Texas 2013 - 83rd Regular

Texas House Bill HB1307 Compare Versions

The same version is selected twice. Please select two different versions to compare.

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	83R14917 JXC-D
2	2	By: Geren, Ritter, Flynn, Pitts, Hilderbran, H.B. No. 1307
3	3	et al.
4	4	Substitute the following for H.B. No. 1307:
5	5	By: Ashby C.S.H.B. No. 1307
6	6
7	7
8	8	A BILL TO BE ENTITLED
9	9	AN ACT
10	10	relating to rates for water service, to the transfer of functions
11	11	relating to the economic regulation of water and sewer service from
12	12	the Texas Commission on Environmental Quality to the Public Utility
13	13	Commission of Texas, and to the duties of the Office of Public
14	14	Utility Counsel regarding the economic regulation of water and
15	15	sewer service.
16	16	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
17	17	SECTION 1. Section 5.013(a), Water Code, is amended to read
18	18	as follows:
19	19	(a) The commission has general jurisdiction over:
20	20	(1) water and water rights including the issuance of
21	21	water rights permits, water rights adjudication, cancellation of
22	22	water rights, and enforcement of water rights;
23	23	(2) continuing supervision over districts created
24	24	under Article III, Sections 52(b)(1) and (2), and Article XVI,
25	25	Section 59, of the Texas Constitution;
26	26	(3) the state's water quality program including
27	27	issuance of permits, enforcement of water quality rules, standards,
28	28	orders, and permits, and water quality planning;
29	29	(4) the determination of the feasibility of certain
30	30	federal projects;
31	31	(5) the adoption and enforcement of rules and
32	32	performance of other acts relating to the safe construction,
33	33	maintenance, and removal of dams;
34	34	(6) conduct of the state's hazardous spill prevention
35	35	and control program;
36	36	(7) the administration of the state's program relating
37	37	to inactive hazardous substance, pollutant, and contaminant
38	38	disposal facilities;
39	39	(8) the administration of a portion of the state's
40	40	injection well program;
41	41	(9) the administration of the state's programs
42	42	involving underground water and water wells and drilled and mined
43	43	shafts;
44	44	(10) the state's responsibilities relating to regional
45	45	waste disposal;
46	46	(11) the responsibilities assigned to the commission
47	47	by Chapters 361, 363, 382, and 401, Health and Safety Code; and
48	48	(12) [administration of the state's water rate program
49	49	under Chapter 13 of this code; and
50	50	[(13)] any other areas assigned to the commission by this
51	51	code and other laws of this state.
52	52	SECTION 2. Section 5.311(a), Water Code, is amended to read
53	53	as follows:
54	54	(a) The commission may delegate to an administrative law
55	55	judge of the State Office of Administrative Hearings the
56	56	responsibility to hear any matter before the commission [and to
57	57	issue interlocutory orders related to interim rates under Chapter
58	58	13].
59	59	SECTION 3. Section 5.507, Water Code, is amended to read as
60	60	follows:
61	61	Sec. 5.507. EMERGENCY ORDER FOR OPERATION OF UTILITY THAT
62	62	DISCONTINUES OPERATION OR IS REFERRED FOR APPOINTMENT OF RECEIVER.
63	63	The commission or the Public Utility Commission of Texas may issue
64	64	an emergency order appointing a willing person to temporarily
65	65	manage and operate a utility under Section 13.4132. Notice of the
66	66	action is adequate if the notice is mailed or hand delivered to the
67	67	last known address of the utility's headquarters.
68	68	SECTION 4. Sections 5.508(a) and (c), Water Code, are
69	69	amended to read as follows:
70	70	(a) Notwithstanding the requirements of Subchapter F,
71	71	Chapter 13 [Section 13.187], the Public Utility Commission of Texas
72	72	[commission] may authorize an emergency rate increase for a utility
73	73	for which a person has been appointed under Section 5.507 or 13.4132
74	74	[13.412] or for which a receiver has been appointed under Section
75	75	13.412 [13.4132] if the increase is necessary to ensure the
76	76	provision of continuous and adequate services to the utility's
77	77	customers. The Public Utility Commission of Texas shall consult
78	78	with the commission as needed to carry out this section.
79	79	(c) Notwithstanding Section 5.505, an order may be issued
80	80	under this section for a term not to exceed 15 months. The Public
81	81	Utility Commission of Texas [commission] shall schedule a hearing
82	82	to establish a final rate within 15 months after the date on which
83	83	an emergency rate increase takes effect. The additional revenues
84	84	collected under an emergency rate increase are subject to refund if
85	85	the utility commission finds that the rate increase was larger than
86	86	necessary to ensure continuous and adequate service.
87	87	SECTION 5. Section 11.002, Water Code, is amended by adding
88	88	Subdivision (21) to read as follows:
89	89	(21) "Utility commission" means the Public Utility
90	90	Commission of Texas.
91	91	SECTION 6. Section 11.041(f), Water Code, is amended to
92	92	read as follows:
93	93	(f) The commission shall hold a hearing on the complaint at
94	94	the time and place stated in the order. It may hear evidence orally
95	95	or by affidavit in support of or against the complaint, and it may
96	96	hear arguments. The utility commission may participate in the
97	97	hearing if necessary to present evidence on the price or rental
98	98	demanded for the available water. On completion of the hearing, the
99	99	commission shall render a written decision.
100	100	SECTION 7. Section 12.013, Water Code, is amended to read as
101	101	follows:
102	102	Sec. 12.013. RATE-FIXING POWER. (a) The utility
103	103	commission shall fix reasonable rates for the furnishing of raw or
104	104	treated water for any purpose mentioned in Chapter 11 or 12 of this
105	105	code.
106	106	(b) In this section, [The term] "political subdivision"
107	107	[when used in this section] means incorporated cities, towns or
108	108	villages, counties, river authorities, water districts, and other
109	109	special purpose districts.
110	110	(c) The utility commission in reviewing and fixing
111	111	reasonable rates for furnishing water under this section may use
112	112	any reasonable basis for fixing rates as may be determined by the
113	113	utility commission to be appropriate under the circumstances of the
114	114	case being reviewed; provided, however, the utility commission may
115	115	not fix a rate which a political subdivision may charge for
116	116	furnishing water which is less than the amount required to meet the
117	117	debt service and bond coverage requirements of that political
118	118	subdivision's outstanding debt.
119	119	(d) The utility commission's jurisdiction under this
120	120	section relating to incorporated cities, towns, or villages shall
121	121	be limited to water furnished by such city, town, or village to
122	122	another political subdivision on a wholesale basis.
123	123	(e) The utility commission may establish interim rates and
124	124	compel continuing service during the pendency of any rate
125	125	proceeding.
126	126	(f) The utility commission may order a refund or assess
127	127	additional charges from the date a petition for rate review is
128	128	received by the utility commission of the difference between the
129	129	rate actually charged and the rate fixed by the utility commission,
130	130	plus interest at the statutory rate.
131	131	[(g) No action or proceeding commenced prior to January 1,
132	132	1977, before the Texas Water Rights Commission shall be affected by
133	133	the enactment of this section.
134	134	[(h) Nothing herein contained shall affect the jurisdiction
135	135	of the Public Utility Commission.]
136	136	SECTION 8. Section 13.002, Water Code, is amended by
137	137	amending Subdivisions (2), (18), and (22) and adding Subdivisions
138	138	(4-a), (4-b), (4-c), and (22-a) to read as follows:
139	139	(2) "Affiliated interest" or "affiliate" means:
140	140	(A) any person or corporation owning or holding
141	141	directly or indirectly five percent or more of the voting
142	142	securities of a utility;
143	143	(B) any person or corporation in any chain of
144	144	successive ownership of five percent or more of the voting
145	145	securities of a utility;
146	146	(C) any corporation five percent or more of the
147	147	voting securities of which is owned or controlled directly or
148	148	indirectly by a utility;
149	149	(D) any corporation five percent or more of the
150	150	voting securities of which is owned or controlled directly or
151	151	indirectly by any person or corporation that owns or controls
152	152	directly or indirectly five percent or more of the voting
153	153	securities of any utility or by any person or corporation in any
154	154	chain of successive ownership of five percent of those utility
155	155	securities;
156	156	(E) any person who is an officer or director of a
157	157	utility or of any corporation in any chain of successive ownership
158	158	of five percent or more of voting securities of a public utility;
159	159	(F) any person or corporation that the utility
160	160	commission, after notice and hearing, determines actually
161	161	exercises any substantial influence or control over the policies
162	162	and actions of a utility or over which a utility exercises such
163	163	control or that is under common control with a utility, such control
164	164	being the possession directly or indirectly of the power to direct
165	165	or cause the direction of the management and policies of another,
166	166	whether that power is established through ownership or voting of
167	167	securities or by any other direct or indirect means; or
168	168	(G) any person or corporation that the utility
169	169	commission, after notice and hearing, determines is exercising
170	170	substantial influence over the policies and actions of the utility
171	171	in conjunction with one or more persons or corporations with which
172	172	they are related by ownership or blood relationship, or by action in
173	173	concert, that together they are affiliated within the meaning of
174	174	this section, even though no one of them alone is so affiliated.
175	175	(4-a) "Class A utility" means a public utility that
176	176	provides retail water or sewer utility service through 10,000 or
177	177	more taps or connections.
178	178	(4-b) "Class B utility" means a public utility that
179	179	provides retail water or sewer utility service through 500 or more
180	180	taps or connections but fewer than 10,000 taps or connections.
181	181	(4-c) "Class C utility" means a public utility that
182	182	provides retail water or sewer utility service through fewer than
183	183	500 taps or connections.
184	184	(18) "Regulatory authority" means, in accordance with
185	185	the context in which it is found, [either] the commission, the
186	186	utility commission, or the governing body of a municipality.
187	187	(22) "Test year" means the most recent 12-month
188	188	period, beginning on the first day of a calendar or fiscal year
189	189	quarter, for which [representative] operating data for a retail
190	190	public utility are available. [A utility rate filing must be based
191	191	on a test year that ended less than 12 months before the date on
192	192	which the utility made the rate filing.]
193	193	(22-a) "Utility commission" means the Public Utility
194	194	Commission of Texas.
195	195	SECTION 9. Section 13.004, Water Code, is amended to read as
196	196	follows:
197	197	Sec. 13.004. JURISDICTION OF UTILITY COMMISSION OVER
198	198	CERTAIN WATER SUPPLY OR SEWER SERVICE CORPORATIONS. (a)
199	199	Notwithstanding any other law, the utility commission has the same
200	200	jurisdiction over a water supply or sewer service corporation that
201	201	the utility commission has under this chapter over a water and sewer
202	202	utility if the utility commission finds that the water supply or
203	203	sewer service corporation:
204	204	(1) is failing to conduct annual or special meetings
205	205	in compliance with Section 67.007; or
206	206	(2) is operating in a manner that does not comply with
207	207	the requirements for classifications as a nonprofit water supply or
208	208	sewer service corporation prescribed by Sections 13.002(11) and
209	209	(24).
210	210	(b) If the water supply or sewer service corporation
211	211	voluntarily converts to a special utility district operating under
212	212	Chapter 65, the utility commission's jurisdiction provided by this
213	213	section ends.
214	214	SECTION 10. Section 13.011, Water Code, is amended to read
215	215	as follows:
216	216	Sec. 13.011. EMPLOYEES. (a) The utility commission and the
217	217	executive director of the commission, subject to approval, as
218	218	applicable, by the utility commission or the commission, shall
219	219	employ any engineering, accounting, and administrative personnel
220	220	necessary to carry out each agency's powers and duties under this
221	221	chapter.
222	222	(b) The executive director and the commission's staff are
223	223	responsible for the gathering of information relating to all
224	224	matters within the jurisdiction of the commission under this
225	225	subchapter. The utility commission and the utility commission's
226	226	staff are responsible for the gathering of information relating to
227	227	all matters within the jurisdiction of the utility commission under
228	228	this subchapter. The duties of the utility commission, the
229	229	executive director, and the staff of the utility commission or
230	230	commission, as appropriate, include:
231	231	(1) accumulation of evidence and other information
232	232	from water and sewer utilities, [and] from the utility commission
233	233	or commission, as appropriate, and the governing body of the
234	234	respective agency, [commission and the board] and from other
235	235	sources for the purposes specified by this chapter;
236	236	(2) preparation and presentation of evidence before
237	237	the utility commission or commission, as appropriate, [commission]
238	238	or its appointed examiner in proceedings;
239	239	(3) conducting investigations of water and sewer
240	240	utilities under the jurisdiction of the utility commission or
241	241	commission, as appropriate [commission];
242	242	(4) preparation of recommendations that the utility
243	243	commission or commission, as appropriate, [commission] undertake
244	244	an investigation of any matter within its jurisdiction;
245	245	(5) preparation of recommendations and a report for
246	246	inclusion in the annual report of the utility commission or
247	247	commission, as appropriate [commission];
248	248	(6) protection and representation of the public
249	249	interest[, together with the public interest advocate,] before the
250	250	utility commission or commission, as appropriate [commission]; and
251	251	(7) other activities that are reasonably necessary to
252	252	enable the utility commission and the executive director and the
253	253	staff of the utility commission or commission, as appropriate, to
254	254	perform their duties.
