Texas 2011 - 82nd Regular

Texas Senate Bill SB661 Compare Versions

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1	1	82R30023 E
2	2	By: Nichols, Hegar S.B. No. 661
3	3	(Solomons)
4	4	Substitute the following for S.B. No. 661: No.
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the continuation and functions, as applicable, of the
10	10	Electric Reliability Council of Texas, the Office of Public Utility
11	11	Counsel, and the Public Utility Commission of Texas and to the
12	12	transfer of certain functions from the Texas Commission on
13	13	Environmental Quality to the Public Utility Commission of Texas;
14	14	imposing administrative penalties.
15	15	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
16	16	ARTICLE 1. GENERAL PROVISIONS RELATING TO THE PUBLIC UTILITY
17	17	COMMISSION OF TEXAS, THE ELECTRIC RELIABILITY COUNCIL OF TEXAS, AND
18	18	THE OFFICE OF PUBLIC UTILITY COUNSEL
19	19	SECTION 1.01. Section 12.005, Utilities Code, is amended to
20	20	read as follows:
21	21	Sec. 12.005. APPLICATION OF SUNSET ACT. The Public Utility
22	22	Commission of Texas is subject to Chapter 325, Government Code
23	23	(Texas Sunset Act). Unless continued in existence as provided by
24	24	that chapter or by Chapter 39, the commission is abolished and this
25	25	title expires September 1, 2023 [2011].
26	26	SECTION 1.02. Section 12.155, Utilities Code, is amended by
27	27	adding Subsection (d) to read as follows:
28	28	(d) A commissioner may not be employed by an independent
29	29	organization certified under Section 39.151. The prohibition under
30	30	this subsection applies until the second anniversary of the date
31	31	the commissioner ceases to serve as a commissioner.
32	32	SECTION 1.03. Section 13.002, Utilities Code, is amended to
33	33	read as follows:
34	34	Sec. 13.002. APPLICATION OF SUNSET ACT. The Office of
35	35	Public Utility Counsel is subject to Chapter 325, Government Code
36	36	(Texas Sunset Act). Unless continued in existence as provided by
37	37	that chapter, the office is abolished and this chapter expires
38	38	September 1, 2023 [2011].
39	39	SECTION 1.04. Section 15.023, Utilities Code, is amended to
40	40	read as follows:
41	41	Sec. 15.023. ADMINISTRATIVE PENALTY, DISGORGEMENT ORDER,
42	42	OR MITIGATION PLAN. (a) The commission may impose an
43	43	administrative penalty against a person regulated under this title
44	44	who violates this title or a rule or order adopted under this title.
45	45	(b) Except as provided by Subsection (b-1), the [The]
46	46	penalty for a violation may be in an amount not to exceed $25,000.
47	47	Each day a violation continues or occurs is a separate violation for
48	48	purposes of imposing a penalty.
49	49	(b-1) The penalty for a violation of a reliability standard
50	50	adopted by the independent organization certified under Section
51	51	39.151 or of a commission rule relating to reliability in the
52	52	wholesale electric market may be in an amount not to exceed
53	53	$100,000. Each day a violation continues or occurs is a separate
54	54	violation for purposes of imposing a penalty.
55	55	(b-2) If a person pays a penalty to a federal authority for a
56	56	violation of a reliability standard that is the same or
57	57	substantially the same as a reliability standard adopted by the
58	58	independent organization certified under Section 39.151:
59	59	(1) the commission may not assess an administrative
60	60	penalty for the same instance or circumstance for which the person
61	61	paid the federal penalty; and
62	62	(2) the commission shall refund the full amount of an
63	63	administrative penalty that the commission assessed against the
64	64	person before the date the person paid the federal penalty, if the
65	65	commission assessed the penalty for the same instance or
66	66	circumstance for which the person paid the federal penalty.
67	67	(c) The commission by rule shall establish a classification
68	68	system for violations described by Subsection (b) and a separate
69	69	classification system for violations described by Subsection
70	70	(b-1). Each system must include [that includes] a range of
71	71	administrative penalties that may be assessed for each class of
72	72	violation, based on:
73	73	(1) the seriousness of the violation, including:
74	74	(A) the nature, circumstances, extent, and
75	75	gravity of a prohibited act; and
76	76	(B) the hazard or potential hazard created to the
77	77	health, safety, or economic welfare of the public;
78	78	(2) the economic harm to property or the environment
79	79	caused by the violation;
80	80	(3) the history of previous violations;
81	81	(4) the amount necessary to deter future violations;
82	82	(5) efforts to correct the violation; and
83	83	(6) any other matter that justice may require.
84	84	(d) The classification system established under Subsection
85	85	(c) shall provide that a penalty in an amount that exceeds $5,000
86	86	may be assessed only if the violation is included in the highest
87	87	class of violations in the classification system. This subsection
88	88	does not apply to the classification system established under
89	89	Subsection (c) for a violation described by Subsection (b-1).
90	90	(e) For a violation of Section 39.157, the commission shall,
91	91	in addition to the assessment of a penalty, order disgorgement of
92	92	all excess revenue resulting from the violation. For any other
93	93	violation of the statutes, rules, or protocols relating to
94	94	wholesale electric markets, the commission may, in addition to the
95	95	assessment of a penalty, order disgorgement of all excess revenue
96	96	resulting from the violation.
97	97	(f) The commission and a person may develop and enter into a
98	98	voluntary mitigation plan relating to a violation of Section 39.157
99	99	or rules adopted by the commission under that section. If the
100	100	commission and a person enter into a voluntary mitigation plan,
101	101	adherence to the plan constitutes an absolute defense against an
102	102	alleged violation with respect to activities covered by the plan.
103	103	(g) In this subchapter, "excess revenue" means revenue in
104	104	excess of revenue that would have occurred absent a violation.
105	105	SECTION 1.05. The heading to Section 15.024, Utilities
106	106	Code, is amended to read as follows:
107	107	Sec. 15.024. ADMINISTRATIVE PENALTY ASSESSMENT OR
108	108	DISGORGEMENT ORDER PROCEDURE.
109	109	SECTION 1.06. Subsection (f), Section 15.024, Utilities
110	110	Code, is amended to read as follows:
111	111	(f) If the person requests a hearing or fails to timely
112	112	respond to the notice, the executive director shall set a hearing
113	113	and give notice of the hearing to the person. The parties to a
114	114	proceeding under this subchapter shall be limited to the person and
115	115	the commission, including the independent market monitor. The
116	116	hearing shall be held by an administrative law judge of the State
117	117	Office of Administrative Hearings. The administrative law judge
118	118	shall make findings of fact and conclusions of law and promptly
119	119	issue to the commission a proposal for a decision about the
120	120	occurrence of the violation and the amount of a proposed penalty.
121	121	Based on the findings of fact, conclusions of law, and proposal for
122	122	a decision, the commission by order may find that a violation has
123	123	occurred and impose a penalty or disgorgement order or may find that
124	124	no violation occurred.
125	125	SECTION 1.07. Section 15.025, Utilities Code, is amended by
126	126	adding Subsections (e) and (f) to read as follows:
127	127	(e) Any excess revenue ordered disgorged under this section
128	128	for a violation of the statutes, rules, or protocols relating to
129	129	wholesale electric markets shall be returned to the affected
130	130	wholesale electric market participants to be used to reduce costs
131	131	or fees incurred by retail electric customers. The commission
132	132	shall adopt rules to prescribe how revenue shall be returned to the
133	133	affected wholesale electric market participants under this
134	134	subsection.
135	135	(f) For purposes of this section and Section 15.026, a
136	136	reference to a penalty shall be construed to include disgorgement.
137	137	SECTION 1.08. Subsections (a) and (b), Section 15.026,
138	138	Utilities Code, are amended to read as follows:
139	139	(a) Judicial review of a commission order imposing an
140	140	administrative penalty or disgorgement is:
141	141	(1) instituted by filing a petition as provided by
142	142	Subchapter G, Chapter 2001, Government Code; and
143	143	(2) under the substantial evidence rule.
144	144	(b) If the court sustains the occurrence of the violation,
145	145	the court may uphold or reduce the amount of the penalty or
146	146	disgorgement and order the person to pay the full or reduced amount
147	147	of the penalty or disgorgement. If the court does not sustain the
148	148	occurrence of the violation, the court shall order that no penalty
149	149	or disgorgement is owed.
150	150	SECTION 1.09. Chapter 15, Utilities Code, is amended by
151	151	adding Subchapter D to read as follows:
152	152	SUBCHAPTER D. CEASE AND DESIST ORDERS
153	153	Sec. 15.101. APPLICATION OF SUBCHAPTER. This subchapter
154	154	applies only to a person to whom Subtitle B applies.
155	155	Sec. 15.102. RULES. The commission shall adopt rules to
156	156	implement this subchapter.
157	157	Sec. 15.103. PROCEEDINGS UNDER OTHER LAW. The commission
158	158	may proceed solely under this subchapter or under this subchapter
159	159	in conjunction with other applicable law.
160	160	Sec. 15.104. AUTHORITY TO ISSUE ORDER. (a) The commission
161	161	on its own motion may issue a cease and desist order:
162	162	(1) after providing notice and an opportunity for a
163	163	hearing if practicable or without notice or opportunity for a
164	164	hearing; and
165	165	(2) if the commission determines that the conduct of a
166	166	person:
167	167	(A) poses a threat to continuous and adequate
168	168	electric service;
169	169	(B) is fraudulent;
170	170	(C) is hazardous;
171	171	(D) creates an immediate danger to the public
172	172	safety; or
173	173	(E) is causing or can be reasonably expected to
174	174	cause an immediate injury to a customer of electric services and
175	175	that the injury is incapable of being repaired or rectified by
176	176	monetary compensation.
177	177	(b) The commission by order or rule may delegate to the
178	178	executive director the authority to issue cease and desist orders
179	179	under this subchapter.
180	180	Sec. 15.105. NOTICE. (a) Notice of a proposed order must
181	181	be given not later than the 10th day before the date set for a
182	182	hearing if the commission requires notice and hearing before
183	183	issuing the order.
184	184	(b) On issuance of an order under Section 15.104 with or
185	185	without a hearing, the commission shall serve on the person
186	186	affected by the order an order that:
187	187	(1) contains a statement of the charges; and
188	188	(2) requires the person immediately to cease and
189	189	desist from the acts, methods, or practices stated in the order.
190	190	(c) The commission shall serve the order by registered or
191	191	certified mail, return receipt requested, to the person's last
192	192	known address.
193	193	Sec. 15.106. HEARING. (a) Chapter 2001, Government Code,
194	194	does not apply to the issuance of a cease and desist order under
195	195	this subchapter without a hearing. A hearing conducted before or
196	196	after issuance of an order under this subchapter is a contested case
197	197	under Chapter 2001, Government Code.
198	198	(b) If the commission issues an order under this subchapter
199	199	without a hearing, the person affected by the order may request a
200	200	hearing to affirm, modify, or set aside the order. A request must
201	201	be submitted not later than the 30th day after the date the person
202	202	receives the order. The commission shall set the hearing for a date
203	203	that is:
204	204	(1) not later than the 10th day after the date the
205	205	commission receives a request for a hearing; or
206	206	(2) agreed to by the person and the commission.
207	207	(c) At or following the hearing, the commission shall wholly
208	208	or partly affirm, modify, or set aside the order. If the person
209	209	affected by an order does not request a hearing in the manner
210	210	provided by Subsection (b), and the commission does not hold a
211	211	hearing on the order, the order is affirmed without further action
212	212	by the commission.
213	213	(d) The commission may hold a hearing under this subchapter
214	214	or may authorize the State Office of Administrative Hearings to
215	215	hold the hearing.
216	216	Sec. 15.107. EFFECT OF ORDER PENDING HEARING. Pending a
217	217	hearing under this subchapter, an order continues in effect unless
218	218	the order is stayed by the commission.
219	219	Sec. 15.108. ADMINISTRATIVE PENALTY. The commission may
220	220	impose an administrative penalty under Subchapter B against a
221	221	person who violates an order issued under this subchapter.
222	222	SECTION 1.10. Section 31.003, Utilities Code, is amended by
223	223	adding Subsection (c) to read as follows:
224	224	(c) A report issued under this section before September 1,
225	225	2013, must include a summary of the information required by Section
226	226	39.926 to be provided on the Internet website found at
227	227	http://www.puc.state.tx.us. This subsection expires September 1,
228	228	2013.
229	229	SECTION 1.11. Section 39.002, Utilities Code, is amended to
230	230	read as follows:
231	231	Sec. 39.002. APPLICABILITY. This chapter, other than
232	232	Sections 39.155, 39.157(e), 39.203, 39.903, 39.904, 39.9051,
233	233	39.9052, [and] 39.914(e), and 39.9161, does not apply to a
234	234	municipally owned utility or an electric cooperative. Sections
235	235	39.157(e), 39.203, and 39.904, however, apply only to a municipally
236	236	owned utility or an electric cooperative that is offering customer
237	237	choice. If there is a conflict between the specific provisions of
238	238	this chapter and any other provisions of this title, except for
239	239	Chapters 40 and 41, the provisions of this chapter control.
240	240	SECTION 1.12. Section 39.151, Utilities Code, is amended by
241	241	amending Subsections (d-1), (e), and (g) and adding Subsections
242	242	(d-2), (d-3), (d-4), (e-1), (g-2), (g-3), and (n) to read as
243	243	follows:
244	244	(d-1) The commission shall require an independent
245	245	organization certified by the commission under this section to
246	246	annually submit to the commission for review and approval the
247	247	organization's entire proposed annual budget. The commission may
248	248	approve, disapprove, or modify any item included in the proposed
249	249	budget. The commission by rule shall establish the type of
250	250	information or documents needed to effectively evaluate the
251	251	proposed budget and reasonable dates for the submission of that
252	252	information or those documents. The commission shall establish a
253	253	procedure to provide public notice of and public participation in
254	254	the budget review process.
255	255	(d-2) An independent organization certified by the
256	256	commission under this section must submit to the commission for
257	257	review and approval proposals for obtaining debt financing or for
258	258	refinancing existing debt. The commission may approve, disapprove,
259	259	or modify a proposal.
260	260	(d-3) An independent organization certified by the
261	261	commission under this section shall develop proposed performance
262	262	measures to track the organization's operations. The independent
263	263	organization must submit the proposed performance measures to the
264	264	commission for review and approval. The commission shall annually
265	265	review the organization's performance as part of the budget review
266	266	process under Subsection (d-1). The commission shall prepare an
267	267	annual report detailing the organization's performance and submit
268	268	the report to the lieutenant governor, the speaker of the house of
269	269	representatives, and each house and senate standing committee that
270	270	has jurisdiction over electric utility issues.
271	271	(d-4) The commission may:
272	272	(1) require an independent organization to provide
273	273	reports and information relating to the independent organization's
274	274	performance of the functions prescribed by this section and
275	275	relating to the organization's revenues, expenses, and other
276	276	financial matters;
277	277	(2) prescribe a system of accounts for an independent
278	278	organization;
279	279	(3) conduct audits of an independent organization's
280	280	performance of the functions prescribed by this section or relating
281	281	to its revenues, expenses, and other financial matters and may
282	282	require an independent organization to conduct such an audit;
283	283	(4) inspect an independent organization's facilities,
284	284	records, and accounts during reasonable hours and after reasonable
285	285	notice to the independent organization;
286	286	(5) assess administrative penalties against an
287	287	independent organization that violates this title or a rule or
288	288	order adopted by the commission and, at the request of the
289	289	commission, the attorney general may apply for a court order to
290	290	require an independent organization to comply with commission rules
291	291	and orders in the manner provided by Chapter 15; and
292	292	(6) resolve disputes between an affected person and an
293	293	independent organization and adopt procedures for the efficient
294	294	resolution of such disputes.
295	295	(e) After approving the budget of an independent
296	296	organization under Subsection (d-1), the [The] commission shall
297	297	[may] authorize the [an independent] organization [that is
298	298	certified under this section] to charge [a reasonable and
299	299	competitively neutral rate] to wholesale buyers and sellers a
300	300	system administration fee, within a range determined by the
301	301	commission, that is reasonable and competitively neutral to fund
302	302	[to cover] the independent organization's approved budget [costs].
303	303	The commission shall investigate the organization's cost
304	304	efficiencies, salaries and benefits, and use of debt financing and
305	305	may require the organization to provide any information needed to
306	306	effectively evaluate [the organization's budget and] the
307	307	reasonableness and neutrality of the fee [a rate or proposed rate]
308	308	or to evaluate the effectiveness or efficiency of the organization.
309	309	The commission shall work with the organization to establish the
310	310	detail of information, both current and historical, and the time
311	311	frames the commission needs to effectively evaluate the fee. The
312	312	commission shall require the independent organization to closely
313	313	match actual revenues generated by the fee with revenue necessary
314	314	to fund the budget and make quarterly fee adjustments to ensure that
315	315	the budget year does not end with surplus or insufficient funds.
316	316	The commission shall require the organization to submit to the
317	317	commission quarterly reports that compare actual expenditures with
318	318	budgeted expenditures [a rate or a rate request].
319	319	(e-1) The review and approval of a proposed budget under
320	320	Subsection (d-1) or a proceeding to authorize and set the range for
321	321	the amount of a fee under Subsection (e) is not a contested case for
322	322	purposes of Chapter 2001, Government Code.
323	323	(g) To maintain certification as an independent
324	324	organization under this section, an organization's governing body
325	325	must be composed of persons specified by this section and selected
326	326	in accordance with formal bylaws or protocols of the organization.
327	327	The bylaws or protocols must be approved by the commission and must
328	328	reflect the input of the commission. The bylaws must specify the
329	329	process by which appropriate stakeholders elect members and, for
330	330	unaffiliated members, prescribe professional qualifications for
331	331	selection as a member. The bylaws must require the use of a
332	332	professional search firm to identify candidates for membership of
333	333	unaffiliated members. The process must allow for commission input
334	334	in identifying candidates. The governing body must be composed of:
335	335	(1) [the chairman of the commission as an ex officio
336	336	nonvoting member;
337	337	[(2) the counsellor as an ex officio voting member
338	338	representing residential and small commercial consumer interests ;
339	339	[(3)] the chief executive officer of the independent
340	340	organization as an ex officio voting member;
341	341	(2) [(4)] six market participants elected by their
342	342	respective market segments to serve one-year terms, with:
343	343	(A) one representing independent generators;
344	344	(B) one representing investor-owned utilities;
345	345	(C) one representing entities that serve retail
346	346	customers [power marketers];
347	347	(D) two [one] representing organizations that
348	348	represent retail customers [retail electric providers]; and
349	349	(E) one representing both municipally owned
350	350	utilities[;] and
351	351	[(F) one representing] electric cooperatives;
352	352	and
353	353	(3) four [(5) one member representing industrial
354	354	consumer interests and elected by the industrial consumer market
355	355	segment to serve a one-year term;
356	356	[(6) one member representing large commercial
357	357	consumer interests selected in accordance with the bylaws to serve
358	358	a one-year term; and
359	359	[(7) five] members unaffiliated with any market
360	360	segment and selected by the other members of the governing body to
361	361	serve not more than two three-year terms.
362	362	(g-2) To maintain certification as an independent
363	363	organization under this section, the organization's governing body
364	364	must establish and implement a formal process for adopting new
365	365	protocols or revisions to existing protocols. The process must
366	366	require that:
367	367	(1) a majority of the organization's governing body
368	368	initiate the creation or revision of protocols; and
369	369	(2) the organization's staff develop the new or
370	370	revised protocols and submit the protocols to the governing body
371	371	for adoption.
372	372	(g-3) The governing body of an independent organization
373	373	certified by the commission under this section shall, in accordance
374	374	with formal bylaws or protocols adopted by the organization and
375	375	approved by the commission, establish and maintain an advisory
376	376	committee whose membership is broadly representative of the
377	377	organization's members to assist the organization's governing body
378	378	and staff in developing or revising protocols or in performing the
379	379	organization's other duties and functions. This subsection does
380	380	not prohibit the governing body of the organization from appointing
381	381	one or more additional committees or subcommittees to assist the
382	382	organization's governing body and staff in performing the
383	383	organization's duties and functions.
384	384	(n) An independent organization certified by the commission
385	385	under this section is subject to review under Chapter 325,
386	386	Government Code (Texas Sunset Act), but is not abolished under that
387	387	chapter. The independent organization shall be reviewed during the
388	388	periods in which the Public Utility Commission of Texas is
389	389	reviewed.
390	390	SECTION 1.13. Subsection (c), Section 39.1515, Utilities
391	391	Code, is amended to read as follows:
392	392	(c) The independent organization shall use money from the
393	393	fee [rate] authorized by Section 39.151(e) to pay for the market
394	394	monitor's activities.
395	395	SECTION 1.14. Subsection (a), Section 39.157, Utilities
396	396	Code, is amended to read as follows:
397	397	(a) The commission shall monitor market power associated
398	398	with the generation, transmission, distribution, and sale of
399	399	electricity in this state. On a finding that market power abuses or
400	400	other violations of this section are occurring, the commission
401	401	shall require reasonable mitigation of the market power by ordering
402	402	the construction of additional transmission or distribution
403	403	facilities, by seeking an injunction or civil penalties as
404	404	necessary to eliminate or to remedy the market power abuse or
405	405	violation as authorized by Chapter 15, by imposing an
406	406	administrative penalty as authorized by Chapter 15, by ordering the
407	407	disgorgement of excess revenue as authorized by Chapter 15, or by
408	408	suspending, revoking, or amending a certificate or registration as
409	409	authorized by Section 39.356. Section 15.024(c) does not apply to
410	410	an administrative penalty imposed under this section. For purposes
411	411	of this subchapter, market power abuses are practices by persons
412	412	possessing market power that are unreasonably discriminatory or
413	413	tend to unreasonably restrict, impair, or reduce the level of
414	414	competition, including practices that tie unregulated products or
415	415	services to regulated products or services or unreasonably
416	416	discriminate in the provision of regulated services. For purposes
417	417	of this section, "market power abuses" include predatory pricing,
418	418	withholding of production, precluding entry, and collusion. A
419	419	violation of the code of conduct provided by Subsection (d) that
420	420	materially impairs the ability of a person to compete in a
421	421	competitive market shall be deemed to be an abuse of market power.
422	422	The possession of a high market share in a market open to
423	423	competition may not, of itself, be deemed to be an abuse of market
424	424	power; however, this sentence shall not affect the application of
425	425	state and federal antitrust laws.
426	426	SECTION 1.15. Subsection (d), Section 39.904, Utilities
427	427	Code, is amended to read as follows:
428	428	(d) In this section, "renewable energy technology" means
429	429	any technology that exclusively relies on an energy source that is
430	430	naturally regenerated over a short time and derived directly from
431	431	the sun, indirectly from the sun, or from moving water or other
432	432	natural movements and mechanisms of the environment. Renewable
433	433	energy technologies include those that rely on energy derived
434	434	directly from the sun, on wind, geothermal, hydroelectric, wave, or
435	435	tidal energy, [or] on biomass or biomass-based waste products, or
436	436	on gasified waste, including landfill gas. A renewable energy
437	437	technology does not rely solely on energy resources derived from
438	438	fossil fuels, waste products from fossil fuels, or waste products
439	439	from inorganic sources.
