Bill Text: TX HB1307 | 2013-2014 | 83rd Legislature | Comm Sub

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Bill Title: Relating to rates for water service, to the transfer of functions relating to the economic regulation of water and sewer service from the Texas Commission on Environmental Quality to the Public Utility Commission of Texas, and to the duties of the Office of Public Utility Counsel regarding the economic regulation of water and sewer service.

Spectrum: Moderate Partisan Bill (Republican 9-1)

Status: (Introduced - Dead) 2013-05-02 - Laid on the table subject to call [HB1307 Detail]

Download: Texas-2013-HB1307-Comm_Sub.html

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83R14917 JXC-D
By: Geren, Ritter, Flynn, Pitts, Hilderbran, H.B. No. 1307
et al.
Substitute the following for H.B. No. 1307:
By: Ashby C.S.H.B. No. 1307

A BILL TO BE ENTITLED
AN ACT
relating to rates for water service, to the transfer of functions
relating to the economic regulation of water and sewer service from
the Texas Commission on Environmental Quality to the Public Utility
Commission of Texas, and to the duties of the Office of Public
Utility Counsel regarding the economic regulation of water and
sewer service.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 5.013(a), Water Code, is amended to read
as follows:
(a) The commission has general jurisdiction over:
(1) water and water rights including the issuance of
water rights permits, water rights adjudication, cancellation of
water rights, and enforcement of water rights;
(2) continuing supervision over districts created
under Article III, Sections 52(b)(1) and (2), and Article XVI,
Section 59, of the Texas Constitution;
(3) the state's water quality program including
issuance of permits, enforcement of water quality rules, standards,
orders, and permits, and water quality planning;
(4) the determination of the feasibility of certain
federal projects;
(5) the adoption and enforcement of rules and
performance of other acts relating to the safe construction,
maintenance, and removal of dams;
(6) conduct of the state's hazardous spill prevention
and control program;
(7) the administration of the state's program relating
to inactive hazardous substance, pollutant, and contaminant
disposal facilities;
(8) the administration of a portion of the state's
injection well program;
(9) the administration of the state's programs
involving underground water and water wells and drilled and mined
shafts;
(10) the state's responsibilities relating to regional
waste disposal;
(11) the responsibilities assigned to the commission
by Chapters 361, 363, 382, and 401, Health and Safety Code; and
(12) [administration of the state's water rate program
under Chapter 13 of this code; and
[(13)] any other areas assigned to the commission by this
code and other laws of this state.
SECTION 2. Section 5.311(a), Water Code, is amended to read
as follows:
(a) The commission may delegate to an administrative law
judge of the State Office of Administrative Hearings the
responsibility to hear any matter before the commission [and to
issue interlocutory orders related to interim rates under Chapter
13].
SECTION 3. Section 5.507, Water Code, is amended to read as
follows:
Sec. 5.507. EMERGENCY ORDER FOR OPERATION OF UTILITY THAT
DISCONTINUES OPERATION OR IS REFERRED FOR APPOINTMENT OF RECEIVER.
The commission or the Public Utility Commission of Texas may issue
an emergency order appointing a willing person to temporarily
manage and operate a utility under Section 13.4132. Notice of the
action is adequate if the notice is mailed or hand delivered to the
last known address of the utility's headquarters.
SECTION 4. Sections 5.508(a) and (c), Water Code, are
amended to read as follows:
(a) Notwithstanding the requirements of Subchapter F,
Chapter 13 [Section 13.187], the Public Utility Commission of Texas
[commission] may authorize an emergency rate increase for a utility
for which a person has been appointed under Section 5.507 or 13.4132
[13.412] or for which a receiver has been appointed under Section
13.412 [13.4132] if the increase is necessary to ensure the
provision of continuous and adequate services to the utility's
customers. The Public Utility Commission of Texas shall consult
with the commission as needed to carry out this section.
(c) Notwithstanding Section 5.505, an order may be issued
under this section for a term not to exceed 15 months. The Public
Utility Commission of Texas [commission] shall schedule a hearing
to establish a final rate within 15 months after the date on which
an emergency rate increase takes effect. The additional revenues
collected under an emergency rate increase are subject to refund if
the utility commission finds that the rate increase was larger than
necessary to ensure continuous and adequate service.
SECTION 5. Section 11.002, Water Code, is amended by adding
Subdivision (21) to read as follows:
(21) "Utility commission" means the Public Utility
Commission of Texas.
SECTION 6. Section 11.041(f), Water Code, is amended to
read as follows:
(f) The commission shall hold a hearing on the complaint at
the time and place stated in the order. It may hear evidence orally
or by affidavit in support of or against the complaint, and it may
hear arguments. The utility commission may participate in the
hearing if necessary to present evidence on the price or rental
demanded for the available water. On completion of the hearing, the
commission shall render a written decision.
SECTION 7. Section 12.013, Water Code, is amended to read as
follows:
Sec. 12.013. RATE-FIXING POWER. (a) The utility
commission shall fix reasonable rates for the furnishing of raw or
treated water for any purpose mentioned in Chapter 11 or 12 of this
code.
(b) In this section, [The term] "political subdivision"
[when used in this section] means incorporated cities, towns or
villages, counties, river authorities, water districts, and other
special purpose districts.
(c) The utility commission in reviewing and fixing
reasonable rates for furnishing water under this section may use
any reasonable basis for fixing rates as may be determined by the
utility commission to be appropriate under the circumstances of the
case being reviewed; provided, however, the utility commission may
not fix a rate which a political subdivision may charge for
furnishing water which is less than the amount required to meet the
debt service and bond coverage requirements of that political
subdivision's outstanding debt.
(d) The utility commission's jurisdiction under this
section relating to incorporated cities, towns, or villages shall
be limited to water furnished by such city, town, or village to
another political subdivision on a wholesale basis.
(e) The utility commission may establish interim rates and
compel continuing service during the pendency of any rate
proceeding.
(f) The utility commission may order a refund or assess
additional charges from the date a petition for rate review is
received by the utility commission of the difference between the
rate actually charged and the rate fixed by the utility commission,
plus interest at the statutory rate.
[(g) No action or proceeding commenced prior to January 1,
1977, before the Texas Water Rights Commission shall be affected by
the enactment of this section.
[(h) Nothing herein contained shall affect the jurisdiction
of the Public Utility Commission.]
SECTION 8. Section 13.002, Water Code, is amended by
amending Subdivisions (2), (18), and (22) and adding Subdivisions
(4-a), (4-b), (4-c), and (22-a) to read as follows:
(2) "Affiliated interest" or "affiliate" means:
(A) any person or corporation owning or holding
directly or indirectly five percent or more of the voting
securities of a utility;
(B) any person or corporation in any chain of
successive ownership of five percent or more of the voting
securities of a utility;
(C) any corporation five percent or more of the
voting securities of which is owned or controlled directly or
indirectly by a utility;
(D) any corporation five percent or more of the
voting securities of which is owned or controlled directly or
indirectly by any person or corporation that owns or controls
directly or indirectly five percent or more of the voting
securities of any utility or by any person or corporation in any
chain of successive ownership of five percent of those utility
securities;
(E) any person who is an officer or director of a
utility or of any corporation in any chain of successive ownership
of five percent or more of voting securities of a public utility;
(F) any person or corporation that the utility
commission, after notice and hearing, determines actually
exercises any substantial influence or control over the policies
and actions of a utility or over which a utility exercises such
control or that is under common control with a utility, such control
being the possession directly or indirectly of the power to direct
or cause the direction of the management and policies of another,
whether that power is established through ownership or voting of
securities or by any other direct or indirect means; or
(G) any person or corporation that the utility
commission, after notice and hearing, determines is exercising
substantial influence over the policies and actions of the utility
in conjunction with one or more persons or corporations with which
they are related by ownership or blood relationship, or by action in
concert, that together they are affiliated within the meaning of
this section, even though no one of them alone is so affiliated.
(4-a) "Class A utility" means a public utility that
provides retail water or sewer utility service through 10,000 or
more taps or connections.
(4-b) "Class B utility" means a public utility that
provides retail water or sewer utility service through 500 or more
taps or connections but fewer than 10,000 taps or connections.
(4-c) "Class C utility" means a public utility that
provides retail water or sewer utility service through fewer than
500 taps or connections.
(18) "Regulatory authority" means, in accordance with
the context in which it is found, [either] the commission, the
utility commission, or the governing body of a municipality.
(22) "Test year" means the most recent 12-month
period, beginning on the first day of a calendar or fiscal year
quarter, for which [representative] operating data for a retail
public utility are available. [A utility rate filing must be based
on a test year that ended less than 12 months before the date on
which the utility made the rate filing.]
(22-a) "Utility commission" means the Public Utility
Commission of Texas.
SECTION 9. Section 13.004, Water Code, is amended to read as
follows:
Sec. 13.004. JURISDICTION OF UTILITY COMMISSION OVER
CERTAIN WATER SUPPLY OR SEWER SERVICE CORPORATIONS. (a)
Notwithstanding any other law, the utility commission has the same
jurisdiction over a water supply or sewer service corporation that
the utility commission has under this chapter over a water and sewer
utility if the utility commission finds that the water supply or
sewer service corporation:
(1) is failing to conduct annual or special meetings
in compliance with Section 67.007; or
(2) is operating in a manner that does not comply with
the requirements for classifications as a nonprofit water supply or
sewer service corporation prescribed by Sections 13.002(11) and
(24).
(b) If the water supply or sewer service corporation
voluntarily converts to a special utility district operating under
Chapter 65, the utility commission's jurisdiction provided by this
section ends.
SECTION 10. Section 13.011, Water Code, is amended to read
as follows:
Sec. 13.011. EMPLOYEES. (a) The utility commission and the
executive director of the commission, subject to approval, as
applicable, by the utility commission or the commission, shall
employ any engineering, accounting, and administrative personnel
necessary to carry out each agency's powers and duties under this
chapter.
(b) The executive director and the commission's staff are
responsible for the gathering of information relating to all
matters within the jurisdiction of the commission under this
subchapter. The utility commission and the utility commission's
staff are responsible for the gathering of information relating to
all matters within the jurisdiction of the utility commission under
this subchapter. The duties of the utility commission, the
executive director, and the staff of the utility commission or
commission, as appropriate, include:
(1) accumulation of evidence and other information
from water and sewer utilities, [and] from the utility commission
or commission, as appropriate, and the governing body of the
respective agency, [commission and the board] and from other
sources for the purposes specified by this chapter;
(2) preparation and presentation of evidence before
the utility commission or commission, as appropriate, [commission]
or its appointed examiner in proceedings;
(3) conducting investigations of water and sewer
utilities under the jurisdiction of the utility commission or
commission, as appropriate [commission];
(4) preparation of recommendations that the utility
commission or commission, as appropriate, [commission] undertake
an investigation of any matter within its jurisdiction;
(5) preparation of recommendations and a report for
inclusion in the annual report of the utility commission or
commission, as appropriate [commission];
(6) protection and representation of the public
interest[, together with the public interest advocate,] before the
utility commission or commission, as appropriate [commission]; and
(7) other activities that are reasonably necessary to
enable the utility commission and the executive director and the
staff of the utility commission or commission, as appropriate, to
perform their duties.
SECTION 11. Section 13.014, Water Code, is amended to read
as follows:
Sec. 13.014. ATTORNEY GENERAL TO REPRESENT COMMISSION OR
UTILITY COMMISSION. The attorney general shall represent the
commission or the utility commission under this chapter in all
matters before the state courts and any court of the United States.
SECTION 12. Subchapter B, Chapter 13, Water Code, is
amended by adding Section 13.017 to read as follows:
Sec. 13.017. OFFICE OF PUBLIC UTILITY COUNSEL; POWERS AND
DUTIES. (a) In this section, "counsellor" and "office" have the
meanings assigned by Section 11.003, Utilities Code.
(b) The independent Office of Public Utility Counsel
represents the interests of residential and small commercial
consumers under this chapter. The office:
(1) shall assess the effect of utility rate changes
and other regulatory actions on residential consumers in this
state;
(2) shall advocate in the office's own name a position
determined by the counsellor to be most advantageous to a
substantial number of residential consumers;
(3) may appear or intervene, as a party or otherwise,
as a matter of right on behalf of:
(A) residential consumers, as a class, in any
proceeding before the utility commission, including an alternative
dispute resolution proceeding; and
(B) small commercial consumers, as a class, in
any proceeding in which the counsellor determines that small
commercial consumers are in need of representation, including an
alternative dispute resolution proceeding;
(4) may initiate or intervene as a matter of right or
otherwise appear in a judicial proceeding:
(A) that involves an action taken by an
administrative agency in a proceeding, including an alternative
dispute resolution proceeding, in which the counsellor is
authorized to appear; or
(B) in which the counsellor determines that
residential consumers or small commercial consumers are in need of
representation;
(5) is entitled to the same access as a party, other
than utility commission staff, to records gathered by the utility
commission under Section 13.133;
(6) is entitled to discovery of any nonprivileged
matter that is relevant to the subject matter of a proceeding or
petition before the utility commission;
(7) may represent an individual residential or small
commercial consumer with respect to the consumer's disputed
complaint concerning retail utility services that is unresolved
before the utility commission;
(8) may recommend legislation to the legislature that
the office determines would positively affect the interests of
residential and small commercial consumers; and
(9) may conduct consumer outreach and education
programs for residential and small commercial consumers.
(c) This section does not:
(1) affect a duty the office is required to perform
under other law; or
(2) limit the authority of the utility commission to
represent residential or small commercial consumers.
(d) The appearance of the counsellor in a proceeding does
not preclude the appearance of other parties on behalf of
residential or small commercial consumers. The counsellor may not
be grouped with any other party.
SECTION 13. Section 13.041, Water Code, is amended to read
as follows:
Sec. 13.041. GENERAL POWERS OF UTILITY COMMISSION AND
COMMISSION [POWER]; RULES; HEARINGS. (a) The utility commission
may regulate and supervise the business of each [every] water and
sewer utility within its jurisdiction, including ratemaking and
other economic regulation. The commission may regulate water and
sewer utilities within its jurisdiction to ensure safe drinking
water and environmental protection. The utility commission and the
commission [and] may do all things, whether specifically designated
in this chapter or implied in this chapter, necessary and
convenient to the exercise of these powers [this power] and
jurisdiction. The utility commission may consult with the
commission as necessary in carrying out its duties related to the
regulation of water and sewer utilities.
(b) The commission and the utility commission shall adopt
and enforce rules reasonably required in the exercise of [its]
powers and jurisdiction of each agency, including rules governing
practice and procedure before the commission and the utility
commission.
(c) The commission and the utility commission may call and
hold hearings, administer oaths, receive evidence at hearings,
issue subpoenas to compel the attendance of witnesses and the
production of papers and documents, and make findings of fact and
decisions with respect to administering this chapter or the rules,
orders, or other actions of the commission or the utility
commission.
(c-1) In addition to the powers and duties of the State
Office of Administrative Hearings under Title 2, Utilities Code,
the utility commission may delegate to an administrative law judge
of the State Office of Administrative Hearings the responsibility
and authority to issue interlocutory orders related to interim
rates under this chapter.