255	255	SECTION 11. Section 13.014, Water Code, is amended to read
256	256	as follows:
257	257	Sec. 13.014. ATTORNEY GENERAL TO REPRESENT COMMISSION OR
258	258	UTILITY COMMISSION. The attorney general shall represent the
259	259	commission or the utility commission under this chapter in all
260	260	matters before the state courts and any court of the United States.
261	261	SECTION 12. Subchapter B, Chapter 13, Water Code, is
262	262	amended by adding Section 13.017 to read as follows:
263	263	Sec. 13.017. OFFICE OF PUBLIC UTILITY COUNSEL; POWERS AND
264	264	DUTIES. (a) In this section, "counsellor" and "office" have the
265	265	meanings assigned by Section 11.003, Utilities Code.
266	266	(b) The independent Office of Public Utility Counsel
267	267	represents the interests of residential and small commercial
268	268	consumers under this chapter. The office:
269	269	(1) shall assess the effect of utility rate changes
270	270	and other regulatory actions on residential consumers in this
271	271	state;
272	272	(2) shall advocate in the office's own name a position
273	273	determined by the counsellor to be most advantageous to a
274	274	substantial number of residential consumers;
275	275	(3) may appear or intervene, as a party or otherwise,
276	276	as a matter of right on behalf of:
277	277	(A) residential consumers, as a class, in any
278	278	proceeding before the utility commission, including an alternative
279	279	dispute resolution proceeding; and
280	280	(B) small commercial consumers, as a class, in
281	281	any proceeding in which the counsellor determines that small
282	282	commercial consumers are in need of representation, including an
283	283	alternative dispute resolution proceeding;
284	284	(4) may initiate or intervene as a matter of right or
285	285	otherwise appear in a judicial proceeding:
286	286	(A) that involves an action taken by an
287	287	administrative agency in a proceeding, including an alternative
288	288	dispute resolution proceeding, in which the counsellor is
289	289	authorized to appear; or
290	290	(B) in which the counsellor determines that
291	291	residential consumers or small commercial consumers are in need of
292	292	representation;
293	293	(5) is entitled to the same access as a party, other
294	294	than utility commission staff, to records gathered by the utility
295	295	commission under Section 13.133;
296	296	(6) is entitled to discovery of any nonprivileged
297	297	matter that is relevant to the subject matter of a proceeding or
298	298	petition before the utility commission;
299	299	(7) may represent an individual residential or small
300	300	commercial consumer with respect to the consumer's disputed
301	301	complaint concerning retail utility services that is unresolved
302	302	before the utility commission;
303	303	(8) may recommend legislation to the legislature that
304	304	the office determines would positively affect the interests of
305	305	residential and small commercial consumers; and
306	306	(9) may conduct consumer outreach and education
307	307	programs for residential and small commercial consumers.
308	308	(c) This section does not:
309	309	(1) affect a duty the office is required to perform
310	310	under other law; or
311	311	(2) limit the authority of the utility commission to
312	312	represent residential or small commercial consumers.
313	313	(d) The appearance of the counsellor in a proceeding does
314	314	not preclude the appearance of other parties on behalf of
315	315	residential or small commercial consumers. The counsellor may not
316	316	be grouped with any other party.
317	317	SECTION 13. Section 13.041, Water Code, is amended to read
318	318	as follows:
319	319	Sec. 13.041. GENERAL POWERS OF UTILITY COMMISSION AND
320	320	COMMISSION [POWER]; RULES; HEARINGS. (a) The utility commission
321	321	may regulate and supervise the business of each [every] water and
322	322	sewer utility within its jurisdiction, including ratemaking and
323	323	other economic regulation. The commission may regulate water and
324	324	sewer utilities within its jurisdiction to ensure safe drinking
325	325	water and environmental protection. The utility commission and the
326	326	commission [and] may do all things, whether specifically designated
327	327	in this chapter or implied in this chapter, necessary and
328	328	convenient to the exercise of these powers [this power] and
329	329	jurisdiction. The utility commission may consult with the
330	330	commission as necessary in carrying out its duties related to the
331	331	regulation of water and sewer utilities.
332	332	(b) The commission and the utility commission shall adopt
333	333	and enforce rules reasonably required in the exercise of [its]
334	334	powers and jurisdiction of each agency, including rules governing
335	335	practice and procedure before the commission and the utility
336	336	commission.
337	337	(c) The commission and the utility commission may call and
338	338	hold hearings, administer oaths, receive evidence at hearings,
339	339	issue subpoenas to compel the attendance of witnesses and the
340	340	production of papers and documents, and make findings of fact and
341	341	decisions with respect to administering this chapter or the rules,
342	342	orders, or other actions of the commission or the utility
343	343	commission.
344	344	(c-1) In addition to the powers and duties of the State
345	345	Office of Administrative Hearings under Title 2, Utilities Code,
346	346	the utility commission may delegate to an administrative law judge
347	347	of the State Office of Administrative Hearings the responsibility
348	348	and authority to issue interlocutory orders related to interim
349	349	rates under this chapter.
350	350	(d) The utility commission may issue emergency orders, with
351	351	or without a hearing:
352	352	(1) to compel a water or sewer service provider that
353	353	has obtained or is required to obtain a certificate of public
354	354	convenience and necessity to provide continuous and adequate water
355	355	service, sewer service, or both, if the discontinuance of the
356	356	service is imminent or has occurred because of the service
357	357	provider's actions or failure to act; and
358	358	(2) to compel a retail public utility to provide an
359	359	emergency interconnection with a neighboring retail public utility
360	360	for the provision of temporary water or sewer service, or both, for
361	361	not more than 90 days if service discontinuance or serious
362	362	impairment in service is imminent or has occurred.
363	363	(e) The utility commission may establish reasonable
364	364	compensation for the temporary service required under Subsection
365	365	(d)(2) [of this section] and may allow the retail public utility
366	366	receiving the service to make a temporary adjustment to its rate
367	367	structure to ensure proper payment.
368	368	(f) If an order is issued under Subsection (d) without a
369	369	hearing, the order shall fix a time, as soon after the emergency
370	370	order is issued as is practicable, and place for a hearing to be
371	371	held before the utility commission.
372	372	(g) The regulatory assessment required by Section 5.701(n)
373	373	[5.235(n) of this code] is not a rate and is not reviewable by the
374	374	utility commission under Section 13.043 [of this code]. The
375	375	commission has the authority to enforce payment and collection of
376	376	the regulatory assessment.
377	377	SECTION 14. Section 13.042, Water Code, is amended to read
378	378	as follows:
379	379	Sec. 13.042. JURISDICTION OF MUNICIPALITY; ORIGINAL AND
380	380	APPELLATE JURISDICTION OF UTILITY COMMISSION. (a) Subject to the
381	381	limitations imposed in this chapter and for the purpose of
382	382	regulating rates and services so that those rates may be fair, just,
383	383	and reasonable and the services adequate and efficient, the
384	384	governing body of each municipality has exclusive original
385	385	jurisdiction over all water and sewer utility rates, operations,
386	386	and services provided by a water and sewer utility within its
387	387	corporate limits.
388	388	(b) The governing body of a municipality by ordinance may
389	389	elect to have the utility commission exercise exclusive original
390	390	jurisdiction over the utility rates, operation, and services of
391	391	utilities, within the incorporated limits of the municipality.
392	392	(c) The governing body of a municipality that surrenders its
393	393	jurisdiction to the utility commission may reinstate its
394	394	jurisdiction by ordinance at any time after the second anniversary
395	395	of the date on which the municipality surrendered its jurisdiction
396	396	to the utility commission, except that the municipality may not
397	397	reinstate its jurisdiction during the pendency of a rate proceeding
398	398	before the utility commission. The municipality may not surrender
399	399	its jurisdiction again until the second anniversary of the date on
400	400	which the municipality reinstates jurisdiction.
401	401	(d) The utility commission shall have exclusive appellate
402	402	jurisdiction to review orders or ordinances of those municipalities
403	403	as provided in this chapter.
404	404	(e) The utility commission shall have exclusive original
405	405	jurisdiction over water and sewer utility rates, operations, and
406	406	services not within the incorporated limits of a municipality
407	407	exercising exclusive original jurisdiction over those rates,
408	408	operations, and services as provided in this chapter.
409	409	(f) This subchapter does not give the utility commission
410	410	power or jurisdiction to regulate or supervise the rates or service
411	411	of a utility owned and operated by a municipality, directly or
412	412	through a municipally owned corporation, within its corporate
413	413	limits or to affect or limit the power, jurisdiction, or duties of a
414	414	municipality that regulates land and supervises water and sewer
415	415	utilities within its corporate limits, except as provided by this
416	416	code.
417	417	SECTION 15. Sections 13.043(a), (b), (c), (e), (f), (g),
418	418	(h), and (j), Water Code, are amended to read as follows:
419	419	(a) Any party to a rate proceeding before the governing body
420	420	of a municipality may appeal the decision of the governing body to
421	421	the utility commission. This subsection does not apply to a
422	422	municipally owned utility. An appeal under this subsection must be
423	423	initiated within 90 days after the date of notice of the final
424	424	decision by the governing body, or within 30 days if the appeal
425	425	relates to the rates of a Class A utility, by filing a petition for
426	426	review with the utility commission and by serving copies on all
427	427	parties to the original rate proceeding. The utility commission
428	428	shall hear the appeal de novo and shall fix in its final order the
429	429	rates the governing body should have fixed in the action from which
430	430	the appeal was taken and may include reasonable expenses incurred
431	431	in the appeal proceedings. The utility commission may establish
432	432	the effective date for the utility commission's rates at the
433	433	original effective date as proposed by the utility provider and may
434	434	order refunds or allow a surcharge to recover lost revenues. The
435	435	utility commission may consider only the information that was
436	436	available to the governing body at the time the governing body made
437	437	its decision and evidence of reasonable expenses incurred in the
438	438	appeal proceedings.
439	439	(b) Ratepayers of the following entities may appeal the
440	440	decision of the governing body of the entity affecting their water,
441	441	drainage, or sewer rates to the utility commission:
442	442	(1) a nonprofit water supply or sewer service
443	443	corporation created and operating under Chapter 67;
444	444	(2) a utility under the jurisdiction of a municipality
445	445	inside the corporate limits of the municipality;
446	446	(3) a municipally owned utility, if the ratepayers
447	447	reside outside the corporate limits of the municipality;
448	448	(4) a district or authority created under Article III,
449	449	Section 52, or Article XVI, Section 59, of the Texas Constitution
450	450	that provides water or sewer service to household users; and
451	451	(5) a utility owned by an affected county, if the
452	452	ratepayer's rates are actually or may be adversely affected. For
453	453	the purposes of this section ratepayers who reside outside the
454	454	boundaries of the district or authority shall be considered a
455	455	separate class from ratepayers who reside inside those boundaries.
456	456	(c) An appeal under Subsection (b) [of this section] must be
457	457	initiated by filing a petition for review with the utility
458	458	commission and the entity providing service within 90 days after
459	459	the effective day of the rate change or, if appealing under
460	460	Subdivision (b)(2) or (5) [of this section], within 90 days after
461	461	the date on which the governing body of the municipality or affected
462	462	county makes a final decision. The petition must be signed by the
463	463	lesser of 10,000 or 10 percent of those ratepayers whose rates have
464	464	been changed and who are eligible to appeal under Subsection (b) [of
465	465	this section].
466	466	(e) In an appeal under Subsection (b) [of this section], the
467	467	utility commission shall hear the appeal de novo and shall fix in
468	468	its final order the rates the governing body should have fixed in
469	469	the action from which the appeal was taken. The utility commission
470	470	may establish the effective date for the utility commission's rates
471	471	at the original effective date as proposed by the service provider,
472	472	may order refunds or allow a surcharge to recover lost revenues, and
473	473	may allow recovery of reasonable expenses incurred by the retail
474	474	public utility in the appeal proceedings. The utility commission
475	475	may consider only the information that was available to the
476	476	governing body at the time the governing body made its decision and
477	477	evidence of reasonable expenses incurred by the retail public
478	478	utility in the appeal proceedings. The rates established by the
479	479	utility commission in an appeal under Subsection (b) [of this
480	480	section] remain in effect until the first anniversary of the
481	481	effective date proposed by the retail public utility for the rates
482	482	being appealed or until changed by the service provider, whichever
483	483	date is later, unless the utility commission determines that a
484	484	financial hardship exists.
