Honorable Troy Fraser, Chair, Senate Committee on Natural Resources
FROM:
John S O'Brien, Director, Legislative Budget Board
IN RE:
SB573 by Nichols (Relating to certificates of public convenience and necessity for water or sewer services.), As Introduced
No significant fiscal implication to the State is anticipated.
The bill would allow the Texas Commission on Environmental Quality (TCEQ) to revoke or amend a Certificate of Convenience and Necessity (CCN) after notice and hearing without a motion or petition. The bill also would delete the requirement that a landowner must first request service from the CCN holder and then demonstrate that an alternate service provider could provide the same level and manner of service before requesting to be released from a CCN.
In addition, the bill would reduce the acreage requirement for an expedited release from a CCN from 50 acres to 25 acres; thus, a landowner with more than 25 acres would be released anytime without cause. The bill would also eliminate current petition requirements for an expedited release, other than the requirement that the petitioner not be in a platted subdivision. The bill also shortens the TCEQ’s review period for an expedited release from 90 to 60 days, and it would require the TCEQ to approve all petitions. The bill adds a limitation that the TCEQ may not deny a petition based on the fact that a CCN holder is a borrower under a federal loan program.
No significant fiscal impact to the TCEQ is expected as a result of the bill's passage.
Local Government Impact
A local government which holds a CCN could be negatively impacted if landowners would be released from such a CCN without cause, especially if: multiple areas would be removed from a CCN; the local government would have already made expenditures to provide services to the area being released; and if the local government was anticipating to recoup such costs through revenues from providing service. Although some of the costs of losing areas from a CNN could be recouped, because the Water Code specifies that compensation may be awarded to a CCN holder if an area is removed from a CCN, this compensation would likely be limited and uncertain, because the award of compensation would not occur until another retail public utility would propose to serve the area.
The cost to a local government resulting from passage of the bill would depend on the number of areas being removed from a CNN service area, the amount of expenditures the local government would have made to provide service to these areas, the amount of revenue the local government anticipated to collect to recoup such costs, and whether another CCN would propose to serve the areas being removed.