81R9720 JJT-F

By: Flynn H.B. No. 1784

A BILL TO BE ENTITLED

AN ACT

relating to the rates charged by a water and sewer utility.

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

SECTION 1. Sections 13.043(e) and (h), Water Code, are amended to read as follows:

(e) In an appeal under Subsection (b) of this section, the commission shall hear the appeal de novo and shall fix in its final order the rates the governing body should have fixed in the action from which the appeal was taken. The commission may establish the effective date for the commission's rates at the original effective date as proposed by the service provider and[,] may order refunds or allow a surcharge to recover lost revenues. The commission[, and] may not allow recovery of any rate case [reasonable] expenses incurred by the retail public utility in the appeal proceedings. The commission may consider only the information that was available to the governing body at the time the governing body made its decision [and evidence of reasonable expenses incurred by the retail public utility in the appeal proceedings]. The rates established by the commission in an appeal under Subsection (b) of this section remain in effect until the first anniversary of the effective date proposed by the retail public utility for the rates being appealed or until changed by the service provider, whichever date is later, unless the commission determines that a financial hardship exists.

(h) The commission or executive director may[, on a motion by the executive director or by the appellant under Subsection (a), (b), or (f) of this section,] establish interim rates to be in effect until a final decision is made in an appeal filed under Subsection (a), (b), or (f).

SECTION 2. Section 13.185(h), Water Code, is amended to read as follows:

(h) The regulatory authority may not include for ratemaking purposes:

(1) legislative advocacy expenses, whether made directly or indirectly, including legislative advocacy expenses included in trade association dues;

(2) costs of processing a refund or credit under Section 13.187 [of this chapter]; [or]

(3) rate case expenses incurred during the hearing process; or

(4) any expenditure found by the regulatory authority to be unreasonable, unnecessary, or not in the public interest, including executive salaries, advertising expenses, legal expenses, and civil penalties or fines.

SECTION 3. Sections 13.187(a), (d), (d-1), (e), (f), (k), (l), and (o), Water Code, are amended to read as follows:

(a) A utility may not make changes in its rates except by delivering a statement of intent to each ratepayer and with the regulatory authority having original jurisdiction at least 120 [60] days before the proposed effective date of the proposed change. The proposed effective date of the new rates must be the first day of a billing period, and the new rates may not apply to service received before the proposed effective date of the new rates. The statement of intent must include:

(1) the information required by the regulatory authority's rules;

(2) a billing comparison regarding the existing water rate and the new water rate computed for the use of:

(A) 10,000 gallons of water; and

(B) 30,000 gallons of water; and

(3) a billing comparison regarding the existing sewer rate and the new sewer rate computed for the use of 10,000 gallons, unless the utility proposes a flat rate for sewer services.

(d) Except as provided by Subsection (d-1), if the application or the statement of intent is not substantially complete or does not comply with the regulatory authority's rules, it may be rejected and the proposed effective date of the rate change may be suspended until a properly completed application is accepted by the regulatory authority and a proper statement of intent is provided. The commission may also suspend the proposed effective date of any rate change if the utility does not have a certificate of public convenience and necessity or a completed application for a certificate or to transfer a certificate pending before the commission or if the utility is delinquent in paying the assessment and any applicable penalties or interest required by Section 5.701(n) of this code.

(d-1) Subject to Subsection (k), after [After] written notice to the utility, a local regulatory authority may suspend the proposed effective date of a rate change for not more than 90 days from the proposed effective date[, except that the suspension shall be extended by two days for each day a hearing exceeds 15 days. If the local regulatory authority does not make a final determination on the proposed rate before the expiration of the applicable suspension period, the proposed rate shall be considered approved. The approval is subject to the local regulatory authority's continuation of a hearing in progress].

(e) The regulatory authority shall hold a hearing on the proposed rate increase if, [If,] before the 91st day after the [effective] date the statement of intent was provided to the authority and each ratepayer under Subsection (a) [of the rate change], the regulatory authority receives a complaint from any affected municipality, or from the lesser of 1,000 or 10 percent of the ratepayers of the utility over whose rates the regulatory authority has original jurisdiction[, the regulatory authority shall set the matter for hearing].

(f) The regulatory authority may set the matter for hearing on its own motion at any time within 120 days after the [effective] date the statement of intent was provided to the authority and each ratepayer under Subsection (a) [of the rate change]. If more than half of the ratepayers of the utility receive service in a county with a population of more than 2.5 million, the hearing must be held at a location in that county.

(k) If the regulatory authority sets the matter for [receives at least the number of complaints from ratepayers required for the regulatory authority to set] a hearing under Subsection (e), the regulatory authority shall [may], pending the hearing and a decision, suspend the date the rate change would otherwise be effective until the date the regulatory authority issues a final decision on the matter. [Except as provided by Subsection (d-1), the proposed rate may not be suspended for longer than:

[(1) 90 days by a local regulatory authority; or

[(2) 150 days by the commission.]

(l) At any time during the pendency of the rate proceeding the regulatory authority or the executive director may fix interim rates to remain in effect until a final determination is made on the proposed rate.

(o) If the [a] regulatory authority does not set a hearing on the proposed rate increase under Subsection (e) or (f), [other than the commission establishes interim rates or an escrow account, the regulatory authority must make a final determination on the rates not later than the first anniversary of the effective date of the interim rates or escrowed rates or] the rates are automatically approved as requested by the utility.

SECTION 4. Sections 13.187(i), (j), and (n), Water Code, are repealed.

SECTION 5. This Act applies only to a statement of intent filed on or after the effective date of this Act. A rate change to which a statement of intent filed before the effective date of this Act applies is governed by the law in effect on the date the statement was filed, and that law is continued in effect for that purpose.

SECTION 6. This Act takes effect September 1, 2009.