485	485	(f) A retail public utility that receives water or sewer
486	486	service from another retail public utility or political subdivision
487	487	of the state, including an affected county, may appeal to the
488	488	utility commission a decision of the provider of water or sewer
489	489	service affecting the amount paid for water or sewer service. An
490	490	appeal under this subsection must be initiated within 90 days after
491	491	the date of notice of the decision is received from the provider of
492	492	water or sewer service by the filing of a petition by the retail
493	493	public utility.
494	494	(g) An applicant for service from an affected county or a
495	495	water supply or sewer service corporation may appeal to the utility
496	496	commission a decision of the county or water supply or sewer service
497	497	corporation affecting the amount to be paid to obtain service other
498	498	than the regular membership or tap fees. In addition to the factors
499	499	specified under Subsection (j), in an appeal brought under this
500	500	subsection the utility commission shall determine whether the
501	501	amount paid by the applicant is consistent with the tariff of the
502	502	water supply or sewer service corporation and is reasonably related
503	503	to the cost of installing on-site and off-site facilities to
504	504	provide service to that applicant. If the utility commission finds
505	505	the amount charged to be clearly unreasonable, it shall establish
506	506	the fee to be paid for that applicant. An appeal under this
507	507	subsection must be initiated within 90 days after the date written
508	508	notice is provided to the applicant or member of the decision of an
509	509	affected county or water supply or sewer service corporation
510	510	relating to the applicant's initial request for that service. A
511	511	determination made by the utility commission on an appeal under
512	512	this subsection is binding on all similarly situated applicants for
513	513	service, and the utility commission may not consider other appeals
514	514	on the same issue until the applicable provisions of the tariff of
515	515	the water supply or sewer service corporation are amended.
516	516	(h) The utility commission may, on a motion by the utility
517	517	commission [executive director] or by the appellant under
518	518	Subsection (a), (b), or (f) [of this section], establish interim
519	519	rates to be in effect until a final decision is made.
520	520	(j) In an appeal under this section, the utility commission
521	521	shall ensure that every rate made, demanded, or received by any
522	522	retail public utility or by any two or more retail public utilities
523	523	jointly shall be just and reasonable. Rates shall not be
524	524	unreasonably preferential, prejudicial, or discriminatory but
525	525	shall be sufficient, equitable, and consistent in application to
526	526	each class of customers. The utility commission shall use a
527	527	methodology that preserves the financial integrity of the retail
528	528	public utility. For agreements between municipalities the utility
529	529	commission shall consider the terms of any wholesale water or sewer
530	530	service agreement in an appellate rate proceeding.
531	531	SECTION 16. Section 13.044(b), Water Code, is amended to
532	532	read as follows:
533	533	(b) Notwithstanding the provisions of any resolution,
534	534	ordinance, or agreement, a district may appeal the rates imposed by
535	535	the municipality by filing a petition with the utility commission.
536	536	The utility commission shall hear the appeal de novo and the
537	537	municipality shall have the burden of proof to establish that the
538	538	rates are just and reasonable. The utility commission shall fix the
539	539	rates to be charged by the municipality and the municipality may not
540	540	increase such rates without the approval of the utility commission.
541	541	SECTION 17. Section 13.046, Water Code, is amended to read
542	542	as follows:
543	543	Sec. 13.046. TEMPORARY RATES FOR SERVICES PROVIDED FOR
544	544	NONFUNCTIONING SYSTEM; SANCTIONS FOR NONCOMPLIANCE. (a) The
545	545	utility commission by rule shall establish a procedure that allows
546	546	a retail public utility that takes over the provision of services
547	547	for a nonfunctioning retail water or sewer utility service provider
548	548	to charge a reasonable rate for the services provided to the
549	549	customers of the nonfunctioning system and to bill the customers
550	550	for the services at that rate immediately to recover service costs.
551	551	(b) The rules must provide a streamlined process that the
552	552	retail public utility that takes over the nonfunctioning system may
553	553	use to apply to the utility commission for a ruling on the
554	554	reasonableness of the rates the utility is charging under
555	555	Subsection (a). The process must allow for adequate consideration
556	556	of costs for interconnection or other costs incurred in making
557	557	services available and of the costs that may necessarily be
558	558	incurred to bring the nonfunctioning system into compliance with
559	559	utility commission and commission rules.
560	560	(c) The utility commission shall provide a reasonable
561	561	period for the retail public utility that takes over the
562	562	nonfunctioning system to bring the nonfunctioning system into
563	563	compliance with utility commission and commission rules during
564	564	which the utility commission or the commission may not impose a
565	565	penalty for any deficiency in the system that is present at the time
566	566	the utility takes over the nonfunctioning system. The utility
567	567	commission must consult with the utility before determining the
568	568	period and may grant an extension of the period for good cause.
569	569	SECTION 18. Section 13.081, Water Code, is amended to read
570	570	as follows:
571	571	Sec. 13.081. FRANCHISES. This chapter may not be construed
572	572	as in any way limiting the rights and powers of a municipality to
573	573	grant or refuse franchises to use the streets and alleys within its
574	574	limits and to make the statutory charges for their use, but no
575	575	provision of any franchise agreement may limit or interfere with
576	576	any power conferred on the utility commission by this chapter. If a
577	577	municipality performs regulatory functions under this chapter, it
578	578	may make such other charges as may be provided in the applicable
579	579	franchise agreement, together with any other charges permitted by
580	580	this chapter.
581	581	SECTION 19. Section 13.082, Water Code, is amended to read
582	582	as follows:
583	583	Sec. 13.082. LOCAL UTILITY SERVICE; EXEMPT AND NONEXEMPT
584	584	AREAS. (a) Notwithstanding any other provision of this section,
585	585	municipalities shall continue to regulate each kind of local
586	586	utility service inside their boundaries until the utility
587	587	commission has assumed jurisdiction over the respective utility
588	588	pursuant to this chapter.
589	589	(b) If a municipality does not surrender its jurisdiction,
590	590	local utility service within the boundaries of the municipality
591	591	shall be exempt from regulation by the utility commission under
592	592	this chapter to the extent that this chapter applies to local
593	593	service, and the municipality shall have, regarding service within
594	594	its boundaries, the right to exercise the same regulatory powers
595	595	under the same standards and rules as the utility commission or
596	596	other standards and rules not inconsistent with them. The utility
597	597	commission's rules relating to service and response to requests for
598	598	service for utilities operating within a municipality's corporate
599	599	limits apply unless the municipality adopts its own rules.
600	600	(c) Notwithstanding any election, the utility commission
601	601	may consider water and sewer utilities' revenues and return on
602	602	investment in exempt areas in fixing rates and charges in nonexempt
603	603	areas and may also exercise the powers conferred necessary to give
604	604	effect to orders under this chapter for the benefit of nonexempt
605	605	areas. Likewise, in fixing rates and charges in the exempt area,
606	606	the governing body may consider water and sewer utilities' revenues
607	607	and return on investment in nonexempt areas.
608	608	(d) Utilities serving exempt areas are subject to the
609	609	reporting requirements of this chapter. Those reports and tariffs
610	610	shall be filed with the governing body of the municipality as well
611	611	as with the utility commission.
612	612	(e) This section does not limit the duty and power of the
613	613	utility commission to regulate service and rates of municipally
614	614	regulated water and sewer utilities for service provided to other
615	615	areas in Texas.
616	616	SECTION 20. Section 13.085, Water Code, is amended to read
617	617	as follows:
618	618	Sec. 13.085. ASSISTANCE BY UTILITY COMMISSION. On request,
619	619	the utility commission may advise and assist municipalities and
620	620	affected counties in connection with questions and proceedings
621	621	arising under this chapter. This assistance may include aid to
622	622	municipalities or an affected county in connection with matters
623	623	pending before the utility commission, the courts, the governing
624	624	body of any municipality, or the commissioners court of an affected
625	625	county, including making members of the staff available to them as
626	626	witnesses and otherwise providing evidence.
627	627	SECTION 21. Section 13.087(c), Water Code, is amended to
628	628	read as follows:
629	629	(c) Notwithstanding any other provision of this chapter,
630	630	the utility commission has jurisdiction to enforce this section.
631	631	SECTION 22. Sections 13.131(a), (b), (c), and (e), Water
632	632	Code, are amended to read as follows:
633	633	(a) Every water and sewer utility shall keep and render to
634	634	the regulatory authority in the manner and form prescribed by the
635	635	utility commission uniform accounts of all business transacted.
636	636	The utility commission may also prescribe forms of books, accounts,
637	637	records, and memoranda to be kept by those utilities, including the
638	638	books, accounts, records, and memoranda of the rendition of and
639	639	capacity for service as well as the receipts and expenditures of
640	640	money, and any other forms, records, and memoranda that in the
641	641	judgment of the utility commission may be necessary to carry out
642	642	this chapter.
643	643	(b) In the case of a utility subject to regulation by a
644	644	federal regulatory agency, compliance with the system of accounts
645	645	prescribed for the particular class of utilities by that agency may
646	646	be considered a sufficient compliance with the system prescribed by
647	647	the utility commission. However, the utility commission may
648	648	prescribe forms of books, accounts, records, and memoranda covering
649	649	information in addition to that required by the federal agency. The
650	650	system of accounts and the forms of books, accounts, records, and
651	651	memoranda prescribed by the utility commission for a utility or
652	652	class of utilities may not conflict or be inconsistent with the
653	653	systems and forms established by a federal agency for that utility
654	654	or class of utilities.
655	655	(c) The utility commission shall fix proper and adequate
656	656	rates and methods of depreciation, amortization, or depletion of
657	657	the several classes of property of each utility and shall require
658	658	every utility to carry a proper and adequate depreciation account
659	659	in accordance with those rates and methods and with any other rules
660	660	the utility commission prescribes. Rules adopted under this
661	661	subsection must require the book cost less net salvage of
662	662	depreciable utility plant retired to be charged in its entirety to
663	663	the accumulated depreciation account in a manner consistent with
664	664	accounting treatment of regulated electric and gas utilities in
665	665	this state. Those rates, methods, and accounts shall be utilized
666	666	uniformly and consistently throughout the rate-setting and appeal
667	667	proceedings.
668	668	(e) Every utility is required to keep and render its books,
669	669	accounts, records, and memoranda accurately and faithfully in the
670	670	manner and form prescribed by the utility commission and to comply
671	671	with all directions of the regulatory authority relating to those
672	672	books, accounts, records, and memoranda. The regulatory authority
673	673	may require the examination and audit of all accounts.
674	674	SECTION 23. Section 13.132, Water Code, is amended to read
675	675	as follows:
676	676	Sec. 13.132. POWERS OF UTILITY COMMISSION. (a) The utility
677	677	commission may:
678	678	(1) require that water and sewer utilities report to
679	679	it any information relating to themselves and affiliated interests
680	680	both inside and outside this state that it considers useful in the
681	681	administration of this chapter, including any information relating
682	682	to a transaction between the utility and an affiliated interest
683	683	inside or outside this state, to the extent that the transaction is
684	684	subject to the utility commission's jurisdiction;
685	685	(2) establish forms for all reports;
686	686	(3) determine the time for reports and the frequency
687	687	with which any reports are to be made;
688	688	(4) require that any reports be made under oath;
689	689	(5) require that a copy of any contract or arrangement
690	690	between any utility and any affiliated interest be filed with it and
691	691	require that such a contract or arrangement that is not in writing
692	692	be reduced to writing;
693	693	(6) require that a copy of any report filed with any
694	694	federal agency or any governmental agency or body of any other state
695	695	be filed with it; and
696	696	(7) require that a copy of annual reports showing all
697	697	payments of compensation, other than salary or wages subject to the
698	698	withholding of federal income tax, made to residents of Texas, or
699	699	with respect to legal, administrative, or legislative matters in
700	700	Texas, or for representation before the Texas Legislature or any
701	701	governmental agency or body be filed with it.
702	702	(b) On the request of the governing body of any
703	703	municipality, the utility commission may provide sufficient staff
704	704	members to advise and consult with the municipality on any pending
705	705	matter.
706	706	SECTION 24. Section 13.1325, Water Code, is amended to read
707	707	as follows:
708	708	Sec. 13.1325. ELECTRONIC COPIES OF RATE INFORMATION. On
709	709	request, the utility commission [state agency with jurisdiction
710	710	over rates charged by water and sewer utilities] shall provide, at a
711	711	reasonable cost, electronic copies of or Internet access to all
712	712	information provided to the utility commission [agency] under
713	713	Sections 13.016 and [,] 13.043[,] and Subchapter F [13.187] to the
714	714	extent that the information is available and is not confidential.
715	715	Copies of all information provided to the utility commission
716	716	[agency] shall be provided to the Office of Public Utility Counsel,
717	717	on request, at no cost to the office.
718	718	SECTION 25. Section 13.133(b), Water Code, is amended to
719	719	read as follows:
720	720	(b) The regulatory authority may require, by order or
721	721	subpoena served on any utility, the production within this state at
722	722	the time and place it may designate of any books, accounts, papers,
723	723	or records kept by that utility outside the state or verified copies
724	724	of them if the regulatory authority [commission] so orders. A
725	725	utility failing or refusing to comply with such an order or subpoena
726	726	violates this chapter.
