80R1522 CBH-D

By: Nichols S.B. No. 727

A BILL TO BE ENTITLED

AN ACT

relating to the authority of a municipality to regulate the provision by a water and sewer utility of service in the municipality's extraterritorial jurisdiction.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sections 13.042(a), (b), (e), and (f), Water Code, are amended to read as follows:

(a) Subject to the limitations imposed in this chapter and for the purpose of regulating rates and services so that those rates may be fair, just, and reasonable and the services adequate and efficient, the governing body of each municipality has exclusive original jurisdiction over all water and sewer utility rates, operations, and services provided by a water and sewer utility within its corporate limits and extraterritorial jurisdiction.

(b) The governing body of a municipality by ordinance may elect to have the commission exercise exclusive original jurisdiction over the utility rates, operation, and services of utilities, within the incorporated limits and extraterritorial jurisdiction of the municipality.

(e) The commission shall have exclusive original jurisdiction over water and sewer utility rates, operations, and services not within the incorporated limits or extraterritorial jurisdiction of a municipality exercising exclusive original jurisdiction over those rates, operations, and services as provided in this chapter.

(f) This subchapter does not give the commission power or jurisdiction to regulate or supervise the rates or service of a utility owned and operated by a municipality, directly or through a municipally owned corporation, within its corporate limits or extraterritorial jurisdiction or to affect or limit the power, jurisdiction, or duties of a municipality that regulates land and supervises water and sewer utilities within its corporate limits or extraterritorial jurisdiction, except as provided by this code.

SECTION 2. Section 13.043(b), Water Code, is amended to read as follows:

(b) Ratepayers of the following entities may appeal the decision of the governing body of the entity affecting their water, drainage, or sewer rates to the commission:

(1) a nonprofit water supply or sewer service corporation created and operating under Chapter 67;

(2) a utility under the jurisdiction of a municipality inside the corporate limits and extraterritorial jurisdiction of the municipality;

(3) a municipally owned utility, if the ratepayers reside outside the corporate limits of the municipality;

(4) a district or authority created under Article III, Section 52, or Article XVI, Section 59, of the Texas Constitution that provides water or sewer service to household users; and

(5) a utility owned by an affected county, if the ratepayer's rates are actually or may be adversely affected. For the purposes of this section ratepayers who reside outside the boundaries of the district or authority shall be considered a separate class from ratepayers who reside inside those boundaries.

SECTION 3. Sections 13.082(a) and (b), Water Code, are amended to read as follows:

(a) Notwithstanding any other provision of this section, municipalities shall continue to regulate each kind of local utility service inside their boundaries and extraterritorial jurisdiction until the commission has assumed jurisdiction over the respective utility pursuant to this chapter.

(b) If a municipality does not surrender its jurisdiction, local utility service within the boundaries and extraterritorial jurisdiction of the municipality shall be exempt from regulation by the commission under this chapter to the extent that this chapter applies to local service, and the municipality shall have, regarding service within its boundaries and extraterritorial jurisdiction, the right to exercise the same regulatory powers under the same standards and rules as the commission or other standards and rules not inconsistent with them. The commission's rules relating to service and response to requests for service for utilities operating within a municipality's corporate limits and extraterritorial jurisdiction apply unless the municipality adopts its own rules.

SECTION 4. Section 13.083, Water Code, is amended to read as follows:

Sec. 13.083. RATE DETERMINATION. A municipality regulating its water and sewer utilities under this chapter shall require from those utilities all necessary data to make a reasonable determination of rate base, expenses, investment, and rate of return within the municipal boundaries and extraterritorial jurisdiction. The standards for this determination shall be based on the procedures and requirements of this chapter, and the municipality shall retain any personnel necessary to make the determination of reasonable rates required under this chapter.

SECTION 5. Section 13.139(b), Water Code, is amended to read as follows:

(b) The governing body of a municipality, as the regulatory authority for public utilities operating within its corporate limits and extraterritorial jurisdiction, and the commission as the regulatory authority for public utilities operating outside the corporate limits and extraterritorial jurisdiction of any municipality, after reasonable notice and hearing on its own motion, may:

(1) ascertain and fix just and reasonable standards, classifications, regulations, service rules, minimum service standards or practices to be observed and followed with respect to the service to be furnished;

(2) ascertain and fix adequate and reasonable standards for the measurement of the quantity, quality, pressure, or other condition pertaining to the supply of the service;

(3) prescribe reasonable regulations for the examination and testing of the service and for the measurement of service; and

(4) establish or approve reasonable rules, regulations, specifications, and standards to secure the accuracy of all meters, instruments, and equipment used for the measurement of any utility service.

SECTION 6. This Act applies only to a statement of intent to change rates delivered to a regulatory authority on or after the effective date of this Act. A statement of intent delivered before the effective date of this Act is governed by the law in effect on the date the statement was delivered, and that law is continued in effect for that purpose.

SECTION 7. This Act takes effect September 1, 2007.