86R5758 JXC-D
 
  By: Hinojosa S.B. No. 1310
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the procedure for amending or revoking certificates of
  public convenience and necessity issued to certain water utilities.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 13.254, Water Code, is amended to read as
  follows:
         Sec. 13.254.  REVOCATION OR AMENDMENT OF CERTIFICATE. (a)
  The utility commission at any time after notice and hearing may
  revoke or amend any certificate of public convenience and
  necessity:
               (1)  with the written consent of the certificate
  holder; or
               (2)  if the utility commission finds that:
                     (A)  [(1)] the certificate holder has never
  provided, is no longer providing, is incapable of providing, or has
  failed to provide continuous and adequate service in the area, or
  part of the area, covered by the certificate;
                     (B)  [(2)] in an affected county as defined in
  Section 16.341, the cost of providing service by the certificate
  holder is so prohibitively expensive as to constitute denial of
  service, provided that, for commercial developments or for
  residential developments started after September 1, 1997, in an
  affected county as defined in Section 16.341, the fact that the cost
  of obtaining service from the currently certificated retail public
  utility makes the development economically unfeasible does not
  render such cost prohibitively expensive in the absence of other
  relevant factors;
                     (C)  [(3)] the certificate holder has agreed in
  writing to allow another retail public utility to provide service
  within its service area, except for an interim period, without
  amending its certificate; or
                     (D)  [(4)] the certificate holder has failed to
  file a cease and desist action pursuant to Section 13.252 within 180
  days of the date that it became aware that another retail public
  utility was providing service within its service area, unless the
  certificate holder demonstrates good cause for its failure to file
  such action within the 180 days.
         (b)  For a proceeding under Subsection (a) in which another
  retail public utility proposes to provide service in the
  decertified area and the certificate holder has not agreed to the
  decertification, the utility commission shall issue an initial
  order to revoke or amend the certificate and follow the process in
  this section to require that the alternate retail public utility
  provide compensation to the certificate holder.
         (c)  [(a-1)] As an alternative to decertification under
  Subsection (a), the owner of a tract of land that is at least 50
  acres and that is not in a platted subdivision actually receiving
  water or sewer service may petition the utility commission under
  this subsection for expedited release of the area from a
  certificate of public convenience and necessity so that the area
  may receive service from another retail public utility. The fact
  that a certificate holder is a borrower under a federal loan program
  is not a bar to a request under this subsection for the release of
  the petitioner's land and the receipt of services from an
  alternative provider. [On the day the petitioner submits the
  petition to the utility commission, the petitioner shall send, via
  certified mail, a copy of the petition to the certificate holder,
  who may submit information to the utility commission to controvert
  information submitted by the petitioner.] The petitioner must
  demonstrate in the petition that:
               (1)  a written request for service, other than a
  request for standard residential or commercial service, has been
  submitted to the certificate holder, identifying:
                     (A)  the area for which service is sought;
                     (B)  the timeframe within which service is needed
  for current and projected service demands in the area;
                     (C)  the level and manner of service needed for
  current and projected service demands in the area;
                     (D)  the approximate cost for the alternative
  provider to provide the service at the same level and manner that is
  requested from the certificate holder;
                     (E)  the flow and pressure requirements and
  specific infrastructure needs, including line size and system
  capacity for the required level of fire protection requested; and
                     (F)  any additional information requested by the
  certificate holder that is reasonably related to determination of
  the capacity or cost for providing the service;
               (2)  the certificate holder has been allowed at least
  90 calendar days to review and respond to the written request and
  the information it contains;
               (3)  the certificate holder:
                     (A)  has refused to provide the service;
                     (B)  is not capable of providing the service on a
  continuous and adequate basis within the timeframe, at the level,
  at the approximate cost that the alternative provider is capable of
  providing for a comparable level of service, or in the manner
  reasonably needed or requested by current and projected service
  demands in the area; or
                     (C)  conditions the provision of service on the
  payment of costs not properly allocable directly to the
  petitioner's service request, as determined by the utility
  commission; and
               (4)  the alternate retail public utility from which the
  petitioner will be requesting service possesses the financial,
  managerial, and technical capability to provide continuous and
  adequate service within the timeframe, at the level, at the cost,
  and in the manner reasonably needed or requested by current and
  projected service demands in the area.
