82R5762 JJT-F
By: Miller of Comal H.B. No. 2895
A BILL TO BE ENTITLED
AN ACT
relating to rate proceedings before a regulatory authority
regarding water utility rates.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 13.182, Water Code, is amended by
amending Subsection (b) and adding Subsection (b-1) to read as
follows:
(b) Except as provided by Subsection (b-1), rates may [Rates
shall] not be unreasonably preferential, prejudicial, or
discriminatory but shall be sufficient, equitable, and consistent
in application to each class of consumers.
(b-1) In establishing a utility's rates, the regulatory
authority may authorize reduced rates for a minimal level of
service to be provided to a class or classes of low-income or
elderly customers to ensure that members of the class or classes may
receive that level of service at affordable rates. The regulatory
authority shall allow the utility to recover the cost of providing
the reduced rates through charges to the utility's other customer
classes.
SECTION 2. Section 13.185, Water Code, is amended by
amending Subsections (b) and (d) and adding Subsections (d-1) and
(d-2) to read as follows:
(b) Utility rates shall be based on the original cost of
property used by and useful to the utility in providing service and
[, including, if necessary to the financial integrity of the
utility,] construction work in progress at cost as recorded on the
books of the utility. [The inclusion of construction work in
progress is an exceptional form of rate relief to be granted only on
the demonstration by the utility by clear and convincing evidence
that the inclusion is in the ratepayers' best interest and is
necessary to the financial integrity of the utility.] Construction
work in progress may not be included in the rate base for major
projects under construction to the extent that those projects have
been inefficiently or imprudently planned or managed. Original
cost is the actual money cost or the actual money value of any
consideration paid, other than money, of the property at the time it
shall have been dedicated to public use, whether by the utility that
is the present owner or by a predecessor, less depreciation.
Utility property funded by explicit customer agreements or customer
contributions in aid of construction such as surcharges may not be
included in invested capital.
(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 determine expenses and
revenues in a manner consistent with Subsections (d-1), (d-2), and
(e) through (h) of this section.
(d-1) In Subsection (d-2):
(1) "Forward-looking test year" means a period of 12
consecutive months that begins on or after the date a rate
application is filed and ends not later than the second anniversary
of the date the rate application is filed.
(2) "Historical test year" means a period of 12
consecutive months that ends before the date a rate application is
filed.
(d-2) The regulatory authority shall base a utility's
expenses, at the utility's choice, on information from a historical
test year or on information projected for a forward-looking test
year, as provided by the filed rate application. The utility has
the burden of proving to the commission that the chosen
forward-looking or historical test year is reasonably
representative of the utility's operations. For purposes of this
subsection:
(1) a rate application filed for a forward-looking
test year must provide projected information for the utility's
revenue requirements for the period, based on information from 12
months of the utility's historical experience, adjusted for known
and measurable changes or estimates; and
(2) a rate application filed for a historical test
year must provide information, adjusted for known and measurable
conditions reasonably expected to occur after the end of the
period, for the most recent 12-month period for which
representative operating information is available and that ended
less than 12 months before the date the rate application is filed.
SECTION 3. Section 13.189, Water Code, is amended by adding
Subsection (c) to read as follows:
(c) For purposes of this section, a reduced rate authorized
under Section 13.182(b-1) does not:
(1) make or grant an unreasonable preference or
advantage to any corporation or person;
(2) subject a corporation or person to an unreasonable
prejudice or disadvantage; or
(3) constitute an unreasonable difference as to rates
of service between classes of service.
SECTION 4. Subchapter F, Chapter 13, Water Code, is amended
by adding Section 13.193 to read as follows:
Sec. 13.193. NONSERVICE CHARGES. The regulatory authority
shall authorize nonservice charges of the following types and
amounts to be included in a utility's tariff:
(1) customer deposits of not more than one-sixth of a
customer's estimated annual billing, according to the customer's
class;
(2) a one-time late-payment penalty for a bill that is
not paid in full at the utility's business office before the close
of business on the date the payment is due, in an amount equal to the
greater of:
(A) 10 percent of the billed amount; or
(B) $10;
(3) a one-time reconnection fee in an amount not to
exceed $50 for restoration of a customer's service that was
disconnected for failure to pay a bill due; and
(4) a one-time penalty for tampering with, diverting,
or damaging a water meter or sewer service connection or any
appurtenance of a water meter or sewer service connection,
including a lock, meter box, or sewer pump, in varying amounts of
not less than $50 and not more than $800, according to the type and
extent of the tampering, diversion, or damage.
SECTION 5. Section 13.002(22), Water Code, is repealed.
SECTION 6. (a) The changes in law made by this Act apply
only to proceedings before a regulatory authority regarding water
utility rates concerning an application filed on or after January
1, 2012. Proceedings before a regulatory authority regarding water
utility rates concerning an application filed before January 1,
2012, are governed by the law in effect when the application was
filed, and the former law is continued in effect for that purpose.
(b) The Texas Commission on Environmental Quality or other
regulatory authority shall adopt rules as necessary to implement
the changes in law made by this Act not later than December 31,
2011.
SECTION 7. This Act takes effect September 1, 2011.