(d) The utility commission may issue emergency orders, with
or without a hearing:
(1) to compel a water or sewer service provider that
has obtained or is required to obtain a certificate of public
convenience and necessity to provide continuous and adequate water
service, sewer service, or both, if the discontinuance of the
service is imminent or has occurred because of the service
provider's actions or failure to act; and
(2) to compel a retail public utility to provide an
emergency interconnection with a neighboring retail public utility
for the provision of temporary water or sewer service, or both, for
not more than 90 days if service discontinuance or serious
impairment in service is imminent or has occurred.
(e) The utility commission may establish reasonable
compensation for the temporary service required under Subsection
(d)(2) [of this section] and may allow the retail public utility
receiving the service to make a temporary adjustment to its rate
structure to ensure proper payment.
(f) If an order is issued under Subsection (d) without a
hearing, the order shall fix a time, as soon after the emergency
order is issued as is practicable, and place for a hearing to be
held before the utility commission.
(g) The regulatory assessment required by Section 5.701(n)
[5.235(n) of this code] is not a rate and is not reviewable by the
utility commission under Section 13.043 [of this code]. The
commission has the authority to enforce payment and collection of
the regulatory assessment.
SECTION 14. Section 13.042, Water Code, is amended to read
as follows:
Sec. 13.042. JURISDICTION OF MUNICIPALITY; ORIGINAL AND
APPELLATE JURISDICTION OF UTILITY COMMISSION. (a) Subject to the
limitations imposed in this chapter and for the purpose of
regulating rates and services so that those rates may be fair, just,
and reasonable and the services adequate and efficient, the
governing body of each municipality has exclusive original
jurisdiction over all water and sewer utility rates, operations,
and services provided by a water and sewer utility within its
corporate limits.
(b) The governing body of a municipality by ordinance may
elect to have the utility commission exercise exclusive original
jurisdiction over the utility rates, operation, and services of
utilities, within the incorporated limits of the municipality.
(c) The governing body of a municipality that surrenders its
jurisdiction to the utility commission may reinstate its
jurisdiction by ordinance at any time after the second anniversary
of the date on which the municipality surrendered its jurisdiction
to the utility commission, except that the municipality may not
reinstate its jurisdiction during the pendency of a rate proceeding
before the utility commission. The municipality may not surrender
its jurisdiction again until the second anniversary of the date on
which the municipality reinstates jurisdiction.
(d) The utility commission shall have exclusive appellate
jurisdiction to review orders or ordinances of those municipalities
as provided in this chapter.
(e) The utility commission shall have exclusive original
jurisdiction over water and sewer utility rates, operations, and
services not within the incorporated limits of a municipality
exercising exclusive original jurisdiction over those rates,
operations, and services as provided in this chapter.
(f) This subchapter does not give the utility commission
power or jurisdiction to regulate or supervise the rates or service
of a utility owned and operated by a municipality, directly or
through a municipally owned corporation, within its corporate
limits or to affect or limit the power, jurisdiction, or duties of a
municipality that regulates land and supervises water and sewer
utilities within its corporate limits, except as provided by this
code.
SECTION 15. Sections 13.043(a), (b), (c), (e), (f), (g),
(h), and (j), Water Code, are amended to read as follows:
(a) Any party to a rate proceeding before the governing body
of a municipality may appeal the decision of the governing body to
the utility commission. This subsection does not apply to a
municipally owned utility. An appeal under this subsection must be
initiated within 90 days after the date of notice of the final
decision by the governing body, or within 30 days if the appeal
relates to the rates of a Class A utility, by filing a petition for
review with the utility commission and by serving copies on all
parties to the original rate proceeding. The utility 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 and may include reasonable expenses incurred
in the appeal proceedings. The utility commission may establish
the effective date for the utility commission's rates at the
original effective date as proposed by the utility provider and may
order refunds or allow a surcharge to recover lost revenues. The
utility 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 in the
appeal proceedings.
(b) Ratepayers of the following entities may appeal the
decision of the governing body of the entity affecting their water,
drainage, or sewer rates to the utility commission:
(1) a nonprofit water supply or sewer service
corporation created and operating under Chapter 67;
(2) a utility under the jurisdiction of a municipality
inside the corporate limits of the municipality;
(3) a municipally owned utility, if the ratepayers
reside outside the corporate limits of the municipality;
(4) a district or authority created under Article III,
Section 52, or Article XVI, Section 59, of the Texas Constitution
that provides water or sewer service to household users; and
(5) a utility owned by an affected county, if the
ratepayer's rates are actually or may be adversely affected. For
the purposes of this section ratepayers who reside outside the
boundaries of the district or authority shall be considered a
separate class from ratepayers who reside inside those boundaries.
(c) An appeal under Subsection (b) [of this section] must be
initiated by filing a petition for review with the utility
commission and the entity providing service within 90 days after
the effective day of the rate change or, if appealing under
Subdivision (b)(2) or (5) [of this section], within 90 days after
the date on which the governing body of the municipality or affected
county makes a final decision. The petition must be signed by the
lesser of 10,000 or 10 percent of those ratepayers whose rates have
been changed and who are eligible to appeal under Subsection (b) [of
this section].
(e) In an appeal under Subsection (b) [of this section], the
utility 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 utility commission
may establish the effective date for the utility commission's rates
at the original effective date as proposed by the service provider,
may order refunds or allow a surcharge to recover lost revenues, and
may allow recovery of reasonable expenses incurred by the retail
public utility in the appeal proceedings. The utility 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
utility 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 utility commission determines that a
financial hardship exists.
(f) A retail public utility that receives water or sewer
service from another retail public utility or political subdivision
of the state, including an affected county, may appeal to the
utility commission a decision of the provider of water or sewer
service affecting the amount paid for water or sewer service. An
appeal under this subsection must be initiated within 90 days after
the date of notice of the decision is received from the provider of
water or sewer service by the filing of a petition by the retail
public utility.
(g) An applicant for service from an affected county or a
water supply or sewer service corporation may appeal to the utility
commission a decision of the county or water supply or sewer service
corporation affecting the amount to be paid to obtain service other
than the regular membership or tap fees. In addition to the factors
specified under Subsection (j), in an appeal brought under this
subsection the utility commission shall determine whether the
amount paid by the applicant is consistent with the tariff of the
water supply or sewer service corporation and is reasonably related
to the cost of installing on-site and off-site facilities to
provide service to that applicant. If the utility commission finds
the amount charged to be clearly unreasonable, it shall establish
the fee to be paid for that applicant. An appeal under this
subsection must be initiated within 90 days after the date written
notice is provided to the applicant or member of the decision of an
affected county or water supply or sewer service corporation
relating to the applicant's initial request for that service. A
determination made by the utility commission on an appeal under
this subsection is binding on all similarly situated applicants for
service, and the utility commission may not consider other appeals
on the same issue until the applicable provisions of the tariff of
the water supply or sewer service corporation are amended.
(h) The utility commission may, on a motion by the utility
commission [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.
(j) In an appeal under this section, the utility commission
shall ensure that every rate made, demanded, or received by any
retail public utility or by any two or more retail public utilities
jointly shall be just and reasonable. Rates shall not be
unreasonably preferential, prejudicial, or discriminatory but
shall be sufficient, equitable, and consistent in application to
each class of customers. The utility commission shall use a
methodology that preserves the financial integrity of the retail
public utility. For agreements between municipalities the utility
commission shall consider the terms of any wholesale water or sewer
service agreement in an appellate rate proceeding.
SECTION 16. Section 13.044(b), Water Code, is amended to
read as follows:
(b) Notwithstanding the provisions of any resolution,
ordinance, or agreement, a district may appeal the rates imposed by
the municipality by filing a petition with the utility commission.
The utility commission shall hear the appeal de novo and the
municipality shall have the burden of proof to establish that the
rates are just and reasonable. The utility commission shall fix the
rates to be charged by the municipality and the municipality may not
increase such rates without the approval of the utility commission.
SECTION 17. Section 13.046, Water Code, is amended to read
as follows:
Sec. 13.046. TEMPORARY RATES FOR SERVICES PROVIDED FOR
NONFUNCTIONING SYSTEM; SANCTIONS FOR NONCOMPLIANCE. (a) The
utility commission by rule shall establish a procedure that allows
a retail public utility that takes over the provision of services
for a nonfunctioning retail water or sewer utility service provider
to charge a reasonable rate for the services provided to the
customers of the nonfunctioning system and to bill the customers
for the services at that rate immediately to recover service costs.
(b) The rules must provide a streamlined process that the
retail public utility that takes over the nonfunctioning system may
use to apply to the utility commission for a ruling on the
reasonableness of the rates the utility is charging under
Subsection (a). The process must allow for adequate consideration
of costs for interconnection or other costs incurred in making
services available and of the costs that may necessarily be
incurred to bring the nonfunctioning system into compliance with
utility commission and commission rules.
(c) The utility commission shall provide a reasonable
period for the retail public utility that takes over the
nonfunctioning system to bring the nonfunctioning system into
compliance with utility commission and commission rules during
which the utility commission or the commission may not impose a
penalty for any deficiency in the system that is present at the time
the utility takes over the nonfunctioning system. The utility
commission must consult with the utility before determining the
period and may grant an extension of the period for good cause.
SECTION 18. Section 13.081, Water Code, is amended to read
as follows:
Sec. 13.081. FRANCHISES. This chapter may not be construed
as in any way limiting the rights and powers of a municipality to
grant or refuse franchises to use the streets and alleys within its
limits and to make the statutory charges for their use, but no
provision of any franchise agreement may limit or interfere with
any power conferred on the utility commission by this chapter. If a
municipality performs regulatory functions under this chapter, it
may make such other charges as may be provided in the applicable
franchise agreement, together with any other charges permitted by
this chapter.
SECTION 19. Section 13.082, Water Code, is amended to read
as follows:
Sec. 13.082. LOCAL UTILITY SERVICE; EXEMPT AND NONEXEMPT
AREAS. (a) Notwithstanding any other provision of this section,
municipalities shall continue to regulate each kind of local
utility service inside their boundaries until the utility
commission has assumed jurisdiction over the respective utility
pursuant to this chapter.
(b) If a municipality does not surrender its jurisdiction,
local utility service within the boundaries of the municipality
shall be exempt from regulation by the utility commission under
this chapter to the extent that this chapter applies to local
service, and the municipality shall have, regarding service within
its boundaries, the right to exercise the same regulatory powers
under the same standards and rules as the utility commission or
other standards and rules not inconsistent with them. The utility
commission's rules relating to service and response to requests for
service for utilities operating within a municipality's corporate
limits apply unless the municipality adopts its own rules.
(c) Notwithstanding any election, the utility commission
may consider water and sewer utilities' revenues and return on
investment in exempt areas in fixing rates and charges in nonexempt
areas and may also exercise the powers conferred necessary to give
effect to orders under this chapter for the benefit of nonexempt
areas. Likewise, in fixing rates and charges in the exempt area,
the governing body may consider water and sewer utilities' revenues
and return on investment in nonexempt areas.
(d) Utilities serving exempt areas are subject to the
reporting requirements of this chapter. Those reports and tariffs
shall be filed with the governing body of the municipality as well
as with the utility commission.
(e) This section does not limit the duty and power of the
utility commission to regulate service and rates of municipally
regulated water and sewer utilities for service provided to other
areas in Texas.
SECTION 20. Section 13.085, Water Code, is amended to read
as follows:
Sec. 13.085. ASSISTANCE BY UTILITY COMMISSION. On request,
the utility commission may advise and assist municipalities and
affected counties in connection with questions and proceedings
arising under this chapter. This assistance may include aid to
municipalities or an affected county in connection with matters
pending before the utility commission, the courts, the governing
body of any municipality, or the commissioners court of an affected
county, including making members of the staff available to them as
witnesses and otherwise providing evidence.
SECTION 21. Section 13.087(c), Water Code, is amended to
read as follows:
(c) Notwithstanding any other provision of this chapter,
the utility commission has jurisdiction to enforce this section.
SECTION 22. Sections 13.131(a), (b), (c), and (e), Water
Code, are amended to read as follows:
(a) Every water and sewer utility shall keep and render to
the regulatory authority in the manner and form prescribed by the
utility commission uniform accounts of all business transacted.
The utility commission may also prescribe forms of books, accounts,
records, and memoranda to be kept by those utilities, including the
books, accounts, records, and memoranda of the rendition of and
capacity for service as well as the receipts and expenditures of
money, and any other forms, records, and memoranda that in the
judgment of the utility commission may be necessary to carry out
this chapter.
(b) In the case of a utility subject to regulation by a
federal regulatory agency, compliance with the system of accounts
prescribed for the particular class of utilities by that agency may
be considered a sufficient compliance with the system prescribed by
the utility commission. However, the utility commission may
prescribe forms of books, accounts, records, and memoranda covering
information in addition to that required by the federal agency. The
system of accounts and the forms of books, accounts, records, and
memoranda prescribed by the utility commission for a utility or
class of utilities may not conflict or be inconsistent with the
systems and forms established by a federal agency for that utility
or class of utilities.
(c) The utility commission shall fix proper and adequate
rates and methods of depreciation, amortization, or depletion of
the several classes of property of each utility and shall require
every utility to carry a proper and adequate depreciation account
in accordance with those rates and methods and with any other rules
the utility commission prescribes. Rules adopted under this
subsection must require the book cost less net salvage of
depreciable utility plant retired to be charged in its entirety to
the accumulated depreciation account in a manner consistent with
accounting treatment of regulated electric and gas utilities in
this state. Those rates, methods, and accounts shall be utilized
uniformly and consistently throughout the rate-setting and appeal
proceedings.
(e) Every utility is required to keep and render its books,
accounts, records, and memoranda accurately and faithfully in the
manner and form prescribed by the utility commission and to comply
with all directions of the regulatory authority relating to those
books, accounts, records, and memoranda. The regulatory authority
may require the examination and audit of all accounts.
SECTION 23. Section 13.132, Water Code, is amended to read
as follows:
Sec. 13.132. POWERS OF UTILITY COMMISSION. (a) The utility
commission may:
(1) require that water and sewer utilities report to
it any information relating to themselves and affiliated interests
both inside and outside this state that it considers useful in the
administration of this chapter, including any information relating
to a transaction between the utility and an affiliated interest
inside or outside this state, to the extent that the transaction is
subject to the utility commission's jurisdiction;
(2) establish forms for all reports;
(3) determine the time for reports and the frequency
with which any reports are to be made;
(4) require that any reports be made under oath;
(5) require that a copy of any contract or arrangement
between any utility and any affiliated interest be filed with it and
require that such a contract or arrangement that is not in writing
be reduced to writing;
(6) require that a copy of any report filed with any
federal agency or any governmental agency or body of any other state
be filed with it; and
(7) require that a copy of annual reports showing all
payments of compensation, other than salary or wages subject to the
withholding of federal income tax, made to residents of Texas, or
with respect to legal, administrative, or legislative matters in
Texas, or for representation before the Texas Legislature or any
governmental agency or body be filed with it.
(b) On the request of the governing body of any
municipality, the utility commission may provide sufficient staff
members to advise and consult with the municipality on any pending
matter.
