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A BILL TO BE ENTITLED
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AN ACT
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relating to the recovery and reimbursement of certain expenses by |
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an electric utility or a water and sewer utility in a rate |
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proceeding. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 33.023, Utilities Code, is amended by |
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adding Subsection (c) to read as follows: |
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(c) For purposes of Subsection (b), the electric utility may |
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not reimburse the governing body of a municipality for any legal |
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expenses that the regulatory authority determines were incurred due |
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to the municipality: |
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(1) filing a frivolous or groundless discovery motion; |
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or |
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(2) engaging in: |
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(A) an act intended to harass, delay, or |
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needlessly increase the expense incurred for participating in the |
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proceeding; or |
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(B) conduct not in the public interest. |
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SECTION 2. Section 36.061, Utilities Code, is amended by |
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adding Subsections (b-1), (b-2), and (b-3) to read as follows: |
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(b-1) For purposes of Subsection (b)(2), the regulatory |
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authority may not allow as a cost or expense legal expenses incurred |
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by an electric utility for participating in a rate proceeding under |
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this title that exceed a total of: |
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(1) $500,000; and |
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(2) 50 percent of the legal expenses incurred by the |
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electric utility to participate in the proceeding that exceed |
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$500,000. |
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(b-2) For purposes of Subsection (b)(2), the regulatory |
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authority may not allow as a cost or expense legal expenses incurred |
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by an electric utility for participating in a rate proceeding under |
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this title that the regulatory authority determines are |
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attributable to the following conduct by the utility: |
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(1) filing a frivolous or groundless discovery motion; |
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or |
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(2) engaging in: |
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(A) an act intended to harass, delay, or |
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needlessly increase the expense incurred for participating in the |
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proceeding; or |
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(B) conduct not in the public interest. |
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(b-3) Notwithstanding Subsection (b-1), the regulatory |
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authority shall allow as a cost or expense legal expenses incurred |
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by an electric utility in a rate proceeding under this title in any |
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amount if the expenses were: |
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(1) attributable to conduct described by Subsection |
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(b-2) by a party to the rate proceeding who was a non-utility |
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intervenor; and |
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(2) reasonable. |
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SECTION 3. Section 13.084, Water Code, is amended to read as |
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follows: |
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Sec. 13.084. AUTHORITY OF GOVERNING BODY; COST |
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REIMBURSEMENT. (a) The governing body of any municipality or the |
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commissioners court of an affected county shall have the right to |
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select and engage rate consultants, accountants, auditors, |
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attorneys, engineers, or any combination of these experts to |
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conduct investigations, present evidence, advise and represent the |
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governing body, and assist with litigation on water and sewer |
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utility ratemaking proceedings. The water and sewer utility |
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engaged in those proceedings shall be required to reimburse the |
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governing body or the commissioners court for the reasonable costs |
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of those services and shall be allowed to recover those expenses |
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through its rates with interest during the period of recovery. |
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(b) For purposes of Subsection (a), the water and sewer |
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utility may not reimburse the governing body of a municipality for |
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any legal expenses that the regulatory authority determines were |
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incurred due to the municipality: |
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(1) filing a frivolous or groundless discovery motion; |
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or |
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(2) engaging in: |
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(A) an act intended to harass, delay, or |
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needlessly increase the expense incurred for participating in the |
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proceeding; or |
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(B) conduct not in the public interest. |
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SECTION 4. Section 13.185, Water Code, is amended by |
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amending Subsection (h) and adding Subsections (h-1) and (h-2) to |
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read as follows: |
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(h) The regulatory authority may not include for ratemaking |
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purposes: |
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(1) legislative advocacy expenses, whether made |
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directly or indirectly, including legislative advocacy expenses |
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included in trade association dues; |
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(2) costs of processing a refund or credit under this |
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subchapter; [or] |
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(3) any expenditure found by the regulatory authority |
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to be unreasonable, unnecessary, or not in the public interest, |
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including executive salaries, advertising expenses, [legal |
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expenses,] and civil penalties or fines; or |
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(4) legal expenses for a rate proceeding found by the |
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regulatory authority to be unreasonable, unnecessary, or not in the |
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public interest or that exceed a total of: |
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(A) $500,000; and |
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(B) 50 percent of the legal expenses incurred by |
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the utility for the proceeding that exceed $500,000. |
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(h-1) An expense is not considered to be in the public |
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interest under Subsection (h)(4) if the expense is attributable to |
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the following conduct by the utility: |
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(1) filing a frivolous or groundless discovery motion; |
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or |
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(2) engaging in an act intended to harass, delay, or |
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needlessly increase the expense incurred for participating in the |
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ratemaking proceeding. |
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(h-2) Notwithstanding Subsection (h)(4), the regulatory |
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authority shall allow for ratemaking purposes expenses incurred by |
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a utility in a ratemaking proceeding in any amount if the expenses |
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were: |
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(1) attributable to conduct described by Subsection |
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(h-1) by a party to the ratemaking proceeding who was a non-utility |
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intervenor; and |
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(2) reasonable. |
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SECTION 5. The changes in law made by this Act apply only to |
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a rate proceeding under Title 2, Utilities Code, or Chapter 13, |
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Water Code, as applicable, that begins on or after the effective |
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date of this Act. A rate proceeding that begins before the |
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effective date of this Act is governed by the law in effect on the |
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date the rate proceeding began, and the former law is continued in |
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effect for that purpose. |
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SECTION 6. This Act takes effect September 1, 2025. |