440	440	SECTION 1.16. (a) Subchapter Z, Chapter 39, Utilities
441	441	Code, is amended by adding Section 39.9041 to read as follows:
442	442	Sec. 39.9041. UNDERGROUND PLACEMENT OF CERTAIN COMPETITIVE
443	443	RENEWABLE ENERGY ZONE TRANSMISSION LINES. A segment of a
444	444	transmission line intended to serve a competitive renewable energy
445	445	zone must be placed underground if the segment is placed or to be
446	446	placed:
447	447	(1) adjacent and parallel to a highway;
448	448	(2) in the corporate limits or extraterritorial
449	449	jurisdiction of a municipality with a population of 25,000 or less;
450	450	and
451	451	(3) across the Guadalupe River.
452	452	(b) Section 39.9041, Utilities Code, as added by this
453	453	section, applies only to a transmission line that is placed in
454	454	service on or after the effective date of this section. A
455	455	transmission line placed in service before the effective date of
456	456	this section is governed by the law in effect at the time the
457	457	transmission line was placed in service, and the former law is
458	458	continued in effect for that purpose.
459	459	(c) This section takes effect immediately if this Act
460	460	receives a vote of two-thirds of all the members elected to each
461	461	house, as provided by Section 39, Article III, Texas Constitution.
462	462	If this Act does not receive the vote necessary for immediate
463	463	effect, this section takes effect September 1, 2011.
464	464	SECTION 1.17. The heading to Section 39.916, Utilities
465	465	Code, is amended to read as follows:
466	466	Sec. 39.916. [INTERCONNECTION OF] DISTRIBUTED RENEWABLE
467	467	GENERATION.
468	468	SECTION 1.18. Section 39.916, Utilities Code, is amended by
469	469	amending Subsections (a), (c), (f), and (j), and adding Subsections
470	470	(i), (k), (l), (m), (n), (o), (p), and (q) to read as follows:
471	471	(a) In this section:
472	472	(1) "Distributed renewable generation" means electric
473	473	generation with a capacity of not more than 2,000 kilowatts
474	474	provided by a renewable energy technology, as defined by Section
475	475	39.904, that is installed on a retail electric customer's side of
476	476	the meter.
477	477	(2) "Distributed renewable generation owner" means:
478	478	(A) an [the] owner of distributed renewable
479	479	generation;
480	480	(B) a retail electric customer on whose side of
481	481	the meter distributed renewable generation is installed and
482	482	operated, regardless of whether the customer takes ownership of the
483	483	distributed renewable generation; or
484	484	(C) a person who by contract is assigned
485	485	ownership rights to energy produced from distributed renewable
486	486	generation located at the premises of the customer on the
487	487	customer's side of the meter.
488	488	(3) "Interconnection" means the right of a distributed
489	489	renewable generation owner to physically connect distributed
490	490	renewable generation to an electricity distribution system, and the
491	491	technical requirements, rules, or processes for the connection.
492	492	(4) "Surplus electricity" means electricity generated
493	493	by distributed renewable generation that is not consumed at the
494	494	place the distributed renewable generation is installed and that
495	495	flows onto the electric distribution system.
496	496	(c) A distributed renewable generation owner [customer] may
497	497	request interconnection by filing an application for
498	498	interconnection with the transmission and distribution utility or
499	499	electric utility. Procedures of a transmission and distribution
500	500	utility or electric utility for the submission and processing of a
501	501	distributed renewable generation owner's [customer's] application
502	502	for interconnection shall be consistent with rules adopted by the
503	503	commission regarding interconnection.
504	504	(f) At the request of a distributed renewable generation
505	505	owner, a [A] transmission and distribution utility or electric
506	506	utility shall make available to the [a] distributed renewable
507	507	generation owner for purposes of this section metering required for
508	508	services provided under this section, including separate meters
509	509	that measure the load and generator output or a single meter capable
510	510	of measuring in-flow and out-flow at the point of common coupling
511	511	meter point. The distributed renewable generation owner must pay
512	512	the differential cost of the metering unless the meters are
513	513	provided at no additional cost. Except as provided by this section,
514	514	Section 39.107 applies to metering under this section.
515	515	(i) A distributed renewable generation owner may sell
516	516	surplus electricity to a retail electric provider or electric
517	517	utility under this section only if the owner's distributed
518	518	renewable generation is rated to produce an amount of electricity
519	519	that is less than or equal to the amount of electricity that the
520	520	retail electric customer for whom the distributed renewable
521	521	generation is installed is reasonably expected to consume annually.
522	522	(j) A [For] distributed renewable generation owner that
523	523	sells surplus electricity [owners] in an area [areas] in which
524	524	customer choice has been introduced [, the distributed renewable
525	525	generation owner] must sell the [owner's surplus] electricity
526	526	[produced] to the retail electric provider that serves the
527	527	[distributed renewable generation owner's] load of the retail
528	528	electric customer for whom the distributed renewable generation is
529	529	installed at a value agreed to by [between] the distributed
530	530	renewable generation owner and the provider. The value [that serves
531	531	the owner's load which] may include, but is not limited to, an
532	532	agreed value based on the clearing price of energy at the time of
533	533	day that the electricity is made available to the grid or the value
534	534	[it] may be a monetary credit applied to an account during a billing
535	535	period that may be carried over to subsequent billing periods until
536	536	the credit has been redeemed.
537	537	(k) The independent organization identified in Section
538	538	39.151 shall develop procedures so that the amount of electricity
539	539	purchased from a distributed renewable generation owner under this
540	540	section in an area in which customer choice has been introduced is
541	541	accounted for in settling the total load served by the provider that
542	542	serves the [that owner's] load of the retail electric customer for
543	543	whom the distributed renewable generation is installed [by January
544	544	1, 2009]. A distributed renewable generation owner requesting net
545	545	metering services for purposes of this section must have metering
546	546	devices capable of providing measurements consistent with the
547	547	independent organization's settlement requirements.
548	548	(l) A distributed renewable generation owner that sells
549	549	surplus electricity in an area in which customer choice has not been
550	550	introduced must sell the electricity to the electric utility that
551	551	serves the load of the retail electric customer for whom the
552	552	distributed renewable generation is installed. The electric
553	553	utility shall purchase the surplus electricity at a value that is
554	554	equal to the avoided cost of the electric utility, as determined in
555	555	accordance with commission rules.
556	556	(m) An electric utility that purchases surplus electricity
557	557	under this section shall:
558	558	(1) make a payment to the seller at least once each
559	559	quarter; or
560	560	(2) apply a monetary credit to the seller's account and
561	561	allow the credit balance to be carried forward onto the seller's
562	562	next monthly bill for not more than 12 months.
563	563	(n) An electric utility that purchases surplus electricity
564	564	under this section shall inform the distributed renewable
565	565	generation owner of the amount of surplus electricity purchased
566	566	from the owner in kilowatt hours during the owner's most recent
567	567	billing cycle and the price paid for the electricity.
568	568	(o) A distributed renewable generation owner may file a
569	569	written complaint with the commission relating to a violation of
570	570	Subsection (l), (m), or (n).
571	571	(p) Neither a retail electric customer that uses
572	572	distributed renewable generation nor the owner of the distributed
573	573	renewable generation that the retail electric customer uses is an
574	574	electric utility, power generation company, or retail electric
575	575	provider for the purposes of this title and neither is required to
576	576	register with or be certified by the commission if at the time
577	577	distributed renewable generation is installed, the estimated
578	578	annual amount of electricity to be produced by the distributed
579	579	renewable generation is less than or equal to the retail electric
580	580	customer's estimated annual electricity consumption.
581	581	(q) This section does not apply to a municipally owned
582	582	utility or electric cooperative.
583	583	SECTION 1.19. Subchapter Z, Chapter 39, Utilities Code, is
584	584	amended by adding Section 39.9161 to read as follows:
585	585	Sec. 39.9161. DISTRIBUTED RENEWABLE GENERATION WITH
586	586	MUNICIPALLY OWNED UTILITIES OR ELECTRIC COOPERATIVES. (a) A
587	587	municipally owned utility or electric cooperative shall provide the
588	588	utility's or cooperative's customers access to interconnection of
589	589	distributed renewable generation and payment for surplus
590	590	electricity produced.
591	591	(b) The governing body of a municipally owned utility or
592	592	board of directors of an electric cooperative shall provide
593	593	oversight and adopt rates, rules, and procedures to allow
594	594	interconnection and payment for surplus electricity on or before
595	595	the 120th day after the date the governing body or board receives a
596	596	bona fide request for interconnection.
597	597	(c) A municipally owned utility or electric cooperative
598	598	that had retail sales of 500,000 megawatt hours or more in 2010
599	599	shall file the utility's or cooperative's interconnection and
600	600	surplus electricity rates, rules, and procedures with the State
601	601	Energy Conservation Office not later than January 1, 2012, and
602	602	shall make timely updates to the filed rates, rules, and
603	603	procedures.
604	604	(d) An electric cooperative shall allow interconnection if:
605	605	(1) the distributed renewable generation to be
606	606	interconnected has a five-year warranty against breakdown or undue
607	607	degradation;
608	608	(2) the rated capacity of the distributed renewable
609	609	generation does not exceed the electric cooperative service
610	610	capacity; and
611	611	(3) the distributed renewable generation meets other
612	612	technical requirements for interconnection that are consistent
613	613	with commission rules.
614	614	(e) An electric cooperative may not require a distributed
615	615	renewable generation owner whose distributed renewable generation
616	616	meets the standards established under Subsection (d) to purchase an
617	617	amount, type, or classification of liability insurance the
618	618	distributed renewable generation owner would not have in the
619	619	absence of the distributed renewable generation.
620	620	SECTION 1.20. Subchapter Z, Chapter 39, Utilities Code, is
621	621	amended by adding Section 39.926 to read as follows:
622	622	Sec. 39.926. INFORMATION ON INTERNET REGARDING PURCHASE OF
623	623	SURPLUS ELECTRICITY PRODUCED BY DISTRIBUTED RENEWABLE GENERATION.
624	624	On an Internet website administered by the commission, the
625	625	commission shall provide for access to easily comparable
626	626	information regarding retail electric providers' offers to
627	627	residential distributed renewable generation owners for their
628	628	surplus electricity.
629	629	SECTION 1.21. Subchapter C, Chapter 52, Utilities Code, is
630	630	amended by adding Section 52.1035 to read as follows:
631	631	Sec. 52.1035. RENEWAL OF CERTAIN REGISTRATIONS OR
632	632	CERTIFICATES. (a) The commission by rule shall require each
633	633	interexchange telecommunications utility, holder of a certificate
634	634	of operating authority, and holder of a service provider
635	635	certificate of operating authority to file with the commission on a
636	636	one-time or regular basis:
637	637	(1) the utility's or holder's name;
638	638	(2) the utility's or holder's address; and
639	639	(3) the most recent version of each annual report the
640	640	commission requires the utility or holder to file under this
641	641	subtitle.
642	642	(b) The rules must:
643	643	(1) require the commission to automatically allow a
644	644	utility or holder an extension of a filing deadline for the number
645	645	of days prescribed by the rule, as applicable; and
646	646	(2) state that the registration or certificate of a
647	647	utility or holder will not be valid after the last day of the
648	648	automatic extension period described by Subdivision (1) if the
649	649	utility or holder does not file information required by the
650	650	commission under this section by the end of the automatic extension
651	651	period.
652	652	(c) A utility or holder whose registration or certificate is
653	653	no longer valid may reregister or obtain a new certificate only by
654	654	complying with the requirements prescribed for an original
655	655	registration or for obtaining an original certificate.
656	656	SECTION 1.22. Subchapter I, Chapter 55, Utilities Code, is
657	657	amended by adding Section 55.204 to read as follows:
658	658	Sec. 55.204. ELECTRONIC TELEPHONE DIRECTORY. (a)
659	659	Notwithstanding any other provision of this title, a
660	660	telecommunications provider or telecommunications utility is not
661	661	required to publish or distribute to the public a printed telephone
662	662	directory listing, provided that the provider or utility:
663	663	(1) provides written notice to the commission that the
664	664	provider or utility will no longer publish or distribute a printed
665	665	telephone directory listing;
666	666	(2) notifies its customers that the provider or
667	667	utility will no longer publish or distribute a printed telephone
668	668	directory listing; and
669	669	(3) publishes a telephone directory listing on the
670	670	provider's or utility's Internet website.
671	671	(b) A provider or utility that publishes a telephone
672	672	directory listing as described by Subsection (a) shall provide a
673	673	print or digital copy of the directory listing to a customer on
674	674	request. The customer must be able to request the print or digital
675	675	copy on the provider's or utility's Internet website or by calling a
676	676	toll-free telephone number. A provider or utility shall provide
677	677	the first print or digital copy requested by a customer in each
678	678	calendar year at no charge to the customer.
679	679	SECTION 1.23. Chapter 185, Utilities Code, is amended to
680	680	read as follows:
681	681	CHAPTER 185. [RATING OF] SOLAR ENERGY DEVICES
682	682	SUBCHAPTER A. GENERAL PROVISIONS
683	683	Sec. 185.001. DEFINITIONS. In this chapter:
684	684	(1) "Commission" means the Public Utility Commission
685	685	of Texas.
686	686	(2) "Solar energy device" means a solar energy
687	687	collector or solar energy system that provides for the collection
688	688	of solar energy or the subsequent use of that energy as thermal,
689	689	mechanical, or electrical energy.
690	690	SUBCHAPTER B. RATING OF SOLAR ENERGY DEVICES
691	691	Sec. 185.021 [185.002]. COMPLIANCE. A person who rates,
692	692	labels, or certifies the performance of a solar energy device in
693	693	this state shall comply with the standards adopted by the
694	694	commission under this chapter.
695	695	Sec. 185.022 [185.003]. ADOPTION OF STANDARDS. (a) The
696	696	commission shall study and adopt standards for rating solar energy
697	697	devices. The standards shall be used in performance labeling and
698	698	certification of solar energy devices in this state.
699	699	(b) The commission shall examine rating standards and
700	700	certification programs used by other states and by industry in
701	701	adopting standards under this section.
702	702	(c) The commission shall adopt the standards that the
703	703	commission finds are the most widely used unless the commission
704	704	finds that those standards are not suitable for use in this state.
705	705	If the commission finds that a widely used standard is not suitable,
706	706	the commission may amend the standard or adopt a standard that the
707	707	commission finds suitable.
708	708	Sec. 185.023 [185.004]. USE OF NATIONAL STANDARDS. If
709	709	national standards for rating and certifying solar energy devices
710	710	are developed by a federal agency in conjunction with the states and
711	711	industry, the commission shall adopt those national standards as
712	712	the standards for use in this state.
713	713	Sec. 185.024 [185.005]. REVIEW OF STANDARDS. The
714	714	commission shall periodically review the standards adopted under
715	715	this chapter and shall amend those standards as necessary to ensure
716	716	that the standards are:
717	717	(1) appropriate in view of current technology; and
718	718	(2) the same as or similar to the standards widely used
719	719	by other states and by industry.
720	720	SUBCHAPTER C. SOLAR ENERGY DEVICE RESTRICTIONS
721	721	Sec. 185.051. CERTAIN RESTRICTIONS VOID. (a) Except as
722	722	provided by Subsection (b), a provision in the dedicatory
723	723	instrument of a property owners' association that prohibits or
724	724	restricts a property owner from installing a solar energy device
725	725	conflicts with the goal for renewable energy provided by Section
726	726	39.904 and is void.
727	727	(b) A provision is not void if the provision only prohibits
728	728	a solar energy device that:
729	729	(1) as adjudicated by a court:
730	730	(A) threatens the public health or safety; or
731	731	(B) violates a law;
732	732	(2) is located on property owned or maintained by the
733	733	property owners' association;
734	734	(3) is located on property owned in common by the
735	735	members of the property owners' association;
736	736	(4) is located in an area on the property owner's
737	737	property other than:
738	738	(A) on the roof of the home or of another
739	739	structure allowed under a dedicatory instrument; or
740	740	(B) in a fenced yard or patio owned and
741	741	maintained by the property owner;
742	742	(5) if mounted on the roof of the home:
743	743	(A) extends higher than the roofline;
744	744	(B) is located in an area other than an area
745	745	designated by the property owners' association, unless the
746	746	alternate location increases the estimated annual energy
747	747	production of the device, as determined by using a publicly
748	748	available modeling tool provided by the National Renewable Energy
749	749	Laboratory, by more than 10 percent above the energy production of
750	750	the device if located in an area designated by the property owners'
751	751	association;
752	752	(C) does not conform to the slope of the roof and
753	753	has a top edge that is not parallel to the roofline; or
754	754	(D) has a frame, a support bracket, or visible
755	755	piping or wiring that is not in a silver, bronze, or black tone
756	756	commonly available in the marketplace;
757	757	(6) if located in a fenced yard or patio, is taller
758	758	than the fence line;
759	759	(7) as installed:
760	760	(A) conflicts with the manufacturer's
761	761	installation requirements; or
762	762	(B) voids material warranties; or
763	763	(8) was installed without prior approval by a
764	764	committee created in a dedicatory instrument for such purposes that
765	765	provides decisions within a reasonable period or within a period
766	766	specified in the dedicatory instrument.
767	767	Sec. 185.052. RULES. The commission shall adopt rules to
768	768	implement this subchapter.
769	769	SECTION 1.24. Section 39.916(h), Utilities Code, is
770	770	repealed.
771	771	SECTION 1.25. The Public Utility Commission of Texas shall
772	772	adopt rules to implement the filing process required by Section
773	773	52.1035, Utilities Code, as added by this article, as soon as
774	774	practicable. The rules must specify whether the commission will
775	775	require that an interexchange telecommunications utility, holder
776	776	of a certificate of operating authority, or holder of a service
777	777	provider certificate of operating authority file the information
778	778	required by Section 52.1035, Utilities Code, as added by this
779	779	article, once or on a regular basis. Regardless of the frequency of
780	780	filing required, each utility or holder shall file the information
781	781	required by Section 52.1035, Utilities Code, as added by this
782	782	article, not later than January 1, 2012. If the commission requires
783	783	regular filings, the rules must specify the timing of the
784	784	subsequent filings.
785	785	SECTION 1.26. The changes in law made by this article to
786	786	Sections 15.023, 15.024, 15.025, 15.026, and 39.157, Utilities
787	787	Code, apply only to a violation that occurs on or after the
788	788	effective date of this Act. For purposes of this section, a
789	789	violation occurs before the effective date of this Act if any
790	790	element of the violation occurs before that date. A violation that
791	791	occurs before the effective date of this Act is covered by the law
792	792	in effect on the date the violation occurred, and the former law is
793	793	continued in effect for that purpose.
794	794	SECTION 1.27. Subchapter C, Chapter 185, Utilities Code, as
795	795	added by this Act, applies to a dedicatory instrument without
796	796	regard to whether the dedicatory instrument takes effect or is
797	797	renewed before, on, or after the effective date of this Act.
798	798	ARTICLE 2. WATER AND SEWER UTILITIES
799	799	SECTION 2.01. Section 13.002, Water Code, is amended by
800	800	amending Subdivisions (2) and (18) and adding Subdivision (22-a) to
801	801	read as follows:
802	802	(2) "Affiliated interest" or "affiliate" means:
803	803	(A) any person or corporation owning or holding
804	804	directly or indirectly five percent or more of the voting
805	805	securities of a utility;
806	806	(B) any person or corporation in any chain of
807	807	successive ownership of five percent or more of the voting
808	808	securities of a utility;
809	809	(C) any corporation five percent or more of the
810	810	voting securities of which is owned or controlled directly or
811	811	indirectly by a utility;
812	812	(D) any corporation five percent or more of the
813	813	voting securities of which is owned or controlled directly or
814	814	indirectly by any person or corporation that owns or controls
815	815	directly or indirectly five percent or more of the voting
816	816	securities of any utility or by any person or corporation in any
817	817	chain of successive ownership of five percent of those utility
818	818	securities;
819	819	(E) any person who is an officer or director of a
820	820	utility or of any corporation in any chain of successive ownership
821	821	of five percent or more of voting securities of a public utility;
822	822	(F) any person or corporation that the utility
823	823	commission, after notice and hearing, determines actually
824	824	exercises any substantial influence or control over the policies
825	825	and actions of a utility or over which a utility exercises such
826	826	control or that is under common control with a utility, such control
827	827	being the possession directly or indirectly of the power to direct
828	828	or cause the direction of the management and policies of another,
829	829	whether that power is established through ownership or voting of
830	830	securities or by any other direct or indirect means; or
831	831	(G) any person or corporation that the utility
832	832	commission, after notice and hearing, determines is exercising
833	833	substantial influence over the policies and actions of the utility
834	834	in conjunction with one or more persons or corporations with which
835	835	they are related by ownership or blood relationship, or by action in
836	836	concert, that together they are affiliated within the meaning of
837	837	this section, even though no one of them alone is so affiliated.
838	838	(18) "Regulatory authority" means, in accordance with
839	839	the context in which it is found, either the commission, the utility
840	840	commission, or the governing body of a municipality.
841	841	(22-a) "Utility commission" means the Public Utility
842	842	Commission of Texas.
843	843	SECTION 2.02. Section 13.004, Water Code, is amended to
844	844	read as follows:
845	845	Sec. 13.004. JURISDICTION OF UTILITY COMMISSION OVER
846	846	CERTAIN WATER SUPPLY OR SEWER SERVICE CORPORATIONS.
847	847	(a) Notwithstanding any other law, the utility commission has the
848	848	same jurisdiction over a water supply or sewer service corporation
849	849	that the utility commission has under this chapter over a water and
850	850	sewer utility if the utility commission finds that the water supply
851	851	or sewer service corporation:
852	852	(1) is failing to conduct annual or special meetings
853	853	in compliance with Section 67.007; or
854	854	(2) is operating in a manner that does not comply with
855	855	the requirements for classifications as a nonprofit water supply or
856	856	sewer service corporation prescribed by Sections 13.002(11) and
857	857	(24).
858	858	(b) If the water supply or sewer service corporation
859	859	voluntarily converts to a special utility district operating under
860	860	Chapter 65, the utility commission's jurisdiction provided by this
861	861	section ends.
862	862	SECTION 2.03. Section 13.011, Water Code, is amended to
863	863	read as follows:
864	864	Sec. 13.011. EMPLOYEES. (a) The executive director of the
865	865	utility commission and the executive director of the commission,
866	866	subject to approval, as applicable, by the utility commission or
867	867	the commission, shall employ any engineering, accounting, and
868	868	administrative personnel necessary to carry out each agency's
869	869	powers and duties under this chapter.