SECTION 24. Section 13.1325, Water Code, is amended to read
as follows:
Sec. 13.1325. ELECTRONIC COPIES OF RATE INFORMATION. On
request, the utility commission [state agency with jurisdiction
over rates charged by water and sewer utilities] shall provide, at a
reasonable cost, electronic copies of or Internet access to all
information provided to the utility commission [agency] under
Sections 13.016 and [,] 13.043[,] and Subchapter F [13.187] to the
extent that the information is available and is not confidential.
Copies of all information provided to the utility commission
[agency] shall be provided to the Office of Public Utility Counsel,
on request, at no cost to the office.
SECTION 25. Section 13.133(b), Water Code, is amended to
read as follows:
(b) The regulatory authority may require, by order or
subpoena served on any utility, the production within this state at
the time and place it may designate of any books, accounts, papers,
or records kept by that utility outside the state or verified copies
of them if the regulatory authority [commission] so orders. A
utility failing or refusing to comply with such an order or subpoena
violates this chapter.
SECTION 26. Section 13.136, Water Code, is amended by
amending Subsections (b) and (c) and adding Subsection (b-1) to
read as follows:
(b) The utility commission by rule shall require each [Each]
utility to annually [shall] file a service, [and] financial, and
normalized earnings report in a form and at times specified by
utility commission rule. The report must include information
sufficient to enable the utility commission to properly monitor
utilities in this state. The utility commission shall make
available to the public information in the report the utility does
not file as confidential.
(b-1) The utility commission shall provide copies of a
report described by Subsection (b) that include information filed
as confidential to the Office of Public Utility Counsel on request,
at no cost to the office.
(c) Every water supply or sewer service corporation shall
file with the utility commission tariffs showing all rates that are
subject to the appellate jurisdiction of the utility commission and
that are in force at the time for any utility service, product, or
commodity offered. Every water supply or sewer service corporation
shall file with and as a part of those tariffs all rules and
regulations relating to or affecting the rates, utility service,
product, or commodity furnished. The filing required under this
subsection shall be for informational purposes only.
SECTION 27. Section 13.137, Water Code, is amended to read
as follows:
Sec. 13.137. OFFICE AND OTHER BUSINESS LOCATIONS OF
UTILITY; RECORDS; REMOVAL FROM STATE. (a) Every utility shall:
(1) make available and notify its customers of a
business location where its customers may make payments to prevent
disconnection of or to restore service:
(A) in each county in which the utility provides
service; or
(B) not more than 20 miles from the residence of
any residential customer if there is no location to receive
payments in the county; and
(2) have an office in a county of this state or in the
immediate area in which its property or some part of its property is
located in which it shall keep all books, accounts, records, and
memoranda required by the utility commission to be kept in this
state.
(b) The utility commission by rule may provide for waiving
the requirements of Subsection (a)(1) for a utility for which
meeting those requirements would cause a rate increase or otherwise
harm or inconvenience customers. The rules must provide for an
additional 14 days to be given for a customer to pay before a
utility that is granted a waiver may disconnect service for late
payment.
(c) Books, accounts, records, or memoranda required by the
regulatory authority to be kept in the state may not be removed from
the state, except on conditions prescribed by the utility
commission.
SECTION 28. Sections 13.1396(b), (c), and (f), Water Code,
are amended to read as follows:
(b) An affected utility shall submit to the office of
emergency management of each county in which the utility has more
than one customer, the utility commission [Public Utility
Commission of Texas], and the office of emergency management of the
governor a copy of:
(1) the affected utility's emergency preparedness plan
approved under Section 13.1395; and
(2) the commission's notification to the affected
utility that the plan is accepted.
(c) Each affected utility shall submit to the utility
commission, each electric utility that provides transmission and
distribution service to the affected utility, each retail electric
provider that sells electric power to the affected utility, the
office of emergency management of each county in which the utility
has water and wastewater facilities that qualify for critical load
status under rules adopted by the utility commission [Public
Utility Commission of Texas, the Public Utility Commission of
Texas], and the division of emergency management of the governor:
(1) information identifying the location and
providing a general description of all water and wastewater
facilities that qualify for critical load status; and
(2) emergency contact information for the affected
utility, including:
(A) the person who will serve as a point of
contact and the person's telephone number;
(B) the person who will serve as an alternative
point of contact and the person's telephone number; and
(C) the affected utility's mailing address.
(f) Not later than May 1 of each year, each electric utility
and each retail electric provider shall determine whether the
facilities of the affected utility qualify for critical load status
under rules adopted by the utility commission [Public Utility
Commission of Texas].
SECTION 29. Section 13.142(b), Water Code, is amended to
read as follows:
(b) The utility commission shall adopt rules concerning
payment of utility bills that are consistent with Chapter 2251,
Government Code.
SECTION 30. Section 13.144, Water Code, is amended to read
as follows:
Sec. 13.144. NOTICE OF WHOLESALE WATER SUPPLY CONTRACT. A
district or authority created under Section 52, Article III, or
Section 59, Article XVI, Texas Constitution, a retail public
utility, a wholesale water service, or other person providing a
retail public utility with a wholesale water supply shall provide
the utility commission with a certified copy of any wholesale water
supply contract with a retail public utility within 30 days after
the date of the execution of the contract. The submission must
include the amount of water being supplied, term of the contract,
consideration being given for the water, purpose of use, location
of use, source of supply, point of delivery, limitations on the
reuse of water, a disclosure of any affiliated interest between the
parties to the contract, and any other condition or agreement
relating to the contract.
SECTION 31. Section 13.147(a), Water Code, is amended to
read as follows:
(a) A retail public utility providing water service may
contract with a retail public utility providing sewer service to
bill and collect the sewer service provider's fees and payments as
part of a consolidated process with the billing and collection of
the water service provider's fees and payments. The water service
provider may provide that service only for customers who are served
by both providers in an area covered by both providers'
certificates of public convenience and necessity. If the water
service provider refuses to enter into a contract under this
section or if the water service provider and sewer service provider
cannot agree on the terms of a contract, the sewer service provider
may petition the utility commission to issue an order requiring the
water service provider to provide that service.
SECTION 32. Section 13.181(b), Water Code, is amended to
read as follows:
(b) Subject to this chapter, the utility commission has all
authority and power of the state to ensure compliance with the
obligations of utilities under this chapter. For this purpose the
regulatory authority may fix and regulate rates of utilities,
including rules and regulations for determining the classification
of customers and services and for determining the applicability of
rates. A rule or order of the regulatory authority may not conflict
with the rulings of any federal regulatory body. The utility
commission may adopt rules which authorize a utility which is
permitted under Section 13.242(c) to provide service without a
certificate of public convenience and necessity to request or
implement a rate increase and operate according to rules,
regulations, and standards of service other than those otherwise
required under this chapter provided that rates are just and
reasonable for customers and the utility and that service is safe,
adequate, efficient, and reasonable.
SECTION 33. Sections 13.182(c) and (d), Water Code, are
amended to read as follows:
(c) For ratemaking purposes, the utility commission may
treat two or more municipalities served by a utility as a single
class wherever the utility commission considers that treatment to
be appropriate.
(d) The utility commission by rule shall establish a
preference that rates under a consolidated tariff be consolidated
by region. The regions under consolidated tariffs must be
determined on a case-by-case basis.
SECTION 34. Section 13.183(d), Water Code, is amended to
read as follows:
(d) A regulatory authority other than the utility
commission may not approve an acquisition adjustment for a system
purchased before the effective date of an ordinance authorizing
acquisition adjustments.
SECTION 35. Section 13.184(a), Water Code, is amended to
read as follows:
(a) Unless the utility commission establishes alternate
rate methodologies in accordance with Section 13.183(c), the
utility commission may not prescribe any rate that will yield more
than a fair return on the invested capital used and useful in
rendering service to the public. The governing body of a
municipality exercising its original jurisdiction over rates and
services may use alternate ratemaking methodologies established by
ordinance or by utility commission rule in accordance with Section
13.183(c). Unless the municipal regulatory authority uses
alternate ratemaking methodologies established by ordinance or by
utility commission rule in accordance with Section 13.183(c), it
may not prescribe any rate that will yield more than a fair return
on the invested capital used and useful in rendering service to the
public.
SECTION 36. Sections 13.185(d) and (h), Water Code, are
amended to read as follows:
(d) Net income is the total revenues of the utility less all
reasonable and necessary expenses as determined by the regulatory
authority. The regulatory authority shall:
(1) base a utility's expenses on historic test year
information adjusted for known and measurable changes, as
determined by utility commission rules; and
(2) determine expenses and revenues in a manner
consistent with Subsections (e) through (h) of this section.
(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 this
subchapter [Section 13.187 of this chapter]; or
(3) 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 37. Section 13.187, Water Code, is amended to read
as follows:
Sec. 13.187. CLASS A UTILITIES: STATEMENT OF INTENT TO
CHANGE RATES; HEARING; DETERMINATION OF RATE LEVEL. (a) This
section applies only to a Class A utility.
(a-1) A utility may not make changes in its rates except by
sending by mail or e-mail [delivering] a statement of intent to each
ratepayer and to [with] the regulatory authority having original
jurisdiction at least 35 [60] days before the effective date of the
proposed change. The utility may send the statement of intent to a
ratepayer by e-mail only if the ratepayer has agreed to receive
communications electronically. The 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 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; and
(4) a description of the process by which a ratepayer
may intervene in the ratemaking proceeding.
(b) The utility shall mail, send by e-mail, or deliver a [A]
copy of the statement of intent [shall be mailed, sent by e-mail, or
delivered] to the Office of Public Utility Counsel, appropriate
offices of each affected municipality, and [to] any other affected
persons as required by the regulatory authority's rules.
(c) When the statement of intent is delivered, the utility
shall file with the regulatory authority an application to change
rates. The application must include information the regulatory
authority requires by rule and any appropriate cost and rate
schedules and written testimony supporting the requested rate
increase. If the utility fails to provide within a reasonable time
after the application is filed the necessary documentation or other
evidence that supports the costs and expenses that are shown in the
application, the regulatory authority may disallow the
nonsupported costs or expenses.
(d) Except as provided by Subsections [Subsection] (d-1)
and (e), 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 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 utility commission may also suspend the
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 utility 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) After written notice to the utility, a local
regulatory authority may suspend the 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. This [The] approval is subject to the
authority of the local regulatory authority thereafter to continue
[authority's continuation of] a hearing in progress.
(e) After written notice to the utility, the utility
commission may suspend the effective date of a rate change for not
more than 150 days from the proposed effective date. If the utility
commission does not make a final determination on the proposed rate
before the expiration of the suspension period, the proposed rate
shall be considered approved. This approval is subject to the
authority of the utility commission thereafter to continue a
hearing in progress [If, before the 91st day after the effective
date 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].
(e-1) The 150-day period described by Subsection (e) shall
be extended two days for each day a hearing exceeds 15 days.
(f) The regulatory authority shall, not later than the 30th
day after the effective date of the change, begin a hearing to
determine the propriety of the change [may set the matter for
hearing on its own motion at any time within 120 days after the
effective date of the rate change]. If the regulatory authority is
the utility commission, the utility commission may refer the matter
to the State Office of Administrative Hearings as provided by
utility commission rules. [If more than half of the ratepayers of
the utility receive service in a county with a population of more
than 3.3 million, the hearing must be held at a location in that
county.]
(g) A local regulatory authority [The] hearing described by
this section may be informal.
(g-1) If the regulatory authority is the utility
commission, the utility commission shall give reasonable notice of
the hearing, including notice to the governing body of each
affected municipality and county. The utility is not required to
provide a formal answer or file any other formal pleading in
response to the notice, and the absence of an answer does not affect
an order for a hearing.
(h) If, after hearing, the regulatory authority finds the
rates currently being charged or those proposed to be charged are
unreasonable or in violation of law, the regulatory authority shall
determine the rates to be charged by the utility and shall fix the
rates by order served on the utility.
(i) A utility may put a changed rate into effect throughout
the area in which the utility sought to change its rates, including
an area over which the utility commission is exercising appellate
or original jurisdiction, by filing a bond with the utility
commission if the suspension period has been extended under
Subsection (e-1) and the utility commission fails to make a final
determination before the 151st day after the date the rate change
would otherwise be effective.
(j) The bonded rate may not exceed the proposed rate. The
bond must be payable to the utility commission in an amount, in a
form, and with a surety approved by the utility commission and
conditioned on refund [The regulatory authority, pending final
action in a rate proceeding, may order the utility to deposit all or
part of the rate increase received or to be received into an escrow
account with a financial institution approved by the regulatory
authority].
(k) Unless otherwise agreed to by the parties to the rate
proceeding, the utility shall refund or credit against future
bills:
(1) all sums collected under the bonded rates [during
the pendency of the rate proceeding] in excess of the rate finally
ordered; and
(2) [plus] interest on those sums at the current
interest rate as determined by the regulatory authority.
[(j) For good cause shown, the regulatory authority may
authorize the release of funds to the utility from the escrow
account during the pendency of the proceeding.
[(k) If the regulatory authority receives at least the
number of complaints from ratepayers required for the regulatory
authority to set a hearing under Subsection (e), the regulatory
authority may, pending the hearing and a decision, suspend the date
the rate change would otherwise be effective. 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 may fix interim rates to remain in effect
during the applicable suspension period under Subsection (d-1) or
Subsections (e) and (e-1) or until a final determination is made on
the proposed rate. If the regulatory authority does not establish
interim rates, the rates in effect when the application described
by Subsection (c) was filed continue in effect during the
suspension period.
(m) If the regulatory authority sets a final rate that is
higher than the interim rate, the utility shall be allowed to
collect the difference between the interim rate and final rate
unless otherwise agreed to by the parties to the rate proceeding.
(n) For good cause shown, the regulatory authority may at
any time during the proceeding require the utility to refund money
collected under a proposed rate before the rate was suspended or an
interim rate was established to the extent the proposed rate
exceeds the existing rate or the interim rate.
(o) If a regulatory authority other than the utility
commission establishes interim rates or bonded rates [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 bonded [escrowed] rates or the rates
are automatically approved as requested by the utility.
(p) Except to implement a rate adjustment provision
approved by the regulatory authority by rule or ordinance, as
applicable, or to adjust the rates of a newly acquired utility
system, a utility or two or more utilities under common control and
ownership may not file a statement of intent to increase its rates
more than once in a 12-month period, unless the regulatory
authority determines that a financial hardship exists. If the
regulatory authority requires the utility to deliver a corrected
statement of intent, the utility is not considered to be in
violation of the 12-month filing requirement.
SECTION 38. Subchapter F, Chapter 13, Water Code, is
amended by adding Sections 13.1871 and 13.1872 to read as follows:
Sec. 13.1871. CLASS B UTILITIES: STATEMENT OF INTENT TO
CHANGE RATES; HEARING; DETERMINATION OF RATE LEVEL. (a) Except as
provided by Section 13.1872, this section applies only to a Class B
utility.