727	727	SECTION 26. Section 13.136, Water Code, is amended by
728	728	amending Subsections (b) and (c) and adding Subsection (b-1) to
729	729	read as follows:
730	730	(b) The utility commission by rule shall require each [Each]
731	731	utility to annually [shall] file a service, [and] financial, and
732	732	normalized earnings report in a form and at times specified by
733	733	utility commission rule. The report must include information
734	734	sufficient to enable the utility commission to properly monitor
735	735	utilities in this state. The utility commission shall make
736	736	available to the public information in the report the utility does
737	737	not file as confidential.
738	738	(b-1) The utility commission shall provide copies of a
739	739	report described by Subsection (b) that include information filed
740	740	as confidential to the Office of Public Utility Counsel on request,
741	741	at no cost to the office.
742	742	(c) Every water supply or sewer service corporation shall
743	743	file with the utility commission tariffs showing all rates that are
744	744	subject to the appellate jurisdiction of the utility commission and
745	745	that are in force at the time for any utility service, product, or
746	746	commodity offered. Every water supply or sewer service corporation
747	747	shall file with and as a part of those tariffs all rules and
748	748	regulations relating to or affecting the rates, utility service,
749	749	product, or commodity furnished. The filing required under this
750	750	subsection shall be for informational purposes only.
751	751	SECTION 27. Section 13.137, Water Code, is amended to read
752	752	as follows:
753	753	Sec. 13.137. OFFICE AND OTHER BUSINESS LOCATIONS OF
754	754	UTILITY; RECORDS; REMOVAL FROM STATE. (a) Every utility shall:
755	755	(1) make available and notify its customers of a
756	756	business location where its customers may make payments to prevent
757	757	disconnection of or to restore service:
758	758	(A) in each county in which the utility provides
759	759	service; or
760	760	(B) not more than 20 miles from the residence of
761	761	any residential customer if there is no location to receive
762	762	payments in the county; and
763	763	(2) have an office in a county of this state or in the
764	764	immediate area in which its property or some part of its property is
765	765	located in which it shall keep all books, accounts, records, and
766	766	memoranda required by the utility commission to be kept in this
767	767	state.
768	768	(b) The utility commission by rule may provide for waiving
769	769	the requirements of Subsection (a)(1) for a utility for which
770	770	meeting those requirements would cause a rate increase or otherwise
771	771	harm or inconvenience customers. The rules must provide for an
772	772	additional 14 days to be given for a customer to pay before a
773	773	utility that is granted a waiver may disconnect service for late
774	774	payment.
775	775	(c) Books, accounts, records, or memoranda required by the
776	776	regulatory authority to be kept in the state may not be removed from
777	777	the state, except on conditions prescribed by the utility
778	778	commission.
779	779	SECTION 28. Sections 13.1396(b), (c), and (f), Water Code,
780	780	are amended to read as follows:
781	781	(b) An affected utility shall submit to the office of
782	782	emergency management of each county in which the utility has more
783	783	than one customer, the utility commission [Public Utility
784	784	Commission of Texas], and the office of emergency management of the
785	785	governor a copy of:
786	786	(1) the affected utility's emergency preparedness plan
787	787	approved under Section 13.1395; and
788	788	(2) the commission's notification to the affected
789	789	utility that the plan is accepted.
790	790	(c) Each affected utility shall submit to the utility
791	791	commission, each electric utility that provides transmission and
792	792	distribution service to the affected utility, each retail electric
793	793	provider that sells electric power to the affected utility, the
794	794	office of emergency management of each county in which the utility
795	795	has water and wastewater facilities that qualify for critical load
796	796	status under rules adopted by the utility commission [Public
797	797	Utility Commission of Texas, the Public Utility Commission of
798	798	Texas], and the division of emergency management of the governor:
799	799	(1) information identifying the location and
800	800	providing a general description of all water and wastewater
801	801	facilities that qualify for critical load status; and
802	802	(2) emergency contact information for the affected
803	803	utility, including:
804	804	(A) the person who will serve as a point of
805	805	contact and the person's telephone number;
806	806	(B) the person who will serve as an alternative
807	807	point of contact and the person's telephone number; and
808	808	(C) the affected utility's mailing address.
809	809	(f) Not later than May 1 of each year, each electric utility
810	810	and each retail electric provider shall determine whether the
811	811	facilities of the affected utility qualify for critical load status
812	812	under rules adopted by the utility commission [Public Utility
813	813	Commission of Texas].
814	814	SECTION 29. Section 13.142(b), Water Code, is amended to
815	815	read as follows:
816	816	(b) The utility commission shall adopt rules concerning
817	817	payment of utility bills that are consistent with Chapter 2251,
818	818	Government Code.
819	819	SECTION 30. Section 13.144, Water Code, is amended to read
820	820	as follows:
821	821	Sec. 13.144. NOTICE OF WHOLESALE WATER SUPPLY CONTRACT. A
822	822	district or authority created under Section 52, Article III, or
823	823	Section 59, Article XVI, Texas Constitution, a retail public
824	824	utility, a wholesale water service, or other person providing a
825	825	retail public utility with a wholesale water supply shall provide
826	826	the utility commission with a certified copy of any wholesale water
827	827	supply contract with a retail public utility within 30 days after
828	828	the date of the execution of the contract. The submission must
829	829	include the amount of water being supplied, term of the contract,
830	830	consideration being given for the water, purpose of use, location
831	831	of use, source of supply, point of delivery, limitations on the
832	832	reuse of water, a disclosure of any affiliated interest between the
833	833	parties to the contract, and any other condition or agreement
834	834	relating to the contract.
835	835	SECTION 31. Section 13.147(a), Water Code, is amended to
836	836	read as follows:
837	837	(a) A retail public utility providing water service may
838	838	contract with a retail public utility providing sewer service to
839	839	bill and collect the sewer service provider's fees and payments as
840	840	part of a consolidated process with the billing and collection of
841	841	the water service provider's fees and payments. The water service
842	842	provider may provide that service only for customers who are served
843	843	by both providers in an area covered by both providers'
844	844	certificates of public convenience and necessity. If the water
845	845	service provider refuses to enter into a contract under this
846	846	section or if the water service provider and sewer service provider
847	847	cannot agree on the terms of a contract, the sewer service provider
848	848	may petition the utility commission to issue an order requiring the
849	849	water service provider to provide that service.
850	850	SECTION 32. Section 13.181(b), Water Code, is amended to
851	851	read as follows:
852	852	(b) Subject to this chapter, the utility commission has all
853	853	authority and power of the state to ensure compliance with the
854	854	obligations of utilities under this chapter. For this purpose the
855	855	regulatory authority may fix and regulate rates of utilities,
856	856	including rules and regulations for determining the classification
857	857	of customers and services and for determining the applicability of
858	858	rates. A rule or order of the regulatory authority may not conflict
859	859	with the rulings of any federal regulatory body. The utility
860	860	commission may adopt rules which authorize a utility which is
861	861	permitted under Section 13.242(c) to provide service without a
862	862	certificate of public convenience and necessity to request or
863	863	implement a rate increase and operate according to rules,
864	864	regulations, and standards of service other than those otherwise
865	865	required under this chapter provided that rates are just and
866	866	reasonable for customers and the utility and that service is safe,
867	867	adequate, efficient, and reasonable.
868	868	SECTION 33. Sections 13.182(c) and (d), Water Code, are
869	869	amended to read as follows:
870	870	(c) For ratemaking purposes, the utility commission may
871	871	treat two or more municipalities served by a utility as a single
872	872	class wherever the utility commission considers that treatment to
873	873	be appropriate.
874	874	(d) The utility commission by rule shall establish a
875	875	preference that rates under a consolidated tariff be consolidated
876	876	by region. The regions under consolidated tariffs must be
877	877	determined on a case-by-case basis.
878	878	SECTION 34. Section 13.183(d), Water Code, is amended to
879	879	read as follows:
880	880	(d) A regulatory authority other than the utility
881	881	commission may not approve an acquisition adjustment for a system
882	882	purchased before the effective date of an ordinance authorizing
883	883	acquisition adjustments.
884	884	SECTION 35. Section 13.184(a), Water Code, is amended to
885	885	read as follows:
886	886	(a) Unless the utility commission establishes alternate
887	887	rate methodologies in accordance with Section 13.183(c), the
888	888	utility commission may not prescribe any rate that will yield more
889	889	than a fair return on the invested capital used and useful in
890	890	rendering service to the public. The governing body of a
891	891	municipality exercising its original jurisdiction over rates and
892	892	services may use alternate ratemaking methodologies established by
893	893	ordinance or by utility commission rule in accordance with Section
894	894	13.183(c). Unless the municipal regulatory authority uses
895	895	alternate ratemaking methodologies established by ordinance or by
896	896	utility commission rule in accordance with Section 13.183(c), it
897	897	may not prescribe any rate that will yield more than a fair return
898	898	on the invested capital used and useful in rendering service to the
899	899	public.
900	900	SECTION 36. Sections 13.185(d) and (h), Water Code, are
901	901	amended to read as follows:
902	902	(d) Net income is the total revenues of the utility less all
903	903	reasonable and necessary expenses as determined by the regulatory
904	904	authority. The regulatory authority shall:
905	905	(1) base a utility's expenses on historic test year
906	906	information adjusted for known and measurable changes, as
907	907	determined by utility commission rules; and
908	908	(2) determine expenses and revenues in a manner
909	909	consistent with Subsections (e) through (h) of this section.
910	910	(h) The regulatory authority may not include for ratemaking
911	911	purposes:
912	912	(1) legislative advocacy expenses, whether made
913	913	directly or indirectly, including legislative advocacy expenses
914	914	included in trade association dues;
915	915	(2) costs of processing a refund or credit under this
916	916	subchapter [Section 13.187 of this chapter]; or
917	917	(3) any expenditure found by the regulatory authority
918	918	to be unreasonable, unnecessary, or not in the public interest,
919	919	including executive salaries, advertising expenses, legal
920	920	expenses, and civil penalties or fines.
921	921	SECTION 37. Section 13.187, Water Code, is amended to read
922	922	as follows:
923	923	Sec. 13.187. CLASS A UTILITIES: STATEMENT OF INTENT TO
924	924	CHANGE RATES; HEARING; DETERMINATION OF RATE LEVEL. (a) This
925	925	section applies only to a Class A utility.
926	926	(a-1) A utility may not make changes in its rates except by
927	927	sending by mail or e-mail [delivering] a statement of intent to each
928	928	ratepayer and to [with] the regulatory authority having original
929	929	jurisdiction at least 35 [60] days before the effective date of the
930	930	proposed change. The utility may send the statement of intent to a
931	931	ratepayer by e-mail only if the ratepayer has agreed to receive
932	932	communications electronically. The effective date of the new rates
933	933	must be the first day of a billing period, and the new rates may not
934	934	apply to service received before the effective date of the new
935	935	rates. The statement of intent must include:
936	936	(1) the information required by the regulatory
937	937	authority's rules;
938	938	(2) a billing comparison regarding the existing water
939	939	rate and the new water rate computed for the use of:
940	940	(A) 10,000 gallons of water; and
941	941	(B) 30,000 gallons of water; [and]
942	942	(3) a billing comparison regarding the existing sewer
943	943	rate and the new sewer rate computed for the use of 10,000 gallons,
944	944	unless the utility proposes a flat rate for sewer services; and
945	945	(4) a description of the process by which a ratepayer
946	946	may intervene in the ratemaking proceeding.
947	947	(b) The utility shall mail, send by e-mail, or deliver a [A]
948	948	copy of the statement of intent [shall be mailed, sent by e-mail, or
949	949	delivered] to the Office of Public Utility Counsel, appropriate
950	950	offices of each affected municipality, and [to] any other affected
951	951	persons as required by the regulatory authority's rules.
952	952	(c) When the statement of intent is delivered, the utility
953	953	shall file with the regulatory authority an application to change
954	954	rates. The application must include information the regulatory
955	955	authority requires by rule and any appropriate cost and rate
956	956	schedules and written testimony supporting the requested rate
957	957	increase. If the utility fails to provide within a reasonable time
958	958	after the application is filed the necessary documentation or other
959	959	evidence that supports the costs and expenses that are shown in the
960	960	application, the regulatory authority may disallow the
961	961	nonsupported costs or expenses.
962	962	(d) Except as provided by Subsections [Subsection] (d-1)
963	963	and (e), if the application or the statement of intent is not
964	964	substantially complete or does not comply with the regulatory
965	965	authority's rules, it may be rejected and the effective date of the
966	966	rate change may be suspended until a properly completed application
967	967	is accepted by the regulatory authority and a proper statement of
968	968	intent is provided. The utility commission may also suspend the
969	969	effective date of any rate change if the utility does not have a
970	970	certificate of public convenience and necessity or a completed
971	971	application for a certificate or to transfer a certificate pending
972	972	before the utility commission or if the utility is delinquent in
973	973	paying the assessment and any applicable penalties or interest
974	974	required by Section 5.701(n) [of this code].