870	870	(b) The executive director and the commission's staff are
871	871	responsible for the gathering of information relating to all
872	872	matters within the jurisdiction of the commission under this
873	873	subchapter. The executive director of the utility commission and
874	874	the utility commission's staff are responsible for the gathering of
875	875	information relating to all matters within the jurisdiction of the
876	876	utility commission under this subchapter. The duties of the
877	877	respective executive directors and staffs [director and the staff]
878	878	include:
879	879	(1) accumulation of evidence and other information
880	880	from water and sewer utilities, [and] from the agency and governing
881	881	body, [commission and the board] and from other sources for the
882	882	purposes specified by this chapter;
883	883	(2) preparation and presentation of evidence before
884	884	the agency [commission] or its appointed examiner in proceedings;
885	885	(3) conducting investigations of water and sewer
886	886	utilities under the jurisdiction of the agency [commission];
887	887	(4) preparation of recommendations that the agency
888	888	[commission] undertake an investigation of any matter within its
889	889	jurisdiction;
890	890	(5) preparation of recommendations and a report for
891	891	inclusion in the annual report of the agency [commission];
892	892	(6) protection and representation of the public
893	893	interest[, together with the public interest advocate,] before the
894	894	agency [commission]; and
895	895	(7) other activities that are reasonably necessary to
896	896	enable the executive director and the staff to perform their
897	897	duties.
898	898	SECTION 2.04. Section 13.014, Water Code, is amended to
899	899	read as follows:
900	900	Sec. 13.014. ATTORNEY GENERAL TO REPRESENT COMMISSION OR
901	901	UTILITY COMMISSION. The attorney general shall represent the
902	902	commission or the utility commission under this chapter in all
903	903	matters before the state courts and any court of the United States.
904	904	SECTION 2.05. Subchapter B, Chapter 13, Water Code, is
905	905	amended by adding Section 13.017 to read as follows:
906	906	Sec. 13.017. OFFICE OF PUBLIC UTILITY COUNSEL; POWERS AND
907	907	DUTIES. (a) In this section, "counsellor" and "office" have the
908	908	meanings assigned by Section 11.003, Utilities Code.
909	909	(b) The office represents the interests of residential and
910	910	small commercial consumers under this chapter. The office:
911	911	(1) shall assess the effect of utility rate changes
912	912	and other regulatory actions on residential consumers in this
913	913	state;
914	914	(2) shall advocate in the office's own name a position
915	915	determined by the counsellor to be most advantageous to a
916	916	substantial number of residential consumers;
917	917	(3) may appear or intervene, as a party or otherwise,
918	918	as a matter of right on behalf of:
919	919	(A) residential consumers, as a class, in any
920	920	proceeding before the utility commission, including an alternative
921	921	dispute resolution proceeding; and
922	922	(B) small commercial consumers, as a class, in
923	923	any proceeding in which the counsellor determines that small
924	924	commercial consumers are in need of representation, including an
925	925	alternative dispute resolution proceeding;
926	926	(4) may initiate or intervene as a matter of right or
927	927	otherwise appear in a judicial proceeding:
928	928	(A) that involves an action taken by an
929	929	administrative agency in a proceeding, including an alternative
930	930	dispute resolution proceeding, in which the counsellor is
931	931	authorized to appear; or
932	932	(B) in which the counsellor determines that
933	933	residential consumers or small commercial consumers are in need of
934	934	representation;
935	935	(5) is entitled to the same access as a party, other
936	936	than utility commission staff, to records gathered by the utility
937	937	commission under Section 13.133;
938	938	(6) is entitled to discovery of any nonprivileged
939	939	matter that is relevant to the subject matter of a proceeding or
940	940	petition before the utility commission;
941	941	(7) may represent an individual residential or small
942	942	commercial consumer with respect to the consumer's disputed
943	943	complaint concerning retail utility services that is unresolved
944	944	before the utility commission; and
945	945	(8) may recommend legislation to the legislature that
946	946	the office determines would positively affect the interests of
947	947	residential and small commercial consumers.
948	948	(c) This section does not limit the authority of the utility
949	949	commission to represent residential or small commercial consumers.
950	950	(d) The appearance of the counsellor in a proceeding does
951	951	not preclude the appearance of other parties on behalf of
952	952	residential or small commercial consumers. The counsellor may not
953	953	be grouped with any other party.
954	954	SECTION 2.06. Section 13.041, Water Code, is amended to
955	955	read as follows:
956	956	Sec. 13.041. GENERAL POWERS OF UTILITY COMMISSION AND
957	957	COMMISSION [POWER]; RULES; HEARINGS. (a) The utility commission
958	958	may regulate and supervise the business of each [every] water and
959	959	sewer utility within its jurisdiction, including ratemaking and
960	960	other economic regulation. The commission shall regulate water and
961	961	sewer utilities within its jurisdiction to ensure safe drinking
962	962	water and environmental protection. The utility commission and the
963	963	commission [and] may do all things, whether specifically designated
964	964	in this chapter or implied in this chapter, necessary and
965	965	convenient to the exercise of these powers [this power] and
966	966	jurisdiction. The utility commission may consult with the
967	967	commission as necessary in carrying out its duties related to the
968	968	regulation of water and sewer utilities.
969	969	(b) The commission and the utility commission shall adopt
970	970	and enforce rules reasonably required in the exercise of [its]
971	971	powers and jurisdiction of each agency, including rules governing
972	972	practice and procedure before the commission and the utility
973	973	commission.
974	974	(c) The commission and the utility commission may call and
975	975	hold hearings, administer oaths, receive evidence at hearings,
976	976	issue subpoenas to compel the attendance of witnesses and the
977	977	production of papers and documents, and make findings of fact and
978	978	decisions with respect to administering this chapter or the rules,
979	979	orders, or other actions of the commission or the utility
980	980	commission.
981	981	(d) The utility commission may issue emergency orders, with
982	982	or without a hearing:
983	983	(1) to compel a water or sewer service provider that
984	984	has obtained or is required to obtain a certificate of public
985	985	convenience and necessity to provide continuous and adequate water
986	986	service, sewer service, or both, if the discontinuance of the
987	987	service is imminent or has occurred because of the service
988	988	provider's actions or failure to act; and
989	989	(2) to compel a retail public utility to provide an
990	990	emergency interconnection with a neighboring retail public utility
991	991	for the provision of temporary water or sewer service, or both, for
992	992	not more than 90 days if service discontinuance or serious
993	993	impairment in service is imminent or has occurred.
994	994	(e) The utility commission may establish reasonable
995	995	compensation for the temporary service required under Subsection
996	996	(d)(2) [of this section] and may allow the retail public utility
997	997	receiving the service to make a temporary adjustment to its rate
998	998	structure to ensure proper payment.
999	999	(f) If an order is issued under Subsection (d) without a
1000	1000	hearing, the order shall fix a time, as soon after the emergency
1001	1001	order is issued as is practicable, and place for a hearing to be
1002	1002	held before the utility commission.
1003	1003	(g) The regulatory assessment required by Section 5.701(n)
1004	1004	[5.235(n) of this code] is not a rate and is not reviewable by the
1005	1005	utility commission under Section 13.043 [of this code]. The
1006	1006	commission has the authority to enforce payment and collection of
1007	1007	the regulatory assessment.
1008	1008	SECTION 2.07. Section 13.042, Water Code, is amended to
1009	1009	read as follows:
1010	1010	Sec. 13.042. JURISDICTION OF MUNICIPALITY; ORIGINAL AND
1011	1011	APPELLATE JURISDICTION OF UTILITY COMMISSION. (a) Subject to the
1012	1012	limitations imposed in this chapter and for the purpose of
1013	1013	regulating rates and services so that those rates may be fair, just,
1014	1014	and reasonable and the services adequate and efficient, the
1015	1015	governing body of each municipality has exclusive original
1016	1016	jurisdiction over all water and sewer utility rates, operations,
1017	1017	and services provided by a water and sewer utility within its
1018	1018	corporate limits.
1019	1019	(b) The governing body of a municipality by ordinance may
1020	1020	elect to have the utility commission exercise exclusive original
1021	1021	jurisdiction over the utility rates, operation, and services of
1022	1022	utilities, within the incorporated limits of the municipality.
1023	1023	(c) The governing body of a municipality that surrenders its
1024	1024	jurisdiction to the utility commission may reinstate its
1025	1025	jurisdiction by ordinance at any time after the second anniversary
1026	1026	of the date on which the municipality surrendered its jurisdiction
1027	1027	to the utility commission, except that the municipality may not
1028	1028	reinstate its jurisdiction during the pendency of a rate proceeding
1029	1029	before the utility commission. The municipality may not surrender
1030	1030	its jurisdiction again until the second anniversary of the date on
1031	1031	which the municipality reinstates jurisdiction.
1032	1032	(d) The utility commission shall have exclusive appellate
1033	1033	jurisdiction to review orders or ordinances of those municipalities
1034	1034	as provided in this chapter.
1035	1035	(e) The utility commission shall have exclusive original
1036	1036	jurisdiction over water and sewer utility rates, operations, and
1037	1037	services not within the incorporated limits of a municipality
1038	1038	exercising exclusive original jurisdiction over those rates,
1039	1039	operations, and services as provided in this chapter.
1040	1040	(f) This subchapter does not give the utility commission
1041	1041	power or jurisdiction to regulate or supervise the rates or service
1042	1042	of a utility owned and operated by a municipality, directly or
1043	1043	through a municipally owned corporation, within its corporate
1044	1044	limits or to affect or limit the power, jurisdiction, or duties of a
1045	1045	municipality that regulates land and supervises water and sewer
1046	1046	utilities within its corporate limits, except as provided by this
1047	1047	code.
1048	1048	SECTION 2.08. Subsections (a), (b), (c), (e), (f), (g),
1049	1049	(h), and (j), Section 13.043, Water Code, are amended to read as
1050	1050	follows:
1051	1051	(a) Any party to a rate proceeding before the governing body
1052	1052	of a municipality may appeal the decision of the governing body to
1053	1053	the utility commission. This subsection does not apply to a
1054	1054	municipally owned utility. An appeal under this subsection must be
1055	1055	initiated within 90 days after the date of notice of the final
1056	1056	decision by the governing body by filing a petition for review with
1057	1057	the utility commission and by serving copies on all parties to the
1058	1058	original rate proceeding. The utility commission shall hear the
1059	1059	appeal de novo and shall fix in its final order the rates the
1060	1060	governing body should have fixed in the action from which the appeal
1061	1061	was taken and may include reasonable expenses incurred in the
1062	1062	appeal proceedings. The utility commission may establish the
1063	1063	effective date for the utility commission's rates at the original
1064	1064	effective date as proposed by the utility provider and may order
1065	1065	refunds or allow a surcharge to recover lost revenues. The utility
1066	1066	commission may consider only the information that was available to
1067	1067	the governing body at the time the governing body made its decision
1068	1068	and evidence of reasonable expenses incurred in the appeal
1069	1069	proceedings.
1070	1070	(b) Ratepayers of the following entities may appeal the
1071	1071	decision of the governing body of the entity affecting their water,
1072	1072	drainage, or sewer rates to the utility commission:
1073	1073	(1) a nonprofit water supply or sewer service
1074	1074	corporation created and operating under Chapter 67;
1075	1075	(2) a utility under the jurisdiction of a municipality
1076	1076	inside the corporate limits of the municipality;
1077	1077	(3) a municipally owned utility, if the ratepayers
1078	1078	reside outside the corporate limits of the municipality;
1079	1079	(4) a district or authority created under Article III,
1080	1080	Section 52, or Article XVI, Section 59, of the Texas Constitution
1081	1081	that provides water or sewer service to household users; and
1082	1082	(5) a utility owned by an affected county, if the
1083	1083	ratepayer's rates are actually or may be adversely affected. For
1084	1084	the purposes of this section ratepayers who reside outside the
1085	1085	boundaries of the district or authority shall be considered a
1086	1086	separate class from ratepayers who reside inside those boundaries.
1087	1087	(c) An appeal under Subsection (b) [of this section] must be
1088	1088	initiated by filing a petition for review with the utility
1089	1089	commission and the entity providing service within 90 days after
1090	1090	the effective day of the rate change or, if appealing under
1091	1091	Subdivision (b)(2) or (5) [of this section], within 90 days after
1092	1092	the date on which the governing body of the municipality or affected
1093	1093	county makes a final decision. The petition must be signed by the
1094	1094	lesser of 10,000 or 10 percent of those ratepayers whose rates have
1095	1095	been changed and who are eligible to appeal under Subsection (b) [of
1096	1096	this section].
1097	1097	(e) In an appeal under Subsection (b) [of this section], the
1098	1098	utility commission shall hear the appeal de novo and shall fix in
1099	1099	its final order the rates the governing body should have fixed in
1100	1100	the action from which the appeal was taken. The utility commission
1101	1101	may establish the effective date for the utility commission's rates
1102	1102	at the original effective date as proposed by the service provider,
1103	1103	may order refunds or allow a surcharge to recover lost revenues, and
1104	1104	may allow recovery of reasonable expenses incurred by the retail
1105	1105	public utility in the appeal proceedings. The utility commission
1106	1106	may consider only the information that was available to the
1107	1107	governing body at the time the governing body made its decision and
1108	1108	evidence of reasonable expenses incurred by the retail public
1109	1109	utility in the appeal proceedings. The rates established by the
1110	1110	utility commission in an appeal under Subsection (b) [of this
1111	1111	section] remain in effect until the first anniversary of the
1112	1112	effective date proposed by the retail public utility for the rates
1113	1113	being appealed or until changed by the service provider, whichever
1114	1114	date is later, unless the utility commission determines that a
1115	1115	financial hardship exists.
1116	1116	(f) A retail public utility that receives water or sewer
1117	1117	service from another retail public utility or political subdivision
1118	1118	of the state, including an affected county, may appeal to the
1119	1119	utility commission a decision of the provider of water or sewer
1120	1120	service affecting the amount paid for water or sewer service. An
1121	1121	appeal under this subsection must be initiated within 90 days after
1122	1122	the date of notice of the decision is received from the provider of
1123	1123	water or sewer service by the filing of a petition by the retail
1124	1124	public utility.
1125	1125	(g) An applicant for service from an affected county or a
1126	1126	water supply or sewer service corporation may appeal to the utility
1127	1127	commission a decision of the county or water supply or sewer service
1128	1128	corporation affecting the amount to be paid to obtain service other
1129	1129	than the regular membership or tap fees. In addition to the factors
1130	1130	specified under Subsection (j), in an appeal brought under this
1131	1131	subsection the utility commission shall determine whether the
1132	1132	amount paid by the applicant is consistent with the tariff of the
1133	1133	water supply or sewer service corporation and is reasonably related
1134	1134	to the cost of installing on-site and off-site facilities to
1135	1135	provide service to that applicant. If the utility commission finds
1136	1136	the amount charged to be clearly unreasonable, it shall establish
1137	1137	the fee to be paid for that applicant. An appeal under this
1138	1138	subsection must be initiated within 90 days after the date written
1139	1139	notice is provided to the applicant or member of the decision of an
1140	1140	affected county or water supply or sewer service corporation
1141	1141	relating to the applicant's initial request for that service. A
1142	1142	determination made by the utility commission on an appeal under
1143	1143	this subsection is binding on all similarly situated applicants for
1144	1144	service, and the utility commission may not consider other appeals
1145	1145	on the same issue until the applicable provisions of the tariff of
1146	1146	the water supply or sewer service corporation are amended.
1147	1147	(h) The utility commission may, on a motion by the executive
1148	1148	director of the utility commission or by the appellant under
1149	1149	Subsection (a), (b), or (f) [of this section], establish interim
1150	1150	rates to be in effect until a final decision is made.
1151	1151	(j) In an appeal under this section, the utility commission
1152	1152	shall ensure that every rate made, demanded, or received by any
1153	1153	retail public utility or by any two or more retail public utilities
1154	1154	jointly shall be just and reasonable. Rates shall not be
1155	1155	unreasonably preferential, prejudicial, or discriminatory but
1156	1156	shall be sufficient, equitable, and consistent in application to
1157	1157	each class of customers. The utility commission shall use a
1158	1158	methodology that preserves the financial integrity of the retail
1159	1159	public utility. For agreements between municipalities the utility
1160	1160	commission shall consider the terms of any wholesale water or sewer
1161	1161	service agreement in an appellate rate proceeding.
1162	1162	SECTION 2.09. Subsection (b), Section 13.044, Water Code,
1163	1163	is amended to read as follows:
1164	1164	(b) Notwithstanding the provisions of any resolution,
1165	1165	ordinance, or agreement, a district may appeal the rates imposed by
1166	1166	the municipality by filing a petition with the utility commission.
1167	1167	The utility commission shall hear the appeal de novo and the
1168	1168	municipality shall have the burden of proof to establish that the
1169	1169	rates are just and reasonable. The utility commission shall fix the
1170	1170	rates to be charged by the municipality and the municipality may not
1171	1171	increase such rates without the approval of the utility commission.
1172	1172	SECTION 2.10. Section 13.046, Water Code, is amended to
1173	1173	read as follows:
1174	1174	Sec. 13.046. TEMPORARY RATES FOR SERVICES PROVIDED FOR
1175	1175	NONFUNCTIONING SYSTEM; SANCTIONS FOR NONCOMPLIANCE. (a) The
1176	1176	utility commission by rule shall establish a procedure that allows
1177	1177	a retail public utility that takes over the provision of services
1178	1178	for a nonfunctioning retail water or sewer utility service provider
1179	1179	to charge a reasonable rate for the services provided to the
1180	1180	customers of the nonfunctioning system and to bill the customers
1181	1181	for the services at that rate immediately to recover service costs.
1182	1182	(b) The rules must provide a streamlined process that the
1183	1183	retail public utility that takes over the nonfunctioning system may
1184	1184	use to apply to the utility commission for a ruling on the
1185	1185	reasonableness of the rates the utility is charging under
1186	1186	Subsection (a). The process must allow for adequate consideration
1187	1187	of costs for interconnection or other costs incurred in making
1188	1188	services available and of the costs that may necessarily be
1189	1189	incurred to bring the nonfunctioning system into compliance with
1190	1190	utility commission and commission rules.
1191	1191	(c) The utility commission shall provide a reasonable
1192	1192	period for the retail public utility that takes over the
1193	1193	nonfunctioning system to bring the nonfunctioning system into
1194	1194	compliance with utility commission and commission rules during
1195	1195	which the utility commission or the commission may not impose a
1196	1196	penalty for any deficiency in the system that is present at the time
1197	1197	the utility takes over the nonfunctioning system. The utility
1198	1198	commission must consult with the utility before determining the
1199	1199	period and may grant an extension of the period for good cause.
1200	1200	SECTION 2.11. Subchapter C, Chapter 13, Water Code, is
1201	1201	amended by adding Section 13.047 to read as follows:
1202	1202	Sec. 13.047. REVIEW AND ORDER FOR CERTAIN WHOLESALE WATER
1203	1203	RATES. (a) A conservation and reclamation district that provides
1204	1204	potable water service to district customers may file an application
1205	1205	with the utility commission requesting a review of the rate a
1206	1206	supplier of raw or treated surface water or groundwater charges the
1207	1207	district to determine whether the rate adversely affects the public
1208	1208	interest.
1209	1209	(b) The utility commission shall presume that the rate
1210	1210	adversely affects the public interest if it is shown on hearing that
1211	1211	the rate the supplier charges the district at the time the
1212	1212	application is made is at least 50 percent higher than the rate
1213	1213	charged at any time during the 36-month period before the date of
1214	1214	the application. The utility commission shall determine the rate
1215	1215	the supplier charges the district adversely affects the public
1216	1216	interest if the utility commission determines:
1217	1217	(1) the protested rate impairs the district's ability
1218	1218	to continue to provide service to its retail customers, based on the
1219	1219	district's financial integrity and operational capability;
1220	1220	(2) the rate evidences the supplier's abuse of
1221	1221	monopoly power in the supplier's provision of water to the district
1222	1222	after weighing all relevant factors, including:
1223	1223	(A) the disparate bargaining power of the
1224	1224	parties, including the district's alternative means, alternative
1225	1225	costs, environmental impact, regulatory issues, and problems of
1226	1226	obtaining alternative supplies of water;
1227	1227	(B) whether the supplier failed to reasonably
1228	1228	demonstrate the changed conditions that are the basis for a change
1229	1229	in rates;
1230	1230	(C) whether the supplier changed the computation
1231	1231	of the revenue requirement or rate from one methodology to another;
1232	1232	(D) where the supplier demands the rate in
1233	1233	accordance with a contract, whether other valuable consideration
1234	1234	was paid or received by a party incident to that contract;
1235	1235	(E) incentives necessary to encourage regional
1236	1236	projects or water conservation measures;
1237	1237	(F) the supplier's obligation to meet federal and
1238	1238	state wastewater discharge and drinking water standards;
1239	1239	(G) the rates charged in this state by other
1240	1240	similarly situated suppliers of water for resale; and
1241	1241	(H) the supplier's rates for water charged to the
1242	1242	supplier's retail customers, if any, compared to the retail rates
1243	1243	the district charges the district's retail customers as a result of
1244	1244	the wholesale rate the supplier demands from the district; or
1245	1245	(3) the rate is unreasonably preferential,
1246	1246	prejudicial, or discriminatory, compared to the wholesale rates the
1247	1247	supplier charges other wholesale customers.
1248	1248	(c) If the utility commission finds on hearing the
1249	1249	application that the rate adversely affects the public interest or
1250	1250	if the rate is presumed to adversely affect the public interest as
1251	1251	provided by Subsection (b), the utility commission by order shall
1252	1252	fix a just and reasonable rate at which the supplier may charge the
1253	1253	district. In fixing the rate, the utility commission shall use a
1254	1254	methodology that preserves the financial integrity of the supplier.
1255	1255	SECTION 2.12. Section 13.081, Water Code, is amended to
1256	1256	read as follows:
1257	1257	Sec. 13.081. FRANCHISES. This chapter may not be construed
1258	1258	as in any way limiting the rights and powers of a municipality to
1259	1259	grant or refuse franchises to use the streets and alleys within its
1260	1260	limits and to make the statutory charges for their use, but no
1261	1261	provision of any franchise agreement may limit or interfere with
1262	1262	any power conferred on the utility commission by this chapter. If a
1263	1263	municipality performs regulatory functions under this chapter, it
1264	1264	may make such other charges as may be provided in the applicable
1265	1265	franchise agreement, together with any other charges permitted by
1266	1266	this chapter.
1267	1267	SECTION 2.13. Section 13.082, Water Code, is amended to
1268	1268	read as follows:
1269	1269	Sec. 13.082. LOCAL UTILITY SERVICE; EXEMPT AND NONEXEMPT
1270	1270	AREAS. (a) Notwithstanding any other provision of this section,
1271	1271	municipalities shall continue to regulate each kind of local
1272	1272	utility service inside their boundaries until the utility
1273	1273	commission has assumed jurisdiction over the respective utility
1274	1274	pursuant to this chapter.
1275	1275	(b) If a municipality does not surrender its jurisdiction,
1276	1276	local utility service within the boundaries of the municipality
1277	1277	shall be exempt from regulation by the utility commission under
1278	1278	this chapter to the extent that this chapter applies to local
1279	1279	service, and the municipality shall have, regarding service within
1280	1280	its boundaries, the right to exercise the same regulatory powers
1281	1281	under the same standards and rules as the utility commission or
1282	1282	other standards and rules not inconsistent with them. The utility
1283	1283	commission's rules relating to service and response to requests for
1284	1284	service for utilities operating within a municipality's corporate
1285	1285	limits apply unless the municipality adopts its own rules.