(b) A utility may not make changes in its rates except by
sending by mail or e-mail a statement of intent to each ratepayer
and to the regulatory authority having original jurisdiction at
least 35 days before the effective date of the proposed change. The
utility may send the statement of intent to a ratepayer by e-mail
only if the ratepayer has agreed to receive communications
electronically. The 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 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;
(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; and
(4) a description of the process by which a ratepayer
may file a complaint under Subsection (i).
(c) The utility shall mail, send by e-mail, or deliver a
copy of the statement of intent to the appropriate offices of each
affected municipality and to any other affected persons as required
by the regulatory authority's rules.
(d) When the statement of intent is delivered, the utility
shall file with the regulatory authority an application to change
rates. The application must include information the regulatory
authority requires by rule and any appropriate cost and rate
schedules supporting the requested rate increase. In adopting
rules relating to the information required in the application, the
utility commission shall ensure that a utility can file a less
burdensome and complex application than is required of a Class A
utility. If the utility fails to provide within a reasonable time
after the application is filed the necessary documentation or other
evidence that supports the costs and expenses that are shown in the
application, the regulatory authority may disallow the
nonsupported costs or expenses.
(e) Except as provided by Subsection (f) or (g), 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 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 utility commission may also suspend the 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 utility
commission or if the utility is delinquent in paying the assessment
and any applicable penalties or interest required by Section
5.701(n).
(f) After written notice to the utility, a local regulatory
authority may suspend the effective date of a rate change for not
more than 90 days from the proposed effective date. If the local
regulatory authority does not make a final determination on the
proposed rate before the expiration of the suspension period, the
proposed rate shall be considered approved. This approval is
subject to the authority of the local regulatory authority
thereafter to continue a hearing in progress.
(g) After written notice to the utility, the utility
commission may suspend the effective date of a rate change for not
more than 205 days from the proposed effective date. If the utility
commission does not make a final determination on the proposed rate
before the expiration of the suspension period, the proposed rate
shall be considered approved. This approval is subject to the
authority of the utility commission thereafter to continue a
hearing in progress.
(h) The 205-day period described by Subsection (g) shall be
extended by two days for each day a hearing exceeds 15 days.
(i) If, before the 91st day after the effective date 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.
(j) If the regulatory authority receives at least the number
of complaints from ratepayers required for the regulatory authority
to set a hearing under Subsection (i), the regulatory authority
may, pending the hearing and a decision, suspend the date the rate
change would otherwise be effective. Except as provided by
Subsection (h), the proposed rate may not be suspended for longer
than:
(1) 90 days by a local regulatory authority; or
(2) 205 days by the utility commission.
(k) The regulatory authority may set the matter for hearing
on its own motion at any time within 120 days after the effective
date of the rate change.
(l) The hearing may be informal.
(m) The regulatory authority shall give reasonable notice
of the hearing, including notice to the governing body of each
affected municipality and county. The utility is not required to
provide a formal answer or file any other formal pleading in
response to the notice, and the absence of an answer does not affect
an order for a hearing.
(n) The utility shall mail notice of the hearing to each
ratepayer before the hearing. The notice must include a
description of the process by which a ratepayer may intervene in the
ratemaking proceeding.
(o) If, after hearing, the regulatory authority finds the
rates currently being charged or those proposed to be charged are
unreasonable or in violation of law, the regulatory authority shall
determine the rates to be charged by the utility and shall fix the
rates by order served on the utility.
(p) A utility may put a changed rate into effect throughout
the area in which the utility sought to change its rates, including
an area over which the utility commission is exercising appellate
or original jurisdiction, by filing a bond with the utility
commission if the suspension period has been extended under
Subsection (h) and the utility commission fails to make a final
determination before the 206th day after the date the rate change
would otherwise be effective.
(q) The bonded rate may not exceed the proposed rate. The
bond must be payable to the utility commission in an amount, in a
form, and with a surety approved by the utility commission and
conditioned on refund.
(r) Unless otherwise agreed to by the parties to the rate
proceeding, the utility shall refund or credit against future
bills:
(1) all sums collected under the bonded rates in
excess of the rate finally ordered; and
(2) interest on those sums at the current interest
rate as determined by the regulatory authority.
(s) At any time during the pendency of the rate proceeding
the regulatory authority may fix interim rates to remain in effect
during the applicable suspension period under Subsection (f) or
Subsections (g) and (h) or until a final determination is made on
the proposed rate. If the regulatory authority does not establish
interim rates, the rates in effect when the application described
by Subsection (e) was filed continue in effect during the
suspension period.
(t) If the regulatory authority sets a final rate that is
higher than the interim rate, the utility shall be allowed to
collect the difference between the interim rate and final rate
unless otherwise agreed to by the parties to the rate proceeding.
(u) For good cause shown, the regulatory authority may at
any time during the proceeding require the utility to refund money
collected under a proposed rate before the rate was suspended or an
interim rate was established to the extent the proposed rate
exceeds the existing rate or the interim rate.
(v) If a regulatory authority other than the utility
commission establishes interim rates or bonded rates, 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 bonded rates or the rates are automatically
approved as requested by the utility.
(w) Except to implement a rate adjustment provision
approved by the regulatory authority by rule or ordinance, as
applicable, or to adjust the rates of a newly acquired utility
system, a utility or two or more utilities under common control and
ownership may not file a statement of intent to increase its rates
more than once in a 12-month period, unless the regulatory
authority determines that a financial hardship exists. If the
regulatory authority requires the utility to deliver a corrected
statement of intent, the utility is not considered to be in
violation of the 12-month filing requirement.
Sec. 13.1872. CLASS C UTILITIES: RATE ADJUSTMENT. (a) This
section applies only to a Class C utility.
(b) For purposes of this section, "price index" means an
appropriate price index designated annually by the utility
commission for the purposes of this section.
(c) A utility may not make changes in its rates except by:
(1) filing an application for a rate adjustment under
the procedures described by Subsection (e) and sending by mail, or
by e-mail if the ratepayer has agreed to receive communications
electronically, a notice to each ratepayer describing the proposed
rate adjustment at least 30 days before the effective date of the
proposed change; or
(2) complying with the procedures to change rates
described by Section 13.1871.
(d) The utility shall mail, send by e-mail, or deliver a
copy of the application to the appropriate offices of each affected
municipality and to any other affected persons as required by the
regulatory authority's rules.
(e) The utility commission by rule shall adopt procedures to
allow a utility to receive without a hearing an annual rate
adjustment based on changes in the price index. The rules must:
(1) include standard language to be included in the
notice described by Subsection (c)(1) describing the rate
adjustment process; and
(2) provide that an annual rate adjustment described
by this section may not result in a rate increase to any class or
category of ratepayer of more than the lesser of:
(A) five percent; or
(B) the percentage increase in the price index
between the year preceding the year in which the utility requests
the adjustment and the year in which the utility requests the
adjustment.
(f) A utility may adjust the utility's rates using the
procedures adopted under Subsection (e) not more than once each
year and not more than four times between rate proceedings
described by Section 13.1871.
SECTION 39. Section 13.188, Water Code, is amended to read
as follows:
Sec. 13.188. ADJUSTMENT FOR CHANGE IN ENERGY COSTS. (a)
Notwithstanding any other provision in this chapter, the utility
commission by rule shall adopt a procedure allowing a utility to
file with the utility commission an application to timely adjust
the utility's rates to reflect an increase or decrease in
documented energy costs in a pass through clause. The utility
commission, by rule, shall require the pass through of documented
decreases in energy costs within a reasonable time. The pass
through, whether a decrease or increase, shall be implemented on no
later than an annual basis, unless the utility commission
determines a special circumstance applies.
(b) Notwithstanding any other provision to the contrary,
this adjustment is an uncontested matter not subject to a contested
case hearing. However, the utility commission [executive director]
shall hold an uncontested public meeting:
(1) on the request of a member of the legislature who
represents the area served by the water and sewer utility; or
(2) if the utility commission [executive director]
determines that there is substantial public interest in the matter.
(c) A proceeding under this section is not a rate case and
Sections [Section] 13.187, 13.1871, and 13.1872 do [does] not
apply.
SECTION 40. Sections 13.241(a), (d), and (e), Water Code,
are amended to read as follows:
(a) In determining whether to grant or amend a certificate
of public convenience and necessity, the utility commission shall
ensure that the applicant possesses the financial, managerial, and
technical capability to provide continuous and adequate service.
(d) Before the utility commission grants a new certificate
of convenience and necessity for an area which would require
construction of a physically separate water or sewer system, the
applicant must demonstrate to the utility commission that
regionalization or consolidation with another retail public
utility is not economically feasible.
(e) The utility commission by rule shall develop a
standardized method for determining under Section 13.246(f) which
of two or more retail public utilities or water supply or sewer
service corporations that apply for a certificate of public
convenience and necessity to provide water or sewer utility service
to an uncertificated area located in an economically distressed
area is more capable financially, managerially, and technically of
providing continuous and adequate service. In this subsection,
"economically distressed area" has the meaning assigned by Section
15.001.
SECTION 41. Sections 13.242(a) and (c), Water Code, are
amended to read as follows:
(a) Unless otherwise specified, a utility, a utility
operated by an affected county, or a water supply or sewer service
corporation may not in any way render retail water or sewer utility
service directly or indirectly to the public without first having
obtained from the utility commission a certificate that the present
or future public convenience and necessity will require that
installation, operation, or extension, and except as otherwise
provided by this subchapter, a retail public utility may not
furnish, make available, render, or extend retail water or sewer
utility service to any area to which retail water or sewer utility
service is being lawfully furnished by another retail public
utility without first having obtained a certificate of public
convenience and necessity that includes the area in which the
consuming facility is located.
(c) The utility commission may by rule allow a municipality
or utility or water supply corporation to render retail water
service without a certificate of public convenience and necessity
if the municipality has given notice under Section 13.255 [of this
code] that it intends to provide retail water service to an area or
if the utility or water supply corporation has less than 15
potential connections and is not within the certificated area of
another retail public utility.
SECTION 42. Section 13.244, Water Code, is amended to read
as follows:
Sec. 13.244. APPLICATION; MAPS AND OTHER INFORMATION;
EVIDENCE AND CONSENT. (a) To obtain a certificate of public
convenience and necessity or an amendment to a certificate, a
public utility or water supply or sewer service corporation shall
submit to the utility commission an application for a certificate
or for an amendment as provided by this section.
(b) Each public utility and water supply or sewer service
corporation shall file with the utility commission a map or maps
showing all its facilities and illustrating separately facilities
for production, transmission, and distribution of its services, and
each certificated retail public utility shall file with the utility
commission a map or maps showing any facilities, customers, or area
currently being served outside its certificated areas.
(c) Each applicant for a certificate or for an amendment
shall file with the utility commission evidence required by the
utility commission to show that the applicant has received the
required consent, franchise, or permit of the proper municipality
or other public authority.
(d) An application for a certificate of public convenience
and necessity or for an amendment to a certificate must contain:
(1) a description of the proposed service area by:
(A) a metes and bounds survey certified by a
licensed state land surveyor or a registered professional land
surveyor;
(B) the Texas State Plane Coordinate System;
(C) verifiable landmarks, including a road,
creek, or railroad line; or
(D) if a recorded plat of the area exists, lot and
block number;
(2) a description of any requests for service in the
proposed service area;
(3) a capital improvements plan, including a budget
and estimated timeline for construction of all facilities necessary
to provide full service to the entire proposed service area;
(4) a description of the sources of funding for all
facilities;
(5) to the extent known, a description of current and
projected land uses, including densities;
(6) a current financial statement of the applicant;
(7) according to the tax roll of the central appraisal
district for each county in which the proposed service area is
located, a list of the owners of each tract of land that is:
(A) at least 50 acres; and
(B) wholly or partially located within the
proposed service area; and
(8) any other item required by the utility commission.
SECTION 43. Sections 13.245(b), (c), (c-1), (c-2), (c-3),
and (e), Water Code, are amended to read as follows:
(b) Except as provided by Subsections (c), (c-1), and (c-2),
the utility commission may not grant to a retail public utility a
certificate of public convenience and necessity for a service area
within the boundaries or extraterritorial jurisdiction of a
municipality without the consent of the municipality. The
municipality may not unreasonably withhold the consent. As a
condition of the consent, a municipality may require that all water
and sewer facilities be designed and constructed in accordance with
the municipality's standards for facilities.
(c) If a municipality has not consented under Subsection (b)
before the 180th day after the date the municipality receives the
retail public utility's application, the utility commission shall
grant the certificate of public convenience and necessity without
the consent of the municipality if the utility commission finds
that the municipality:
(1) does not have the ability to provide service; or
(2) has failed to make a good faith effort to provide
service on reasonable terms and conditions.
(c-1) If a municipality has not consented under Subsection
(b) before the 180th day after the date a landowner or a retail
public utility submits to the municipality a formal request for
service according to the municipality's application requirements
and standards for facilities on the same or substantially similar
terms as provided by the retail public utility's application to the
utility commission, including a capital improvements plan required
by Section 13.244(d)(3) or a subdivision plat, the utility
commission may grant the certificate of public convenience and
necessity without the consent of the municipality if:
(1) the utility commission makes the findings required
by Subsection (c);
(2) the municipality has not entered into a binding
commitment to serve the area that is the subject of the retail
public utility's application to the utility commission before the
180th day after the date the formal request was made; and
(3) the landowner or retail public utility that
submitted the formal request has not unreasonably refused to:
(A) comply with the municipality's service
extension and development process; or
(B) enter into a contract for water or sewer
services with the municipality.
(c-2) If a municipality refuses to provide service in the
proposed service area, as evidenced by a formal vote of the
municipality's governing body or an official notification from the
municipality, the utility commission is not required to make the
findings otherwise required by this section and may grant the
certificate of public convenience and necessity to the retail
public utility at any time after the date of the formal vote or
receipt of the official notification.
(c-3) The utility commission must include as a condition of
a certificate of public convenience and necessity granted under
Subsection (c-1) or (c-2) that all water and sewer facilities be
designed and constructed in accordance with the municipality's
standards for water and sewer facilities.
(e) If the utility commission makes a decision under
Subsection (d) regarding the grant of a certificate of public
convenience and necessity without the consent of the municipality,
the municipality or the retail public utility may appeal the
decision to the appropriate state district court. The court shall
hear the petition within 120 days after the date the petition is
filed. On final disposition, the court may award reasonable fees to
the prevailing party.
SECTION 44. Sections 13.2451(b) and (c), Water Code, are
amended to read as follows:
(b) The utility commission may not extend a municipality's
certificate of public convenience and necessity beyond its
extraterritorial jurisdiction if an owner of land that is located
wholly or partly outside the extraterritorial jurisdiction elects
to exclude some or all of the landowner's property within a proposed
service area in accordance with Section 13.246(h). This subsection
does not apply to a transfer of a certificate as approved by the
utility commission.
(c) The utility commission, after notice to the
municipality and an opportunity for a hearing, may decertify an
area outside a municipality's extraterritorial jurisdiction if the
municipality does not provide service to the area on or before the
fifth anniversary of the date the certificate of public convenience
and necessity was granted for the area. This subsection does not
apply to a certificate of public convenience and necessity for an
area:
(1) that was transferred to a municipality on approval
of the utility commission; and
(2) in relation to which the municipality has spent
public funds.
