION __. (a)  Section 104.301, Utilities Code, is amended 
to read as follows:
	Sec. 104.301.  INTERIM ADJUSTMENT FOR ELIGIBLE 
INFRASTRUCTURE INVESTMENTS [CHANGES IN INVESTMENT].  (a)  The 
purpose of this subchapter is to provide for the prompt replacement 
of aging portions of the gas delivery system, and to address energy 
demand, energy load, energy efficiency incentives, energy 
programs, and energy performance measures.
	(b)  In this section, "eligible infrastructure investment" 
means the difference between the value of the invested capital of a 
gas utility 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.  The term does not include:
		(1)  changes in invested capital resulting from 
allocations of invested capital to the utility from an affiliate or 
an operating division of the utility not subject to this title other 
than allocations of net investment in computer equipment, software, 
communications, and metering; or
		(2)  classifications of investment that were not 
included in the utility's invested capital in the utility's most 
recent ratemaking proceeding.
	(c)  A gas utility that has filed a rate case under 
Subchapter C within the preceding two years may file with each [the] 
regulatory authority an application for a tariff or rate schedule 
that provides for an interim adjustment in the utility's monthly 
customer charge or initial block rate to recover the cost of an 
eligible infrastructure investment [changes in the investment in 
service for gas utility services].  The adjustment, if granted,
shall be allocated among the gas utility's classes of customers in 
the same manner as the cost of service was allocated among classes 
of customers in the utility's latest effective rates for the area in 
which the tariff or rate schedule is implemented.
	(d)  The gas utility shall file the application for the
tariff, [or] rate schedule, or interim [the annual] adjustment 
[under Subsection (c),] with each [the] regulatory authority for 
the area in which the tariff or rate schedule will be implemented at 
least 60 days before the proposed implementation date of the 
tariff, rate schedule, or interim [annual] adjustment.  The gas 
utility shall provide notice of the application for the tariff, 
rate schedule, or interim [annual] adjustment to affected customers 
by bill insert or direct mail not later than the 45th day after the 
date the utility files the application for the tariff, rate 
schedule, or interim [annual] adjustment with the regulatory 
authorities [authority].
	(e)  During the 60-day period, the regulatory authorities
[authority] may act to suspend the implementation of the tariff, 
rate schedule, or interim [annual] adjustment for up to 45 days.  
The regulatory authority may approve, approve in part, or deny the 
application for the tariff, rate schedule, or interim adjustment 
filed by the gas utility with the regulatory authority.  An 
approval, approval in part, or denial of a tariff, rate schedule, or 
interim adjustment by a municipality in its capacity as a 
regulatory authority may be appealed by the gas utility to the 
railroad commission as provided by Section 102.001(b).  In deciding 
to approve, approve in part, or deny an application, the commission 
shall consider comments submitted by a regulatory authority.  After 
the issuance of a final order or decision by the [a] regulatory 
authorities [authority] in a rate case that is filed after the 
implementation of a tariff or rate schedule under this section, any 
change in investment that has been included in an interim 
adjustment in accordance with the tariff or rate schedule under 
this section shall no longer be subject to subsequent review for 
reasonableness or prudence.  Until the issuance of a final order or 
decision by a regulatory authority in a rate case that is filed 
after the implementation of a tariff or rate schedule under this 
section, all amounts collected under the tariff or rate schedule 
before the filing of the rate case are subject to refund.  The gas 
utility shall maintain complete records in accordance with 
commission rules sufficient to identify the specific items and 
amounts included in the interim adjustment and to support the 
inclusion of those items and amounts in the interim adjustment.
	(f) [(b)  The amount the gas utility shall adjust the 
utility's rates upward or downward 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)]  The interim adjustment shall be recalculated on an 
annual basis [in accordance with the requirements of Subsection 
(b)].  The gas utility may file a request with a [the] regulatory 
authority to suspend the operation of the tariff or rate schedule 
for any year.  The request must be in writing and state the reasons 
why the suspension is justified.  The regulatory authority may 
grant the suspension on a showing by the utility of reasonable 
justification.
	(g) [(d)]  A gas utility may only adjust the utility's rates 
under the tariff or rate schedule for the return on investment, 
depreciation expense, ad valorem taxes, revenue related taxes, and 
incremental federal income taxes related to the eligible 
infrastructure investment [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 final order issued by or settlement agreement 
approved by the regulatory authorities [authority] establishing 
the gas utility's latest effective rates for the area in which the 
tariff or rate schedule is implemented.
	(h) [(e)]  A gas utility that implements a tariff or rate 
schedule under this section shall file with the regulatory 
authorities [authority] an annual report describing the elements of 
each eligible infrastructure investment [projects] completed and 
placed in service during the preceding calendar year and the 
investments retired or abandoned during the preceding calendar 
year.  The annual report shall also state the cost, need, and 
customers benefited by each eligible infrastructure [the change in] 
investment.
	(i) [(f)]  In addition to the report required under 
Subsection (h) [(e)], the gas utility shall file with the 
regulatory authorities [authority] an annual earnings monitoring 
report in a form established by the railroad commission and
demonstrating the utility's earnings during the preceding calendar 
year.
	(j) [(g)]  If the gas utility is earning a return on invested 
capital, as demonstrated by the report filed under Subsection (i)
[(f)], 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.
	(k) [(h)]  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.
	(l) [(i)]  This section does not limit the power of [a] 
regulatory authorities otherwise provided by this code [authority 
under Section 104.151].
	(m) [(j)]  A gas utility implementing a tariff or rate 
schedule under this section shall reimburse the railroad commission 
the utility's proportionate share of the railroad commission's 
costs related to the administration of the interim rate adjustment 
mechanism provided by this section.
	(n)  A gas utility implementing a tariff or rate schedule 
under this section shall reimburse a municipality or coalition of 
municipalities for the municipality's or coalition's reasonable 
costs of consultants, accountants, auditors, attorneys, and 
engineers engaged to review the interim rate adjustment.  The 
amount that a utility is obligated to reimburse a municipality or a 
coalition of municipalities under this subsection may not exceed an 
amount equal to two percent of the expected annual increase in 
revenue that the utility will derive from the interim rate 
adjustment in the area subject to the original jurisdiction of the 
municipality or, with respect to a coalition of municipalities, the 
area subject to the original jurisdiction of the municipalities 
participating in the coalition.
	(o)  The exclusion of a portion of the gas utility's invested 
capital under Subsection (b) does not preclude the utility from 
requesting that amount in its invested capital in a general rate 
case brought under Subchapter C.
	(b)  This section applies only to an application for a tariff 
or rate schedule in relation to which a regulatory authority has not 
issued a final order on the effective date of this section.  An 
application in relation to which a regulatory authority has issued 
a final order before the effective date of this section is governed 
by the law in effect on the date the final order is issued, and that 
law is continued in effect for that purpose.