1286	1286	(c) Notwithstanding any election, the utility commission
1287	1287	may consider water and sewer utilities' revenues and return on
1288	1288	investment in exempt areas in fixing rates and charges in nonexempt
1289	1289	areas and may also exercise the powers conferred necessary to give
1290	1290	effect to orders under this chapter for the benefit of nonexempt
1291	1291	areas. Likewise, in fixing rates and charges in the exempt area,
1292	1292	the governing body may consider water and sewer utilities' revenues
1293	1293	and return on investment in nonexempt areas.
1294	1294	(d) Utilities serving exempt areas are subject to the
1295	1295	reporting requirements of this chapter. Those reports and tariffs
1296	1296	shall be filed with the governing body of the municipality as well
1297	1297	as with the utility commission.
1298	1298	(e) This section does not limit the duty and power of the
1299	1299	utility commission to regulate service and rates of municipally
1300	1300	regulated water and sewer utilities for service provided to other
1301	1301	areas in Texas.
1302	1302	SECTION 2.14. Section 13.085, Water Code, is amended to
1303	1303	read as follows:
1304	1304	Sec. 13.085. ASSISTANCE BY UTILITY COMMISSION. On request,
1305	1305	the utility commission may advise and assist municipalities and
1306	1306	affected counties in connection with questions and proceedings
1307	1307	arising under this chapter. This assistance may include aid to
1308	1308	municipalities or an affected county in connection with matters
1309	1309	pending before the utility commission, the courts, the governing
1310	1310	body of any municipality, or the commissioners court of an affected
1311	1311	county, including making members of the staff available to them as
1312	1312	witnesses and otherwise providing evidence.
1313	1313	SECTION 2.15. Subsection (c), Section 13.087, Water Code,
1314	1314	is amended to read as follows:
1315	1315	(c) Notwithstanding any other provision of this chapter,
1316	1316	the utility commission has jurisdiction to enforce this section.
1317	1317	SECTION 2.16. Subsections (a), (b), (c), and (e), Section
1318	1318	13.131, Water Code, are amended to read as follows:
1319	1319	(a) Every water and sewer utility shall keep and render to
1320	1320	the regulatory authority in the manner and form prescribed by the
1321	1321	utility commission uniform accounts of all business transacted.
1322	1322	The utility commission may also prescribe forms of books, accounts,
1323	1323	records, and memoranda to be kept by those utilities, including the
1324	1324	books, accounts, records, and memoranda of the rendition of and
1325	1325	capacity for service as well as the receipts and expenditures of
1326	1326	money, and any other forms, records, and memoranda that in the
1327	1327	judgment of the utility commission may be necessary to carry out
1328	1328	this chapter.
1329	1329	(b) In the case of a utility subject to regulation by a
1330	1330	federal regulatory agency, compliance with the system of accounts
1331	1331	prescribed for the particular class of utilities by that agency may
1332	1332	be considered a sufficient compliance with the system prescribed by
1333	1333	the utility commission. However, the utility commission may
1334	1334	prescribe forms of books, accounts, records, and memoranda covering
1335	1335	information in addition to that required by the federal agency. The
1336	1336	system of accounts and the forms of books, accounts, records, and
1337	1337	memoranda prescribed by the utility commission for a utility or
1338	1338	class of utilities may not conflict or be inconsistent with the
1339	1339	systems and forms established by a federal agency for that utility
1340	1340	or class of utilities.
1341	1341	(c) The utility commission shall fix proper and adequate
1342	1342	rates and methods of depreciation, amortization, or depletion of
1343	1343	the several classes of property of each utility and shall require
1344	1344	every utility to carry a proper and adequate depreciation account
1345	1345	in accordance with those rates and methods and with any other rules
1346	1346	the utility commission prescribes. Rules adopted under this
1347	1347	subsection must require the book cost less net salvage of
1348	1348	depreciable utility plant retired to be charged in its entirety to
1349	1349	the accumulated depreciation account in a manner consistent with
1350	1350	accounting treatment of regulated electric and gas utilities in
1351	1351	this state. Those rates, methods, and accounts shall be utilized
1352	1352	uniformly and consistently throughout the rate-setting and appeal
1353	1353	proceedings.
1354	1354	(e) Every utility is required to keep and render its books,
1355	1355	accounts, records, and memoranda accurately and faithfully in the
1356	1356	manner and form prescribed by the utility commission and to comply
1357	1357	with all directions of the regulatory authority relating to those
1358	1358	books, accounts, records, and memoranda. The regulatory authority
1359	1359	may require the examination and audit of all accounts.
1360	1360	SECTION 2.17. Section 13.132, Water Code, is amended to
1361	1361	read as follows:
1362	1362	Sec. 13.132. POWERS OF UTILITY COMMISSION. (a) The
1363	1363	utility commission may:
1364	1364	(1) require that water and sewer utilities report to
1365	1365	it any information relating to themselves and affiliated interests
1366	1366	both inside and outside this state that it considers useful in the
1367	1367	administration of this chapter;
1368	1368	(2) establish forms for all reports;
1369	1369	(3) determine the time for reports and the frequency
1370	1370	with which any reports are to be made;
1371	1371	(4) require that any reports be made under oath;
1372	1372	(5) require that a copy of any contract or arrangement
1373	1373	between any utility and any affiliated interest be filed with it and
1374	1374	require that such a contract or arrangement that is not in writing
1375	1375	be reduced to writing;
1376	1376	(6) require that a copy of any report filed with any
1377	1377	federal agency or any governmental agency or body of any other state
1378	1378	be filed with it; and
1379	1379	(7) require that a copy of annual reports showing all
1380	1380	payments of compensation, other than salary or wages subject to the
1381	1381	withholding of federal income tax, made to residents of Texas, or
1382	1382	with respect to legal, administrative, or legislative matters in
1383	1383	Texas, or for representation before the Texas Legislature or any
1384	1384	governmental agency or body be filed with it.
1385	1385	(b) On the request of the governing body of any
1386	1386	municipality, the utility commission may provide sufficient staff
1387	1387	members to advise and consult with the municipality on any pending
1388	1388	matter.
1389	1389	SECTION 2.18. Subsection (b), Section 13.133, Water Code,
1390	1390	is amended to read as follows:
1391	1391	(b) The regulatory authority may require, by order or
1392	1392	subpoena served on any utility, the production within this state at
1393	1393	the time and place it may designate of any books, accounts, papers,
1394	1394	or records kept by that utility outside the state or verified copies
1395	1395	of them if the regulatory authority [commission] so orders. A
1396	1396	utility failing or refusing to comply with such an order or subpoena
1397	1397	violates this chapter.
1398	1398	SECTION 2.19. Subsections (b) and (c), Section 13.136,
1399	1399	Water Code, are amended to read as follows:
1400	1400	(b) Each utility annually shall file a service and financial
1401	1401	report in a form and at times specified by utility commission rule.
1402	1402	(c) Every water supply or sewer service corporation shall
1403	1403	file with the utility commission tariffs showing all rates that are
1404	1404	subject to the appellate jurisdiction of the utility commission and
1405	1405	that are in force at the time for any utility service, product, or
1406	1406	commodity offered. Every water supply or sewer service corporation
1407	1407	shall file with and as a part of those tariffs all rules and
1408	1408	regulations relating to or affecting the rates, utility service,
1409	1409	product, or commodity furnished. The filing required under this
1410	1410	subsection shall be for informational purposes only.
1411	1411	SECTION 2.20. Section 13.137, Water Code, is amended to
1412	1412	read as follows:
1413	1413	Sec. 13.137. OFFICE AND OTHER BUSINESS LOCATIONS OF
1414	1414	UTILITY; RECORDS; REMOVAL FROM STATE. (a) Every utility shall:
1415	1415	(1) make available and notify its customers of a
1416	1416	business location where its customers may make payments to prevent
1417	1417	disconnection of or to restore service:
1418	1418	(A) in each county in which the utility provides
1419	1419	service; or
1420	1420	(B) not more than 20 miles from the residence of
1421	1421	any residential customer if there is no location to receive
1422	1422	payments in the county; and
1423	1423	(2) have an office in a county of this state or in the
1424	1424	immediate area in which its property or some part of its property is
1425	1425	located in which it shall keep all books, accounts, records, and
1426	1426	memoranda required by the utility commission to be kept in this
1427	1427	state.
1428	1428	(b) The utility commission by rule may provide for waiving
1429	1429	the requirements of Subsection (a)(1) for a utility for which
1430	1430	meeting those requirements would cause a rate increase or otherwise
1431	1431	harm or inconvenience customers. The rules must provide for an
1432	1432	additional 14 days to be given for a customer to pay before a
1433	1433	utility that is granted a waiver may disconnect service for late
1434	1434	payment.
1435	1435	(c) Books, accounts, records, or memoranda required by the
1436	1436	regulatory authority to be kept in the state may not be removed from
1437	1437	the state, except on conditions prescribed by the utility
1438	1438	commission.
1439	1439	SECTION 2.21. Subsection (b), Section 13.139, Water Code,
1440	1440	is amended to read as follows:
1441	1441	(b) The governing body of a municipality, as the regulatory
1442	1442	authority for public utilities operating within its corporate
1443	1443	limits, and the utility commission or the commission as the
1444	1444	regulatory authority for public utilities operating outside the
1445	1445	corporate limits of any municipality, after reasonable notice and
1446	1446	hearing on its own motion, may:
1447	1447	(1) ascertain and fix just and reasonable standards,
1448	1448	classifications, regulations, service rules, minimum service
1449	1449	standards or practices to be observed and followed with respect to
1450	1450	the service to be furnished;
1451	1451	(2) ascertain and fix adequate and reasonable
1452	1452	standards for the measurement of the quantity, quality, pressure,
1453	1453	or other condition pertaining to the supply of the service;
1454	1454	(3) prescribe reasonable regulations for the
1455	1455	examination and testing of the service and for the measurement of
1456	1456	service; and
1457	1457	(4) establish or approve reasonable rules,
1458	1458	regulations, specifications, and standards to secure the accuracy
1459	1459	of all meters, instruments, and equipment used for the measurement
1460	1460	of any utility service.
1461	1461	SECTION 2.22. Section 13.1395, Water Code, is amended by
1462	1462	adding Subsection (m) to read as follows:
1463	1463	(m) The commission shall coordinate with the utility
1464	1464	commission in the administration of this section.
1465	1465	SECTION 2.23. Subsection (b), Section 13.142, Water Code,
1466	1466	is amended to read as follows:
1467	1467	(b) The utility commission shall adopt rules concerning
1468	1468	payment of utility bills that are consistent with Chapter 2251,
1469	1469	Government Code.
1470	1470	SECTION 2.24. Section 13.144, Water Code, is amended to
1471	1471	read as follows:
1472	1472	Sec. 13.144. NOTICE OF WHOLESALE WATER SUPPLY CONTRACT. A
1473	1473	district or authority created under Section 52, Article III, or
1474	1474	Section 59, Article XVI, Texas Constitution, a retail public
1475	1475	utility, a wholesale water service, or other person providing a
1476	1476	retail public utility with a wholesale water supply shall provide
1477	1477	the utility commission and the commission with a certified copy of
1478	1478	any wholesale water supply contract with a retail public utility
1479	1479	within 30 days after the date of the execution of the contract. The
1480	1480	submission must include the amount of water being supplied, term of
1481	1481	the contract, consideration being given for the water, purpose of
1482	1482	use, location of use, source of supply, point of delivery,
1483	1483	limitations on the reuse of water, a disclosure of any affiliated
1484	1484	interest between the parties to the contract, and any other
1485	1485	condition or agreement relating to the contract.
1486	1486	SECTION 2.25. Subsection (a), Section 13.147, Water Code,
1487	1487	is amended to read as follows:
1488	1488	(a) A retail public utility providing water service may
1489	1489	contract with a retail public utility providing sewer service to
1490	1490	bill and collect the sewer service provider's fees and payments as
1491	1491	part of a consolidated process with the billing and collection of
1492	1492	the water service provider's fees and payments. The water service
1493	1493	provider may provide that service only for customers who are served
1494	1494	by both providers in an area covered by both providers'
1495	1495	certificates of public convenience and necessity. If the water
1496	1496	service provider refuses to enter into a contract under this
1497	1497	section or if the water service provider and sewer service provider
1498	1498	cannot agree on the terms of a contract, the sewer service provider
1499	1499	may petition the utility commission to issue an order requiring the
1500	1500	water service provider to provide that service.
1501	1501	SECTION 2.26. Subsection (b), Section 13.181, Water Code,
1502	1502	is amended to read as follows:
1503	1503	(b) Subject to this chapter, the utility commission has all
1504	1504	authority and power of the state to ensure compliance with the
1505	1505	obligations of utilities under this chapter. For this purpose the
1506	1506	regulatory authority may fix and regulate rates of utilities,
1507	1507	including rules and regulations for determining the classification
1508	1508	of customers and services and for determining the applicability of
1509	1509	rates. A rule or order of the regulatory authority may not conflict
1510	1510	with the rulings of any federal regulatory body. The utility
1511	1511	commission may adopt rules which authorize a utility which is
1512	1512	permitted under Section 13.242(c) to provide service without a
1513	1513	certificate of public convenience and necessity to request or
1514	1514	implement a rate increase and operate according to rules,
1515	1515	regulations, and standards of service other than those otherwise
1516	1516	required under this chapter provided that rates are just and
1517	1517	reasonable for customers and the utility and that service is safe,
1518	1518	adequate, efficient, and reasonable.
1519	1519	SECTION 2.27. Subsections (c) and (d), Section 13.182,
1520	1520	Water Code, are amended to read as follows:
1521	1521	(c) For ratemaking purposes, the utility commission may
1522	1522	treat two or more municipalities served by a utility as a single
1523	1523	class wherever the utility commission considers that treatment to
1524	1524	be appropriate.
1525	1525	(d) The utility commission by rule shall establish a
1526	1526	preference that rates under a consolidated tariff be consolidated
1527	1527	by region. The regions under consolidated tariffs must be
1528	1528	determined on a case-by-case basis.
1529	1529	SECTION 2.28. Subsection (d), Section 13.183, Water Code,
1530	1530	is amended to read as follows:
1531	1531	(d) A regulatory authority other than the utility
1532	1532	commission may not approve an acquisition adjustment for a system
1533	1533	purchased before the effective date of an ordinance authorizing
1534	1534	acquisition adjustments.
1535	1535	SECTION 2.29. Subsection (a), Section 13.184, Water Code,
1536	1536	is amended to read as follows:
1537	1537	(a) Unless the utility commission establishes alternate
1538	1538	rate methodologies in accordance with Section 13.183(c), the
1539	1539	utility commission may not prescribe any rate that will yield more
1540	1540	than a fair return on the invested capital used and useful in
1541	1541	rendering service to the public. The governing body of a
1542	1542	municipality exercising its original jurisdiction over rates and
1543	1543	services may use alternate ratemaking methodologies established by
1544	1544	ordinance or by utility commission rule in accordance with Section
1545	1545	13.183(c). Unless the municipal regulatory authority uses
1546	1546	alternate ratemaking methodologies established by ordinance or by
1547	1547	utility commission rule in accordance with Section 13.183(c), it
1548	1548	may not prescribe any rate that will yield more than a fair return
1549	1549	on the invested capital used and useful in rendering service to the
1550	1550	public.
1551	1551	SECTION 2.30. Subsections (d), (k), and (o), Section
1552	1552	13.187, Water Code, are amended to read as follows:
1553	1553	(d) Except as provided by Subsection (d-1), if the
1554	1554	application or the statement of intent is not substantially
1555	1555	complete or does not comply with the regulatory authority's rules,
1556	1556	it may be rejected and the effective date of the rate change may be
1557	1557	suspended until a properly completed application is accepted by the
1558	1558	regulatory authority and a proper statement of intent is provided.
1559	1559	The utility commission may also suspend the effective date of any
1560	1560	rate change if the utility does not have a certificate of public
1561	1561	convenience and necessity or a completed application for a
1562	1562	certificate or to transfer a certificate pending before the utility
1563	1563	commission or if the utility is delinquent in paying the assessment
1564	1564	and any applicable penalties or interest required by Section
1565	1565	5.701(n) [of this code].
1566	1566	(k) If the regulatory authority receives at least the number
1567	1567	of complaints from ratepayers required for the regulatory authority
1568	1568	to set a hearing under Subsection (e), the regulatory authority
1569	1569	may, pending the hearing and a decision, suspend the date the rate
1570	1570	change would otherwise be effective. Except as provided by
1571	1571	Subsection (d-1), the proposed rate may not be suspended for longer
1572	1572	than:
1573	1573	(1) 90 days by a local regulatory authority; or
1574	1574	(2) 150 days by the utility commission.
1575	1575	(o) If a regulatory authority other than the utility
1576	1576	commission establishes interim rates or an escrow account, the
1577	1577	regulatory authority must make a final determination on the rates
1578	1578	not later than the first anniversary of the effective date of the
1579	1579	interim rates or escrowed rates or the rates are automatically
1580	1580	approved as requested by the utility.
1581	1581	SECTION 2.31. Subsection (a), Section 13.188, Water Code,
1582	1582	is amended to read as follows:
1583	1583	(a) Notwithstanding any other provision in this chapter,
1584	1584	the utility commission by rule shall adopt a procedure allowing a
1585	1585	utility to file with the utility commission an application to
1586	1586	timely adjust the utility's rates to reflect an increase or
1587	1587	decrease in documented energy costs in a pass through clause. The
1588	1588	utility commission, by rule, shall require the pass through of
1589	1589	documented decreases in energy costs within a reasonable time. The
1590	1590	pass through, whether a decrease or increase, shall be implemented
1591	1591	on no later than an annual basis, unless the utility commission
1592	1592	determines a special circumstance applies.
1593	1593	SECTION 2.32. Subsections (a) and (d), Section 13.241,
1594	1594	Water Code, are amended to read as follows:
1595	1595	(a) In determining whether to grant or amend a certificate
1596	1596	of public convenience and necessity, the utility commission shall
1597	1597	ensure that the applicant possesses the financial, managerial, and
1598	1598	technical capability to provide continuous and adequate service.
1599	1599	(d) Before the utility commission grants a new certificate
1600	1600	of convenience and necessity for an area which would require
1601	1601	construction of a physically separate water or sewer system, the
1602	1602	applicant must demonstrate to the utility commission that
1603	1603	regionalization or consolidation with another retail public
1604	1604	utility is not economically feasible.
1605	1605	SECTION 2.33. Subsections (a) and (c), Section 13.242,
1606	1606	Water Code, are amended to read as follows:
1607	1607	(a) Unless otherwise specified, a utility, a utility
1608	1608	operated by an affected county, or a water supply or sewer service
1609	1609	corporation may not in any way render retail water or sewer utility
1610	1610	service directly or indirectly to the public without first having
1611	1611	obtained from the utility commission a certificate that the present
1612	1612	or future public convenience and necessity will require that
1613	1613	installation, operation, or extension, and except as otherwise
1614	1614	provided by this subchapter, a retail public utility may not
1615	1615	furnish, make available, render, or extend retail water or sewer
1616	1616	utility service to any area to which retail water or sewer utility
1617	1617	service is being lawfully furnished by another retail public
1618	1618	utility without first having obtained a certificate of public
1619	1619	convenience and necessity that includes the area in which the
1620	1620	consuming facility is located.
1621	1621	(c) The utility commission may by rule allow a municipality
1622	1622	or utility or water supply corporation to render retail water
1623	1623	service without a certificate of public convenience and necessity
1624	1624	if the municipality has given notice under Section 13.255 [of this
1625	1625	code] that it intends to provide retail water service to an area or
1626	1626	if the utility or water supply corporation has less than 15
1627	1627	potential connections and is not within the certificated area of
1628	1628	another retail public utility.
1629	1629	SECTION 2.34. Section 13.244, Water Code, is amended to
1630	1630	read as follows:
1631	1631	Sec. 13.244. APPLICATION; MAPS AND OTHER INFORMATION;
1632	1632	EVIDENCE AND CONSENT. (a) To obtain a certificate of public
1633	1633	convenience and necessity or an amendment to a certificate, a
1634	1634	public utility or water supply or sewer service corporation shall
1635	1635	submit to the utility commission an application for a certificate
1636	1636	or for an amendment as provided by this section.
1637	1637	(b) Each public utility and water supply or sewer service
1638	1638	corporation shall file with the utility commission a map or maps
1639	1639	showing all its facilities and illustrating separately facilities
1640	1640	for production, transmission, and distribution of its services, and
1641	1641	each certificated retail public utility shall file with the utility
1642	1642	commission a map or maps showing any facilities, customers, or area
1643	1643	currently being served outside its certificated areas.
1644	1644	(c) Each applicant for a certificate or for an amendment
1645	1645	shall file with the utility commission evidence required by the
1646	1646	commission to show that the applicant has received the required
1647	1647	consent, franchise, or permit of the proper municipality or other
1648	1648	public authority.
1649	1649	(d) An application for a certificate of public convenience
1650	1650	and necessity or for an amendment to a certificate must contain:
1651	1651	(1) a description of the proposed service area by:
1652	1652	(A) a metes and bounds survey certified by a
1653	1653	licensed state land surveyor or a registered professional land
1654	1654	surveyor;
1655	1655	(B) the Texas State Plane Coordinate System;
1656	1656	(C) verifiable landmarks, including a road,
1657	1657	creek, or railroad line; or
1658	1658	(D) if a recorded plat of the area exists, lot and
1659	1659	block number;
1660	1660	(2) a description of any requests for service in the
1661	1661	proposed service area;
1662	1662	(3) a capital improvements plan, including a budget
1663	1663	and estimated timeline for construction of all facilities necessary
1664	1664	to provide full service to the entire proposed service area;
1665	1665	(4) a description of the sources of funding for all
1666	1666	facilities;
1667	1667	(5) to the extent known, a description of current and
1668	1668	projected land uses, including densities;
1669	1669	(6) a current financial statement of the applicant;
1670	1670	(7) according to the tax roll of the central appraisal
1671	1671	district for each county in which the proposed service area is
1672	1672	located, a list of the owners of each tract of land that is:
1673	1673	(A) at least 50 acres; and
1674	1674	(B) wholly or partially located within the
1675	1675	proposed service area; and
1676	1676	(8) any other item required by the utility commission.
1677	1677	SECTION 2.35. Subsections (b), (c), and (e), Section
1678	1678	13.245, Water Code, are amended to read as follows:
1679	1679	(b) Except as provided by Subsection (c), the utility
1680	1680	commission may not grant to a retail public utility a certificate of
1681	1681	public convenience and necessity for a service area within the
1682	1682	boundaries or extraterritorial jurisdiction of a municipality
1683	1683	without the consent of the municipality. The municipality may not
1684	1684	unreasonably withhold the consent. As a condition of the consent, a
1685	1685	municipality may require that all water and sewer facilities be
1686	1686	designed and constructed in accordance with the municipality's
1687	1687	standards for facilities.