SECTION 45. Section 13.246, Water Code, is amended to read
as follows:
Sec. 13.246. NOTICE AND HEARING; ISSUANCE OR REFUSAL;
FACTORS CONSIDERED. (a) If an application for a certificate of
public convenience and necessity or for an amendment to a
certificate is filed, the utility commission shall cause notice of
the application to be given to affected parties and to each county
and groundwater conservation district that is wholly or partly
included in the area proposed to be certified. If requested, the
utility commission shall fix a time and place for a hearing and give
notice of the hearing. Any person affected by the application may
intervene at the hearing.
(a-1) Except as otherwise provided by this subsection, in
addition to the notice required by Subsection (a), the utility
commission shall require notice to be mailed to each owner of a
tract of land that is at least 25 acres and is wholly or partially
included in the area proposed to be certified. Notice required
under this subsection must be mailed by first class mail to the
owner of the tract according to the most current tax appraisal rolls
of the applicable central appraisal district at the time the
utility commission received the application for the certificate or
amendment. Good faith efforts to comply with the requirements of
this subsection shall be considered adequate notice to landowners.
Notice under this subsection is not required for a matter filed with
the utility commission or the commission under:
(1) Section 13.248 or 13.255; or
(2) Chapter 65.
(b) The utility commission may grant applications and issue
certificates and amendments to certificates only if the utility
commission finds that a certificate or amendment is necessary for
the service, accommodation, convenience, or safety of the public.
The utility commission may issue a certificate or amendment as
requested, or refuse to issue it, or issue it for the construction
of only a portion of the contemplated system or facility or
extension, or for the partial exercise only of the right or
privilege and may impose special conditions necessary to ensure
that continuous and adequate service is provided.
(c) Certificates of public convenience and necessity and
amendments to certificates shall be granted by the utility
commission on a nondiscriminatory basis after consideration by the
utility commission of:
(1) the adequacy of service currently provided to the
requested area;
(2) the need for additional service in the requested
area, including whether any landowners, prospective landowners,
tenants, or residents have requested service;
(3) the effect of the granting of a certificate or of
an amendment on the recipient of the certificate or amendment, on
the landowners in the area, and on any retail public utility of the
same kind already serving the proximate area;
(4) the ability of the applicant to provide adequate
service, including meeting the standards of the commission, taking
into consideration the current and projected density and land use
of the area;
(5) the feasibility of obtaining service from an
adjacent retail public utility;
(6) the financial ability of the applicant to pay for
the facilities necessary to provide continuous and adequate service
and the financial stability of the applicant, including, if
applicable, the adequacy of the applicant's debt-equity ratio;
(7) environmental integrity;
(8) the probable improvement of service or lowering of
cost to consumers in that area resulting from the granting of the
certificate or amendment; and
(9) the effect on the land to be included in the
certificated area.
(d) The utility commission may require an applicant for a
certificate or for an amendment to provide a bond or other financial
assurance in a form and amount specified by the utility commission
to ensure that continuous and adequate utility service is provided.
(e) Where applicable, in addition to the other factors in
this section the utility commission shall consider the efforts of
the applicant:
(1) to extend service to any economically distressed
areas located within the service areas certificated to the
applicant; and
(2) to enforce the rules adopted under Section 16.343.
(f) If two or more retail public utilities or water supply
or sewer service corporations apply for a certificate of public
convenience and necessity to provide water or sewer utility service
to an uncertificated area located in an economically distressed
area and otherwise meet the requirements for obtaining a new
certificate, the utility commission shall grant the certificate to
the retail public utility or water supply or sewer service
corporation that is more capable financially, managerially, and
technically of providing continuous and adequate service.
(g) In this section, "economically distressed area" has the
meaning assigned by Section 15.001.
(h) Except as provided by Subsection (i), a landowner who
owns a tract of land that is at least 25 acres and that is wholly or
partially located within the proposed service area may elect to
exclude some or all of the landowner's property from the proposed
service area by providing written notice to the utility commission
before the 30th day after the date the landowner receives notice of
a new application for a certificate of public convenience and
necessity or for an amendment to an existing certificate of public
convenience and necessity. The landowner's election is effective
without a further hearing or other process by the utility
commission. If a landowner makes an election under this
subsection, the application shall be modified so that the electing
landowner's property is not included in the proposed service area.
An applicant for a certificate of public convenience and necessity
that has land removed from its proposed certificated service area
because of a landowner's election under this subsection may not be
required to provide service to the removed land for any reason,
including the violation of law or utility commission or commission
rules by the water or sewer system of another person.
(i) A landowner is not entitled to make an election under
Subsection (h) but is entitled to contest the inclusion of the
landowner's property in the proposed service area at a hearing held
by the utility commission regarding the application if the proposed
service area is located within the boundaries or extraterritorial
jurisdiction of a municipality with a population of more than
500,000 and the municipality or a utility owned by the municipality
is the applicant.
SECTION 46. Section 13.247(a), Water Code, is amended to
read as follows:
(a) If an area is within the boundaries of a municipality,
all retail public utilities certified or entitled to certification
under this chapter to provide service or operate facilities in that
area may continue and extend service in its area of public
convenience and necessity within the area pursuant to the rights
granted by its certificate and this chapter, unless the
municipality exercises its power of eminent domain to acquire the
property of the retail public utility under Subsection (d). Except
as provided by Section 13.255, a municipally owned or operated
utility may not provide retail water and sewer utility service
within the area certificated to another retail public utility
without first having obtained from the utility commission a
certificate of public convenience and necessity that includes the
areas to be served.
SECTION 47. Section 13.248, Water Code, is amended to read
as follows:
Sec. 13.248. CONTRACTS VALID AND ENFORCEABLE. Contracts
between retail public utilities designating areas to be served and
customers to be served by those retail public utilities, when
approved by the utility commission after public notice and hearing,
are valid and enforceable and are incorporated into the appropriate
areas of public convenience and necessity.
SECTION 48. Sections 13.250(b), (c), and (e), Water Code,
are amended to read as follows:
(b) Unless the utility commission issues a certificate that
neither the present nor future convenience and necessity will be
adversely affected, the holder of a certificate or a person who
possesses facilities used to provide utility service shall not
discontinue, reduce, or impair service to a certified service area
or part of a certified service area except for:
(1) nonpayment of charges for services provided by the
certificate holder or a person who possesses facilities used to
provide utility service;
(2) nonpayment of charges for sewer service provided
by another retail public utility under an agreement between the
retail public utility and the certificate holder or a person who
possesses facilities used to provide utility service or under a
utility commission-ordered arrangement between the two service
providers;
(3) nonuse; or
(4) other similar reasons in the usual course of
business.
(c) Any discontinuance, reduction, or impairment of
service, whether with or without approval of the utility
commission, shall be in conformity with and subject to conditions,
restrictions, and limitations that the utility commission
prescribes.
(e) Not later than the 48th hour after the hour in which a
utility files a bankruptcy petition, the utility shall report this
fact to the utility commission and the commission in writing.
SECTION 49. Section 13.2502(d), Water Code, is amended to
read as follows:
(d) This section does not limit or extend the jurisdiction
of the utility commission under Section 13.043(g).
SECTION 50. Section 13.251, Water Code, is amended to read
as follows:
Sec. 13.251. SALE, ASSIGNMENT, OR LEASE OF CERTIFICATE.
Except as provided by Section 13.255 [of this code], a utility or a
water supply or sewer service corporation may not sell, assign, or
lease a certificate of public convenience and necessity or any
right obtained under a certificate unless the commission has
determined that the purchaser, assignee, or lessee is capable of
rendering adequate and continuous service to every consumer within
the certified area, after considering the factors under Section
13.246(c) [of this code]. The sale, assignment, or lease shall be
on the conditions prescribed by the utility commission.
SECTION 51. Section 13.252, Water Code, is amended to read
as follows:
Sec. 13.252. INTERFERENCE WITH OTHER RETAIL PUBLIC UTILITY.
If a retail public utility in constructing or extending a line,
plant, or system interferes or attempts to interfere with the
operation of a line, plant, or system of any other retail public
utility, or furnishes, makes available, renders, or extends retail
water or sewer utility service to any portion of the service area of
another retail public utility that has been granted or is not
required to possess a certificate of public convenience and
necessity, the utility commission may issue an order prohibiting
the construction, extension, or provision of service or prescribing
terms and conditions for locating the line, plant, or system
affected or for the provision of the service.
SECTION 52. Section 13.253, Water Code, is amended to read
as follows:
Sec. 13.253. IMPROVEMENTS IN SERVICE; INTERCONNECTING
SERVICE. (a) After notice and hearing, the utility commission or
the commission may:
(1) order any retail public utility that is required
by law to possess a certificate of public convenience and necessity
or any retail public utility that possesses a certificate of public
convenience and necessity and is located in an affected county as
defined in Section 16.341 to:
(A) provide specified improvements in its
service in a defined area if service in that area is inadequate or
is substantially inferior to service in a comparable area and it is
reasonable to require the retail public utility to provide the
improved service; or
(B) develop, implement, and follow financial,
managerial, and technical practices that are acceptable to the
utility commission to ensure that continuous and adequate service
is provided to any areas currently certificated to the retail
public utility if the retail public utility has not provided
continuous and adequate service to any of those areas and, for a
utility, to provide financial assurance of the utility's ability to
operate the system in accordance with applicable laws and rules, in
the form of a bond or other financial assurance in a form and amount
specified by the utility commission;
(2) order two or more public utilities or water supply
or sewer service corporations to establish specified facilities for
interconnecting service;
(3) order a public utility or water supply or sewer
service corporation that has not demonstrated that it can provide
continuous and adequate service from its drinking water source or
sewer treatment facility to obtain service sufficient to meet its
obligation to provide continuous and adequate service on at least a
wholesale basis from another consenting utility service provider;
or
(4) issue an emergency order, with or without a
hearing, under Section 13.041.
(b) If the utility commission has reason to believe that
improvements and repairs to a water or sewer service system are
necessary to enable a retail public utility to provide continuous
and adequate service in any portion of its service area and the
retail public utility has provided financial assurance under
Section 341.0355, Health and Safety Code, or under this chapter,
the utility commission, after providing to the retail public
utility notice and an opportunity to be heard by the commissioners
at a [commission] meeting of the utility commission, may
immediately order specified improvements and repairs to the water
or sewer system, the costs of which may be paid by the bond or other
financial assurance in an amount determined by the utility
commission not to exceed the amount of the bond or financial
assurance. The order requiring the improvements may be an
emergency order if it is issued after the retail public utility has
had an opportunity to be heard [by the commissioners] at a
[commission] meeting of the utility commission. After notice and
hearing, the utility commission may require a retail public utility
to obligate additional money to replace the financial assurance
used for the improvements.
SECTION 53. Sections 13.254(a), (a-1), (a-2), (a-3), (a-4),
(a-6), (a-8), (b), (c), (d), (e), (f), (g), (g-1), and (h), Water
Code, are amended to read as follows:
(a) The utility commission at any time after notice and
hearing may revoke or amend any certificate of public convenience
and necessity with the written consent of the certificate holder or
if the utility commission [it] finds that:
(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;
(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;
(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
(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.
(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 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.
(a-2) A landowner is not entitled to make the election
described in Subsection (a-1) or (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.
(a-3) Within 60 calendar days from the date the utility
commission determines the petition filed pursuant to Subsection
(a-1) to be administratively complete, the utility commission shall
grant the petition unless the utility commission makes an express
finding that the petitioner failed to satisfy the elements required
in Subsection (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.
(a-4) Chapter 2001, Government Code, does not apply to any
petition filed under Subsection (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.
(a-6) The utility commission shall grant a petition
received under Subsection (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 (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.
(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 (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.
(b) Upon written request from the certificate holder, the
utility commission [executive director] 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).
(c) If the certificate of any retail public utility is
revoked or amended, the utility commission may require one or more
retail public utilities with their consent to provide service in
the area in question. The order of the utility commission shall not
be effective to transfer property.
(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 54. Sections 13.255(a), (b), (c), (d), (e), (g-1),
(k), (l), and (m), Water Code, are amended to read as follows:
(a) In the event that an area is incorporated or annexed by a
municipality, either before or after the effective date of this
section, the municipality and a retail public utility that provides
water or sewer service to all or part of the area pursuant to a
certificate of convenience and necessity may agree in writing that
all or part of the area may be served by a municipally owned
utility, by a franchised utility, or by the retail public utility.
In this section, the phrase "franchised utility" shall mean a
retail public utility that has been granted a franchise by a
municipality to provide water or sewer service inside municipal
boundaries. The agreement may provide for single or dual
certification of all or part of the area, for the purchase of
facilities or property, and for such other or additional terms that
the parties may agree on. If a franchised utility is to serve the
area, the franchised utility shall also be a party to the agreement.
The executed agreement shall be filed with the utility commission,
and the utility commission, on receipt of the agreement, shall
incorporate the terms of the agreement into the respective
certificates of convenience and necessity of the parties to the
agreement.
(b) If an agreement is not executed within 180 days after
the municipality, in writing, notifies the retail public utility of
its intent to provide service to the incorporated or annexed area,
and if the municipality desires and intends to provide retail
utility service to the area, the municipality, prior to providing
service to the area, shall file an application with the utility
commission to grant single certification to the municipally owned
water or sewer utility or to a franchised utility. If an
application for single certification is filed, the utility
commission shall fix a time and place for a hearing and give notice
of the hearing to the municipality and franchised utility, if any,
and notice of the application and hearing to the retail public
utility.
(c) The utility commission shall grant single certification
to the municipality. The utility commission shall also determine
whether single certification as requested by the municipality would
result in property of a retail public utility being rendered
useless or valueless to the retail public utility, and shall
determine in its order the monetary amount that is adequate and just
to compensate the retail public utility for such property. If the
municipality in its application has requested the transfer of
specified property of the retail public utility to the municipality
or to a franchised utility, the utility commission shall also
determine in its order the adequate and just compensation to be paid
for such property pursuant to the provisions of this section,
including an award for damages to property remaining in the
ownership of the retail public utility after single certification.
The order of the utility commission shall not be effective to
transfer property. A transfer of property may only be obtained
under this section by a court judgment rendered pursuant to
Subsection (d) or (e) [of this section]. The grant of single
certification by the utility commission shall go into effect on the
date the municipality or franchised utility, as the case may be,
pays adequate and just compensation pursuant to court order, or
pays an amount into the registry of the court or to the retail
public utility under Subsection (f). If the court judgment
provides that the retail public utility is not entitled to any
compensation, the grant of single certification shall go into
effect when the court judgment becomes final. The municipality or
franchised utility must provide to each customer of the retail
public utility being acquired an individual written notice within
60 days after the effective date for the transfer specified in the
court judgment. The notice must clearly advise the customer of the
identity of the new service provider, the reason for the transfer,
the rates to be charged by the new service provider, and the
effective date of those rates.