         (d)  A landowner who intends to file a petition under
  Subsection (c) shall provide to the certificate holder notice of
  the landowner's intent to file the petition at least 30 days before
  the date the landowner files the petition. The notice must specify
  the tract of land to be decertified. On the day the landowner
  submits the petition to the utility commission under Subsection
  (c), the landowner by certified mail shall send a copy of the
  petition to the certificate holder. The certificate holder may
  submit to the utility commission information to controvert
  information submitted by the landowner.
         (e)  [(a-2)] A landowner is not entitled to make the election
  described in Subsection (c) [(a-1)] or (h) [(a-5)] but is entitled
  to contest under Subsection (a) the involuntary certification of
  its property in a hearing held by the utility commission if the
  landowner's property is located:
               (1)  within the boundaries of any municipality or the
  extraterritorial jurisdiction of a municipality with a population
  of more than 500,000 and the municipality or retail public utility
  owned by the municipality is the holder of the certificate; or
               (2)  in a platted subdivision actually receiving water
  or sewer service.
         (f)  Not later than the 60th day after [(a-3) Within 60
  calendar days from] the date the utility commission determines a
  [the] petition filed pursuant to Subsection (c) [(a-1)] to be
  administratively complete, the utility commission shall issue an
  initial order granting [grant] the petition unless the utility
  commission makes an express finding that the petitioner failed to
  satisfy the elements required in Subsection (c) [(a-1)] and
  supports its finding with separate findings and conclusions for
  each element based solely on the information provided by the
  petitioner and the certificate holder. The utility commission may
  grant or deny a petition subject to terms and conditions
  specifically related to the service request of the petitioner and
  all relevant information submitted by the petitioner and the
  certificate holder. [In addition, the utility commission may
  require an award of compensation as otherwise provided by this
  section.]
         (g)  [(a-4)] Chapter 2001, Government Code, does not apply to
  a [any] petition filed under Subsection (c) [(a-1)]. The decision
  of the utility commission on the petition is final after any
  reconsideration authorized by the utility commission's rules and
  may not be appealed.
         (h)  [(a-5)] As an alternative to decertification under
  Subsection (a) and expedited release under Subsection (c) [(a-1)],
  the owner of a tract of land that is at least 25 acres and that is
  not receiving water or sewer service may petition for expedited
  release of the area from a certificate of public convenience and
  necessity and is entitled to that release if the landowner's
  property:
               (1)  is located in a county:
                     (A)  with a population of at least one million or
  that is[, a county] adjacent to a county with a population of at
  least one million; or
                     (B)  [, or a county] with a population of more than
  200,000 and less than 220,000 that does not contain a public or
  private university that had a total enrollment in the most recent
  fall semester of 40,000 or more; and
               (2)  is not located[, and not] in a county that has a
  population of more than 45,500 and less than 47,500.
         (i)  A landowner who intends to file a petition under
  Subsection (h) shall provide to the certificate holder notice of
  the landowner's intent to file the petition at least 30 days before
  the date the landowner files the petition. The notice must specify
  the tract of land to be decertified.
         (j) [(a-6)]  The utility commission shall issue an initial
  order granting [grant] a petition received under Subsection (h)
  [(a-5)] not later than the 60th day after the date the landowner
  files the petition. The utility commission may not deny a petition
  received under Subsection (h) [(a-5)] based on the fact that a
  certificate holder is a borrower under a federal loan program. [The
  utility commission may require an award of compensation by the
  petitioner to a decertified retail public utility that is the
  subject of a petition filed under Subsection (a-5) as otherwise
  provided by this section.]