1688	1688	(c) If a municipality has not consented under Subsection (b)
1689	1689	before the 180th day after the date the municipality receives the
1690	1690	retail public utility's application, the utility commission shall
1691	1691	grant the certificate of public convenience and necessity without
1692	1692	the consent of the municipality if the utility commission finds
1693	1693	that the municipality:
1694	1694	(1) does not have the ability to provide service; or
1695	1695	(2) has failed to make a good faith effort to provide
1696	1696	service on reasonable terms and conditions.
1697	1697	(e) If the utility commission makes a decision under
1698	1698	Subsection (d) regarding the grant of a certificate of public
1699	1699	convenience and necessity without the consent of the municipality,
1700	1700	the municipality or the retail public utility may appeal the
1701	1701	decision to the appropriate state district court. The court shall
1702	1702	hear the petition within 120 days after the date the petition is
1703	1703	filed. On final disposition, the court may award reasonable fees to
1704	1704	the prevailing party.
1705	1705	SECTION 2.36. Subsection (c), Section 13.2451, Water Code,
1706	1706	is amended to read as follows:
1707	1707	(c) The utility commission, after notice to the
1708	1708	municipality and an opportunity for a hearing, may decertify an
1709	1709	area outside a municipality's extraterritorial jurisdiction if the
1710	1710	municipality does not provide service to the area on or before the
1711	1711	fifth anniversary of the date the certificate of public convenience
1712	1712	and necessity was granted for the area. This subsection does not
1713	1713	apply to a certificate of public convenience and necessity for an
1714	1714	area:
1715	1715	(1) that was transferred to a municipality on approval
1716	1716	of the utility commission; and
1717	1717	(2) in relation to which the municipality has spent
1718	1718	public funds.
1719	1719	SECTION 2.37. Subsections (a), (a-1), (b), (c), (d), (f),
1720	1720	(h), and (i), Section 13.246, Water Code, are amended to read as
1721	1721	follows:
1722	1722	(a) If an application for a certificate of public
1723	1723	convenience and necessity or for an amendment to a certificate is
1724	1724	filed, the utility commission shall cause notice of the application
1725	1725	to be given to affected parties and to each county and groundwater
1726	1726	conservation district that is wholly or partly included in the area
1727	1727	proposed to be certified. If requested, the utility commission
1728	1728	shall fix a time and place for a hearing and give notice of the
1729	1729	hearing. Any person affected by the application may intervene at
1730	1730	the hearing.
1731	1731	(a-1) Except as otherwise provided by this subsection, in
1732	1732	addition to the notice required by Subsection (a), the utility
1733	1733	commission shall require notice to be mailed to each owner of a
1734	1734	tract of land that is at least 25 acres and is wholly or partially
1735	1735	included in the area proposed to be certified. Notice required
1736	1736	under this subsection must be mailed by first class mail to the
1737	1737	owner of the tract according to the most current tax appraisal rolls
1738	1738	of the applicable central appraisal district at the time the
1739	1739	utility commission received the application for the certificate or
1740	1740	amendment. Good faith efforts to comply with the requirements of
1741	1741	this subsection shall be considered adequate notice to landowners.
1742	1742	Notice under this subsection is not required for a matter filed with
1743	1743	the utility commission or the commission under:
1744	1744	(1) Section 13.248 or 13.255; or
1745	1745	(2) Chapter 65.
1746	1746	(b) The utility commission may grant applications and issue
1747	1747	certificates and amendments to certificates only if the utility
1748	1748	commission finds that a certificate or amendment is necessary for
1749	1749	the service, accommodation, convenience, or safety of the public.
1750	1750	The utility commission may issue a certificate or amendment as
1751	1751	requested, or refuse to issue it, or issue it for the construction
1752	1752	of only a portion of the contemplated system or facility or
1753	1753	extension, or for the partial exercise only of the right or
1754	1754	privilege and may impose special conditions necessary to ensure
1755	1755	that continuous and adequate service is provided.
1756	1756	(c) Certificates of public convenience and necessity and
1757	1757	amendments to certificates shall be granted by the utility
1758	1758	commission on a nondiscriminatory basis after consideration by the
1759	1759	utility commission of:
1760	1760	(1) the adequacy of service currently provided to the
1761	1761	requested area;
1762	1762	(2) the need for additional service in the requested
1763	1763	area, including whether any landowners, prospective landowners,
1764	1764	tenants, or residents have requested service;
1765	1765	(3) the effect of the granting of a certificate or of
1766	1766	an amendment on the recipient of the certificate or amendment, on
1767	1767	the landowners in the area, and on any retail public utility of the
1768	1768	same kind already serving the proximate area;
1769	1769	(4) the ability of the applicant to provide adequate
1770	1770	service, including meeting the standards of the commission, taking
1771	1771	into consideration the current and projected density and land use
1772	1772	of the area;
1773	1773	(5) the feasibility of obtaining service from an
1774	1774	adjacent retail public utility;
1775	1775	(6) the financial ability of the applicant to pay for
1776	1776	the facilities necessary to provide continuous and adequate service
1777	1777	and the financial stability of the applicant, including, if
1778	1778	applicable, the adequacy of the applicant's debt-equity ratio;
1779	1779	(7) environmental integrity;
1780	1780	(8) the probable improvement of service or lowering of
1781	1781	cost to consumers in that area resulting from the granting of the
1782	1782	certificate or amendment; and
1783	1783	(9) the effect on the land to be included in the
1784	1784	certificated area.
1785	1785	(d) The utility commission may require an applicant for a
1786	1786	certificate or for an amendment to provide a bond or other financial
1787	1787	assurance in a form and amount specified by the utility commission
1788	1788	to ensure that continuous and adequate utility service is provided.
1789	1789	(f) If two or more retail public utilities or water supply
1790	1790	or sewer service corporations apply for a certificate of public
1791	1791	convenience and necessity to provide water or sewer utility service
1792	1792	to an uncertificated area located in an economically distressed
1793	1793	area and otherwise meet the requirements for obtaining a new
1794	1794	certificate, the utility commission shall grant the certificate to
1795	1795	the retail public utility or water supply or sewer service
1796	1796	corporation that is more capable financially, managerially, and
1797	1797	technically of providing continuous and adequate service.
1798	1798	(h) Except as provided by Subsection (i), a landowner who
1799	1799	owns a tract of land that is at least 25 acres and that is wholly or
1800	1800	partially located within the proposed service area may elect to
1801	1801	exclude some or all of the landowner's property from the proposed
1802	1802	service area by providing written notice to the utility commission
1803	1803	before the 30th day after the date the landowner receives notice of
1804	1804	a new application for a certificate of public convenience and
1805	1805	necessity or for an amendment to an existing certificate of public
1806	1806	convenience and necessity. The landowner's election is effective
1807	1807	without a further hearing or other process by the utility
1808	1808	commission. If a landowner makes an election under this
1809	1809	subsection, the application shall be modified so that the electing
1810	1810	landowner's property is not included in the proposed service area.
1811	1811	(i) A landowner is not entitled to make an election under
1812	1812	Subsection (h) but is entitled to contest the inclusion of the
1813	1813	landowner's property in the proposed service area at a hearing held
1814	1814	by the utility commission regarding the application if the proposed
1815	1815	service area is located within the boundaries or extraterritorial
1816	1816	jurisdiction of a municipality with a population of more than
1817	1817	500,000 and the municipality or a utility owned by the municipality
1818	1818	is the applicant.
1819	1819	SECTION 2.38. Subsection (a), Section 13.247, Water Code,
1820	1820	is amended to read as follows:
1821	1821	(a) If an area is within the boundaries of a municipality,
1822	1822	all retail public utilities certified or entitled to certification
1823	1823	under this chapter to provide service or operate facilities in that
1824	1824	area may continue and extend service in its area of public
1825	1825	convenience and necessity within the area pursuant to the rights
1826	1826	granted by its certificate and this chapter, unless the
1827	1827	municipality exercises its power of eminent domain to acquire the
1828	1828	property of the retail public utility under Subsection (d). Except
1829	1829	as provided by Section 13.255, a municipally owned or operated
1830	1830	utility may not provide retail water and sewer utility service
1831	1831	within the area certificated to another retail public utility
1832	1832	without first having obtained from the utility commission a
1833	1833	certificate of public convenience and necessity that includes the
1834	1834	areas to be served.
1835	1835	SECTION 2.39. Section 13.248, Water Code, is amended to
1836	1836	read as follows:
1837	1837	Sec. 13.248. CONTRACTS VALID AND ENFORCEABLE. Contracts
1838	1838	between retail public utilities designating areas to be served and
1839	1839	customers to be served by those retail public utilities, when
1840	1840	approved by the utility commission after public notice and hearing,
1841	1841	are valid and enforceable and are incorporated into the appropriate
1842	1842	areas of public convenience and necessity.
1843	1843	SECTION 2.40. Subsections (b), (c), and (e), Section
1844	1844	13.250, Water Code, are amended to read as follows:
1845	1845	(b) Unless the utility commission issues a certificate that
1846	1846	neither the present nor future convenience and necessity will be
1847	1847	adversely affected, the holder of a certificate or a person who
1848	1848	possesses facilities used to provide utility service shall not
1849	1849	discontinue, reduce, or impair service to a certified service area
1850	1850	or part of a certified service area except for:
1851	1851	(1) nonpayment of charges for services provided by the
1852	1852	certificate holder or a person who possesses facilities used to
1853	1853	provide utility service;
1854	1854	(2) nonpayment of charges for sewer service provided
1855	1855	by another retail public utility under an agreement between the
1856	1856	retail public utility and the certificate holder or a person who
1857	1857	possesses facilities used to provide utility service or under a
1858	1858	utility commission-ordered arrangement between the two service
1859	1859	providers;
1860	1860	(3) nonuse; or
1861	1861	(4) other similar reasons in the usual course of
1862	1862	business.
1863	1863	(c) Any discontinuance, reduction, or impairment of
1864	1864	service, whether with or without approval of the utility
1865	1865	commission, shall be in conformity with and subject to conditions,
1866	1866	restrictions, and limitations that the utility commission
1867	1867	prescribes.
1868	1868	(e) Not later than the 48th hour after the hour in which a
1869	1869	utility files a bankruptcy petition, the utility shall report this
1870	1870	fact to the utility commission and the commission in writing.
1871	1871	SECTION 2.41. Subsection (d), Section 13.2502, Water Code,
1872	1872	is amended to read as follows:
1873	1873	(d) This section does not limit or extend the jurisdiction
1874	1874	of the utility commission under Section 13.043(g).
1875	1875	SECTION 2.42. Section 13.251, Water Code, is amended to
1876	1876	read as follows:
1877	1877	Sec. 13.251. SALE, ASSIGNMENT, OR LEASE OF CERTIFICATE.
1878	1878	Except as provided by Section 13.255 [of this code], a utility or a
1879	1879	water supply or sewer service corporation may not sell, assign, or
1880	1880	lease a certificate of public convenience and necessity or any
1881	1881	right obtained under a certificate unless the commission has
1882	1882	determined that the purchaser, assignee, or lessee is capable of
1883	1883	rendering adequate and continuous service to every consumer within
1884	1884	the certified area, after considering the factors under Section
1885	1885	13.246(c) [of this code]. The sale, assignment, or lease shall be
1886	1886	on the conditions prescribed by the utility commission.
1887	1887	SECTION 2.43. Section 13.252, Water Code, is amended to
1888	1888	read as follows:
1889	1889	Sec. 13.252. INTERFERENCE WITH OTHER RETAIL PUBLIC UTILITY.
1890	1890	If a retail public utility in constructing or extending a line,
1891	1891	plant, or system interferes or attempts to interfere with the
1892	1892	operation of a line, plant, or system of any other retail public
1893	1893	utility, or furnishes, makes available, renders, or extends retail
1894	1894	water or sewer utility service to any portion of the service area of
1895	1895	another retail public utility that has been granted or is not
1896	1896	required to possess a certificate of public convenience and
1897	1897	necessity, the utility commission may issue an order prohibiting
1898	1898	the construction, extension, or provision of service or prescribing
1899	1899	terms and conditions for locating the line, plant, or system
1900	1900	affected or for the provision of the service.
1901	1901	SECTION 2.44. Section 13.253, Water Code, is amended to
1902	1902	read as follows:
1903	1903	Sec. 13.253. IMPROVEMENTS IN SERVICE; INTERCONNECTING
1904	1904	SERVICE. (a) After notice and hearing, the utility commission or
1905	1905	the commission may:
1906	1906	(1) order any retail public utility that is required
1907	1907	by law to possess a certificate of public convenience and necessity
1908	1908	or any retail public utility that possesses a certificate of public
1909	1909	convenience and necessity and is located in an affected county as
1910	1910	defined in Section 16.341 to:
1911	1911	(A) provide specified improvements in its
1912	1912	service in a defined area if service in that area is inadequate or
1913	1913	is substantially inferior to service in a comparable area and it is
1914	1914	reasonable to require the retail public utility to provide the
1915	1915	improved service; or
1916	1916	(B) develop, implement, and follow financial,
1917	1917	managerial, and technical practices that are acceptable to the
1918	1918	utility commission to ensure that continuous and adequate service
1919	1919	is provided to any areas currently certificated to the retail
1920	1920	public utility if the retail public utility has not provided
1921	1921	continuous and adequate service to any of those areas and, for a
1922	1922	utility, to provide financial assurance of the utility's ability to
1923	1923	operate the system in accordance with applicable laws and rules, in
1924	1924	the form of a bond or other financial assurance in a form and amount
1925	1925	specified by the utility commission;
1926	1926	(2) order two or more public utilities or water supply
1927	1927	or sewer service corporations to establish specified facilities for
1928	1928	interconnecting service;
1929	1929	(3) order a public utility or water supply or sewer
1930	1930	service corporation that has not demonstrated that it can provide
1931	1931	continuous and adequate service from its drinking water source or
1932	1932	sewer treatment facility to obtain service sufficient to meet its
1933	1933	obligation to provide continuous and adequate service on at least a
1934	1934	wholesale basis from another consenting utility service provider;
1935	1935	or
1936	1936	(4) issue an emergency order, with or without a
1937	1937	hearing, under Section 13.041.
1938	1938	(b) If the utility commission has reason to believe that
1939	1939	improvements and repairs to a water or sewer service system are
1940	1940	necessary to enable a retail public utility to provide continuous
1941	1941	and adequate service in any portion of its service area and the
1942	1942	retail public utility has provided financial assurance under
1943	1943	Section 341.0355, Health and Safety Code, or under this chapter,
1944	1944	the utility commission, after providing to the retail public
1945	1945	utility notice and an opportunity to be heard by the commissioners
1946	1946	at a [commission] meeting of the utility commission, may
1947	1947	immediately order specified improvements and repairs to the water
1948	1948	or sewer system, the costs of which may be paid by the bond or other
1949	1949	financial assurance in an amount determined by the utility
1950	1950	commission not to exceed the amount of the bond or financial
1951	1951	assurance. The order requiring the improvements may be an
1952	1952	emergency order if it is issued after the retail public utility has
1953	1953	had an opportunity to be heard [by the commissioners] at a
1954	1954	[commission] meeting of the utility commission. After notice and
1955	1955	hearing, the utility commission may require a retail public utility
1956	1956	to obligate additional money to replace the financial assurance
1957	1957	used for the improvements.
1958	1958	SECTION 2.45. Section 13.254, Water Code, is amended to
1959	1959	read as follows:
1960	1960	Sec. 13.254. REVOCATION OR AMENDMENT OF CERTIFICATE. (a)
1961	1961	The utility commission at any time after notice and hearing may[, on
1962	1962	its own motion or on receipt of a petition described by Subsection
1963	1963	(a-1),] revoke or amend any certificate of public convenience and
1964	1964	necessity with the written consent of the certificate holder or if
1965	1965	the utility commission [it] finds that:
1966	1966	(1) the certificate holder has never provided, is no
1967	1967	longer providing, is incapable of providing, or has failed to
1968	1968	provide continuous and adequate service in the area, or part of the
1969	1969	area, covered by the certificate;
1970	1970	(2) in an affected county as defined in Section
1971	1971	16.341, the cost of providing service by the certificate holder is
1972	1972	so prohibitively expensive as to constitute denial of service,
1973	1973	provided that, for commercial developments or for residential
1974	1974	developments started after September 1, 1997, in an affected county
1975	1975	as defined in Section 16.341, the fact that the cost of obtaining
1976	1976	service from the currently certificated retail public utility makes
1977	1977	the development economically unfeasible does not render such cost
1978	1978	prohibitively expensive in the absence of other relevant factors;
1979	1979	(3) the certificate holder has agreed in writing to
1980	1980	allow another retail public utility to provide service within its
1981	1981	service area, except for an interim period, without amending its
1982	1982	certificate; or
1983	1983	(4) the certificate holder has failed to file a cease
1984	1984	and desist action pursuant to Section 13.252 within 180 days of the
1985	1985	date that it became aware that another retail public utility was
1986	1986	providing service within its service area, unless the certificate
1987	1987	holder demonstrates good cause for its failure to file such action
1988	1988	within the 180 days.
1989	1989	(a-1) As an alternative to decertification under Subsection
1990	1990	(a), the owner of a tract of land that is at least 50 acres and that
1991	1991	is not in a platted subdivision actually receiving water or sewer
1992	1992	service may petition the utility commission under this subsection
1993	1993	for expedited release of the area from a certificate of public
1994	1994	convenience and necessity so that the area may receive service from
1995	1995	another retail public utility. The petitioner shall deliver, via
1996	1996	certified mail, a copy of the petition to the certificate holder,
1997	1997	who may submit information to the utility commission to controvert
1998	1998	information submitted by the petitioner. The petitioner must
1999	1999	demonstrate that:
2000	2000	(1) a written request for service, other than a
2001	2001	request for standard residential or commercial service, has been
2002	2002	submitted to the certificate holder, identifying:
2003	2003	(A) the area for which service is sought;
2004	2004	(B) the timeframe within which service is needed
2005	2005	for current and projected service demands in the area;
2006	2006	(C) the level and manner of service needed for
2007	2007	current and projected service demands in the area; and
2008	2008	(D) any additional information requested by the
2009	2009	certificate holder that is reasonably related to determination of
2010	2010	the capacity or cost for providing the service;
2011	2011	(2) the certificate holder has been allowed at least
2012	2012	90 calendar days to review and respond to the written request and
2013	2013	the information it contains;
2014	2014	(3) the certificate holder:
2015	2015	(A) has refused to provide the service;
2016	2016	(B) is not capable of providing the service on a
2017	2017	continuous and adequate basis within the timeframe, at the level,
2018	2018	or in the manner reasonably needed or requested by current and
2019	2019	projected service demands in the area; or
2020	2020	(C) conditions the provision of service on the
2021	2021	payment of costs not properly allocable directly to the
2022	2022	petitioner's service request, as determined by the utility
2023	2023	commission; and
2024	2024	(4) the alternate retail public utility from which the
2025	2025	petitioner will be requesting service is capable of providing
2026	2026	continuous and adequate service within the timeframe, at the level,
2027	2027	and in the manner reasonably needed or requested by current and
2028	2028	projected service demands in the area.
2029	2029	(a-2) A landowner is not entitled to make the election
2030	2030	described in Subsection (a-1) or (a-5) but is entitled to contest
2031	2031	under Subsection (a) the involuntary certification of its property
2032	2032	in a hearing held by the utility commission if the landowner's
2033	2033	property is located:
2034	2034	(1) within the boundaries of any municipality or the
2035	2035	extraterritorial jurisdiction of a municipality with a population
2036	2036	of more than 500,000 and the municipality or retail public utility
2037	2037	owned by the municipality is the holder of the certificate; or
2038	2038	(2) in a platted subdivision actually receiving water
2039	2039	or sewer service.
2040	2040	(a-3) Within 90 calendar days from the date the utility
2041	2041	commission determines the petition filed pursuant to Subsection
2042	2042	(a-1) to be administratively complete, the utility commission shall
2043	2043	grant the petition unless the utility commission makes an express
2044	2044	finding that the petitioner failed to satisfy the elements required
2045	2045	in Subsection (a-1) and supports its finding with separate findings
2046	2046	and conclusions for each element based solely on the information
2047	2047	provided by the petitioner and the certificate holder. The utility
2048	2048	commission may grant or deny a petition subject to terms and
2049	2049	conditions specifically related to the service request of the
2050	2050	petitioner and all relevant information submitted by the petitioner
2051	2051	and the certificate holder. In addition, the utility commission
2052	2052	may require an award of compensation as otherwise provided by this
2053	2053	section.
2054	2054	(a-4) Chapter 2001, Government Code, does not apply to any
2055	2055	petition filed under Subsection (a-1). The decision of the utility
2056	2056	commission on the petition is final after any reconsideration
2057	2057	authorized by the utility commission's rules and may not be
2058	2058	appealed.
2059	2059	(a-5) As an alternative to decertification under Subsection
2060	2060	(a) and expedited release under Subsection (a-1), the owner of a
2061	2061	tract of land that is at least 25 acres and that is not receiving
2062	2062	water or sewer service may petition for expedited release of the
2063	2063	area from a certificate of public convenience and necessity and is
2064	2064	entitled to that release if the landowner's property is located in a
2065	2065	county with a population of at least one million, a county adjacent
2066	2066	to a county with a population of at least one million, or a county
2067	2067	with a population of more than 200,000 and less than 220,000.
2068	2068	(a-6) The utility commission shall grant a petition
2069	2069	received under Subsection (a-5) not later than the 60th day after
2070	2070	the date the landowner files the petition. The utility commission
2071	2071	may not deny a petition received under Subsection (a-5) based on the
2072	2072	fact that a certificate holder is a borrower under a federal loan
2073	2073	program. The utility commission may require an award of
2074	2074	compensation by the petitioner to a decertified retail public
2075	2075	utility that is the subject of a petition filed under Subsection
2076	2076	(a-5) as otherwise provided by this section.
2077	2077	(b) Upon written request from the certificate holder, the
2078	2078	utility commission [executive director] may cancel the certificate
2079	2079	of a utility or water supply corporation authorized by rule to
2080	2080	operate without a certificate of public convenience and necessity
2081	2081	under Section 13.242(c).
2082	2082	(c) If the certificate of any retail public utility is
2083	2083	revoked or amended, the utility commission may require one or more
2084	2084	retail public utilities with their consent to provide service in
2085	2085	the area in question. The order of the utility commission shall not
2086	2086	be effective to transfer property.
2087	2087	(d) A retail public utility may not in any way render retail
2088	2088	water or sewer service directly or indirectly to the public in an
2089	2089	area that has been decertified under this section without providing
2090	2090	compensation for any property that the utility commission
2091	2091	determines is rendered useless or valueless to the decertified
2092	2092	retail public utility as a result of the decertification.
2093	2093	(e) The determination of the monetary amount of
2094	2094	compensation, if any, shall be determined at the time another
2095	2095	retail public utility seeks to provide service in the previously
2096	2096	decertified area and before service is actually provided. The
2097	2097	utility commission shall ensure that the monetary amount of
2098	2098	compensation is determined not later than the 90th calendar day
2099	2099	after the date on which a retail public utility notifies the utility
2100	2100	commission of its intent to provide service to the decertified
2101	2101	area.