975	975	(d-1) After written notice to the utility, a local
976	976	regulatory authority may suspend the effective date of a rate
977	977	change for not more than 90 days from the proposed effective date[,
978	978	except that the suspension shall be extended by two days for each
979	979	day a hearing exceeds 15 days]. If the local regulatory authority
980	980	does not make a final determination on the proposed rate before the
981	981	expiration of the [applicable] suspension period, the proposed rate
982	982	shall be considered approved. This [The] approval is subject to the
983	983	authority of the local regulatory authority thereafter to continue
984	984	[authority's continuation of] a hearing in progress.
985	985	(e) After written notice to the utility, the utility
986	986	commission may suspend the effective date of a rate change for not
987	987	more than 150 days from the proposed effective date. If the utility
988	988	commission does not make a final determination on the proposed rate
989	989	before the expiration of the suspension period, the proposed rate
990	990	shall be considered approved. This approval is subject to the
991	991	authority of the utility commission thereafter to continue a
992	992	hearing in progress [If, before the 91st day after the effective
993	993	date of the rate change, the regulatory authority receives a
994	994	complaint from any affected municipality, or from the lesser of
995	995	1,000 or 10 percent of the ratepayers of the utility over whose
996	996	rates the regulatory authority has original jurisdiction, the
997	997	regulatory authority shall set the matter for hearing].
998	998	(e-1) The 150-day period described by Subsection (e) shall
999	999	be extended two days for each day a hearing exceeds 15 days.
1000	1000	(f) The regulatory authority shall, not later than the 30th
1001	1001	day after the effective date of the change, begin a hearing to
1002	1002	determine the propriety of the change [may set the matter for
1003	1003	hearing on its own motion at any time within 120 days after the
1004	1004	effective date of the rate change]. If the regulatory authority is
1005	1005	the utility commission, the utility commission may refer the matter
1006	1006	to the State Office of Administrative Hearings as provided by
1007	1007	utility commission rules. [If more than half of the ratepayers of
1008	1008	the utility receive service in a county with a population of more
1009	1009	than 3.3 million, the hearing must be held at a location in that
1010	1010	county.]
1011	1011	(g) A local regulatory authority [The] hearing described by
1012	1012	this section may be informal.
1013	1013	(g-1) If the regulatory authority is the utility
1014	1014	commission, the utility commission shall give reasonable notice of
1015	1015	the hearing, including notice to the governing body of each
1016	1016	affected municipality and county. The utility is not required to
1017	1017	provide a formal answer or file any other formal pleading in
1018	1018	response to the notice, and the absence of an answer does not affect
1019	1019	an order for a hearing.
1020	1020	(h) If, after hearing, the regulatory authority finds the
1021	1021	rates currently being charged or those proposed to be charged are
1022	1022	unreasonable or in violation of law, the regulatory authority shall
1023	1023	determine the rates to be charged by the utility and shall fix the
1024	1024	rates by order served on the utility.
1025	1025	(i) A utility may put a changed rate into effect throughout
1026	1026	the area in which the utility sought to change its rates, including
1027	1027	an area over which the utility commission is exercising appellate
1028	1028	or original jurisdiction, by filing a bond with the utility
1029	1029	commission if the suspension period has been extended under
1030	1030	Subsection (e-1) and the utility commission fails to make a final
1031	1031	determination before the 151st day after the date the rate change
1032	1032	would otherwise be effective.
1033	1033	(j) The bonded rate may not exceed the proposed rate. The
1034	1034	bond must be payable to the utility commission in an amount, in a
1035	1035	form, and with a surety approved by the utility commission and
1036	1036	conditioned on refund [The regulatory authority, pending final
1037	1037	action in a rate proceeding, may order the utility to deposit all or
1038	1038	part of the rate increase received or to be received into an escrow
1039	1039	account with a financial institution approved by the regulatory
1040	1040	authority].
1041	1041	(k) Unless otherwise agreed to by the parties to the rate
1042	1042	proceeding, the utility shall refund or credit against future
1043	1043	bills:
1044	1044	(1) all sums collected under the bonded rates [during
1045	1045	the pendency of the rate proceeding] in excess of the rate finally
1046	1046	ordered; and
1047	1047	(2) [plus] interest on those sums at the current
1048	1048	interest rate as determined by the regulatory authority.
1049	1049	[(j) For good cause shown, the regulatory authority may
1050	1050	authorize the release of funds to the utility from the escrow
1051	1051	account during the pendency of the proceeding.
1052	1052	[(k) If the regulatory authority receives at least the
1053	1053	number of complaints from ratepayers required for the regulatory
1054	1054	authority to set a hearing under Subsection (e), the regulatory
1055	1055	authority may, pending the hearing and a decision, suspend the date
1056	1056	the rate change would otherwise be effective. Except as provided by
1057	1057	Subsection (d-1), the proposed rate may not be suspended for longer
1058	1058	than:
1059	1059	[(1) 90 days by a local regulatory authority; or
1060	1060	[(2) 150 days by the commission.]
1061	1061	(l) At any time during the pendency of the rate proceeding
1062	1062	the regulatory authority may fix interim rates to remain in effect
1063	1063	during the applicable suspension period under Subsection (d-1) or
1064	1064	Subsections (e) and (e-1) or until a final determination is made on
1065	1065	the proposed rate. If the regulatory authority does not establish
1066	1066	interim rates, the rates in effect when the application described
1067	1067	by Subsection (c) was filed continue in effect during the
1068	1068	suspension period.
1069	1069	(m) If the regulatory authority sets a final rate that is
1070	1070	higher than the interim rate, the utility shall be allowed to
1071	1071	collect the difference between the interim rate and final rate
1072	1072	unless otherwise agreed to by the parties to the rate proceeding.
1073	1073	(n) For good cause shown, the regulatory authority may at
1074	1074	any time during the proceeding require the utility to refund money
1075	1075	collected under a proposed rate before the rate was suspended or an
1076	1076	interim rate was established to the extent the proposed rate
1077	1077	exceeds the existing rate or the interim rate.
1078	1078	(o) If a regulatory authority other than the utility
1079	1079	commission establishes interim rates or bonded rates [an escrow
1080	1080	account], the regulatory authority must make a final determination
1081	1081	on the rates not later than the first anniversary of the effective
1082	1082	date of the interim rates or bonded [escrowed] rates or the rates
1083	1083	are automatically approved as requested by the utility.
1084	1084	(p) Except to implement a rate adjustment provision
1085	1085	approved by the regulatory authority by rule or ordinance, as
1086	1086	applicable, or to adjust the rates of a newly acquired utility
1087	1087	system, a utility or two or more utilities under common control and
1088	1088	ownership may not file a statement of intent to increase its rates
1089	1089	more than once in a 12-month period, unless the regulatory
1090	1090	authority determines that a financial hardship exists. If the
1091	1091	regulatory authority requires the utility to deliver a corrected
1092	1092	statement of intent, the utility is not considered to be in
1093	1093	violation of the 12-month filing requirement.
1094	1094	SECTION 38. Subchapter F, Chapter 13, Water Code, is
1095	1095	amended by adding Sections 13.1871 and 13.1872 to read as follows:
1096	1096	Sec. 13.1871. CLASS B UTILITIES: STATEMENT OF INTENT TO
1097	1097	CHANGE RATES; HEARING; DETERMINATION OF RATE LEVEL. (a) Except as
1098	1098	provided by Section 13.1872, this section applies only to a Class B
1099	1099	utility.
1100	1100	(b) A utility may not make changes in its rates except by
1101	1101	sending by mail or e-mail a statement of intent to each ratepayer
1102	1102	and to the regulatory authority having original jurisdiction at
1103	1103	least 35 days before the effective date of the proposed change. The
1104	1104	utility may send the statement of intent to a ratepayer by e-mail
1105	1105	only if the ratepayer has agreed to receive communications
1106	1106	electronically. The effective date of the new rates must be the
1107	1107	first day of a billing period, and the new rates may not apply to
1108	1108	service received before the effective date of the new rates. The
1109	1109	statement of intent must include:
1110	1110	(1) the information required by the regulatory
1111	1111	authority's rules;
1112	1112	(2) a billing comparison regarding the existing water
1113	1113	rate and the new water rate computed for the use of:
1114	1114	(A) 10,000 gallons of water; and
1115	1115	(B) 30,000 gallons of water;
1116	1116	(3) a billing comparison regarding the existing sewer
1117	1117	rate and the new sewer rate computed for the use of 10,000 gallons,
1118	1118	unless the utility proposes a flat rate for sewer services; and
1119	1119	(4) a description of the process by which a ratepayer
1120	1120	may file a complaint under Subsection (i).
1121	1121	(c) The utility shall mail, send by e-mail, or deliver a
1122	1122	copy of the statement of intent to the appropriate offices of each
1123	1123	affected municipality and to any other affected persons as required
1124	1124	by the regulatory authority's rules.
1125	1125	(d) When the statement of intent is delivered, the utility
1126	1126	shall file with the regulatory authority an application to change
1127	1127	rates. The application must include information the regulatory
1128	1128	authority requires by rule and any appropriate cost and rate
1129	1129	schedules supporting the requested rate increase. In adopting
1130	1130	rules relating to the information required in the application, the
1131	1131	utility commission shall ensure that a utility can file a less
1132	1132	burdensome and complex application than is required of a Class A
1133	1133	utility. If the utility fails to provide within a reasonable time
1134	1134	after the application is filed the necessary documentation or other
1135	1135	evidence that supports the costs and expenses that are shown in the
1136	1136	application, the regulatory authority may disallow the
1137	1137	nonsupported costs or expenses.
1138	1138	(e) Except as provided by Subsection (f) or (g), if the
1139	1139	application or the statement of intent is not substantially
1140	1140	complete or does not comply with the regulatory authority's rules,
1141	1141	it may be rejected and the effective date of the rate change may be
1142	1142	suspended until a properly completed application is accepted by the
1143	1143	regulatory authority and a proper statement of intent is provided.
1144	1144	The utility commission may also suspend the effective date of any
1145	1145	rate change if the utility does not have a certificate of public
1146	1146	convenience and necessity or a completed application for a
1147	1147	certificate or to transfer a certificate pending before the utility
1148	1148	commission or if the utility is delinquent in paying the assessment
1149	1149	and any applicable penalties or interest required by Section
1150	1150	5.701(n).
1151	1151	(f) After written notice to the utility, a local regulatory
1152	1152	authority may suspend the effective date of a rate change for not
1153	1153	more than 90 days from the proposed effective date. If the local
1154	1154	regulatory authority does not make a final determination on the
1155	1155	proposed rate before the expiration of the suspension period, the
1156	1156	proposed rate shall be considered approved. This approval is
1157	1157	subject to the authority of the local regulatory authority
1158	1158	thereafter to continue a hearing in progress.
1159	1159	(g) After written notice to the utility, the utility
1160	1160	commission may suspend the effective date of a rate change for not
1161	1161	more than 205 days from the proposed effective date. If the utility
1162	1162	commission does not make a final determination on the proposed rate
1163	1163	before the expiration of the suspension period, the proposed rate
1164	1164	shall be considered approved. This approval is subject to the
1165	1165	authority of the utility commission thereafter to continue a
1166	1166	hearing in progress.
1167	1167	(h) The 205-day period described by Subsection (g) shall be
1168	1168	extended by two days for each day a hearing exceeds 15 days.
1169	1169	(i) If, before the 91st day after the effective date of the
1170	1170	rate change, the regulatory authority receives a complaint from any
1171	1171	affected municipality, or from the lesser of 1,000 or 10 percent of
1172	1172	the ratepayers of the utility over whose rates the regulatory
1173	1173	authority has original jurisdiction, the regulatory authority
1174	1174	shall set the matter for hearing.
1175	1175	(j) If the regulatory authority receives at least the number
1176	1176	of complaints from ratepayers required for the regulatory authority
1177	1177	to set a hearing under Subsection (i), the regulatory authority
1178	1178	may, pending the hearing and a decision, suspend the date the rate
1179	1179	change would otherwise be effective. Except as provided by
1180	1180	Subsection (h), the proposed rate may not be suspended for longer
1181	1181	than:
1182	1182	(1) 90 days by a local regulatory authority; or
1183	1183	(2) 205 days by the utility commission.
1184	1184	(k) The regulatory authority may set the matter for hearing
1185	1185	on its own motion at any time within 120 days after the effective
1186	1186	date of the rate change.
1187	1187	(l) The hearing may be informal.