         (k)  A [(a-7) The] utility shall include with the statement
  of intent provided to each landowner or ratepayer a notice of:
               (1)  a proceeding under this section related to
  certification or decertification;
               (2)  the reason or reasons for the proposed rate
  change; and
               (3)  any bill payment assistance program available to
  low-income ratepayers.
         (l)  [(a-8)] If a certificate holder has never made service
  available through planning, design, construction of facilities, or
  contractual obligations to serve the area a petitioner seeks to
  have released under Subsection (c) [(a-1)], the utility commission
  is not required to find that the proposed alternative provider is
  capable of providing better service than the certificate holder,
  but only that the proposed alternative provider is capable of
  providing the requested service.
         (m)  [(a-9)] Subsection (l) [(a-8)] does not apply to a
  county:
               (1)  that borders the United Mexican States and the
  Gulf of Mexico or a county adjacent to a county that borders the
  United Mexican States and the Gulf of Mexico;
               (2)  [.
         [(a-10)  Subsection (a-8) does not apply to a county:
               [(1)] with a population of more than 30,000 and less
  than 35,000 that borders the Red River;
               (3)  [or
               [(2)] with a population of more than 100,000 and less
  than 200,000 that borders a county described by Subdivision (2);
               (4)  [(1).
         [(a-11)  Subsection (a-8) does not apply to a county:
               [(1)] with a population of 130,000 or more that is
  adjacent to a county with a population of 1.5 million or more that
  is within 200 miles of an international border; or
               (5)  [(2)] with a population of more than 40,000 and
  less than 50,000 that contains a portion of the San Antonio River.
         (n)  [(b)] Upon written request from the certificate holder,
  the utility commission may cancel the certificate of a utility or
  water supply corporation authorized by rule to operate without a
  certificate of public convenience and necessity under Section
  13.242(c).
         (o)  [(c)] If the certificate of any retail public utility is
  revoked or amended under this section, the utility commission may
  require one or more retail public utilities with their consent to
  provide service in the decertified area [in question]. An [The]
  order of the utility commission issued under this subsection shall
  not be effective to transfer property.
         (p)  In an initial order issued under Subsection (b), (f), or
  (j), the utility commission shall require the certificate holder,
  not later than the 20th day after the date the order is issued, to
  submit to the utility commission and, as applicable, the petitioner
  and any retail public utility that intends to provide service to the
  decertified area the following information, which must be current
  as of the date the information is provided:
               (1)  the number of potable water connections the
  certificate holder could have served in the decertified area at a
  density of one connection per acre while maintaining 0.6 gallons
  per minute of potable water supply to each connection with the
  groundwater supply, surface water supply, and treated water
  purchase contract supply available to the certificate holder;
               (2)  the number of wastewater connections the
  certificate holder could have served in the decertified area at a
  density of one connection per acre while maintaining 200 gallons
  per day of wastewater treatment capacity to each connection with
  the combined wastewater treatment plant capacity and wastewater
  treatment wholesale contract capacity available to the certificate
  holder;
               (3)  the certificate holder's base monthly retail rate;
  and
               (4)  any additional supporting evidence or
  documentation for the information described by Subdivision (1),
  (2), or (3) if required by the utility commission.
         (q)  Not later than the 30th day after the date the utility
  commission receives the information required to be submitted under
  Subsection (p), the utility commission shall issue a second order
  requiring that just and adequate compensation be paid to the
  certificate holder and establishing the amount of compensation.
  Compensation is just and adequate if the compensation is in an
  amount equal to the certificate holder's base monthly retail rate
  multiplied by the number of water and wastewater connections the
  certificate holder could have served in the decertified area for a
  period of 10 years. For an area decertified under Subsection (a),
  the alternate retail public utility that intends to serve the area
  shall pay the compensation. For an area decertified under
  Subsection (c) or (h), the petitioner shall pay the compensation. 