(d) In the event the final order of the utility commission
is not appealed within 30 days, the municipality may request the
district court of Travis County to enter a judgment consistent with
the order of the utility commission. In such event, the court shall
render a judgment that:
(1) transfers to the municipally owned utility or
franchised utility title to property to be transferred to the
municipally owned utility or franchised utility as delineated by
the utility commission's final order and property determined by the
utility commission to be rendered useless or valueless by the
granting of single certification; and
(2) orders payment to the retail public utility of
adequate and just compensation for the property as determined by
the utility commission in its final order.
(e) Any party that is aggrieved by a final order of the
utility commission under this section may file an appeal with the
district court of Travis County within 30 days after the order
becomes final. The hearing in such an appeal before the district
court shall be by trial de novo on all issues. After the hearing, if
the court determines that the municipally owned utility or
franchised utility is entitled to single certification under the
provisions of this section, the court shall enter a judgment that:
(1) transfers to the municipally owned utility or
franchised utility title to property requested by the municipality
to be transferred to the municipally owned utility or franchised
utility and located within the singly certificated area and
property determined by the court or jury to be rendered useless or
valueless by the granting of single certification; and
(2) orders payment in accordance with Subsection (g)
[of this section] to the retail public utility of adequate and just
compensation for the property transferred and for the property
damaged as determined by the court or jury.
(g-1) The utility commission shall adopt rules governing
the evaluation of the factors to be considered in determining the
monetary compensation under Subsection (g). The utility commission
by rule shall adopt procedures to ensure that the total
compensation to be paid to a retail public utility under Subsection
(g) is determined not later than the 90th calendar day after the
date on which the utility commission determines that the
municipality's application is administratively complete.
(k) The following conditions apply when a municipality or
franchised utility makes an application to acquire the service area
or facilities of a retail public utility described in Subsection
(j)(2):
(1) the utility commission or court must determine
that the service provided by the retail public utility is
substandard or its rates are unreasonable in view of the reasonable
expenses of the utility;
(2) if the municipality abandons its application, the
court or the utility commission is authorized to award to the retail
public utility its reasonable expenses related to the proceeding
hereunder, including attorney fees; and
(3) unless otherwise agreed by the retail public
utility, the municipality must take the entire utility property of
the retail public utility in a proceeding hereunder.
(l) For an area incorporated by a municipality, the
compensation provided under Subsection (g) shall be determined by a
qualified individual or firm to serve as independent appraiser, who
shall be selected by the affected retail public utility, and the
costs of the appraiser shall be paid by the municipality. For an
area annexed by a municipality, the compensation provided under
Subsection (g) shall be determined by a qualified individual or
firm to which the municipality and the retail public utility agree
to serve as independent appraiser. If the retail public utility and
the municipality are unable to agree on a single individual or firm
to serve as the independent appraiser before the 11th day after the
date the retail public utility or municipality notifies the other
party of the impasse, the retail public utility and municipality
each shall appoint a qualified individual or firm to serve as
independent appraiser. On or before the 10th business day after the
date of their appointment, the independent appraisers shall meet to
reach an agreed determination of the amount of compensation. If the
appraisers are unable to agree on a determination before the 16th
business day after the date of their first meeting under this
subsection, the retail public utility or municipality may petition
the utility commission or a person the utility commission
designates for the purpose to appoint a third qualified independent
appraiser to reconcile the appraisals of the two originally
appointed appraisers. The determination of the third appraiser may
not be less than the lesser or more than the greater of the two
original appraisals. The costs of the independent appraisers for
an annexed area shall be shared equally by the retail public utility
and the municipality. The determination of compensation under this
subsection is binding on the utility commission.
(m) The utility commission shall deny an application for
single certification by a municipality that fails to demonstrate
compliance with the commission's minimum requirements for public
drinking water systems.
SECTION 55. Section 13.2551, Water Code, is amended to read
as follows:
Sec. 13.2551. COMPLETION OF DECERTIFICATION. (a) As a
condition to decertification or single certification under Section
13.254 or 13.255, and on request by an affected retail public
utility, the utility commission may order:
(1) the retail public utility seeking to provide
service to a decertified area to serve the entire service area of
the retail public utility that is being decertified; and
(2) the transfer of the entire certificate of public
convenience and necessity of a partially decertified retail public
utility to the retail public utility seeking to provide service to
the decertified area.
(b) The utility commission shall order service to the entire
area under Subsection (a) if the utility commission finds that the
decertified retail public utility will be unable to provide
continuous and adequate service at an affordable cost to the
remaining customers.
(c) The utility commission shall require the retail public
utility seeking to provide service to the decertified area to
provide continuous and adequate service to the remaining customers
at a cost comparable to the cost of that service to its other
customers and shall establish the terms under which the service
must be provided. The terms may include:
(1) transferring debt and other contract obligations;
(2) transferring real and personal property;
(3) establishing interim service rates for affected
customers during specified times; and
(4) other provisions necessary for the just and
reasonable allocation of assets and liabilities.
(d) The retail public utility seeking decertification shall
not charge the affected customers any transfer fee or other fee to
obtain service other than the retail public utility's usual and
customary rates for monthly service or the interim rates set by the
utility commission, if applicable.
(e) The utility commission shall not order compensation to
the decertificated retail utility if service to the entire service
area is ordered under this section.
SECTION 56. Sections 13.257(e), (i), (r), and (s), Water
Code, are amended to read as follows:
(e) The notice must be given to the prospective purchaser
before the execution of a binding contract of purchase and sale.
The notice may be given separately or as an addendum to or paragraph
of the contract. If the seller fails to provide the notice required
by this section, the purchaser may terminate the contract. If the
seller provides the notice at or before the closing of the purchase
and sale contract and the purchaser elects to close even though the
notice was not timely provided before the execution of the
contract, it is conclusively presumed that the purchaser has waived
all rights to terminate the contract and recover damages or pursue
other remedies or rights under this section. Notwithstanding any
provision of this section to the contrary, a seller, title
insurance company, real estate broker, or examining attorney, or an
agent, representative, or person acting on behalf of the seller,
company, broker, or attorney, is not liable for damages under
Subsection (m) or (n) or liable for any other damages to any person
for:
(1) failing to provide the notice required by this
section to a purchaser before the execution of a binding contract of
purchase and sale or at or before the closing of the purchase and
sale contract if:
(A) the utility service provider did not file the
map of the certificated service area in the real property records of
the county in which the service area is located and with the utility
commission depicting the boundaries of the service area of the
utility service provider as shown in the real property records of
the county in which the service area is located; and
(B) the utility commission did not maintain an
accurate map of the certificated service area of the utility
service provider as required by this chapter; or
(2) unintentionally providing a notice required by
this section that is incorrect under the circumstances before the
execution of a binding contract of purchase and sale or at or before
the closing of the purchase and sale contract.
(i) If the notice is given at closing as provided by
Subsection (g), a purchaser, or the purchaser's heirs, successors,
or assigns, may not maintain an action for damages or maintain an
action against a seller, title insurance company, real estate
broker, or lienholder, or any agent, representative, or person
acting on behalf of the seller, company, broker, or lienholder, by
reason of the seller's use of the information filed with the utility
commission by the utility service provider or the seller's use of
the map of the certificated service area of the utility service
provider filed in the real property records to determine whether
the property to be purchased is within the certificated service
area of the utility service provider. An action may not be
maintained against a title insurance company for the failure to
disclose that the described real property is included within the
certificated service area of a utility service provider if the
utility service provider did not file in the real property records
or with the utility commission the map of the certificated service
area.
(r) A utility service provider shall:
(1) record in the real property records of each county
in which the service area or a portion of the service area is
located a certified copy of the map of the certificate of public
convenience and necessity and of any amendment to the certificate
as contained in the utility commission's records, and a boundary
description of the service area by:
(A) a metes and bounds survey certified by a
licensed state land surveyor or a registered professional land
surveyor;
(B) the Texas State Plane Coordinate System;
(C) verifiable landmarks, including a road,
creek, or railroad line; or
(D) if a recorded plat of the area exists, lot and
block number; and
(2) submit to the utility commission [executive
director] evidence of the recording.
(s) Each county shall accept and file in its real property
records a utility service provider's map presented to the county
clerk under this section if the map meets filing requirements, does
not exceed 11 inches by 17 inches in size, and is accompanied by the
appropriate fee. The recording required by this section must be
completed not later than the 31st day after the date a utility
service provider receives a final order from the utility commission
granting an application for a new certificate or for an amendment to
a certificate that results in a change in the utility service
provider's service area.
SECTION 57. Sections 13.301(a), (b), (c), (d), (e), (f),
and (g), Water Code, are amended to read as follows:
(a) A utility or a water supply or sewer service
corporation, on or before the 120th day before the effective date of
a sale, acquisition, lease, or rental of a water or sewer system
that is required by law to possess a certificate of public
convenience and necessity or the effective date of a merger or
consolidation with such a utility or water supply or sewer service
corporation, shall:
(1) file a written application with the utility
commission; and
(2) unless public notice is waived by the utility
commission [executive director] for good cause shown, give public
notice of the action.
(b) The utility commission may require that the person
purchasing or acquiring the water or sewer system demonstrate
adequate financial, managerial, and technical capability for
providing continuous and adequate service to the requested area and
any areas currently certificated to the person.
(c) If the person purchasing or acquiring the water or sewer
system cannot demonstrate adequate financial capability, the
utility commission may require that the person provide a bond or
other financial assurance in a form and amount specified by the
utility commission to ensure continuous and adequate utility
service is provided.
(d) The utility commission shall, with or without a public
hearing, investigate the sale, acquisition, lease, or rental to
determine whether the transaction will serve the public interest.
(e) Before the expiration of the 120-day notification
period, the utility commission [executive director] shall notify
all known parties to the transaction and the Office of Public
Utility Counsel whether [of] the utility commission will [executive
director's decision whether to request that the commission] hold a
public hearing to determine if the transaction will serve the
public interest. The utility commission may hold [executive
director may request] a hearing if:
(1) the application filed with the utility commission
or the public notice was improper;
(2) the person purchasing or acquiring the water or
sewer system has not demonstrated adequate financial, managerial,
and technical capability for providing continuous and adequate
service to the service area being acquired and to any areas
currently certificated to the person;
(3) the person or an affiliated interest of the person
purchasing or acquiring the water or sewer system has a history of:
(A) noncompliance with the requirements of the
utility commission, the commission, or the [Texas] Department of
State Health Services; or
(B) continuing mismanagement or misuse of
revenues as a utility service provider;
(4) the person purchasing or acquiring the water or
sewer system cannot demonstrate the financial ability to provide
the necessary capital investment to ensure the provision of
continuous and adequate service to the customers of the water or
sewer system; or
(5) there are concerns that the transaction may not
serve the public interest, after the application of the
considerations provided by Section 13.246(c) for determining
whether to grant a certificate of convenience and necessity.
(f) Unless the utility commission holds [executive director
requests that] a public hearing [be held], the sale, acquisition,
lease, or rental may be completed as proposed:
(1) at the end of the 120-day period; or
(2) at any time after the utility commission
[executive director] notifies the utility or water supply or sewer
service corporation that a hearing will not be held [requested].
(g) If the utility commission decides to hold a hearing [is
requested] or if the utility or water supply or sewer service
corporation fails to make the application as required or to provide
public notice, the sale, acquisition, lease, or rental may not be
completed unless the utility commission determines that the
proposed transaction serves the public interest.
SECTION 58. Section 13.302, Water Code, is amended to read
as follows:
Sec. 13.302. PURCHASE OF VOTING STOCK IN ANOTHER PUBLIC
UTILITY: REPORT. (a) A utility may not purchase voting stock in
another utility doing business in this state and a person may not
acquire a controlling interest in a utility doing business in this
state unless the person or utility files a written application with
the utility commission not later than the 61st day before the date
on which the transaction is to occur.
(b) The utility commission may require that a person
acquiring a controlling interest in a utility demonstrate adequate
financial, managerial, and technical capability for providing
continuous and adequate service to the requested area and any areas
currently certificated to the person.
(c) If the person acquiring a controlling interest cannot
demonstrate adequate financial capability, the utility commission
may require that the person provide a bond or other financial
assurance in a form and amount specified by the utility commission
to ensure continuous and adequate utility service is provided.
(d) The utility commission [executive director] may
[request that the commission] hold a public hearing on the
transaction if the utility commission [executive director]
believes that a criterion prescribed by Section 13.301(e) applies.
(e) Unless the utility commission holds [executive director
requests that] a public hearing [be held], the purchase or
acquisition may be completed as proposed:
(1) at the end of the 60-day period; or
(2) at any time after the utility commission
[executive director] notifies the person or utility that a hearing
will not be held [requested].
(f) If the utility commission decides to hold a hearing [is
requested] or if the person or utility fails to make the application
to the utility commission as required, the purchase or acquisition
may not be completed unless the utility commission determines that
the proposed transaction serves the public interest. A purchase or
acquisition that is not completed in accordance with the provisions
of this section is void.
SECTION 59. Section 13.303, Water Code, is amended to read
as follows:
Sec. 13.303. LOANS TO STOCKHOLDERS: REPORT. A utility may
not loan money, stocks, bonds, notes, or other evidences of
indebtedness to any corporation or person owning or holding
directly or indirectly any stock of the utility unless the utility
reports the transaction to the utility commission within 60 days
after the date of the transaction.
SECTION 60. Section 13.304, Water Code, is amended to read
as follows:
Sec. 13.304. FORECLOSURE REPORT. (a) A utility that
receives notice that all or a portion of the utility's facilities or
property used to provide utility service are being posted for
foreclosure shall notify the utility commission and the commission
in writing of that fact not later than the 10th day after the date on
which the utility receives the notice.
(b) A financial institution that forecloses on a utility or
on any part of the utility's facilities or property that are used to
provide utility service is not required to provide the 120-day
notice prescribed by Section 13.301, but shall provide written
notice to the utility commission and the commission before the 30th
day preceding the date on which the foreclosure is completed.
(c) The financial institution may operate the utility for an
interim period prescribed by utility commission rule before
transferring or otherwise obtaining a certificate of convenience
and necessity. A financial institution that operates a utility
during an interim period under this subsection is subject to each
utility commission rule to which the utility was subject and in the
same manner.
SECTION 61. Section 13.341, Water Code, is amended to read
as follows:
Sec. 13.341. JURISDICTION OVER AFFILIATED INTERESTS. The
utility commission has jurisdiction over affiliated interests
having transactions with utilities under the jurisdiction of the
utility commission to the extent of access to all accounts and
records of those affiliated interests relating to such
transactions, including but in no way limited to accounts and
records of joint or general expenses, any portion of which may be
applicable to those transactions.
SECTION 62. Section 13.342, Water Code, is amended to read
as follows:
Sec. 13.342. DISCLOSURE OF SUBSTANTIAL INTEREST IN VOTING
SECURITIES. The utility commission may require the disclosure of
the identity and respective interests of every owner of any
substantial interest in the voting securities of any utility or its
affiliated interest. One percent or more is a substantial interest
within the meaning of this section.
SECTION 63. Section 13.343(a), Water Code, is amended to
read as follows:
(a) The owner of a utility that supplies retail water
service may not contract to purchase from an affiliated supplier
wholesale water service for any of that owner's systems unless:
(1) the wholesale service is provided for not more
than 90 days to remedy an emergency condition, as defined by utility
commission or commission rule; or
(2) the utility commission [executive director]
determines that the utility cannot obtain wholesale water service
from another source at a lower cost than from the affiliate.
