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A BILL TO BE ENTITLED
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AN ACT
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relating to allowing a water and sewer utility to assess a system |
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construction and improvement surcharge to recover certain costs |
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associated with certain construction and improvement projects. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter F, Chapter 13, Water Code, is amended |
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by adding Section 13.193 to read as follows: |
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Sec. 13.193. SYSTEM CONSTRUCTION AND IMPROVEMENT |
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SURCHARGE. (a) A utility may charge a system construction and |
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improvement surcharge to recover the depreciation and pre-tax |
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return costs of a project that is: |
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(1) completed and placed into service between two |
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consecutive rate cases; and |
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(2) related to a: |
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(A) distribution system; |
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(B) collection system; or |
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(C) treatment works project. |
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(b) The commission by rule shall: |
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(1) adopt standards regarding the types of projects |
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for which a utility may assess a surcharge under this section; |
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(2) require a utility that proposes to assess a |
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surcharge under this section to file a tariff establishing the |
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manner in which the utility intends to assess the surcharge, which |
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may include: |
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(A) a sliding scale of utility rates; or |
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(B) an alternative method of automatic rate |
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adjustments; and |
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(3) adopt standards and procedures to be followed in |
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establishing the method by which the surcharge is assessed and the |
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amount of the surcharge. |
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(c) In adopting rules under Subsection (b), the commission |
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shall ensure that: |
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(1) the utility is required to submit to the executive |
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director for review and approval a proposed capital budget that |
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specifies the projects and related depreciation and pre-tax return |
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costs in relation to which the utility wants to impose the |
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surcharge; |
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(2) the total amount the utility is authorized to |
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recover annually through the surcharge and the amount the utility |
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actually recovers are subject to annual audit by the executive |
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director; |
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(3) the amount the utility recovers from the surcharge |
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includes an amount necessary to ensure that the surcharge yields a |
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rate of return on invested capital that is equal to the rate of |
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return approved for the utility in the utility's most recent |
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approved base rate application; |
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(4) the amount the utility recovers from the surcharge |
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each year does not exceed an amount equal to 10 percent of the |
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utility's annual revenue; |
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(5) the utility does not implement an increase under |
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this section more often than once each calendar quarter; |
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(6) the surcharge is applied to the customers of each |
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system that is included on a combined tariff authorized under |
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Section 13.145; and |
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(7) the utility provides to each customer written |
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notice of the surcharge and any increase in the surcharge before the |
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surcharge or increase is implemented. |
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(d) The implementation of a surcharge or an increase in a |
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surcharge is not a rate change for purposes of Section 13.187. |
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SECTION 2. The changes in law made by Section 13.193, Water |
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Code, as added by this Act, apply only to a project that is |
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completed and placed into service on or after the effective date of |
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this Act. A project that is completed and placed into service before |
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the effective date of this Act is subject to the law in effect at |
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that time, and that law is continued in effect for that purpose. |
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SECTION 3. The Texas Commission on Environmental Quality |
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shall adopt rules consistent with Section 13.193, Water Code, as |
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added by this Act, not later than December 1, 2009. |
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SECTION 4. This Act takes effect September 1, 2009. |