         (r)  Notwithstanding Subsection (q), the retail public
  utility or petitioner may, before the date the utility commission
  is authorized to issue a second order under Subsection (q), request
  that the utility commission notify the retail public utility or
  petitioner of the amount of compensation the utility commission
  intends to order and request a hearing on the issue of compensation
  before the utility commission to be held before the second order may
  be issued. The utility commission is not required to hold the
  hearing unless the requestor deposits the amount of compensation
  the utility commission intends to order into the registry of the
  district court of Travis County, pending the outcome of the
  hearing.
         (s)  The utility commission shall conduct a hearing under
  Subsection (r) not later than the 60th day after the date of the
  request. At the hearing, the utility commission shall consider
  evidence relating to all information submitted under Subsection
  (p). The utility commission shall issue the second order after the
  hearing. 
         (t)  When compensation has been paid according to the
  requirements of the second order, the utility commission shall
  issue a third order to finalize the decertification of the retail
  public utility. The third order must be made effective as of the
  date the compensation is paid.
         (u)  [(d)     A retail public utility may not in any way render
  retail water or sewer service directly or indirectly to the public
  in an area that has been decertified under this section without
  providing compensation for any property that the utility commission
  determines is rendered useless or valueless to the decertified
  retail public utility as a result of the decertification.
         [(e)     The determination of the monetary amount of
  compensation, if any, shall be determined at the time another
  retail public utility seeks to provide service in the previously
  decertified area and before service is actually provided. The
  utility commission shall ensure that the monetary amount of
  compensation is determined not later than the 90th calendar day
  after the date on which a retail public utility notifies the utility
  commission of its intent to provide service to the decertified
  area.
         [(f)     The monetary amount shall be determined by a qualified
  individual or firm serving as independent appraiser agreed upon by
  the decertified retail public utility and the retail public utility
  seeking to serve the area. The determination of compensation by the
  independent appraiser shall be binding on the utility commission.
  The costs of the independent appraiser shall be borne by the retail
  public utility seeking to serve the area.
         [(g)     For the purpose of implementing this section, the value
  of real property owned and utilized by the retail public utility for
  its facilities shall be determined according to the standards set
  forth in Chapter 21, Property Code, governing actions in eminent
  domain and the value of personal property shall be determined
  according to the factors in this subsection. The factors ensuring
  that the compensation to a retail public utility is just and
  adequate shall include: the amount of the retail public utility's
  debt allocable for service to the area in question; the value of the
  service facilities of the retail public utility located within the
  area in question; the amount of any expenditures for planning,
  design, or construction of service facilities that are allocable to
  service to the area in question; the amount of the retail public
  utility's contractual obligations allocable to the area in
  question; any demonstrated impairment of service or increase of
  cost to consumers of the retail public utility remaining after the
  decertification; the impact on future revenues lost from existing
  customers; necessary and reasonable legal expenses and
  professional fees; and other relevant factors. The utility
  commission shall adopt rules governing the evaluation of these
  factors.
         [(g-1)     If the retail public utilities cannot agree on an
  independent appraiser within 10 calendar days after the date on
  which the retail public utility notifies the utility commission of
  its intent to provide service to the decertified area, each retail
  public utility shall engage its own appraiser at its own expense,
  and each appraisal shall be submitted to the utility commission
  within 60 calendar days. After receiving the appraisals, the
  utility commission shall appoint a third appraiser who shall make a
  determination of the compensation within 30 days. The determination
  may not be less than the lower appraisal or more than the higher
  appraisal. Each retail public utility shall pay half the cost of the
  third appraisal.
         [(h)]  A certificate holder that has land removed from its
  certificated service area in accordance with this section may not
  be required, after the land is removed, to provide service to the
  removed land for any reason, including the violation of law or
  utility commission or commission rules by a water or sewer system of
  another person.
         SECTION 2.  The changes in law made by this Act apply only to
  a proceeding affecting a certificate of public convenience and
  necessity that commences on or after the effective date of this Act.
  A proceeding affecting a certificate of public convenience and
  necessity that commenced before the effective date of this Act is
  governed by the law in effect on the date the proceeding is
  commenced, and that law is continued in effect for that purpose.
         SECTION 3.  This Act takes effect September 1, 2019.