SECTION 64. Section 13.381, Water Code, is amended to read
as follows:
Sec. 13.381. RIGHT TO JUDICIAL REVIEW; EVIDENCE. Any party
to a proceeding before the utility commission or the commission is
entitled to judicial review under the substantial evidence rule.
SECTION 65. Section 13.382(a), Water Code, is amended to
read as follows:
(a) Any party represented by counsel who alleges that
existing rates are excessive or that rates prescribed by the
utility commission are excessive and who is a prevailing party in
proceedings for review of a utility commission order or decision
may in the same action recover against the regulation fund
reasonable fees for attorneys and expert witnesses and other costs
incurred by him before the utility commission and the court. The
amount of the attorney's fees shall be fixed by the court.
SECTION 66. Section 13.411, Water Code, is amended to read
as follows:
Sec. 13.411. ACTION TO ENJOIN OR REQUIRE COMPLIANCE. (a)
If the utility commission or the commission has reason to believe
that any retail public utility or any other person or corporation is
engaged in or is about to engage in any act in violation of this
chapter or of any order or rule of the utility commission or the
commission entered or adopted under this chapter or that any retail
public utility or any other person or corporation is failing to
comply with this chapter or with any rule or order, the attorney
general on request of the utility commission or the commission, in
addition to any other remedies provided in this chapter, shall
bring an action in a court of competent jurisdiction in the name of
and on behalf of the utility commission or the commission against
the retail public utility or other person or corporation to enjoin
the commencement or continuation of any act or to require
compliance with this chapter or the rule or order.
(b) If the utility commission or the executive director of
the commission has reason to believe that the failure of the owner
or operator of a water utility to properly operate, maintain, or
provide adequate facilities presents an imminent threat to human
health or safety, the utility commission or the executive director
shall immediately:
(1) notify the utility's representative; and
(2) initiate enforcement action consistent with:
(A) this subchapter; and
(B) procedural rules adopted by the utility
commission or the commission.
SECTION 67. Section 13.4115, Water Code, is amended to read
as follows:
Sec. 13.4115. ACTION TO REQUIRE ADJUSTMENT TO CONSUMER
CHARGE; PENALTY. In regard to a customer complaint arising out of a
charge made by a public utility, if the utility commission [the
executive director] finds that the utility has failed to make the
proper adjustment to the customer's bill after the conclusion of
the complaint process established by the utility commission, the
utility commission may issue an order requiring the utility to make
the adjustment. Failure to comply with the order within 30 days of
receiving the order is a violation for which the utility commission
may impose an administrative penalty under Section 13.4151.
SECTION 68. Sections 13.412(a), (f), and (g), Water Code,
are amended to read as follows:
(a) At the request of the utility commission or the
commission, the attorney general shall bring suit for the
appointment of a receiver to collect the assets and carry on the
business of a water or sewer utility that:
(1) has abandoned operation of its facilities;
(2) informs the utility commission or the commission
that the owner is abandoning the system;
(3) violates a final order of the utility commission
or the commission; or
(4) allows any property owned or controlled by it to be
used in violation of a final order of the utility commission or the
commission.
(f) For purposes of this section and Section 13.4132,
abandonment may include but is not limited to:
(1) failure to pay a bill or obligation owed to a
retail public utility or to an electric or gas utility with the
result that the utility service provider has issued a notice of
discontinuance of necessary services;
(2) failure to provide appropriate water or wastewater
treatment so that a potential health hazard results;
(3) failure to adequately maintain facilities,
resulting in potential health hazards, extended outages, or
repeated service interruptions;
(4) failure to provide customers adequate notice of a
health hazard or potential health hazard;
(5) failure to secure an alternative available water
supply during an outage;
(6) displaying a pattern of hostility toward or
repeatedly failing to respond to the utility commission or the
commission or the utility's customers; and
(7) failure to provide the utility commission or the
commission with adequate information on how to contact the utility
for normal business and emergency purposes.
(g) Notwithstanding Section 64.021, Civil Practice and
Remedies Code, a receiver appointed under this section may seek
[commission] approval from the utility commission and the
commission to acquire the water or sewer utility's facilities and
transfer the utility's certificate of convenience and necessity.
The receiver must apply in accordance with Subchapter H.
SECTION 69. Section 13.413, Water Code, is amended to read
as follows:
Sec. 13.413. PAYMENT OF COSTS OF RECEIVERSHIP. The
receiver may, subject to the approval of the court and after giving
notice to all interested parties, sell or otherwise dispose of all
or part of the real or personal property of a water or sewer utility
against which a proceeding has been brought under this subchapter
to pay the costs incurred in the operation of the receivership. The
costs include:
(1) payment of fees to the receiver for his services;
(2) payment of fees to attorneys, accountants,
engineers, or any other person or entity that provides goods or
services necessary to the operation of the receivership; and
(3) payment of costs incurred in ensuring that any
property owned or controlled by a water or sewer utility is not used
in violation of a final order of the utility commission or the
commission.
SECTION 70. Section 13.4131, Water Code, is amended to read
as follows:
Sec. 13.4131. SUPERVISION OF CERTAIN UTILITIES. (a) The
utility commission, after providing to the utility notice and an
opportunity for a hearing, may place a utility under supervision
for gross or continuing mismanagement, gross or continuing
noncompliance with this chapter or a rule adopted under this
chapter [commission rules], or noncompliance with an order issued
under this chapter [commission orders].
(b) While supervising a utility, the utility commission may
require the utility to abide by conditions and requirements
prescribed by the utility commission, including:
(1) management requirements;
(2) additional reporting requirements;
(3) restrictions on hiring, salary or benefit
increases, capital investment, borrowing, stock issuance or
dividend declarations, and liquidation of assets; and
(4) a requirement that the utility place the utility's
funds into an account in a financial institution approved by the
utility commission and use of those funds shall be restricted to
reasonable and necessary utility expenses.
(c) While supervising a utility, the utility commission may
require that the utility obtain [commission] approval from the
utility commission before taking any action that may be restricted
under Subsection (b) [of this section]. Any action or transaction
which occurs without [commission] approval may be voided by the
utility commission.
SECTION 71. Sections 13.4132(a), (b), and (d), Water Code,
are amended to read as follows:
(a) The utility commission or the commission, after
providing to the utility notice and an opportunity to be heard by
the commissioners at a utility commission or commission meeting,
may authorize a willing person to temporarily manage and operate a
utility if the utility:
(1) has discontinued or abandoned operations or the
provision of services; or
(2) has been or is being referred to the attorney
general for the appointment of a receiver under Section 13.412.
(b) The utility commission or the commission may appoint a
person under this section by emergency order, and notice of the
action is adequate if the notice is mailed or hand-delivered to the
last known address of the utility's headquarters.
(d) This section does not affect the authority of the
utility commission or the commission to pursue an enforcement claim
against a utility or an affiliated interest.
SECTION 72. Sections 13.4133(a) and (c), Water Code, are
amended to read as follows:
(a) Notwithstanding the requirements of Subchapter F
[Section 13.187 of this code], the utility commission may authorize
an emergency rate increase for a utility for which a person has been
appointed under Section 13.4132 [of this code] or for which a
receiver has been appointed under Section 13.412 [of this code] if
the increase is necessary to ensure the provision of continuous and
adequate services to the utility's customers.
(c) The utility commission shall schedule a hearing to
establish a final rate within 15 months after the date on which an
emergency rate increase takes effect. The utility commission shall
require the utility to provide notice of the hearing to each
customer. The additional revenues collected under an emergency
rate increase are subject to refund if the utility commission finds
that the rate increase was larger than necessary to ensure
continuous and adequate service.
SECTION 73. Sections 13.414(a) and (c), Water Code, are
amended to read as follows:
(a) Any retail public utility or affiliated interest that
violates this chapter, fails to perform a duty imposed on it, or
fails, neglects, or refuses to obey an order, rule, direction, or
requirement of the utility commission or the commission or decree
or judgment of a court is subject to a civil penalty of not less than
$100 nor more than $5,000 for each violation.
(c) The attorney general shall institute suit on his own
initiative or at the request of, in the name of, and on behalf of the
utility commission or the commission in a court of competent
jurisdiction to recover the penalty under this section.
SECTION 74. Sections 13.4151(a), (b), (c), (d), (e), (f),
(g), (h), (i), (j), (k), and (m), Water Code, are amended to read as
follows:
(a) If a person, affiliated interest, or entity subject to
the jurisdiction of the utility commission or the commission
violates this chapter or a rule or order adopted under this chapter,
the utility commission or the commission, as applicable, may assess
a penalty against that person, affiliated interest, or entity as
provided by this section. The penalty may be in an amount not to
exceed $5,000 a day. Each day a violation continues may be
considered a separate violation.
(b) In determining the amount of the penalty, the utility
commission or the commission shall consider:
(1) the nature, circumstances, extent, duration, and
gravity of the prohibited acts or omissions;
(2) with respect to the alleged violator:
(A) the history and extent of previous
violations;
(B) the degree of culpability, including whether
the violation was attributable to mechanical or electrical failures
and whether the violation could have been reasonably anticipated
and avoided;
(C) the demonstrated good faith, including
actions taken by the person, affiliated interest, or entity to
correct the cause of the violation;
(D) any economic benefit gained through the
violation; and
(E) the amount necessary to deter future
violations; and
(3) any other matters that justice requires.
(c) If, after examination of a possible violation and the
facts surrounding that possible violation, the utility commission
or the executive director of the commission concludes that a
violation has occurred, the utility commission or the executive
director may issue a preliminary report stating the facts on which
that conclusion is based, recommending that a penalty under this
section be imposed on the person, affiliated interest, or retail
public utility charged, and recommending the amount of that
proposed penalty. The utility commission or the executive director
shall base the recommended amount of the proposed penalty on the
factors provided by Subsection (b) [of this section], and shall
analyze each factor for the benefit of the appropriate agency
[commission].
(d) Not later than the 10th day after the date on which the
report is issued, the utility commission or the executive director
of the commission shall give written notice of the report to the
person, affiliated interest, or retail public utility charged with
the violation. The notice shall include a brief summary of the
charges, a statement of the amount of the penalty recommended, and a
statement of the right of the person, affiliated interest, or
retail public utility charged to a hearing on the occurrence of the
violation, the amount of the penalty, or both.
(e) Not later than the 20th day after the date on which
notice is received, the person, affiliated interest, or retail
public utility charged may give the appropriate agency [commission]
written consent to the [executive director's] report described by
Subsection (c), including the recommended penalty, or may make a
written request for a hearing.
(f) If the person, affiliated interest, or retail public
utility charged with the violation consents to the penalty
recommended in the report described by Subsection (c) [by the
executive director] or fails to timely respond to the notice, the
utility commission or the commission by order shall assess that
penalty or order a hearing to be held on the findings and
recommendations in the [executive director's] report. If the
utility commission or the commission assesses the penalty
recommended by the report, the utility commission or the commission
shall give written notice to the person, affiliated interest, or
retail public utility charged of its decision.
(g) If the person, affiliated interest, or retail public
utility charged requests or the utility commission or the
commission orders a hearing, the appropriate agency [commission]
shall call a hearing and give notice of the hearing. As a result of
the hearing, the appropriate agency [commission] by order may find
that a violation has occurred and may assess a civil penalty, may
find that a violation has occurred but that no penalty should be
assessed, or may find that no violation has occurred. All
proceedings under this subsection are subject to Chapter 2001,
Government Code. In making any penalty decision, the appropriate
agency [commission] shall analyze each of the factors provided by
Subsection (b) [of this section].
(h) The utility commission or the commission shall give
notice of its decision to the person, affiliated interest, or
retail public utility charged, and if the appropriate agency
[commission] finds that a violation has occurred and has assessed a
penalty, that agency [the commission] shall give written notice to
the person, affiliated interest, or retail public utility charged
of its findings, of the amount of the penalty, and of the person's,
affiliated interest's, or retail public utility's right to judicial
review of the agency's [commission's] order. If the utility
commission or the commission is required to give notice of a penalty
under this subsection or Subsection (f) [of this section], the
appropriate agency [commission] shall file notice of that agency's
[its] decision in the Texas Register not later than the 10th day
after the date on which the decision is adopted.
(i) Within the 30-day period immediately following the day
on which the utility commission's or commission's order is final, as
provided by Subchapter F, Chapter 2001, Government Code, the
person, affiliated interest, or retail public utility charged with
the penalty shall:
(1) pay the penalty in full; or
(2) if the person, affiliated interest, or retail
public utility seeks judicial review of the fact of the violation,
the amount of the penalty, or both:
(A) forward the amount of the penalty to the
appropriate agency [commission] for placement in an escrow account;
or
(B) post with the appropriate agency
[commission] a supersedeas bond in a form approved by the agency
[commission] for the amount of the penalty to be effective until all
judicial review of the order or decision is final.
(j) Failure to forward the money to or to post the bond with
the utility commission or the commission within the time provided
by Subsection (i) [of this section] constitutes a waiver of all
legal rights to judicial review. If the person, affiliated
interest, or retail public utility charged fails to forward the
money or post the bond as provided by Subsection (i) [of this
section], the appropriate agency [commission] or the executive
director of that agency may forward the matter to the attorney
general for enforcement.
(k) Judicial review of the order or decision of the utility
commission or the commission assessing the penalty shall be under
the substantial evidence rule and may be instituted by filing a
petition with a district court in Travis County, as provided by
Subchapter G, Chapter 2001, Government Code.
(m) Notwithstanding any other provision of law, the utility
commission or the commission may compromise, modify, extend the
time for payment of, or remit, with or without condition, any
penalty imposed under this section.
SECTION 75. Section 13.417, Water Code, is amended to read
as follows:
Sec. 13.417. CONTEMPT PROCEEDINGS. If any person or retail
public utility fails to comply with any lawful order of the utility
commission or the commission or with any subpoena or subpoena duces
tecum or if any witness refuses to testify about any matter on which
he may be lawfully interrogated, the utility commission or the
commission may apply to any court of competent jurisdiction to
compel obedience by proceedings for contempt.
SECTION 76. Section 13.418, Water Code, is amended to read
as follows:
Sec. 13.418. DISPOSITION OF FINES AND PENALTIES; WATER
UTILITY IMPROVEMENT ACCOUNT. (a) Fines and penalties collected
under this chapter from a retail public utility that is not a public
utility in other than criminal proceedings shall be [paid to the
commission and] deposited in the general revenue fund.
(b) Fines and penalties collected from a public utility
under this chapter in other than criminal proceedings shall be
[paid to the commission and] deposited in the water utility
improvement account as provided by Section 341.0485, Health and
Safety Code.
SECTION 77. Section 13.501(7), Water Code, is amended to
read as follows:
(7) "Multiple use facility" means commercial or
industrial parks, office complexes, marinas, and others
specifically identified in utility commission rules with five or
more units.