1188	1188	(m) The regulatory authority shall give reasonable notice
1189	1189	of the hearing, including notice to the governing body of each
1190	1190	affected municipality and county. The utility is not required to
1191	1191	provide a formal answer or file any other formal pleading in
1192	1192	response to the notice, and the absence of an answer does not affect
1193	1193	an order for a hearing.
1194	1194	(n) The utility shall mail notice of the hearing to each
1195	1195	ratepayer before the hearing. The notice must include a
1196	1196	description of the process by which a ratepayer may intervene in the
1197	1197	ratemaking proceeding.
1198	1198	(o) If, after hearing, the regulatory authority finds the
1199	1199	rates currently being charged or those proposed to be charged are
1200	1200	unreasonable or in violation of law, the regulatory authority shall
1201	1201	determine the rates to be charged by the utility and shall fix the
1202	1202	rates by order served on the utility.
1203	1203	(p) A utility may put a changed rate into effect throughout
1204	1204	the area in which the utility sought to change its rates, including
1205	1205	an area over which the utility commission is exercising appellate
1206	1206	or original jurisdiction, by filing a bond with the utility
1207	1207	commission if the suspension period has been extended under
1208	1208	Subsection (h) and the utility commission fails to make a final
1209	1209	determination before the 206th day after the date the rate change
1210	1210	would otherwise be effective.
1211	1211	(q) The bonded rate may not exceed the proposed rate. The
1212	1212	bond must be payable to the utility commission in an amount, in a
1213	1213	form, and with a surety approved by the utility commission and
1214	1214	conditioned on refund.
1215	1215	(r) Unless otherwise agreed to by the parties to the rate
1216	1216	proceeding, the utility shall refund or credit against future
1217	1217	bills:
1218	1218	(1) all sums collected under the bonded rates in
1219	1219	excess of the rate finally ordered; and
1220	1220	(2) interest on those sums at the current interest
1221	1221	rate as determined by the regulatory authority.
1222	1222	(s) At any time during the pendency of the rate proceeding
1223	1223	the regulatory authority may fix interim rates to remain in effect
1224	1224	during the applicable suspension period under Subsection (f) or
1225	1225	Subsections (g) and (h) or until a final determination is made on
1226	1226	the proposed rate. If the regulatory authority does not establish
1227	1227	interim rates, the rates in effect when the application described
1228	1228	by Subsection (e) was filed continue in effect during the
1229	1229	suspension period.
1230	1230	(t) If the regulatory authority sets a final rate that is
1231	1231	higher than the interim rate, the utility shall be allowed to
1232	1232	collect the difference between the interim rate and final rate
1233	1233	unless otherwise agreed to by the parties to the rate proceeding.
1234	1234	(u) For good cause shown, the regulatory authority may at
1235	1235	any time during the proceeding require the utility to refund money
1236	1236	collected under a proposed rate before the rate was suspended or an
1237	1237	interim rate was established to the extent the proposed rate
1238	1238	exceeds the existing rate or the interim rate.
1239	1239	(v) If a regulatory authority other than the utility
1240	1240	commission establishes interim rates or bonded rates, the
1241	1241	regulatory authority must make a final determination on the rates
1242	1242	not later than the first anniversary of the effective date of the
1243	1243	interim rates or bonded rates or the rates are automatically
1244	1244	approved as requested by the utility.
1245	1245	(w) Except to implement a rate adjustment provision
1246	1246	approved by the regulatory authority by rule or ordinance, as
1247	1247	applicable, or to adjust the rates of a newly acquired utility
1248	1248	system, a utility or two or more utilities under common control and
1249	1249	ownership may not file a statement of intent to increase its rates
1250	1250	more than once in a 12-month period, unless the regulatory
1251	1251	authority determines that a financial hardship exists. If the
1252	1252	regulatory authority requires the utility to deliver a corrected
1253	1253	statement of intent, the utility is not considered to be in
1254	1254	violation of the 12-month filing requirement.
1255	1255	Sec. 13.1872. CLASS C UTILITIES: RATE ADJUSTMENT. (a) This
1256	1256	section applies only to a Class C utility.
1257	1257	(b) For purposes of this section, "price index" means an
1258	1258	appropriate price index designated annually by the utility
1259	1259	commission for the purposes of this section.
1260	1260	(c) A utility may not make changes in its rates except by:
1261	1261	(1) filing an application for a rate adjustment under
1262	1262	the procedures described by Subsection (e) and sending by mail, or
1263	1263	by e-mail if the ratepayer has agreed to receive communications
1264	1264	electronically, a notice to each ratepayer describing the proposed
1265	1265	rate adjustment at least 30 days before the effective date of the
1266	1266	proposed change; or
1267	1267	(2) complying with the procedures to change rates
1268	1268	described by Section 13.1871.
1269	1269	(d) The utility shall mail, send by e-mail, or deliver a
1270	1270	copy of the application to the appropriate offices of each affected
1271	1271	municipality and to any other affected persons as required by the
1272	1272	regulatory authority's rules.
1273	1273	(e) The utility commission by rule shall adopt procedures to
1274	1274	allow a utility to receive without a hearing an annual rate
1275	1275	adjustment based on changes in the price index. The rules must:
1276	1276	(1) include standard language to be included in the
1277	1277	notice described by Subsection (c)(1) describing the rate
1278	1278	adjustment process; and
1279	1279	(2) provide that an annual rate adjustment described
1280	1280	by this section may not result in a rate increase to any class or
1281	1281	category of ratepayer of more than the lesser of:
1282	1282	(A) five percent; or
1283	1283	(B) the percentage increase in the price index
1284	1284	between the year preceding the year in which the utility requests
1285	1285	the adjustment and the year in which the utility requests the
1286	1286	adjustment.
1287	1287	(f) A utility may adjust the utility's rates using the
1288	1288	procedures adopted under Subsection (e) not more than once each
1289	1289	year and not more than four times between rate proceedings
1290	1290	described by Section 13.1871.
1291	1291	SECTION 39. Section 13.188, Water Code, is amended to read
1292	1292	as follows:
1293	1293	Sec. 13.188. ADJUSTMENT FOR CHANGE IN ENERGY COSTS. (a)
1294	1294	Notwithstanding any other provision in this chapter, the utility
1295	1295	commission by rule shall adopt a procedure allowing a utility to
1296	1296	file with the utility commission an application to timely adjust
1297	1297	the utility's rates to reflect an increase or decrease in
1298	1298	documented energy costs in a pass through clause. The utility
1299	1299	commission, by rule, shall require the pass through of documented
1300	1300	decreases in energy costs within a reasonable time. The pass
1301	1301	through, whether a decrease or increase, shall be implemented on no
1302	1302	later than an annual basis, unless the utility commission
1303	1303	determines a special circumstance applies.
1304	1304	(b) Notwithstanding any other provision to the contrary,
1305	1305	this adjustment is an uncontested matter not subject to a contested
1306	1306	case hearing. However, the utility commission [executive director]
1307	1307	shall hold an uncontested public meeting:
1308	1308	(1) on the request of a member of the legislature who
1309	1309	represents the area served by the water and sewer utility; or
1310	1310	(2) if the utility commission [executive director]
1311	1311	determines that there is substantial public interest in the matter.
1312	1312	(c) A proceeding under this section is not a rate case and
1313	1313	Sections [Section] 13.187, 13.1871, and 13.1872 do [does] not
1314	1314	apply.
1315	1315	SECTION 40. Sections 13.241(a), (d), and (e), Water Code,
1316	1316	are amended to read as follows:
1317	1317	(a) In determining whether to grant or amend a certificate
1318	1318	of public convenience and necessity, the utility commission shall
1319	1319	ensure that the applicant possesses the financial, managerial, and
1320	1320	technical capability to provide continuous and adequate service.
1321	1321	(d) Before the utility commission grants a new certificate
1322	1322	of convenience and necessity for an area which would require
1323	1323	construction of a physically separate water or sewer system, the
1324	1324	applicant must demonstrate to the utility commission that
1325	1325	regionalization or consolidation with another retail public
1326	1326	utility is not economically feasible.
1327	1327	(e) The utility commission by rule shall develop a
1328	1328	standardized method for determining under Section 13.246(f) which
1329	1329	of two or more retail public utilities or water supply or sewer
1330	1330	service corporations that apply for a certificate of public
1331	1331	convenience and necessity to provide water or sewer utility service
1332	1332	to an uncertificated area located in an economically distressed
1333	1333	area is more capable financially, managerially, and technically of
1334	1334	providing continuous and adequate service. In this subsection,
1335	1335	"economically distressed area" has the meaning assigned by Section
1336	1336	15.001.
1337	1337	SECTION 41. Sections 13.242(a) and (c), Water Code, are
1338	1338	amended to read as follows:
1339	1339	(a) Unless otherwise specified, a utility, a utility
1340	1340	operated by an affected county, or a water supply or sewer service
1341	1341	corporation may not in any way render retail water or sewer utility
1342	1342	service directly or indirectly to the public without first having
1343	1343	obtained from the utility commission a certificate that the present
1344	1344	or future public convenience and necessity will require that
1345	1345	installation, operation, or extension, and except as otherwise
1346	1346	provided by this subchapter, a retail public utility may not
1347	1347	furnish, make available, render, or extend retail water or sewer
1348	1348	utility service to any area to which retail water or sewer utility
1349	1349	service is being lawfully furnished by another retail public
1350	1350	utility without first having obtained a certificate of public
1351	1351	convenience and necessity that includes the area in which the
1352	1352	consuming facility is located.
1353	1353	(c) The utility commission may by rule allow a municipality
1354	1354	or utility or water supply corporation to render retail water
1355	1355	service without a certificate of public convenience and necessity
1356	1356	if the municipality has given notice under Section 13.255 [of this
1357	1357	code] that it intends to provide retail water service to an area or
1358	1358	if the utility or water supply corporation has less than 15
1359	1359	potential connections and is not within the certificated area of
1360	1360	another retail public utility.
1361	1361	SECTION 42. Section 13.244, Water Code, is amended to read
1362	1362	as follows:
1363	1363	Sec. 13.244. APPLICATION; MAPS AND OTHER INFORMATION;
1364	1364	EVIDENCE AND CONSENT. (a) To obtain a certificate of public
1365	1365	convenience and necessity or an amendment to a certificate, a
1366	1366	public utility or water supply or sewer service corporation shall
1367	1367	submit to the utility commission an application for a certificate
1368	1368	or for an amendment as provided by this section.
1369	1369	(b) Each public utility and water supply or sewer service
1370	1370	corporation shall file with the utility commission a map or maps
1371	1371	showing all its facilities and illustrating separately facilities
1372	1372	for production, transmission, and distribution of its services, and
1373	1373	each certificated retail public utility shall file with the utility
1374	1374	commission a map or maps showing any facilities, customers, or area
1375	1375	currently being served outside its certificated areas.
1376	1376	(c) Each applicant for a certificate or for an amendment
1377	1377	shall file with the utility commission evidence required by the
1378	1378	utility commission to show that the applicant has received the
1379	1379	required consent, franchise, or permit of the proper municipality
1380	1380	or other public authority.
1381	1381	(d) An application for a certificate of public convenience
1382	1382	and necessity or for an amendment to a certificate must contain:
1383	1383	(1) a description of the proposed service area by:
1384	1384	(A) a metes and bounds survey certified by a
1385	1385	licensed state land surveyor or a registered professional land
1386	1386	surveyor;
1387	1387	(B) the Texas State Plane Coordinate System;
1388	1388	(C) verifiable landmarks, including a road,
1389	1389	creek, or railroad line; or
1390	1390	(D) if a recorded plat of the area exists, lot and
1391	1391	block number;
1392	1392	(2) a description of any requests for service in the
1393	1393	proposed service area;
1394	1394	(3) a capital improvements plan, including a budget
1395	1395	and estimated timeline for construction of all facilities necessary
1396	1396	to provide full service to the entire proposed service area;
1397	1397	(4) a description of the sources of funding for all
1398	1398	facilities;
1399	1399	(5) to the extent known, a description of current and
1400	1400	projected land uses, including densities;
1401	1401	(6) a current financial statement of the applicant;
1402	1402	(7) according to the tax roll of the central appraisal
1403	1403	district for each county in which the proposed service area is
1404	1404	located, a list of the owners of each tract of land that is:
1405	1405	(A) at least 50 acres; and
1406	1406	(B) wholly or partially located within the
1407	1407	proposed service area; and
1408	1408	(8) any other item required by the utility commission.
1409	1409	SECTION 43. Sections 13.245(b), (c), (c-1), (c-2), (c-3),
1410	1410	and (e), Water Code, are amended to read as follows:
1411	1411	(b) Except as provided by Subsections (c), (c-1), and (c-2),
1412	1412	the utility commission may not grant to a retail public utility a
1413	1413	certificate of public convenience and necessity for a service area
1414	1414	within the boundaries or extraterritorial jurisdiction of a
1415	1415	municipality without the consent of the municipality. The
1416	1416	municipality may not unreasonably withhold the consent. As a
1417	1417	condition of the consent, a municipality may require that all water
1418	1418	and sewer facilities be designed and constructed in accordance with
1419	1419	the municipality's standards for facilities.
