|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to the authority of a gas utility to receive an interim |
|
adjustment for certain infrastructure projects. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. 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 an incentive to gas |
|
utilities to promptly replace aging portions of the gas delivery |
|
system, to encourage investment, and to enhance reliability, public |
|
safety, and service without triggering the need for a ratemaking |
|
proceeding to recover the utility's return on, and associated |
|
increases in, invested capital. |
|
(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. |
|
SECTION 2. This Act 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 Act. An |
|
application in relation to which a regulatory authority has issued |
|
a final order before the effective date of this Act 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. |
|
SECTION 3. This Act takes effect September 1, 2007. |