SECTION 78. Section 13.502(e), Water Code, is amended to
read as follows:
(e) An owner of an apartment house, manufactured home rental
community, or multiple use facility or a manager of a condominium
may not change from submetered billing to allocated billing unless:
(1) the utility commission [executive director]
approves of the change in writing after a demonstration of good
cause, including meter reading or billing problems that could not
feasibly be corrected or equipment failures; and
(2) the property owner meets rental agreement
requirements established by the utility commission.
SECTION 79. Sections 13.503(a), (b), and (e), Water Code,
are amended to read as follows:
(a) The utility commission shall encourage submetering of
individual rental or dwelling units by master meter operators or
building owners to enhance the conservation of water resources.
(b) Notwithstanding any other law, the utility commission
shall adopt rules and standards under which an owner, operator, or
manager of an apartment house, manufactured home rental community,
or multiple use facility that is not individually metered for water
for each rental or dwelling unit may install submetering equipment
for each individual rental or dwelling unit for the purpose of
fairly allocating the cost of each individual rental or dwelling
unit's water consumption, including wastewater charges based on
water consumption. In addition to other appropriate safeguards for
the tenant, the rules shall require that, except as provided by this
section, an apartment house owner, manufactured home rental
community owner, multiple use facility owner, or condominium
manager may not impose on the tenant any extra charges, over and
above the cost per gallon and any other applicable taxes and
surcharges that are charged by the retail public utility to the
owner or manager, and that the rental unit or apartment house owner
or manager shall maintain adequate records regarding submetering
and make the records available for inspection by the tenant during
reasonable business hours. The rules shall allow an owner or
manager to charge a tenant a fee for late payment of a submetered
water bill if the amount of the fee does not exceed five percent of
the bill paid late. All submetering equipment is subject to the
rules and standards established by the utility commission for
accuracy, testing, and record keeping of meters installed by
utilities and to the meter-testing requirements of Section 13.140
[of this code].
(e) The utility commission may authorize a building owner to
use submetering equipment that relies on integrated radio based
meter reading systems and remote registration in a building
plumbing system using submeters that comply with nationally
recognized plumbing standards and are as accurate as utility water
meters in single application conditions.
SECTION 80. Section 13.5031, Water Code, is amended to read
as follows:
Sec. 13.5031. NONSUBMETERING RULES. Notwithstanding any
other law, the utility commission shall adopt rules and standards
governing billing systems or methods used by manufactured home
rental community owners, apartment house owners, condominium
managers, or owners of other multiple use facilities for prorating
or allocating among tenants nonsubmetered master metered utility
service costs. In addition to other appropriate safeguards for the
tenant, those rules shall require that:
(1) the rental agreement contain a clear written
description of the method of calculation of the allocation of
nonsubmetered master metered utilities for the manufactured home
rental community, apartment house, or multiple use facility;
(2) the rental agreement contain a statement of the
average manufactured home, apartment, or multiple use facility unit
monthly bill for all units for any allocation of those utilities for
the previous calendar year;
(3) except as provided by this section, an owner or
condominium manager may not impose additional charges on a tenant
in excess of the actual charges imposed on the owner or condominium
manager for utility consumption by the manufactured home rental
community, apartment house, or multiple use facility;
(4) the owner or condominium manager shall maintain
adequate records regarding the utility consumption of the
manufactured home rental community, apartment house, or multiple
use facility, the charges assessed by the retail public utility,
and the allocation of the utility costs to the tenants;
(5) the owner or condominium manager shall maintain
all necessary records concerning utility allocations, including
the retail public utility's bills, and shall make the records
available for inspection by the tenants during normal business
hours; and
(6) the owner or condominium manager may charge a
tenant a fee for late payment of an allocated water bill if the
amount of the fee does not exceed five percent of the bill paid
late.
SECTION 81. Section 13.505, Water Code, is amended to read
as follows:
Sec. 13.505. ENFORCEMENT. In addition to the enforcement
provisions contained in Subchapter K [of this chapter], if an
apartment house owner, condominium manager, manufactured home
rental community owner, or other multiple use facility owner
violates a rule of the utility commission regarding submetering of
utility service consumed exclusively within the tenant's dwelling
unit or multiple use facility unit or nonsubmetered master metered
utility costs, the tenant may recover three times the amount of any
overcharge, a civil penalty equal to one month's rent, reasonable
attorney's fees, and court costs from the owner or condominium
manager. However, an owner of an apartment house, manufactured
home rental community, or other multiple use facility or
condominium manager is not liable for a civil penalty if the owner
or condominium manager proves the violation was a good faith,
unintentional mistake.
SECTION 82. Section 13.512, Water Code, is amended to read
as follows:
Sec. 13.512. AUTHORITY TO ENTER INTO PRIVATIZATION
CONTRACTS. Any eligible city is authorized to enter into
privatization contracts if such action is recommended by the board
of utility trustees and authorized by the governing body of the
eligible city pursuant to an ordinance. Any privatization contract
entered into prior to the effective date of this Act is validated,
ratified, and approved. Each eligible city shall file a copy of its
privatization contract with the utility commission, for
information purposes only, within 60 days of execution or the
effective date of this Act, whichever is later.
SECTION 83. Section 13.513, Water Code, is amended to read
as follows:
Sec. 13.513. ELECTION BY ELIGIBLE CITY TO EXEMPT SERVICE
PROVIDER FROM UTILITY COMMISSION JURISDICTION. A service provider
shall not constitute a "water and sewer utility," a "public
utility," a "utility," or a "retail public utility" within the
meaning of this chapter [Chapter 13] as a result of entering into or
performing a privatization contract, if the governing body of the
eligible city shall so elect by ordinance and provide notice
thereof in writing to the utility commission; provided, however,
this provision shall not affect the application of this chapter
[Chapter 13] to an eligible city itself. Notwithstanding anything
contained in this section, any service provider who seeks to extend
or render sewer service to any person or municipality other than, or
in addition to, an eligible city may be a "public utility" for the
purposes of this chapter [Chapter 13] with respect to such other
person or municipality.
SECTION 84. Section 49.352(c), Water Code, is amended to
read as follows:
(c) For purposes of this section, a municipality may obtain
single certification in the manner provided by Section 13.255,
except that the municipality may file an application with the
Public Utility Commission of Texas [commission] to grant single
certification immediately after the municipality provides notice
of intent to provide service as required by Section 13.255(b).
SECTION 85. Section 552.047(e), Local Government Code, is
amended to read as follows:
(e) Users residing within the established service area, but
outside the municipality's boundaries, may appeal rates
established for drainage charges under [to the Texas Natural
Resource Conservation Commission as authorized by] Section
13.043(b), [of the] Water Code.
SECTION 86. Section 7201.004(b), Special District Local
Laws Code, is amended to read as follows:
(b) This section does not apply to:
(1) rules or regulations concerning potable water
quality standards; or
(2) conflicts relating to service areas or
certificates issued to the corporation or district by the Public
Utility Commission of Texas or the Texas Commission on
Environmental Quality.
SECTION 87. Section 7201.005(c), Special District Local
Laws Code, is amended to read as follows:
(c) District boundaries may be modified in accordance with
Chapters 13 and 49, Water Code, except that the boundaries must
include all territory in any area included under a certificate of
convenience and necessity issued by the Public Utility Commission
of Texas or the Texas Commission on Environmental Quality to the
district.
SECTION 88. Section 7201.102, Special District Local Laws
Code, is amended to read as follows:
Sec. 7201.102. PROVISION OF SERVICE. The district shall at
all times operate and construct necessary improvements within the
certificated areas established by the Public Utility Commission of
Texas or the Texas Commission on Environmental Quality [commission]
to provide uninterrupted, continuous, and adequate service to
existing and future customers for water, sewer, and contract
services.
SECTION 89. Section 8363.106(b), Special District Local
Laws Code, is amended to read as follows:
(b) In relation to a retail public utility that provides
water or sewer service to all or part of the area of the district
under a certificate of public convenience and necessity, the
district may exercise the powers given to a municipality provided
by Section 13.255, Water Code, as if the district were a
municipality that had annexed the area of the district. The Public
Utility Commission of Texas [commission] shall grant single
certification as to the city as provided by Section 13.255(c),
Water Code, in the event that the district applies for the
certification on the city's behalf in the manner provided by
Section 13.255(b), Water Code.
SECTION 90. Section 8363.251(a), Special District Local
Laws Code, is amended to read as follows:
(a) The city may dissolve the district by ordinance after
provision is made for all debts incurred by the district if one or
more of the following does not occur:
(1) on or before the 90th day after the effective date
of the Act enacting this chapter, the city receives one or more
petitions requesting annexation of all territory in the district
remaining in the extraterritorial jurisdiction of the city;
(2) on or before the last day of the ninth month after
the effective date of the Act enacting this chapter, the city adopts
one or more ordinances annexing all territory in the district
remaining in the city's extraterritorial jurisdiction;
(3) on or before the last day of the third year after
the effective date of the Act enacting this chapter, the Public
Utility Commission of Texas [commission] issues an order approving
the sale and transfer of a certificate of public convenience and
necessity authorizing the city to provide retail water service to
territory in the district; or
(4) by the end of the fifth year after the effective
date of the Act enacting this chapter, the district has completed
construction of internal streets and water and sanitary sewer
facilities sufficient to serve at least 100 residential lots in the
district.
SECTION 91. Section 8801.201, Special District Local Laws
Code, is amended to read as follows:
Sec. 8801.201. APPEAL OF SURFACE WATER RATES. (a) A person
who is required to convert to surface water under this chapter and
who purchases that water supply wholesale from a political
subdivision as defined by Section 12.013(b), Water Code, may appeal
to the Public Utility Commission of Texas [commission] the rates
the political subdivision charges to the person. Chapter 12, Water
Code, and rules adopted under that chapter apply to an appeal under
this section.
(b) The Public Utility Commission of Texas [commission]
shall hear the appeal not later than the 180th day after the date
the appeal is filed.
(c) The Public Utility Commission of Texas [commission]
shall issue a final decision on the appeal not later than the 60th
day after the date the hearing ends.
SECTION 92. (a) On September 1, 2014, the following are
transferred from the Texas Commission on Environmental Quality to
the Public Utility Commission of Texas:
(1) the powers, duties, functions, programs, and
activities of the Texas Commission on Environmental Quality
relating to the economic regulation of water and sewer service,
including the issuance and transfer of certificates of convenience
and necessity, the determination of rates, and the administration
of hearings and proceedings involving those matters, under Sections
11.041 and 12.013 and Chapter 13, Water Code, as provided by this
Act;
(2) any obligations and contracts of the Texas
Commission on Environmental Quality that are directly related to
implementing a power, duty, function, program, or activity
transferred under this Act; and
(3) all property and records in the custody of the
Texas Commission on Environmental Quality that are related to a
power, duty, function, program, or activity transferred under this
Act and all funds appropriated by the legislature for that power,
duty, function, program, or activity.
(b) The Texas Commission on Environmental Quality shall
continue to carry out the commission's duties related to the
economic regulation of water and sewer service under the law as it
existed immediately before the effective date of this Act until
September 1, 2014, and the former law is continued in effect for
that purpose.
(c) The Texas Commission on Environmental Quality and the
Public Utility Commission of Texas shall enter into a memorandum of
understanding that:
(1) identifies in detail the applicable powers and
duties that are transferred by this Act;
(2) establishes a plan for the identification and
transfer of the records, personnel, property, and unspent
appropriations of the Texas Commission on Environmental Quality
that are used for purposes of the commission's powers and duties
directly related to the economic regulation of water and sewer
service under Sections 11.041 and 12.013 and Chapter 13, Water
Code, as amended by this Act; and
(3) establishes a plan for the transfer of all pending
applications, hearings, rulemaking proceedings, and orders
relating to the economic regulation of water and sewer service
under Sections 11.041 and 12.013 and Chapter 13, Water Code, as
amended by this Act, from the Texas Commission on Environmental
Quality to the Public Utility Commission of Texas.
(d) The memorandum of understanding under this section:
(1) is not required to be adopted by rule under Section
5.104, Water Code; and
(2) must be completed by August 1, 2014.
(e) The executive directors of the Texas Commission on
Environmental Quality and the Public Utility Commission of Texas
may agree in the memorandum of understanding under this section to
transfer to the Public Utility Commission of Texas any personnel of
the Texas Commission on Environmental Quality whose functions
predominantly involve powers, duties, obligations, functions, and
activities related to the economic regulation of water and sewer
service under Sections 11.041 and 12.013 and Chapter 13, Water
Code, as amended by this Act.
(f) The Texas Commission on Environmental Quality and the
Public Utility Commission of Texas shall periodically update the
Office of Public Utility Counsel on the anticipated contents of the
memorandum of understanding under this section during the
development of the memorandum.
(g) On or after September 1, 2013, the Office of Public
Utility Counsel may initiate or intervene in a contested case
before the Texas Commission on Environmental Quality that the
office would be entitled to initiate or intervene in if the case
were before the Public Utility Commission of Texas, as authorized
by Chapter 13, Water Code, as amended by this Act.
(h) The Texas Commission on Environmental Quality and the
Public Utility Commission of Texas shall appoint a transition team
to accomplish the purposes of this section. The transition team may
consult with the Office of Public Utility Counsel to accomplish the
purposes of this section. The transition team shall establish
guidelines on how the two agencies will cooperate regarding:
(1) meeting federal drinking water standards;
(2) maintaining adequate supplies of water;
(3) meeting established design criteria for
wastewater treatment plants;
(4) demonstrating the economic feasibility of
regionalization; and
(5) serving the needs of economically distressed
areas.
(i) The transition team appointed under Subsection (h) of
this section shall provide monthly updates to the executive
directors of the Texas Commission on Environmental Quality and the
Public Utility Commission of Texas on the implementation of this
Act and provide a final report on the implementation to the
executive directors not later than September 1, 2014.
(j) A rule, form, policy, procedure, or decision of the
Texas Commission on Environmental Quality related to a power, duty,
function, program, or activity transferred under this Act continues
in effect as a rule, form, policy, procedure, or decision of the
Public Utility Commission of Texas and remains in effect until
amended or replaced by that agency. Notwithstanding any other law,
beginning September 1, 2013, the Public Utility Commission of Texas
may propose rules, forms, policies, and procedures related to a
function to be transferred to the Public Utility Commission of
Texas under this Act.
(k) The Public Utility Commission of Texas and the Texas
Commission on Environmental Quality shall adopt rules to implement
the changes in law made by this Act to Sections 11.041 and 12.013
and Chapter 13, Water Code, not later than September 1, 2015.
(l) An affiliate of a Class A utility, as those terms are
defined by Section 13.002, Water Code, as amended by this Act, may
not file an application for a rate change on or after the effective
date of this Act unless the affiliated Class A utility has filed for
a rate change on or after that date. In relation to the application
filed by the affiliate of the Class A utility, the Public Utility
Commission of Texas:
(1) may not approve the rate change application until
the Public Utility Commission of Texas approves the rate change
application filed by the affiliated Class A utility; and
(2) may require the affiliate to comply with the Class
A utility rate change process prescribed by Section 13.187, Water
Code, regardless of whether the affiliate is classified as a Class
A, B, or C utility under Section 13.002, Water Code, as added by
this Act.
SECTION 93. This Act takes effect September 1, 2013.