1420	1420	(c) If a municipality has not consented under Subsection (b)
1421	1421	before the 180th day after the date the municipality receives the
1422	1422	retail public utility's application, the utility commission shall
1423	1423	grant the certificate of public convenience and necessity without
1424	1424	the consent of the municipality if the utility commission finds
1425	1425	that the municipality:
1426	1426	(1) does not have the ability to provide service; or
1427	1427	(2) has failed to make a good faith effort to provide
1428	1428	service on reasonable terms and conditions.
1429	1429	(c-1) If a municipality has not consented under Subsection
1430	1430	(b) before the 180th day after the date a landowner or a retail
1431	1431	public utility submits to the municipality a formal request for
1432	1432	service according to the municipality's application requirements
1433	1433	and standards for facilities on the same or substantially similar
1434	1434	terms as provided by the retail public utility's application to the
1435	1435	utility commission, including a capital improvements plan required
1436	1436	by Section 13.244(d)(3) or a subdivision plat, the utility
1437	1437	commission may grant the certificate of public convenience and
1438	1438	necessity without the consent of the municipality if:
1439	1439	(1) the utility commission makes the findings required
1440	1440	by Subsection (c);
1441	1441	(2) the municipality has not entered into a binding
1442	1442	commitment to serve the area that is the subject of the retail
1443	1443	public utility's application to the utility commission before the
1444	1444	180th day after the date the formal request was made; and
1445	1445	(3) the landowner or retail public utility that
1446	1446	submitted the formal request has not unreasonably refused to:
1447	1447	(A) comply with the municipality's service
1448	1448	extension and development process; or
1449	1449	(B) enter into a contract for water or sewer
1450	1450	services with the municipality.
1451	1451	(c-2) If a municipality refuses to provide service in the
1452	1452	proposed service area, as evidenced by a formal vote of the
1453	1453	municipality's governing body or an official notification from the
1454	1454	municipality, the utility commission is not required to make the
1455	1455	findings otherwise required by this section and may grant the
1456	1456	certificate of public convenience and necessity to the retail
1457	1457	public utility at any time after the date of the formal vote or
1458	1458	receipt of the official notification.
1459	1459	(c-3) The utility commission must include as a condition of
1460	1460	a certificate of public convenience and necessity granted under
1461	1461	Subsection (c-1) or (c-2) that all water and sewer facilities be
1462	1462	designed and constructed in accordance with the municipality's
1463	1463	standards for water and sewer facilities.
1464	1464	(e) If the utility commission makes a decision under
1465	1465	Subsection (d) regarding the grant of a certificate of public
1466	1466	convenience and necessity without the consent of the municipality,
1467	1467	the municipality or the retail public utility may appeal the
1468	1468	decision to the appropriate state district court. The court shall
1469	1469	hear the petition within 120 days after the date the petition is
1470	1470	filed. On final disposition, the court may award reasonable fees to
1471	1471	the prevailing party.
1472	1472	SECTION 44. Sections 13.2451(b) and (c), Water Code, are
1473	1473	amended to read as follows:
1474	1474	(b) The utility commission may not extend a municipality's
1475	1475	certificate of public convenience and necessity beyond its
1476	1476	extraterritorial jurisdiction if an owner of land that is located
1477	1477	wholly or partly outside the extraterritorial jurisdiction elects
1478	1478	to exclude some or all of the landowner's property within a proposed
1479	1479	service area in accordance with Section 13.246(h). This subsection
1480	1480	does not apply to a transfer of a certificate as approved by the
1481	1481	utility commission.
1482	1482	(c) The utility commission, after notice to the
1483	1483	municipality and an opportunity for a hearing, may decertify an
1484	1484	area outside a municipality's extraterritorial jurisdiction if the
1485	1485	municipality does not provide service to the area on or before the
1486	1486	fifth anniversary of the date the certificate of public convenience
1487	1487	and necessity was granted for the area. This subsection does not
1488	1488	apply to a certificate of public convenience and necessity for an
1489	1489	area:
1490	1490	(1) that was transferred to a municipality on approval
1491	1491	of the utility commission; and
1492	1492	(2) in relation to which the municipality has spent
1493	1493	public funds.
1494	1494	SECTION 45. Section 13.246, Water Code, is amended to read
1495	1495	as follows:
1496	1496	Sec. 13.246. NOTICE AND HEARING; ISSUANCE OR REFUSAL;
1497	1497	FACTORS CONSIDERED. (a) If an application for a certificate of
1498	1498	public convenience and necessity or for an amendment to a
1499	1499	certificate is filed, the utility commission shall cause notice of
1500	1500	the application to be given to affected parties and to each county
1501	1501	and groundwater conservation district that is wholly or partly
1502	1502	included in the area proposed to be certified. If requested, the
1503	1503	utility commission shall fix a time and place for a hearing and give
1504	1504	notice of the hearing. Any person affected by the application may
1505	1505	intervene at the hearing.
1506	1506	(a-1) Except as otherwise provided by this subsection, in
1507	1507	addition to the notice required by Subsection (a), the utility
1508	1508	commission shall require notice to be mailed to each owner of a
1509	1509	tract of land that is at least 25 acres and is wholly or partially
1510	1510	included in the area proposed to be certified. Notice required
1511	1511	under this subsection must be mailed by first class mail to the
1512	1512	owner of the tract according to the most current tax appraisal rolls
1513	1513	of the applicable central appraisal district at the time the
1514	1514	utility commission received the application for the certificate or
1515	1515	amendment. Good faith efforts to comply with the requirements of
1516	1516	this subsection shall be considered adequate notice to landowners.
1517	1517	Notice under this subsection is not required for a matter filed with
1518	1518	the utility commission or the commission under:
1519	1519	(1) Section 13.248 or 13.255; or
1520	1520	(2) Chapter 65.
1521	1521	(b) The utility commission may grant applications and issue
1522	1522	certificates and amendments to certificates only if the utility
1523	1523	commission finds that a certificate or amendment is necessary for
1524	1524	the service, accommodation, convenience, or safety of the public.
1525	1525	The utility commission may issue a certificate or amendment as
1526	1526	requested, or refuse to issue it, or issue it for the construction
1527	1527	of only a portion of the contemplated system or facility or
1528	1528	extension, or for the partial exercise only of the right or
1529	1529	privilege and may impose special conditions necessary to ensure
1530	1530	that continuous and adequate service is provided.
1531	1531	(c) Certificates of public convenience and necessity and
1532	1532	amendments to certificates shall be granted by the utility
1533	1533	commission on a nondiscriminatory basis after consideration by the
1534	1534	utility commission of:
1535	1535	(1) the adequacy of service currently provided to the
1536	1536	requested area;
1537	1537	(2) the need for additional service in the requested
1538	1538	area, including whether any landowners, prospective landowners,
1539	1539	tenants, or residents have requested service;
1540	1540	(3) the effect of the granting of a certificate or of
1541	1541	an amendment on the recipient of the certificate or amendment, on
1542	1542	the landowners in the area, and on any retail public utility of the
1543	1543	same kind already serving the proximate area;
1544	1544	(4) the ability of the applicant to provide adequate
1545	1545	service, including meeting the standards of the commission, taking
1546	1546	into consideration the current and projected density and land use
1547	1547	of the area;
1548	1548	(5) the feasibility of obtaining service from an
1549	1549	adjacent retail public utility;
1550	1550	(6) the financial ability of the applicant to pay for
1551	1551	the facilities necessary to provide continuous and adequate service
1552	1552	and the financial stability of the applicant, including, if
1553	1553	applicable, the adequacy of the applicant's debt-equity ratio;
1554	1554	(7) environmental integrity;
1555	1555	(8) the probable improvement of service or lowering of
1556	1556	cost to consumers in that area resulting from the granting of the
1557	1557	certificate or amendment; and
1558	1558	(9) the effect on the land to be included in the
1559	1559	certificated area.
1560	1560	(d) The utility commission may require an applicant for a
1561	1561	certificate or for an amendment to provide a bond or other financial
1562	1562	assurance in a form and amount specified by the utility commission
1563	1563	to ensure that continuous and adequate utility service is provided.
1564	1564	(e) Where applicable, in addition to the other factors in
1565	1565	this section the utility commission shall consider the efforts of
1566	1566	the applicant:
1567	1567	(1) to extend service to any economically distressed
1568	1568	areas located within the service areas certificated to the
1569	1569	applicant; and
1570	1570	(2) to enforce the rules adopted under Section 16.343.
1571	1571	(f) If two or more retail public utilities or water supply
1572	1572	or sewer service corporations apply for a certificate of public
1573	1573	convenience and necessity to provide water or sewer utility service
1574	1574	to an uncertificated area located in an economically distressed
1575	1575	area and otherwise meet the requirements for obtaining a new
1576	1576	certificate, the utility commission shall grant the certificate to
1577	1577	the retail public utility or water supply or sewer service
1578	1578	corporation that is more capable financially, managerially, and
1579	1579	technically of providing continuous and adequate service.
1580	1580	(g) In this section, "economically distressed area" has the
1581	1581	meaning assigned by Section 15.001.
1582	1582	(h) Except as provided by Subsection (i), a landowner who
1583	1583	owns a tract of land that is at least 25 acres and that is wholly or
1584	1584	partially located within the proposed service area may elect to
1585	1585	exclude some or all of the landowner's property from the proposed
1586	1586	service area by providing written notice to the utility commission
1587	1587	before the 30th day after the date the landowner receives notice of
1588	1588	a new application for a certificate of public convenience and
1589	1589	necessity or for an amendment to an existing certificate of public
1590	1590	convenience and necessity. The landowner's election is effective
1591	1591	without a further hearing or other process by the utility
1592	1592	commission. If a landowner makes an election under this
1593	1593	subsection, the application shall be modified so that the electing
1594	1594	landowner's property is not included in the proposed service area.
1595	1595	An applicant for a certificate of public convenience and necessity
1596	1596	that has land removed from its proposed certificated service area
1597	1597	because of a landowner's election under this subsection may not be
1598	1598	required to provide service to the removed land for any reason,
1599	1599	including the violation of law or utility commission or commission
1600	1600	rules by the water or sewer system of another person.
1601	1601	(i) A landowner is not entitled to make an election under
1602	1602	Subsection (h) but is entitled to contest the inclusion of the
1603	1603	landowner's property in the proposed service area at a hearing held
1604	1604	by the utility commission regarding the application if the proposed
1605	1605	service area is located within the boundaries or extraterritorial
1606	1606	jurisdiction of a municipality with a population of more than
1607	1607	500,000 and the municipality or a utility owned by the municipality
1608	1608	is the applicant.
1609	1609	SECTION 46. Section 13.247(a), Water Code, is amended to
1610	1610	read as follows:
1611	1611	(a) If an area is within the boundaries of a municipality,
1612	1612	all retail public utilities certified or entitled to certification
1613	1613	under this chapter to provide service or operate facilities in that
1614	1614	area may continue and extend service in its area of public
1615	1615	convenience and necessity within the area pursuant to the rights
1616	1616	granted by its certificate and this chapter, unless the
1617	1617	municipality exercises its power of eminent domain to acquire the
1618	1618	property of the retail public utility under Subsection (d). Except
1619	1619	as provided by Section 13.255, a municipally owned or operated
1620	1620	utility may not provide retail water and sewer utility service
1621	1621	within the area certificated to another retail public utility
1622	1622	without first having obtained from the utility commission a
1623	1623	certificate of public convenience and necessity that includes the
1624	1624	areas to be served.
1625	1625	SECTION 47. Section 13.248, Water Code, is amended to read
1626	1626	as follows:
1627	1627	Sec. 13.248. CONTRACTS VALID AND ENFORCEABLE. Contracts
1628	1628	between retail public utilities designating areas to be served and
1629	1629	customers to be served by those retail public utilities, when
1630	1630	approved by the utility commission after public notice and hearing,
1631	1631	are valid and enforceable and are incorporated into the appropriate
1632	1632	areas of public convenience and necessity.
1633	1633	SECTION 48. Sections 13.250(b), (c), and (e), Water Code,
1634	1634	are amended to read as follows:
1635	1635	(b) Unless the utility commission issues a certificate that
1636	1636	neither the present nor future convenience and necessity will be
1637	1637	adversely affected, the holder of a certificate or a person who
1638	1638	possesses facilities used to provide utility service shall not
1639	1639	discontinue, reduce, or impair service to a certified service area
1640	1640	or part of a certified service area except for:
1641	1641	(1) nonpayment of charges for services provided by the
1642	1642	certificate holder or a person who possesses facilities used to
1643	1643	provide utility service;
1644	1644	(2) nonpayment of charges for sewer service provided
1645	1645	by another retail public utility under an agreement between the
1646	1646	retail public utility and the certificate holder or a person who
1647	1647	possesses facilities used to provide utility service or under a
1648	1648	utility commission-ordered arrangement between the two service
1649	1649	providers;
1650	1650	(3) nonuse; or
1651	1651	(4) other similar reasons in the usual course of
1652	1652	business.