2102	2102	(f) The monetary amount shall be determined by a qualified
2103	2103	individual or firm serving as independent appraiser agreed upon by
2104	2104	the decertified retail public utility and the retail public utility
2105	2105	seeking to serve the area. The determination of compensation by the
2106	2106	independent appraiser shall be binding on the utility commission.
2107	2107	The costs of the independent appraiser shall be borne by the retail
2108	2108	public utility seeking to serve the area.
2109	2109	(g) For the purpose of implementing this section, the value
2110	2110	of real property owned and utilized by the retail public utility for
2111	2111	its facilities shall be determined according to the standards set
2112	2112	forth in Chapter 21, Property Code, governing actions in eminent
2113	2113	domain and the value of personal property shall be determined
2114	2114	according to the factors in this subsection. The factors ensuring
2115	2115	that the compensation to a retail public utility is just and
2116	2116	adequate shall include: the amount of the retail public utility's
2117	2117	debt allocable for service to the area in question; the value of the
2118	2118	service facilities of the retail public utility located within the
2119	2119	area in question; the amount of any expenditures for planning,
2120	2120	design, or construction of service facilities that are allocable to
2121	2121	service to the area in question; the amount of the retail public
2122	2122	utility's contractual obligations allocable to the area in
2123	2123	question; any demonstrated impairment of service or increase of
2124	2124	cost to consumers of the retail public utility remaining after the
2125	2125	decertification; the impact on future revenues lost from existing
2126	2126	customers; necessary and reasonable legal expenses and
2127	2127	professional fees; and other relevant factors. The utility
2128	2128	commission shall adopt rules governing the evaluation of these
2129	2129	factors.
2130	2130	(g-1) If the retail public utilities cannot agree on an
2131	2131	independent appraiser within 10 calendar days after the date on
2132	2132	which the retail public utility notifies the utility commission of
2133	2133	its intent to provide service to the decertified area, each retail
2134	2134	public utility shall engage its own appraiser at its own expense,
2135	2135	and each appraisal shall be submitted to the utility commission
2136	2136	within 60 calendar days. After receiving the appraisals, the
2137	2137	utility commission shall appoint a third appraiser who shall make a
2138	2138	determination of the compensation within 30 days. The
2139	2139	determination may not be less than the lower appraisal or more than
2140	2140	the higher appraisal. Each retail public utility shall pay half the
2141	2141	cost of the third appraisal.
2142	2142	SECTION 2.46. Subsections (a), (b), (c), (d), (e), (g-1),
2143	2143	(k), (l), and (m), Section 13.255, Water Code, are amended to read
2144	2144	as follows:
2145	2145	(a) In the event that an area is incorporated or annexed by a
2146	2146	municipality, either before or after the effective date of this
2147	2147	section, the municipality and a retail public utility that provides
2148	2148	water or sewer service to all or part of the area pursuant to a
2149	2149	certificate of convenience and necessity may agree in writing that
2150	2150	all or part of the area may be served by a municipally owned
2151	2151	utility, by a franchised utility, or by the retail public utility.
2152	2152	In this section, the phrase "franchised utility" shall mean a
2153	2153	retail public utility that has been granted a franchise by a
2154	2154	municipality to provide water or sewer service inside municipal
2155	2155	boundaries. The agreement may provide for single or dual
2156	2156	certification of all or part of the area, for the purchase of
2157	2157	facilities or property, and for such other or additional terms that
2158	2158	the parties may agree on. If a franchised utility is to serve the
2159	2159	area, the franchised utility shall also be a party to the agreement.
2160	2160	The executed agreement shall be filed with the utility commission,
2161	2161	and the utility commission, on receipt of the agreement, shall
2162	2162	incorporate the terms of the agreement into the respective
2163	2163	certificates of convenience and necessity of the parties to the
2164	2164	agreement.
2165	2165	(b) If an agreement is not executed within 180 days after
2166	2166	the municipality, in writing, notifies the retail public utility of
2167	2167	its intent to provide service to the incorporated or annexed area,
2168	2168	and if the municipality desires and intends to provide retail
2169	2169	utility service to the area, the municipality, prior to providing
2170	2170	service to the area, shall file an application with the utility
2171	2171	commission to grant single certification to the municipally owned
2172	2172	water or sewer utility or to a franchised utility. If an
2173	2173	application for single certification is filed, the utility
2174	2174	commission shall fix a time and place for a hearing and give notice
2175	2175	of the hearing to the municipality and franchised utility, if any,
2176	2176	and notice of the application and hearing to the retail public
2177	2177	utility.
2178	2178	(c) The utility commission shall grant single certification
2179	2179	to the municipality. The utility commission shall also determine
2180	2180	whether single certification as requested by the municipality would
2181	2181	result in property of a retail public utility being rendered
2182	2182	useless or valueless to the retail public utility, and shall
2183	2183	determine in its order the monetary amount that is adequate and just
2184	2184	to compensate the retail public utility for such property. If the
2185	2185	municipality in its application has requested the transfer of
2186	2186	specified property of the retail public utility to the municipality
2187	2187	or to a franchised utility, the utility commission shall also
2188	2188	determine in its order the adequate and just compensation to be paid
2189	2189	for such property pursuant to the provisions of this section,
2190	2190	including an award for damages to property remaining in the
2191	2191	ownership of the retail public utility after single certification.
2192	2192	The order of the utility commission shall not be effective to
2193	2193	transfer property. A transfer of property may only be obtained
2194	2194	under this section by a court judgment rendered pursuant to
2195	2195	Subsection (d) or (e) [of this section]. The grant of single
2196	2196	certification by the utility commission shall go into effect on the
2197	2197	date the municipality or franchised utility, as the case may be,
2198	2198	pays adequate and just compensation pursuant to court order, or
2199	2199	pays an amount into the registry of the court or to the retail
2200	2200	public utility under Subsection (f). If the court judgment
2201	2201	provides that the retail public utility is not entitled to any
2202	2202	compensation, the grant of single certification shall go into
2203	2203	effect when the court judgment becomes final. The municipality or
2204	2204	franchised utility must provide to each customer of the retail
2205	2205	public utility being acquired an individual written notice within
2206	2206	60 days after the effective date for the transfer specified in the
2207	2207	court judgment. The notice must clearly advise the customer of the
2208	2208	identity of the new service provider, the reason for the transfer,
2209	2209	the rates to be charged by the new service provider, and the
2210	2210	effective date of those rates.
2211	2211	(d) In the event the final order of the utility commission
2212	2212	is not appealed within 30 days, the municipality may request the
2213	2213	district court of Travis County to enter a judgment consistent with
2214	2214	the order of the utility commission. In such event, the court shall
2215	2215	render a judgment that:
2216	2216	(1) transfers to the municipally owned utility or
2217	2217	franchised utility title to property to be transferred to the
2218	2218	municipally owned utility or franchised utility as delineated by
2219	2219	the utility commission's final order and property determined by the
2220	2220	utility commission to be rendered useless or valueless by the
2221	2221	granting of single certification; and
2222	2222	(2) orders payment to the retail public utility of
2223	2223	adequate and just compensation for the property as determined by
2224	2224	the utility commission in its final order.
2225	2225	(e) Any party that is aggrieved by a final order of the
2226	2226	utility commission under this section may file an appeal with the
2227	2227	district court of Travis County within 30 days after the order
2228	2228	becomes final. The hearing in such an appeal before the district
2229	2229	court shall be by trial de novo on all issues. After the hearing, if
2230	2230	the court determines that the municipally owned utility or
2231	2231	franchised utility is entitled to single certification under the
2232	2232	provisions of this section, the court shall enter a judgment that:
2233	2233	(1) transfers to the municipally owned utility or
2234	2234	franchised utility title to property requested by the municipality
2235	2235	to be transferred to the municipally owned utility or franchised
2236	2236	utility and located within the singly certificated area and
2237	2237	property determined by the court or jury to be rendered useless or
2238	2238	valueless by the granting of single certification; and
2239	2239	(2) orders payment in accordance with Subsection (g)
2240	2240	[of this section] to the retail public utility of adequate and just
2241	2241	compensation for the property transferred and for the property
2242	2242	damaged as determined by the court or jury.
2243	2243	(g-1) The utility commission shall adopt rules governing
2244	2244	the evaluation of the factors to be considered in determining the
2245	2245	monetary compensation under Subsection (g). The utility commission
2246	2246	by rule shall adopt procedures to ensure that the total
2247	2247	compensation to be paid to a retail public utility under Subsection
2248	2248	(g) is determined not later than the 90th calendar day after the
2249	2249	date on which the utility commission determines that the
2250	2250	municipality's application is administratively complete.
2251	2251	(k) The following conditions apply when a municipality or
2252	2252	franchised utility makes an application to acquire the service area
2253	2253	or facilities of a retail public utility described in Subsection
2254	2254	(j)(2):
2255	2255	(1) the utility commission or court must determine
2256	2256	that the service provided by the retail public utility is
2257	2257	substandard or its rates are unreasonable in view of the reasonable
2258	2258	expenses of the utility;
2259	2259	(2) if the municipality abandons its application, the
2260	2260	court or the utility commission is authorized to award to the retail
2261	2261	public utility its reasonable expenses related to the proceeding
2262	2262	hereunder, including attorney fees; and
2263	2263	(3) unless otherwise agreed by the retail public
2264	2264	utility, the municipality must take the entire utility property of
2265	2265	the retail public utility in a proceeding hereunder.
2266	2266	(l) For an area incorporated by a municipality, the
2267	2267	compensation provided under Subsection (g) shall be determined by a
2268	2268	qualified individual or firm to serve as independent appraiser, who
2269	2269	shall be selected by the affected retail public utility, and the
2270	2270	costs of the appraiser shall be paid by the municipality. For an
2271	2271	area annexed by a municipality, the compensation provided under
2272	2272	Subsection (g) shall be determined by a qualified individual or
2273	2273	firm to which the municipality and the retail public utility agree
2274	2274	to serve as independent appraiser. If the retail public utility and
2275	2275	the municipality are unable to agree on a single individual or firm
2276	2276	to serve as the independent appraiser before the 11th day after the
2277	2277	date the retail public utility or municipality notifies the other
2278	2278	party of the impasse, the retail public utility and municipality
2279	2279	each shall appoint a qualified individual or firm to serve as
2280	2280	independent appraiser. On or before the 10th business day after the
2281	2281	date of their appointment, the independent appraisers shall meet to
2282	2282	reach an agreed determination of the amount of compensation. If the
2283	2283	appraisers are unable to agree on a determination before the 16th
2284	2284	business day after the date of their first meeting under this
2285	2285	subsection, the retail public utility or municipality may petition
2286	2286	the utility commission or a person the utility commission
2287	2287	designates for the purpose to appoint a third qualified independent
2288	2288	appraiser to reconcile the appraisals of the two originally
2289	2289	appointed appraisers. The determination of the third appraiser may
2290	2290	not be less than the lesser or more than the greater of the two
2291	2291	original appraisals. The costs of the independent appraisers for
2292	2292	an annexed area shall be shared equally by the retail public utility
2293	2293	and the municipality. The determination of compensation under this
2294	2294	subsection is binding on the utility commission.
2295	2295	(m) The utility commission shall deny an application for
2296	2296	single certification by a municipality that fails to demonstrate
2297	2297	compliance with the commission's minimum requirements for public
2298	2298	drinking water systems.
2299	2299	SECTION 2.47. Section 13.2551, Water Code, is amended to
2300	2300	read as follows:
2301	2301	Sec. 13.2551. COMPLETION OF DECERTIFICATION. (a) As a
2302	2302	condition to decertification or single certification under Section
2303	2303	13.254 or 13.255, and on request by an affected retail public
2304	2304	utility, the utility commission may order:
2305	2305	(1) the retail public utility seeking to provide
2306	2306	service to a decertified area to serve the entire service area of
2307	2307	the retail public utility that is being decertified; and
2308	2308	(2) the transfer of the entire certificate of public
2309	2309	convenience and necessity of a partially decertified retail public
2310	2310	utility to the retail public utility seeking to provide service to
2311	2311	the decertified area.
2312	2312	(b) The utility commission shall order service to the entire
2313	2313	area under Subsection (a) if the utility commission finds that the
2314	2314	decertified retail public utility will be unable to provide
2315	2315	continuous and adequate service at an affordable cost to the
2316	2316	remaining customers.
2317	2317	(c) The utility commission shall require the retail public
2318	2318	utility seeking to provide service to the decertified area to
2319	2319	provide continuous and adequate service to the remaining customers
2320	2320	at a cost comparable to the cost of that service to its other
2321	2321	customers and shall establish the terms under which the service
2322	2322	must be provided. The terms may include:
2323	2323	(1) transferring debt and other contract obligations;
2324	2324	(2) transferring real and personal property;
2325	2325	(3) establishing interim service rates for affected
2326	2326	customers during specified times; and
2327	2327	(4) other provisions necessary for the just and
2328	2328	reasonable allocation of assets and liabilities.
2329	2329	(d) The retail public utility seeking decertification shall
2330	2330	not charge the affected customers any transfer fee or other fee to
2331	2331	obtain service other than the retail public utility's usual and
2332	2332	customary rates for monthly service or the interim rates set by the
2333	2333	utility commission, if applicable.
2334	2334	(e) The utility commission shall not order compensation to
2335	2335	the decertificated retail utility if service to the entire service
2336	2336	area is ordered under this section.
2337	2337	SECTION 2.48. Subsections (e), (i), (r), and (s), Section
2338	2338	13.257, Water Code, are amended to read as follows:
2339	2339	(e) The notice must be given to the prospective purchaser
2340	2340	before the execution of a binding contract of purchase and sale.
2341	2341	The notice may be given separately or as an addendum to or paragraph
2342	2342	of the contract. If the seller fails to provide the notice required
2343	2343	by this section, the purchaser may terminate the contract. If the
2344	2344	seller provides the notice at or before the closing of the purchase
2345	2345	and sale contract and the purchaser elects to close even though the
2346	2346	notice was not timely provided before the execution of the
2347	2347	contract, it is conclusively presumed that the purchaser has waived
2348	2348	all rights to terminate the contract and recover damages or pursue
2349	2349	other remedies or rights under this section. Notwithstanding any
2350	2350	provision of this section to the contrary, a seller, title
2351	2351	insurance company, real estate broker, or examining attorney, or an
2352	2352	agent, representative, or person acting on behalf of the seller,
2353	2353	company, broker, or attorney, is not liable for damages under
2354	2354	Subsection (m) or (n) or liable for any other damages to any person
2355	2355	for:
2356	2356	(1) failing to provide the notice required by this
2357	2357	section to a purchaser before the execution of a binding contract of
2358	2358	purchase and sale or at or before the closing of the purchase and
2359	2359	sale contract if:
2360	2360	(A) the utility service provider did not file the
2361	2361	map of the certificated service area in the real property records of
2362	2362	the county in which the service area is located and with the utility
2363	2363	commission depicting the boundaries of the service area of the
2364	2364	utility service provider as shown in the real property records of
2365	2365	the county in which the service area is located; and
2366	2366	(B) the utility commission did not maintain an
2367	2367	accurate map of the certificated service area of the utility
2368	2368	service provider as required by this chapter; or
2369	2369	(2) unintentionally providing a notice required by
2370	2370	this section that is incorrect under the circumstances before the
2371	2371	execution of a binding contract of purchase and sale or at or before
2372	2372	the closing of the purchase and sale contract.
2373	2373	(i) If the notice is given at closing as provided by
2374	2374	Subsection (g), a purchaser, or the purchaser's heirs, successors,
2375	2375	or assigns, may not maintain an action for damages or maintain an
2376	2376	action against a seller, title insurance company, real estate
2377	2377	broker, or lienholder, or any agent, representative, or person
2378	2378	acting on behalf of the seller, company, broker, or lienholder, by
2379	2379	reason of the seller's use of the information filed with the utility
2380	2380	commission by the utility service provider or the seller's use of
2381	2381	the map of the certificated service area of the utility service
2382	2382	provider filed in the real property records to determine whether
2383	2383	the property to be purchased is within the certificated service
2384	2384	area of the utility service provider. An action may not be
2385	2385	maintained against a title insurance company for the failure to
2386	2386	disclose that the described real property is included within the
2387	2387	certificated service area of a utility service provider if the
2388	2388	utility service provider did not file in the real property records
2389	2389	or with the utility commission the map of the certificated service
2390	2390	area.
2391	2391	(r) A utility service provider shall:
2392	2392	(1) record in the real property records of each county
2393	2393	in which the service area or a portion of the service area is
2394	2394	located a certified copy of the map of the certificate of public
2395	2395	convenience and necessity and of any amendment to the certificate
2396	2396	as contained in the utility commission's records, and a boundary
2397	2397	description of the service area by:
2398	2398	(A) a metes and bounds survey certified by a
2399	2399	licensed state land surveyor or a registered professional land
2400	2400	surveyor;
2401	2401	(B) the Texas State Plane Coordinate System;
2402	2402	(C) verifiable landmarks, including a road,
2403	2403	creek, or railroad line; or
2404	2404	(D) if a recorded plat of the area exists, lot and
2405	2405	block number; and
2406	2406	(2) submit to the executive director of the utility
2407	2407	commission evidence of the recording.
2408	2408	(s) Each county shall accept and file in its real property
2409	2409	records a utility service provider's map presented to the county
2410	2410	clerk under this section if the map meets filing requirements, does
2411	2411	not exceed 11 inches by 17 inches in size, and is accompanied by the
2412	2412	appropriate fee. The recording required by this section must be
2413	2413	completed not later than the 31st day after the date a utility
2414	2414	service provider receives a final order from the utility commission
2415	2415	granting an application for a new certificate or for an amendment to
2416	2416	a certificate that results in a change in the utility service
2417	2417	provider's service area.
2418	2418	SECTION 2.49. Subsections (a) through (g), Section 13.301,
2419	2419	Water Code, are amended to read as follows:
2420	2420	(a) A utility or a water supply or sewer service
2421	2421	corporation, on or before the 120th day before the effective date of
2422	2422	a sale, acquisition, lease, or rental of a water or sewer system
2423	2423	that is required by law to possess a certificate of public
2424	2424	convenience and necessity or the effective date of a merger or
2425	2425	consolidation with such a utility or water supply or sewer service
2426	2426	corporation, shall:
2427	2427	(1) file a written application with the utility
2428	2428	commission; and
2429	2429	(2) unless public notice is waived by the executive
2430	2430	director of the utility commission for good cause shown, give
2431	2431	public notice of the action.
2432	2432	(b) The utility commission may require that the person
2433	2433	purchasing or acquiring the water or sewer system demonstrate
2434	2434	adequate financial, managerial, and technical capability for
2435	2435	providing continuous and adequate service to the requested area and
2436	2436	any areas currently certificated to the person.
2437	2437	(c) If the person purchasing or acquiring the water or sewer
2438	2438	system cannot demonstrate adequate financial capability, the
2439	2439	utility commission may require that the person provide a bond or
2440	2440	other financial assurance in a form and amount specified by the
2441	2441	utility commission to ensure continuous and adequate utility
2442	2442	service is provided.
2443	2443	(d) The utility commission shall, with or without a public
2444	2444	hearing, investigate the sale, acquisition, lease, or rental to
2445	2445	determine whether the transaction will serve the public interest.
2446	2446	(e) Before the expiration of the 120-day notification
2447	2447	period, the executive director of the utility commission shall
2448	2448	notify all known parties to the transaction and the Office of Public
2449	2449	Utility Counsel whether [of] the executive director of the utility
2450	2450	commission will [director's decision whether to] request that the
2451	2451	utility commission hold a public hearing to determine if the
2452	2452	transaction will serve the public interest. The executive director
2453	2453	of the utility commission may request a hearing if:
2454	2454	(1) the application filed with the utility commission
2455	2455	or the public notice was improper;
2456	2456	(2) the person purchasing or acquiring the water or
2457	2457	sewer system has not demonstrated adequate financial, managerial,
2458	2458	and technical capability for providing continuous and adequate
2459	2459	service to the service area being acquired and to any areas
2460	2460	currently certificated to the person;
2461	2461	(3) the person or an affiliated interest of the person
2462	2462	purchasing or acquiring the water or sewer system has a history of:
2463	2463	(A) noncompliance with the requirements of the
2464	2464	utility commission, the commission, or the [Texas] Department of
2465	2465	State Health Services; or
2466	2466	(B) continuing mismanagement or misuse of
2467	2467	revenues as a utility service provider;
2468	2468	(4) the person purchasing or acquiring the water or
2469	2469	sewer system cannot demonstrate the financial ability to provide
2470	2470	the necessary capital investment to ensure the provision of
2471	2471	continuous and adequate service to the customers of the water or
2472	2472	sewer system; or
2473	2473	(5) there are concerns that the transaction may not
2474	2474	serve the public interest, after the application of the
2475	2475	considerations provided by Section 13.246(c) for determining
2476	2476	whether to grant a certificate of convenience and necessity.
2477	2477	(f) Unless the executive director of the utility commission
2478	2478	requests that a public hearing be held, the sale, acquisition,
2479	2479	lease, or rental may be completed as proposed:
2480	2480	(1) at the end of the 120-day period; or
2481	2481	(2) at any time after the executive director of the
2482	2482	utility commission notifies the utility or water supply or sewer
2483	2483	service corporation that a hearing will not be requested.
2484	2484	(g) If a hearing is requested or if the utility or water
2485	2485	supply or sewer service corporation fails to make the application
2486	2486	as required or to provide public notice, the sale, acquisition,
2487	2487	lease, or rental may not be completed unless the utility commission
2488	2488	determines that the proposed transaction serves the public
2489	2489	interest.
2490	2490	SECTION 2.50. Section 13.302, Water Code, is amended to
2491	2491	read as follows:
2492	2492	Sec. 13.302. PURCHASE OF VOTING STOCK IN ANOTHER PUBLIC
2493	2493	UTILITY: REPORT. (a) A utility may not purchase voting stock in
2494	2494	another utility doing business in this state and a person may not
2495	2495	acquire a controlling interest in a utility doing business in this
2496	2496	state unless the person or utility files a written application with
2497	2497	the utility commission not later than the 61st day before the date
2498	2498	on which the transaction is to occur.
2499	2499	(b) The utility commission may require that a person
2500	2500	acquiring a controlling interest in a utility demonstrate adequate
2501	2501	financial, managerial, and technical capability for providing
2502	2502	continuous and adequate service to the requested area and any areas
2503	2503	currently certificated to the person.
2504	2504	(c) If the person acquiring a controlling interest cannot
2505	2505	demonstrate adequate financial capability, the utility commission
2506	2506	may require that the person provide a bond or other financial
2507	2507	assurance in a form and amount specified by the utility commission
2508	2508	to ensure continuous and adequate utility service is provided.
2509	2509	(d) The executive director of the utility commission may
2510	2510	request that the utility commission hold a public hearing on the
2511	2511	transaction if the executive director of the utility commission
2512	2512	believes that a criterion prescribed by Section 13.301(e) applies.
2513	2513	(e) Unless the executive director of the utility commission
2514	2514	requests that a public hearing be held, the purchase or acquisition
2515	2515	may be completed as proposed:
2516	2516	(1) at the end of the 60-day period; or
2517	2517	(2) at any time after the executive director of the
2518	2518	utility commission notifies the person or utility that a hearing
2519	2519	will not be requested.
2520	2520	(f) If a hearing is requested or if the person or utility
2521	2521	fails to make the application to the utility commission as
2522	2522	required, the purchase or acquisition may not be completed unless
2523	2523	the utility commission determines that the proposed transaction
2524	2524	serves the public interest. A purchase or acquisition that is not
2525	2525	completed in accordance with the provisions of this section is
2526	2526	void.
2527	2527	SECTION 2.51. Section 13.303, Water Code, is amended to
2528	2528	read as follows:
2529	2529	Sec. 13.303. LOANS TO STOCKHOLDERS: REPORT. A utility may
2530	2530	not loan money, stocks, bonds, notes, or other evidences of
2531	2531	indebtedness to any corporation or person owning or holding
2532	2532	directly or indirectly any stock of the utility unless the utility
2533	2533	reports the transaction to the utility commission within 60 days
2534	2534	after the date of the transaction.
2535	2535	SECTION 2.52. Section 13.304, Water Code, is amended to
2536	2536	read as follows:
2537	2537	Sec. 13.304. FORECLOSURE REPORT. (a) A utility that
2538	2538	receives notice that all or a portion of the utility's facilities or
2539	2539	property used to provide utility service are being posted for
2540	2540	foreclosure shall notify the utility commission and the commission
2541	2541	in writing of that fact not later than the 10th day after the date on
2542	2542	which the utility receives the notice.
2543	2543	(b) A financial institution that forecloses on a utility or
2544	2544	on any part of the utility's facilities or property that are used to
2545	2545	provide utility service is not required to provide the 120-day
2546	2546	notice prescribed by Section 13.301, but shall provide written
2547	2547	notice to the utility commission and the commission before the 30th
2548	2548	day preceding the date on which the foreclosure is completed.
2549	2549	(c) The financial institution may operate the utility for an
2550	2550	interim period prescribed by utility commission rule before
2551	2551	transferring or otherwise obtaining a certificate of convenience
2552	2552	and necessity. A financial institution that operates a utility
2553	2553	during an interim period under this subsection is subject to each
2554	2554	utility commission rule to which the utility was subject and in the
2555	2555	same manner.
2556	2556	SECTION 2.53. Section 13.341, Water Code, is amended to
2557	2557	read as follows:
2558	2558	Sec. 13.341. JURISDICTION OVER AFFILIATED INTERESTS. The
2559	2559	utility commission has jurisdiction over affiliated interests
2560	2560	having transactions with utilities under the jurisdiction of the
2561	2561	utility commission to the extent of access to all accounts and
2562	2562	records of those affiliated interests relating to such
2563	2563	transactions, including but in no way limited to accounts and
2564	2564	records of joint or general expenses, any portion of which may be
2565	2565	applicable to those transactions.
2566	2566	SECTION 2.54. Section 13.342, Water Code, is amended to
2567	2567	read as follows:
2568	2568	Sec. 13.342. DISCLOSURE OF SUBSTANTIAL INTEREST IN VOTING
2569	2569	SECURITIES. The utility commission may require the disclosure of
2570	2570	the identity and respective interests of every owner of any
2571	2571	substantial interest in the voting securities of any utility or its
2572	2572	affiliated interest. One percent or more is a substantial interest
2573	2573	within the meaning of this section.
2574	2574	SECTION 2.55. Subsection (a), Section 13.343, Water Code,
2575	2575	is amended to read as follows:
2576	2576	(a) The owner of a utility that supplies retail water
2577	2577	service may not contract to purchase from an affiliated supplier
2578	2578	wholesale water service for any of that owner's systems unless:
2579	2579	(1) the wholesale service is provided for not more
2580	2580	than 90 days to remedy an emergency condition, as defined by utility
2581	2581	commission or commission rule; or
2582	2582	(2) the executive director of the utility commission
2583	2583	determines that the utility cannot obtain wholesale water service
2584	2584	from another source at a lower cost than from the affiliate.
2585	2585	SECTION 2.56. Section 13.381, Water Code, is amended to
2586	2586	read as follows:
2587	2587	Sec. 13.381. RIGHT TO JUDICIAL REVIEW; EVIDENCE. Any party
2588	2588	to a proceeding before the utility commission or the commission is
2589	2589	entitled to judicial review under the substantial evidence rule.
2590	2590	SECTION 2.57. Subsection (a), Section 13.382, Water Code,
2591	2591	is amended to read as follows:
2592	2592	(a) Any party represented by counsel who alleges that
2593	2593	existing rates are excessive or that rates prescribed by the
2594	2594	utility commission are excessive and who is a prevailing party in
2595	2595	proceedings for review of a utility commission order or decision
2596	2596	may in the same action recover against the regulation fund
2597	2597	reasonable fees for attorneys and expert witnesses and other costs
2598	2598	incurred by him before the utility commission and the court. The
2599	2599	amount of the attorney's fees shall be fixed by the court.
2600	2600	SECTION 2.58. Section 13.411, Water Code, is amended to
2601	2601	read as follows:
2602	2602	Sec. 13.411. ACTION TO ENJOIN OR REQUIRE COMPLIANCE.
2603	2603	(a) If the utility commission or the commission has reason to
2604	2604	believe that any retail public utility or any other person or
2605	2605	corporation is engaged in or is about to engage in any act in
2606	2606	violation of this chapter or of any order or rule of the utility
2607	2607	commission or the commission entered or adopted under this chapter
2608	2608	or that any retail public utility or any other person or corporation
2609	2609	is failing to comply with this chapter or with any rule or order,
2610	2610	the attorney general on request of the utility commission or the
2611	2611	commission, in addition to any other remedies provided in this
2612	2612	chapter, shall bring an action in a court of competent jurisdiction
2613	2613	in the name of and on behalf of the utility commission or the
2614	2614	commission against the retail public utility or other person or
2615	2615	corporation to enjoin the commencement or continuation of any act
2616	2616	or to require compliance with this chapter or the rule or order.
2617	2617	(b) If the executive director of the utility commission or
2618	2618	the executive director of the commission has reason to believe that
2619	2619	the failure of the owner or operator of a water utility to properly
2620	2620	operate, maintain, or provide adequate facilities presents an
2621	2621	imminent threat to human health or safety, the executive director
2622	2622	of the utility commission or the executive director of the
2623	2623	commission shall immediately:
2624	2624	(1) notify the utility's representative; and
2625	2625	(2) initiate enforcement action consistent with:
2626	2626	(A) this subchapter; and
2627	2627	(B) procedural rules adopted by the utility
2628	2628	commission or the commission.
2629	2629	SECTION 2.59. Section 13.4115, Water Code, is amended to
2630	2630	read as follows:
2631	2631	Sec. 13.4115. ACTION TO REQUIRE ADJUSTMENT TO CONSUMER
2632	2632	CHARGE; PENALTY. In regard to a customer complaint arising out of a
2633	2633	charge made by a public utility, if the utility commission [the
2634	2634	executive director] finds that the utility has failed to make the
2635	2635	proper adjustment to the customer's bill after the conclusion of
2636	2636	the complaint process established by the utility commission, the
2637	2637	utility commission may issue an order requiring the utility to make
2638	2638	the adjustment. Failure to comply with the order within 30 days of
2639	2639	receiving the order is a violation for which the utility commission
2640	2640	may impose an administrative penalty under Section 13.4151.
2641	2641	SECTION 2.60. Subsections (a), (f), and (g), Section
2642	2642	13.412, Water Code, are amended to read as follows:
2643	2643	(a) At the request of the utility commission or the
2644	2644	commission, the attorney general shall bring suit for the
2645	2645	appointment of a receiver to collect the assets and carry on the
2646	2646	business of a water or sewer utility that:
2647	2647	(1) has abandoned operation of its facilities;
2648	2648	(2) informs the utility commission or the commission
2649	2649	that the owner is abandoning the system;
2650	2650	(3) violates a final order of the utility commission
2651	2651	or the commission; or
2652	2652	(4) allows any property owned or controlled by it to be
2653	2653	used in violation of a final order of the utility commission or the
2654	2654	commission.
2655	2655	(f) For purposes of this section and Section 13.4132,
2656	2656	abandonment may include but is not limited to:
2657	2657	(1) failure to pay a bill or obligation owed to a
2658	2658	retail public utility or to an electric or gas utility with the
2659	2659	result that the utility service provider has issued a notice of
2660	2660	discontinuance of necessary services;
2661	2661	(2) failure to provide appropriate water or wastewater
2662	2662	treatment so that a potential health hazard results;
2663	2663	(3) failure to adequately maintain facilities,
2664	2664	resulting in potential health hazards, extended outages, or
2665	2665	repeated service interruptions;
2666	2666	(4) failure to provide customers adequate notice of a
2667	2667	health hazard or potential health hazard;
2668	2668	(5) failure to secure an alternative available water
2669	2669	supply during an outage;
2670	2670	(6) displaying a pattern of hostility toward or
2671	2671	repeatedly failing to respond to the utility commission or the
2672	2672	commission or the utility's customers; and
2673	2673	(7) failure to provide the utility commission or the
2674	2674	commission with adequate information on how to contact the utility
2675	2675	for normal business and emergency purposes.
2676	2676	(g) Notwithstanding Section 64.021, Civil Practice and
2677	2677	Remedies Code, a receiver appointed under this section may seek
2678	2678	[commission] approval from the utility commission and the
2679	2679	commission to acquire the water or sewer utility's facilities and
2680	2680	transfer the utility's certificate of convenience and necessity.
2681	2681	The receiver must apply in accordance with Subchapter H.
2682	2682	SECTION 2.61. Section 13.413, Water Code, is amended to
2683	2683	read as follows:
2684	2684	Sec. 13.413. PAYMENT OF COSTS OF RECEIVERSHIP. The
2685	2685	receiver may, subject to the approval of the court and after giving
2686	2686	notice to all interested parties, sell or otherwise dispose of all
2687	2687	or part of the real or personal property of a water or sewer utility
2688	2688	against which a proceeding has been brought under this subchapter
2689	2689	to pay the costs incurred in the operation of the receivership. The
2690	2690	costs include:
2691	2691	(1) payment of fees to the receiver for his services;
2692	2692	(2) payment of fees to attorneys, accountants,
2693	2693	engineers, or any other person or entity that provides goods or
2694	2694	services necessary to the operation of the receivership; and
2695	2695	(3) payment of costs incurred in ensuring that any
2696	2696	property owned or controlled by a water or sewer utility is not used
2697	2697	in violation of a final order of the utility commission or the
2698	2698	commission.
2699	2699	SECTION 2.62. Section 13.4131, Water Code, is amended to
2700	2700	read as follows:
2701	2701	Sec. 13.4131. SUPERVISION OF CERTAIN UTILITIES. (a) The
2702	2702	utility commission, after providing to the utility notice and an
2703	2703	opportunity for a hearing, may place a utility under supervision
2704	2704	for gross or continuing mismanagement, gross or continuing
2705	2705	noncompliance with this chapter or a rule adopted under this
2706	2706	chapter [commission rules], or noncompliance with an order issued
2707	2707	under this chapter [commission orders].
2708	2708	(b) While supervising a utility, the utility commission may
2709	2709	require the utility to abide by conditions and requirements
2710	2710	prescribed by the utility commission, including:
2711	2711	(1) management requirements;
2712	2712	(2) additional reporting requirements;
2713	2713	(3) restrictions on hiring, salary or benefit
2714	2714	increases, capital investment, borrowing, stock issuance or
2715	2715	dividend declarations, and liquidation of assets; and
2716	2716	(4) a requirement that the utility place the utility's
2717	2717	funds into an account in a financial institution approved by the
2718	2718	utility commission and use of those funds shall be restricted to
2719	2719	reasonable and necessary utility expenses.
2720	2720	(c) While supervising a utility, the utility commission may
2721	2721	require that the utility obtain [commission] approval from the
2722	2722	utility commission before taking any action that may be restricted
2723	2723	under Subsection (b) [of this section]. Any action or transaction
2724	2724	which occurs without [commission] approval may be voided by the
2725	2725	utility commission.
2726	2726	SECTION 2.63. Subsections (a) and (c), Section 13.4133,
2727	2727	Water Code, are amended to read as follows:
2728	2728	(a) Notwithstanding the requirements of Section 13.187 [of
2729	2729	this code], the utility commission may authorize an emergency rate
2730	2730	increase for a utility for which a person has been appointed under
2731	2731	Section 13.4132 [of this code] or for which a receiver has been
2732	2732	appointed under Section 13.412 [of this code] if the increase is
2733	2733	necessary to ensure the provision of continuous and adequate
2734	2734	services to the utility's customers.
2735	2735	(c) The utility commission shall schedule a hearing to
2736	2736	establish a final rate within 15 months after the date on which an
2737	2737	emergency rate increase takes effect. The utility commission shall
2738	2738	require the utility to provide notice of the hearing to each
2739	2739	customer and to the Office of Public Utility Counsel. The
2740	2740	additional revenues collected under an emergency rate increase are
2741	2741	subject to refund if the utility commission finds that the rate
2742	2742	increase was larger than necessary to ensure continuous and
2743	2743	adequate service.
2744	2744	SECTION 2.64. Subsections (a) and (c), Section 13.414,
2745	2745	Water Code, are amended to read as follows:
2746	2746	(a) Any retail public utility or affiliated interest that
2747	2747	violates this chapter, fails to perform a duty imposed on it, or
2748	2748	fails, neglects, or refuses to obey an order, rule, direction, or
2749	2749	requirement of the utility commission or the commission or decree
2750	2750	or judgment of a court is subject to a civil penalty of not less than
2751	2751	$100 nor more than $5,000 for each violation.
2752	2752	(c) The attorney general shall institute suit on his own
2753	2753	initiative or at the request of, in the name of, and on behalf of the
2754	2754	utility commission or the commission in a court of competent
2755	2755	jurisdiction to recover the penalty under this section.
2756	2756	SECTION 2.65. Subsections (a) through (k) and (m), Section
2757	2757	13.4151, Water Code, are amended to read as follows:
2758	2758	(a) If a person, affiliated interest, or entity subject to
2759	2759	the jurisdiction of the utility commission or the commission
2760	2760	violates this chapter or a rule or order adopted under this chapter,
2761	2761	the utility commission or the commission, as applicable, may assess
2762	2762	a penalty against that person, affiliated interest, or entity as
2763	2763	provided by this section. The penalty may be in an amount not to
2764	2764	exceed $500 a day. Each day a violation continues may be considered
2765	2765	a separate violation.
2766	2766	(b) In determining the amount of the penalty, the utility
2767	2767	commission or the commission shall consider:
2768	2768	(1) the nature, circumstances, extent, duration, and
2769	2769	gravity of the prohibited acts or omissions;
2770	2770	(2) with respect to the alleged violator:
2771	2771	(A) the history and extent of previous
2772	2772	violations;
2773	2773	(B) the degree of culpability, including whether
2774	2774	the violation was attributable to mechanical or electrical failures
2775	2775	and whether the violation could have been reasonably anticipated
2776	2776	and avoided;
2777	2777	(C) the demonstrated good faith, including
2778	2778	actions taken by the person, affiliated interest, or entity to
2779	2779	correct the cause of the violation;
2780	2780	(D) any economic benefit gained through the
2781	2781	violation; and
2782	2782	(E) the amount necessary to deter future
2783	2783	violations; and
2784	2784	(3) any other matters that justice requires.
2785	2785	(c) If, after examination of a possible violation and the
2786	2786	facts surrounding that possible violation, the executive director
2787	2787	of the utility commission or the executive director of the
2788	2788	commission concludes that a violation has occurred, the executive
2789	2789	director of the utility commission or the executive director of the
2790	2790	commission may issue a preliminary report stating the facts on
2791	2791	which that conclusion is based, recommending that a penalty under
2792	2792	this section be imposed on the person, affiliated interest, or
2793	2793	retail public utility charged, and recommending the amount of that
2794	2794	proposed penalty. The executive director of the utility commission
2795	2795	or the executive director of the commission shall base the
2796	2796	recommended amount of the proposed penalty on the factors provided
2797	2797	by Subsection (b) [of this section], and shall analyze each factor
2798	2798	for the benefit of the agency [commission].
2799	2799	(d) Not later than the 10th day after the date on which the
2800	2800	report is issued, the executive director of the utility commission
2801	2801	or the executive director of the commission shall give written
2802	2802	notice of the report to the person, affiliated interest, or retail
2803	2803	public utility charged with the violation. The notice shall
2804	2804	include a brief summary of the charges, a statement of the amount of
2805	2805	the penalty recommended, and a statement of the right of the person,
2806	2806	affiliated interest, or retail public utility charged to a hearing
2807	2807	on the occurrence of the violation, the amount of the penalty, or
2808	2808	both.
2809	2809	(e) Not later than the 20th day after the date on which
2810	2810	notice is received, the person, affiliated interest, or retail
2811	2811	public utility charged may give the agency [commission] written
2812	2812	consent to the [executive director's] report described by
2813	2813	Subsection (c), including the recommended penalty, or may make a
2814	2814	written request for a hearing.
2815	2815	(f) If the person, affiliated interest, or retail public
2816	2816	utility charged with the violation consents to the penalty
2817	2817	recommended in the report described by Subsection (c) [by the
2818	2818	executive director] or fails to timely respond to the notice, the
2819	2819	utility commission or the commission by order shall assess that
2820	2820	penalty or order a hearing to be held on the findings and
2821	2821	recommendations in the [executive director's] report. If the
2822	2822	utility commission or the commission assesses the penalty
2823	2823	recommended by the report, the utility commission or the commission
2824	2824	shall give written notice to the person, affiliated interest, or
2825	2825	retail public utility charged of its decision.
2826	2826	(g) If the person, affiliated interest, or retail public
2827	2827	utility charged requests or the utility commission or the
2828	2828	commission orders a hearing, the agency [commission] shall call a
2829	2829	hearing and give notice of the hearing. As a result of the hearing,
2830	2830	the agency [commission] by order may find that a violation has
2831	2831	occurred and may assess a civil penalty, may find that a violation
2832	2832	has occurred but that no penalty should be assessed, or may find
2833	2833	that no violation has occurred. All proceedings under this
2834	2834	subsection are subject to Chapter 2001, Government Code. In making
2835	2835	any penalty decision, the agency [commission] shall analyze each of
2836	2836	the factors provided by Subsection (b) [of this section].
2837	2837	(h) The utility commission or the commission shall give
2838	2838	notice of its decision to the person, affiliated interest, or
2839	2839	retail public utility charged, and if the agency [commission] finds
2840	2840	that a violation has occurred and has assessed a penalty, the agency
2841	2841	[commission] shall give written notice to the person, affiliated
2842	2842	interest, or retail public utility charged of its findings, of the
2843	2843	amount of the penalty, and of the person's, affiliated interest's,
2844	2844	or retail public utility's right to judicial review of the agency's
2845	2845	[commission's] order. If the agency [commission] is required to
2846	2846	give notice of a penalty under this subsection or Subsection (f) [of
2847	2847	this section], the agency [commission] shall file notice of the
2848	2848	agency's [its] decision in the Texas Register not later than the
2849	2849	10th day after the date on which the decision is adopted.
2850	2850	(i) Within the 30-day period immediately following the day
2851	2851	on which the agency's [commission's] order is final, as provided by
2852	2852	Subchapter F, Chapter 2001, Government Code, the person, affiliated
2853	2853	interest, or retail public utility charged with the penalty shall:
2854	2854	(1) pay the penalty in full; or
2855	2855	(2) if the person, affiliated interest, or retail
2856	2856	public utility seeks judicial review of the fact of the violation,
2857	2857	the amount of the penalty, or both:
2858	2858	(A) forward the amount of the penalty to the
2859	2859	agency [commission] for placement in an escrow account; or
2860	2860	(B) post with the agency [commission] a
2861	2861	supersedeas bond in a form approved by the agency [commission] for
2862	2862	the amount of the penalty to be effective until all judicial review
2863	2863	of the order or decision is final.
2864	2864	(j) Failure to forward the money to or to post the bond with
2865	2865	the agency [commission] within the time provided by Subsection (i)
2866	2866	[of this section] constitutes a waiver of all legal rights to
2867	2867	judicial review. If the person, affiliated interest, or retail
2868	2868	public utility charged fails to forward the money or post the bond
2869	2869	as provided by Subsection (i) [of this section], the agency
2870	2870	[commission] or the executive director of the agency may forward
2871	2871	the matter to the attorney general for enforcement.
2872	2872	(k) Judicial review of the order or decision of the agency
2873	2873	[commission] assessing the penalty shall be under the substantial
2874	2874	evidence rule and may be instituted by filing a petition with a
2875	2875	district court in Travis County, as provided by Subchapter G,
2876	2876	Chapter 2001, Government Code.
2877	2877	(m) Notwithstanding any other provision of law, the agency
2878	2878	[commission] may compromise, modify, extend the time for payment
2879	2879	of, or remit, with or without condition, any penalty imposed under
2880	2880	this section.
2881	2881	SECTION 2.66. Section 13.417, Water Code, is amended to
2882	2882	read as follows:
2883	2883	Sec. 13.417. CONTEMPT PROCEEDINGS. If any person or retail
2884	2884	public utility fails to comply with any lawful order of the utility
2885	2885	commission or the commission or with any subpoena or subpoena duces
2886	2886	tecum or if any witness refuses to testify about any matter on which
2887	2887	he may be lawfully interrogated, the utility commission or the
2888	2888	commission may apply to any court of competent jurisdiction to
2889	2889	compel obedience by proceedings for contempt.
2890	2890	SECTION 2.67. Section 13.418, Water Code, is amended to
2891	2891	read as follows:
2892	2892	Sec. 13.418. DISPOSITION OF FINES AND PENALTIES; WATER
2893	2893	UTILITY IMPROVEMENT ACCOUNT. (a) Fines and penalties collected
2894	2894	under this chapter from a retail public utility that is not a public
2895	2895	utility in other than criminal proceedings shall be [paid to the
2896	2896	commission and] deposited in the general revenue fund.
2897	2897	(b) Fines and penalties collected from a public utility
2898	2898	under this chapter in other than criminal proceedings shall be
2899	2899	[paid to the commission and] deposited in the water utility
2900	2900	improvement account as provided by Section 341.0485, Health and
2901	2901	Safety Code.
2902	2902	SECTION 2.68. Subdivision (7), Section 13.501, Water Code,
2903	2903	is amended to read as follows:
2904	2904	(7) "Multiple use facility" means commercial or
2905	2905	industrial parks, office complexes, marinas, and others
2906	2906	specifically identified in utility commission rules with five or
2907	2907	more units.
2908	2908	SECTION 2.69. Subsection (e), Section 13.502, Water Code,
2909	2909	is amended to read as follows:
2910	2910	(e) An owner of an apartment house, manufactured home rental
2911	2911	community, or multiple use facility or a manager of a condominium
2912	2912	may not change from submetered billing to allocated billing unless:
2913	2913	(1) the executive director of the utility commission
2914	2914	approves of the change in writing after a demonstration of good
2915	2915	cause, including meter reading or billing problems that could not
2916	2916	feasibly be corrected or equipment failures; and
2917	2917	(2) the property owner meets rental agreement
2918	2918	requirements established by the utility commission.
2919	2919	SECTION 2.70. Subsections (a), (b), and (e), Section
2920	2920	13.503, Water Code, are amended to read as follows:
2921	2921	(a) The utility commission shall encourage submetering of
2922	2922	individual rental or dwelling units by master meter operators or
2923	2923	building owners to enhance the conservation of water resources.
2924	2924	(b) Notwithstanding any other law, the utility commission
2925	2925	shall adopt rules and standards under which an owner, operator, or
2926	2926	manager of an apartment house, manufactured home rental community,
2927	2927	or multiple use facility that is not individually metered for water
2928	2928	for each rental or dwelling unit may install submetering equipment
2929	2929	for each individual rental or dwelling unit for the purpose of
2930	2930	fairly allocating the cost of each individual rental or dwelling
2931	2931	unit's water consumption, including wastewater charges based on
2932	2932	water consumption. In addition to other appropriate safeguards for
2933	2933	the tenant, the rules shall require that, except as provided by this
2934	2934	section, an apartment house owner, manufactured home rental
2935	2935	community owner, multiple use facility owner, or condominium
2936	2936	manager may not impose on the tenant any extra charges, over and
2937	2937	above the cost per gallon and any other applicable taxes and
2938	2938	surcharges that are charged by the retail public utility to the
2939	2939	owner or manager, and that the rental unit or apartment house owner
2940	2940	or manager shall maintain adequate records regarding submetering
2941	2941	and make the records available for inspection by the tenant during
2942	2942	reasonable business hours. The rules shall allow an owner or
2943	2943	manager to charge a tenant a fee for late payment of a submetered
2944	2944	water bill if the amount of the fee does not exceed five percent of
2945	2945	the bill paid late. All submetering equipment is subject to the
2946	2946	rules and standards established by the utility commission for
2947	2947	accuracy, testing, and record keeping of meters installed by
2948	2948	utilities and to the meter-testing requirements of Section 13.140
2949	2949	[of this code].
2950	2950	(e) The utility commission may authorize a building owner to
2951	2951	use submetering equipment that relies on integrated radio based
2952	2952	meter reading systems and remote registration in a building
2953	2953	plumbing system using submeters that comply with nationally
2954	2954	recognized plumbing standards and are as accurate as utility water
2955	2955	meters in single application conditions.
2956	2956	SECTION 2.71. Section 13.5031, Water Code, is amended to
2957	2957	read as follows:
2958	2958	Sec. 13.5031. NONSUBMETERING RULES. Notwithstanding any
2959	2959	other law, the utility commission shall adopt rules and standards
2960	2960	governing billing systems or methods used by manufactured home
2961	2961	rental community owners, apartment house owners, condominium
2962	2962	managers, or owners of other multiple use facilities for prorating
2963	2963	or allocating among tenants nonsubmetered master metered utility
2964	2964	service costs. In addition to other appropriate safeguards for the
2965	2965	tenant, those rules shall require that:
2966	2966	(1) the rental agreement contain a clear written
2967	2967	description of the method of calculation of the allocation of
2968	2968	nonsubmetered master metered utilities for the manufactured home
2969	2969	rental community, apartment house, or multiple use facility;
2970	2970	(2) the rental agreement contain a statement of the
2971	2971	average manufactured home, apartment, or multiple use facility unit
2972	2972	monthly bill for all units for any allocation of those utilities for
2973	2973	the previous calendar year;
2974	2974	(3) except as provided by this section, an owner or
2975	2975	condominium manager may not impose additional charges on a tenant
2976	2976	in excess of the actual charges imposed on the owner or condominium
2977	2977	manager for utility consumption by the manufactured home rental
2978	2978	community, apartment house, or multiple use facility;
2979	2979	(4) the owner or condominium manager shall maintain
2980	2980	adequate records regarding the utility consumption of the
2981	2981	manufactured home rental community, apartment house, or multiple
2982	2982	use facility, the charges assessed by the retail public utility,
2983	2983	and the allocation of the utility costs to the tenants;
2984	2984	(5) the owner or condominium manager shall maintain
2985	2985	all necessary records concerning utility allocations, including
2986	2986	the retail public utility's bills, and shall make the records
2987	2987	available for inspection by the tenants during normal business
2988	2988	hours; and
2989	2989	(6) the owner or condominium manager may charge a
2990	2990	tenant a fee for late payment of an allocated water bill if the
2991	2991	amount of the fee does not exceed five percent of the bill paid
2992	2992	late.
2993	2993	SECTION 2.72. Section 13.505, Water Code, is amended to
2994	2994	read as follows:
2995	2995	Sec. 13.505. ENFORCEMENT. In addition to the enforcement
2996	2996	provisions contained in Subchapter K [of this chapter], if an
2997	2997	apartment house owner, condominium manager, manufactured home
2998	2998	rental community owner, or other multiple use facility owner
2999	2999	violates a rule of the utility commission regarding submetering of
3000	3000	utility service consumed exclusively within the tenant's dwelling
3001	3001	unit or multiple use facility unit or nonsubmetered master metered
3002	3002	utility costs, the tenant may recover three times the amount of any
3003	3003	overcharge, a civil penalty equal to one month's rent, reasonable
3004	3004	attorney's fees, and court costs from the owner or condominium
3005	3005	manager. However, an owner of an apartment house, manufactured
3006	3006	home rental community, or other multiple use facility or
3007	3007	condominium manager is not liable for a civil penalty if the owner
3008	3008	or condominium manager proves the violation was a good faith,
3009	3009	unintentional mistake.
3010	3010	SECTION 2.73. Section 13.512, Water Code, is amended to
3011	3011	read as follows:
3012	3012	Sec. 13.512. AUTHORITY TO ENTER INTO PRIVATIZATION
3013	3013	CONTRACTS. Any eligible city is authorized to enter into
3014	3014	privatization contracts if such action is recommended by the board
3015	3015	of utility trustees and authorized by the governing body of the
3016	3016	eligible city pursuant to an ordinance. Any privatization contract
3017	3017	entered into prior to the effective date of this Act is validated,
3018	3018	ratified, and approved. Each eligible city shall file a copy of its
3019	3019	privatization contract with the utility commission, for
3020	3020	information purposes only, within 60 days of execution or the
3021	3021	effective date of this Act, whichever is later.
3022	3022	SECTION 2.74. Section 13.513, Water Code, is amended to
3023	3023	read as follows:
3024	3024	Sec. 13.513. ELECTION BY ELIGIBLE CITY TO EXEMPT SERVICE
3025	3025	PROVIDER FROM UTILITY COMMISSION JURISDICTION. A service provider
3026	3026	shall not constitute a "water and sewer utility," a "public
3027	3027	utility," a "utility," or a "retail public utility" within the
3028	3028	meaning of this chapter [Chapter 13] as a result of entering into or
3029	3029	performing a privatization contract, if the governing body of the
3030	3030	eligible city shall so elect by ordinance and provide notice
3031	3031	thereof in writing to the utility commission; provided, however,
3032	3032	this provision shall not affect the application of this chapter
3033	3033	[Chapter 13] to an eligible city itself. Notwithstanding anything
3034	3034	contained in this section, any service provider who seeks to extend
3035	3035	or render sewer service to any person or municipality other than, or
3036	3036	in addition to, an eligible city may be a "public utility" for the
3037	3037	purposes of this chapter [Chapter 13] with respect to such other
3038	3038	person or municipality.
3039	3039	SECTION 2.75. Subsection (a), Section 5.013, Water Code, is
3040	3040	amended to read as follows:
3041	3041	(a) The commission has general jurisdiction over:
3042	3042	(1) water and water rights including the issuance of
3043	3043	water rights permits, water rights adjudication, cancellation of
3044	3044	water rights, and enforcement of water rights;
3045	3045	(2) continuing supervision over districts created
3046	3046	under Article III, Sections 52(b)(1) and (2), and Article XVI,
3047	3047	Section 59, of the Texas Constitution;
3048	3048	(3) the state's water quality program including
3049	3049	issuance of permits, enforcement of water quality rules, standards,
3050	3050	orders, and permits, and water quality planning;
3051	3051	(4) the determination of the feasibility of certain
3052	3052	federal projects;
3053	3053	(5) the adoption and enforcement of rules and
3054	3054	performance of other acts relating to the safe construction,
3055	3055	maintenance, and removal of dams;
3056	3056	(6) conduct of the state's hazardous spill prevention
3057	3057	and control program;
3058	3058	(7) the administration of the state's program relating
3059	3059	to inactive hazardous substance, pollutant, and contaminant
3060	3060	disposal facilities;
3061	3061	(8) the administration of a portion of the state's
3062	3062	injection well program;
3063	3063	(9) the administration of the state's programs
3064	3064	involving underground water and water wells and drilled and mined
3065	3065	shafts;
3066	3066	(10) the state's responsibilities relating to regional
3067	3067	waste disposal;
3068	3068	(11) the responsibilities assigned to the commission
3069	3069	by Chapters 361, 363, 382, and 401, Health and Safety Code; and
3070	3070	(12) [administration of the state's water rate program
3071	3071	under Chapter 13 of this code; and
3072	3072	[(13)] any other areas assigned to the commission by
3073	3073	this code and other laws of this state.
3074	3074	SECTION 2.76. (a) On June 1, 2012, the following are
3075	3075	transferred from the Texas Commission on Environmental Quality to
3076	3076	the Public Utility Commission of Texas:
3077	3077	(1) the powers, duties, functions, programs, and
3078	3078	activities of the Texas Commission on Environmental Quality
3079	3079	relating to the economic regulation of water and sewer utilities,
3080	3080	including the issuance and transfer of certificates of convenience
3081	3081	and necessity, the determination of rates, and the administration
3082	3082	of hearings and proceedings involving those matters, under Chapter
3083	3083	13, Water Code, as provided by this article;
3084	3084	(2) any obligations and contracts of the Texas
3085	3085	Commission on Environmental Quality that are directly related to
3086	3086	implementing a power, duty, function, program, or activity
3087	3087	transferred under this article; and
3088	3088	(3) all property and records in the custody of the
3089	3089	Texas Commission on Environmental Quality that are related to a
3090	3090	power, duty, function, program, or activity transferred under this
3091	3091	article and all funds appropriated by the legislature for that
3092	3092	power, duty, function, program, or activity.
3093	3093	(b) The Texas Commission on Environmental Quality and the
3094	3094	Public Utility Commission of Texas shall enter into a memorandum of
3095	3095	understanding that:
3096	3096	(1) identifies in detail the applicable powers and
3097	3097	duties that are transferred by this article;
3098	3098	(2) establishes a plan for the identification and
3099	3099	transfer of the records, personnel, property, and unspent
3100	3100	appropriations of the Texas Commission on Environmental Quality
3101	3101	that are used for purposes of the commission's powers and duties
3102	3102	directly related to the regulation of water and sewer utilities
3103	3103	under Chapter 13, Water Code, as amended by this article; and
3104	3104	(3) establishes a plan for the transfer of all pending
3105	3105	applications, hearings, rulemaking proceedings, and orders
3106	3106	relating to the economic regulation of water and sewer utilities
3107	3107	under Chapter 13, Water Code, as amended by this article, from the
3108	3108	Texas Commission on Environmental Quality to the Public Utility
3109	3109	Commission of Texas.
3110	3110	(c) The memorandum of understanding described by this
3111	3111	section is not required to be adopted by rule under Section 5.104,
3112	3112	Water Code.
3113	3113	(d) The executive directors of the Texas Commission on
3114	3114	Environmental Quality and the Public Utility Commission of Texas
3115	3115	may agree in the memorandum of understanding under this section to
3116	3116	transfer to the Public Utility Commission of Texas any personnel of
3117	3117	the Texas Commission on Environmental Quality whose functions
3118	3118	predominantly involve powers, duties, obligations, functions, and
3119	3119	activities related to the regulation of water and sewer utilities
3120	3120	under Chapter 13, Water Code, as amended by this article.
3121	3121	(e) The Texas Commission on Environmental Quality and the
3122	3122	Public Utility Commission of Texas shall appoint a transition team
3123	3123	to accomplish the purposes of this section. The transition team
3124	3124	shall establish guidelines on how the two agencies will cooperate
3125	3125	regarding:
3126	3126	(1) meeting federal drinking water standards;
3127	3127	(2) maintaining adequate supplies of water;
3128	3128	(3) meeting established design criteria for
3129	3129	wastewater treatment plants;
3130	3130	(4) demonstrating the economic feasibility of
3131	3131	regionalization; and
3132	3132	(5) serving the needs of economically distressed
3133	3133	areas.
3134	3134	(f) A rule, form, policy, procedure, or decision of the
3135	3135	Texas Commission on Environmental Quality related to a power, duty,
3136	3136	function, program, or activity transferred under this article
3137	3137	continues in effect as a rule, form, policy, procedure, or decision
3138	3138	of the Public Utility Commission of Texas and remains in effect
3139	3139	until amended or replaced by that agency.
3140	3140	(g) The memorandum required by this section must be
3141	3141	completed by April 1, 2012.
3142	3142	(h) The Public Utility Commission of Texas and the Texas
3143	3143	Commission on Environmental Quality shall adopt rules to implement
3144	3144	the changes in law made by this article to Chapter 13, Water Code,
3145	3145	not later than November 1, 2012.
3146	3146	SECTION 2.77. (a) The Public Utility Commission of Texas
3147	3147	shall conduct a comparative analysis of the ratemaking authority of
3148	3148	the commission before the effective date of this Act and the
3149	3149	ratemaking authority of the commission after the transition
3150	3150	described in Section 2.75 of this article, to identify potential
3151	3151	for procedural standardization. The Public Utility Commission of
3152	3152	Texas shall issue a report of the analysis, with recommendations
3153	3153	regarding rate standardization, for consideration by the 83rd
3154	3154	Legislature.
3155	3155	(b) The Public Utility Commission of Texas shall prepare a
3156	3156	report describing staffing changes related to the transition
3157	3157	described in Section 2.75 of this article, including reductions in
3158	3158	staff that the commission may realize as a result of consolidated
3159	3159	functions. The Public Utility Commission of Texas shall submit the
3160	3160	report to the Legislative Budget Board and the governor with the
3161	3161	legislative appropriations request for the 2014-2015 biennium.
3162	3162	SECTION 2.78. (a) On June 1, 2012, the following are
3163	3163	transferred from the office of public interest counsel of the Texas
3164	3164	Commission on Environmental Quality to the Office of Public Utility
3165	3165	Counsel:
3166	3166	(1) the powers, duties, functions, programs, and
3167	3167	activities of the office of public interest counsel of the Texas
3168	3168	Commission on Environmental Quality relating to the representation
3169	3169	of the public interest in matters related to the regulation of water
3170	3170	and sewer utilities under Chapter 13, Water Code, as amended by this
3171	3171	article;
3172	3172	(2) any obligations and contracts of the office of
3173	3173	public interest counsel of the Texas Commission on Environmental
3174	3174	Quality that are directly related to implementing a power, duty,
3175	3175	function, program, or activity transferred under this article; and
3176	3176	(3) all property and records in the custody of the
3177	3177	office of public interest counsel of the Texas Commission on
3178	3178	Environmental Quality that are related to a power, duty, function,
3179	3179	program, or activity transferred under this article and all funds
3180	3180	appropriated by the legislature for that power, duty, function,
3181	3181	program, or activity.
3182	3182	(b) The office of public interest counsel of the Texas
3183	3183	Commission on Environmental Quality and the Office of Public
3184	3184	Utility Counsel shall enter into a memorandum of understanding
3185	3185	that:
3186	3186	(1) identifies in detail the applicable powers and
3187	3187	duties that are transferred by this article; and
3188	3188	(2) establishes a plan for the identification and
3189	3189	transfer of the records, personnel, property, and unspent
3190	3190	appropriations of the Texas Commission on Environmental Quality
3191	3191	that are used for purposes of the office of public interest
3192	3192	counsel's powers and duties directly related to the representation
3193	3193	of the public interest in matters relating to the regulation of
3194	3194	water and sewer utilities under Chapter 13, Water Code, as amended
3195	3195	by this article.
3196	3196	(c) The memorandum of understanding described by this
3197	3197	section is not required to be adopted by rule under Section 5.104,
3198	3198	Water Code.
3199	3199	(d) The office of public interest counsel of the Texas
3200	3200	Commission on Environmental Quality and the Office of Public
3201	3201	Utility Counsel may agree in the memorandum of understanding under
3202	3202	this section to transfer to the Office of Public Utility Counsel any
3203	3203	personnel of the office of public interest counsel whose functions
3204	3204	predominantly involve powers, duties, obligations, functions, and
3205	3205	activities related to the representation of the public interest in
3206	3206	matters relating to the regulation of water and sewer utilities
3207	3207	under Chapter 13, Water Code, as amended by this article.
3208	3208	(e) The office of public interest counsel of the Texas
3209	3209	Commission on Environmental Quality and the Office of Public
3210	3210	Utility Counsel shall appoint a transition team to accomplish the
3211	3211	purposes of this section.
3212	3212	(f) A rule, form, policy, procedure, or decision of the
3213	3213	office of public interest counsel of the Texas Commission on
3214	3214	Environmental Quality related to a power, duty, function, program,
3215	3215	or activity transferred under this article continues in effect as a
3216	3216	rule, form, policy, procedure, or decision of the Office of Public
3217	3217	Utility Counsel and remains in effect until amended or replaced by
3218	3218	that agency.
3219	3219	(g) The memorandum required by this section must be
3220	3220	completed by April 1, 2012.
3221	3221	(h) The Office of Public Utility Counsel and the office of
3222	3222	public interest counsel of the Texas Commission on Environmental
3223	3223	Quality shall adopt rules to implement the changes in law made by
3224	3224	this article to Chapter 13, Water Code, not later than November 1,
3225	3225	2012.
3226	3226	ARTICLE 3. OTHER WATER AND SEWER DUTIES OF PUBLIC UTILITY
3227	3227	COMMISSION OF TEXAS
3228	3228	SECTION 3.01. Section 11.002, Water Code, is amended by
3229	3229	adding Subdivision (21) to read as follows:
3230	3230	(21) "Utility commission" means the Public Utility
3231	3231	Commission of Texas.
3232	3232	SECTION 3.02. Section 11.041, Water Code, is amended to
3233	3233	read as follows:
3234	3234	Sec. 11.041. DENIAL OF WATER: COMPLAINT. (a) Any person
3235	3235	entitled to receive or use water from any canal, ditch, flume,
3236	3236	lateral, dam, reservoir, or lake or from any conserved or stored
3237	3237	supply may present to the utility commission a written petition
3238	3238	showing:
3239	3239	(1) that the person [he] is entitled to receive or use
3240	3240	the water;
3241	3241	(2) that the person [he] is willing and able to pay a
3242	3242	just and reasonable price for the water;
3243	3243	(3) that the party owning or controlling the water
3244	3244	supply has water not contracted to others and available for the
3245	3245	petitioner's use; and
3246	3246	(4) that the party owning or controlling the water
3247	3247	supply fails or refuses to supply the available water to the
3248	3248	petitioner, or that the price or rental demanded for the available
3249	3249	water is not reasonable and just or is discriminatory.
3250	3250	(b) If the petition is accompanied by a deposit of $25, the
3251	3251	executive director of the utility commission shall have a
3252	3252	preliminary investigation of the complaint made and determine
3253	3253	whether or not there are probable grounds for the complaint.
3254	3254	(c) If, after preliminary investigation, the executive
3255	3255	director of the utility commission determines that probable grounds
3256	3256	exist for the complaint, the utility commission shall enter an
3257	3257	order setting a time and place for a hearing on the petition.
3258	3258	(d) The utility commission may require the complainant to
3259	3259	make an additional deposit or execute a bond satisfactory to the
3260	3260	utility commission in an amount fixed by the utility commission
3261	3261	conditioned on the payment of all costs of the proceeding.
3262	3262	(e) At least 20 days before the date set for the hearing, the
3263	3263	utility commission shall transmit by registered mail a certified
3264	3264	copy of the petition and a certified copy of the hearing order to
3265	3265	the person against whom the complaint is made.
3266	3266	(f) The utility commission shall hold a hearing on the
3267	3267	complaint at the time and place stated in the order. It may hear
3268	3268	evidence orally or by affidavit in support of or against the
3269	3269	complaint, and it may hear arguments. The commission may
3270	3270	participate in the hearing for the purpose of presenting evidence
3271	3271	on the availability of the water requested by the petitioner. On
3272	3272	completion of the hearing, the utility commission shall render a
3273	3273	written decision.
3274	3274	(g) If, after the preliminary investigation, the executive
3275	3275	director of the utility commission determines that no probable
3276	3276	grounds exist for the complaint, the executive director of the
3277	3277	utility commission shall dismiss the complaint. The utility
3278	3278	commission may either return the deposit or pay it into the State
3279	3279	Treasury.
3280	3280	SECTION 3.03. Section 12.013, Water Code, is amended to
3281	3281	read as follows:
3282	3282	Sec. 12.013. RATE-FIXING POWER. (a) The utility
3283	3283	commission shall fix reasonable rates for the furnishing of raw or
3284	3284	treated water for any purpose mentioned in Chapter 11 or 12 of this
3285	3285	code.
3286	3286	(b) In this section, [The term] "political subdivision"
3287	3287	[when used in this section] means incorporated cities, towns or
3288	3288	villages, counties, river authorities, water districts, and other
3289	3289	special purpose districts.
3290	3290	(c) The utility commission in reviewing and fixing
3291	3291	reasonable rates for furnishing water under this section may use
3292	3292	any reasonable basis for fixing rates as may be determined by the
3293	3293	utility commission to be appropriate under the circumstances of the
3294	3294	case being reviewed; provided, however, the utility commission may
3295	3295	not fix a rate which a political subdivision may charge for
3296	3296	furnishing water which is less than the amount required to meet the
3297	3297	debt service and bond coverage requirements of that political
3298	3298	subdivision's outstanding debt.
3299	3299	(d) The utility commission's jurisdiction under this
3300	3300	section relating to incorporated cities, towns, or villages shall
3301	3301	be limited to water furnished by such city, town, or village to
3302	3302	another political subdivision on a wholesale basis.
3303	3303	(e) The utility commission may establish interim rates and
3304	3304	compel continuing service during the pendency of any rate
3305	3305	proceeding.
3306	3306	(f) The utility commission may order a refund or assess
3307	3307	additional charges from the date a petition for rate review is
3308	3308	received by the utility commission of the difference between the
3309	3309	rate actually charged and the rate fixed by the utility commission,
3310	3310	plus interest at the statutory rate.
3311	3311	[(g) No action or proceeding commenced prior to January 1,
3312	3312	1977, before the Texas Water Rights Commission shall be affected by
3313	3313	the enactment of this section.
3314	3314	[(h) Nothing herein contained shall affect the jurisdiction
3315	3315	of the Public Utility Commission.]
3316	3316	ARTICLE 4. EFFECTIVE DATE
3317	3317	SECTION 4.01. Except as otherwise provided by this Act,
3318	3318	this Act takes effect September 1, 2011.