1653	1653	(c) Any discontinuance, reduction, or impairment of
1654	1654	service, whether with or without approval of the utility
1655	1655	commission, shall be in conformity with and subject to conditions,
1656	1656	restrictions, and limitations that the utility commission
1657	1657	prescribes.
1658	1658	(e) Not later than the 48th hour after the hour in which a
1659	1659	utility files a bankruptcy petition, the utility shall report this
1660	1660	fact to the utility commission and the commission in writing.
1661	1661	SECTION 49. Section 13.2502(d), Water Code, is amended to
1662	1662	read as follows:
1663	1663	(d) This section does not limit or extend the jurisdiction
1664	1664	of the utility commission under Section 13.043(g).
1665	1665	SECTION 50. Section 13.251, Water Code, is amended to read
1666	1666	as follows:
1667	1667	Sec. 13.251. SALE, ASSIGNMENT, OR LEASE OF CERTIFICATE.
1668	1668	Except as provided by Section 13.255 [of this code], a utility or a
1669	1669	water supply or sewer service corporation may not sell, assign, or
1670	1670	lease a certificate of public convenience and necessity or any
1671	1671	right obtained under a certificate unless the commission has
1672	1672	determined that the purchaser, assignee, or lessee is capable of
1673	1673	rendering adequate and continuous service to every consumer within
1674	1674	the certified area, after considering the factors under Section
1675	1675	13.246(c) [of this code]. The sale, assignment, or lease shall be
1676	1676	on the conditions prescribed by the utility commission.
1677	1677	SECTION 51. Section 13.252, Water Code, is amended to read
1678	1678	as follows:
1679	1679	Sec. 13.252. INTERFERENCE WITH OTHER RETAIL PUBLIC UTILITY.
1680	1680	If a retail public utility in constructing or extending a line,
1681	1681	plant, or system interferes or attempts to interfere with the
1682	1682	operation of a line, plant, or system of any other retail public
1683	1683	utility, or furnishes, makes available, renders, or extends retail
1684	1684	water or sewer utility service to any portion of the service area of
1685	1685	another retail public utility that has been granted or is not
1686	1686	required to possess a certificate of public convenience and
1687	1687	necessity, the utility commission may issue an order prohibiting
1688	1688	the construction, extension, or provision of service or prescribing
1689	1689	terms and conditions for locating the line, plant, or system
1690	1690	affected or for the provision of the service.
1691	1691	SECTION 52. Section 13.253, Water Code, is amended to read
1692	1692	as follows:
1693	1693	Sec. 13.253. IMPROVEMENTS IN SERVICE; INTERCONNECTING
1694	1694	SERVICE. (a) After notice and hearing, the utility commission or
1695	1695	the commission may:
1696	1696	(1) order any retail public utility that is required
1697	1697	by law to possess a certificate of public convenience and necessity
1698	1698	or any retail public utility that possesses a certificate of public
1699	1699	convenience and necessity and is located in an affected county as
1700	1700	defined in Section 16.341 to:
1701	1701	(A) provide specified improvements in its
1702	1702	service in a defined area if service in that area is inadequate or
1703	1703	is substantially inferior to service in a comparable area and it is
1704	1704	reasonable to require the retail public utility to provide the
1705	1705	improved service; or
1706	1706	(B) develop, implement, and follow financial,
1707	1707	managerial, and technical practices that are acceptable to the
1708	1708	utility commission to ensure that continuous and adequate service
1709	1709	is provided to any areas currently certificated to the retail
1710	1710	public utility if the retail public utility has not provided
1711	1711	continuous and adequate service to any of those areas and, for a
1712	1712	utility, to provide financial assurance of the utility's ability to
1713	1713	operate the system in accordance with applicable laws and rules, in
1714	1714	the form of a bond or other financial assurance in a form and amount
1715	1715	specified by the utility commission;
1716	1716	(2) order two or more public utilities or water supply
1717	1717	or sewer service corporations to establish specified facilities for
1718	1718	interconnecting service;
1719	1719	(3) order a public utility or water supply or sewer
1720	1720	service corporation that has not demonstrated that it can provide
1721	1721	continuous and adequate service from its drinking water source or
1722	1722	sewer treatment facility to obtain service sufficient to meet its
1723	1723	obligation to provide continuous and adequate service on at least a
1724	1724	wholesale basis from another consenting utility service provider;
1725	1725	or
1726	1726	(4) issue an emergency order, with or without a
1727	1727	hearing, under Section 13.041.
1728	1728	(b) If the utility commission has reason to believe that
1729	1729	improvements and repairs to a water or sewer service system are
1730	1730	necessary to enable a retail public utility to provide continuous
1731	1731	and adequate service in any portion of its service area and the
1732	1732	retail public utility has provided financial assurance under
1733	1733	Section 341.0355, Health and Safety Code, or under this chapter,
1734	1734	the utility commission, after providing to the retail public
1735	1735	utility notice and an opportunity to be heard by the commissioners
1736	1736	at a [commission] meeting of the utility commission, may
1737	1737	immediately order specified improvements and repairs to the water
1738	1738	or sewer system, the costs of which may be paid by the bond or other
1739	1739	financial assurance in an amount determined by the utility
1740	1740	commission not to exceed the amount of the bond or financial
1741	1741	assurance. The order requiring the improvements may be an
1742	1742	emergency order if it is issued after the retail public utility has
1743	1743	had an opportunity to be heard [by the commissioners] at a
1744	1744	[commission] meeting of the utility commission. After notice and
1745	1745	hearing, the utility commission may require a retail public utility
1746	1746	to obligate additional money to replace the financial assurance
1747	1747	used for the improvements.
1748	1748	SECTION 53. Sections 13.254(a), (a-1), (a-2), (a-3), (a-4),
1749	1749	(a-6), (a-8), (b), (c), (d), (e), (f), (g), (g-1), and (h), Water
1750	1750	Code, are amended to read as follows:
1751	1751	(a) The utility commission at any time after notice and
1752	1752	hearing may revoke or amend any certificate of public convenience
1753	1753	and necessity with the written consent of the certificate holder or
1754	1754	if the utility commission [it] finds that:
1755	1755	(1) the certificate holder has never provided, is no
1756	1756	longer providing, is incapable of providing, or has failed to
1757	1757	provide continuous and adequate service in the area, or part of the
1758	1758	area, covered by the certificate;
1759	1759	(2) in an affected county as defined in Section
1760	1760	16.341, the cost of providing service by the certificate holder is
1761	1761	so prohibitively expensive as to constitute denial of service,
1762	1762	provided that, for commercial developments or for residential
1763	1763	developments started after September 1, 1997, in an affected county
1764	1764	as defined in Section 16.341, the fact that the cost of obtaining
1765	1765	service from the currently certificated retail public utility makes
1766	1766	the development economically unfeasible does not render such cost
1767	1767	prohibitively expensive in the absence of other relevant factors;
1768	1768	(3) the certificate holder has agreed in writing to
1769	1769	allow another retail public utility to provide service within its
1770	1770	service area, except for an interim period, without amending its
1771	1771	certificate; or
1772	1772	(4) the certificate holder has failed to file a cease
1773	1773	and desist action pursuant to Section 13.252 within 180 days of the
1774	1774	date that it became aware that another retail public utility was
1775	1775	providing service within its service area, unless the certificate
1776	1776	holder demonstrates good cause for its failure to file such action
1777	1777	within the 180 days.
1778	1778	(a-1) As an alternative to decertification under Subsection
1779	1779	(a), the owner of a tract of land that is at least 50 acres and that
1780	1780	is not in a platted subdivision actually receiving water or sewer
1781	1781	service may petition the utility commission under this subsection
1782	1782	for expedited release of the area from a certificate of public
1783	1783	convenience and necessity so that the area may receive service from
1784	1784	another retail public utility. The fact that a certificate holder
1785	1785	is a borrower under a federal loan program is not a bar to a request
1786	1786	under this subsection for the release of the petitioner's land and
1787	1787	the receipt of services from an alternative provider. On the day
1788	1788	the petitioner submits the petition to the utility commission, the
1789	1789	petitioner shall send, via certified mail, a copy of the petition to
1790	1790	the certificate holder, who may submit information to the utility
1791	1791	commission to controvert information submitted by the petitioner.
1792	1792	The petitioner must demonstrate that:
1793	1793	(1) a written request for service, other than a
1794	1794	request for standard residential or commercial service, has been
1795	1795	submitted to the certificate holder, identifying:
1796	1796	(A) the area for which service is sought;
1797	1797	(B) the timeframe within which service is needed
1798	1798	for current and projected service demands in the area;
1799	1799	(C) the level and manner of service needed for
1800	1800	current and projected service demands in the area;
1801	1801	(D) the approximate cost for the alternative
1802	1802	provider to provide the service at the same level and manner that is
1803	1803	requested from the certificate holder;
1804	1804	(E) the flow and pressure requirements and
1805	1805	specific infrastructure needs, including line size and system
1806	1806	capacity for the required level of fire protection requested; and
1807	1807	(F) any additional information requested by the
1808	1808	certificate holder that is reasonably related to determination of
1809	1809	the capacity or cost for providing the service;
1810	1810	(2) the certificate holder has been allowed at least
1811	1811	90 calendar days to review and respond to the written request and
1812	1812	the information it contains;
1813	1813	(3) the certificate holder:
1814	1814	(A) has refused to provide the service;
1815	1815	(B) is not capable of providing the service on a
1816	1816	continuous and adequate basis within the timeframe, at the level,
1817	1817	at the approximate cost that the alternative provider is capable of
1818	1818	providing for a comparable level of service, or in the manner
1819	1819	reasonably needed or requested by current and projected service
1820	1820	demands in the area; or
1821	1821	(C) conditions the provision of service on the
1822	1822	payment of costs not properly allocable directly to the
1823	1823	petitioner's service request, as determined by the utility
1824	1824	commission; and
1825	1825	(4) the alternate retail public utility from which the
1826	1826	petitioner will be requesting service possesses the financial,
1827	1827	managerial, and technical capability to provide continuous and
1828	1828	adequate service within the timeframe, at the level, at the cost,
1829	1829	and in the manner reasonably needed or requested by current and
1830	1830	projected service demands in the area.
1831	1831	(a-2) A landowner is not entitled to make the election
1832	1832	described in Subsection (a-1) or (a-5) but is entitled to contest
1833	1833	under Subsection (a) the involuntary certification of its property
1834	1834	in a hearing held by the utility commission if the landowner's
1835	1835	property is located:
1836	1836	(1) within the boundaries of any municipality or the
1837	1837	extraterritorial jurisdiction of a municipality with a population
1838	1838	of more than 500,000 and the municipality or retail public utility
1839	1839	owned by the municipality is the holder of the certificate; or
1840	1840	(2) in a platted subdivision actually receiving water
1841	1841	or sewer service.
1842	1842	(a-3) Within 60 calendar days from the date the utility
1843	1843	commission determines the petition filed pursuant to Subsection
1844	1844	(a-1) to be administratively complete, the utility commission shall
1845	1845	grant the petition unless the utility commission makes an express
1846	1846	finding that the petitioner failed to satisfy the elements required
1847	1847	in Subsection (a-1) and supports its finding with separate findings
1848	1848	and conclusions for each element based solely on the information
1849	1849	provided by the petitioner and the certificate holder. The utility
1850	1850	commission may grant or deny a petition subject to terms and
1851	1851	conditions specifically related to the service request of the
1852	1852	petitioner and all relevant information submitted by the petitioner
1853	1853	and the certificate holder. In addition, the utility commission
1854	1854	may require an award of compensation as otherwise provided by this
1855	1855	section.
1856	1856	(a-4) Chapter 2001, Government Code, does not apply to any
1857	1857	petition filed under Subsection (a-1). The decision of the utility
1858	1858	commission on the petition is final after any reconsideration
1859	1859	authorized by the utility commission's rules and may not be
1860	1860	appealed.
1861	1861	(a-6) The utility commission shall grant a petition
1862	1862	received under Subsection (a-5) not later than the 60th day after
1863	1863	the date the landowner files the petition. The utility commission
1864	1864	may not deny a petition received under Subsection (a-5) based on the
1865	1865	fact that a certificate holder is a borrower under a federal loan
1866	1866	program. The utility commission may require an award of
1867	1867	compensation by the petitioner to a decertified retail public
1868	1868	utility that is the subject of a petition filed under Subsection
1869	1869	(a-5) as otherwise provided by this section.
1870	1870	(a-8) If a certificate holder has never made service
1871	1871	available through planning, design, construction of facilities, or
1872	1872	contractual obligations to serve the area a petitioner seeks to
1873	1873	have released under Subsection (a-1), the utility commission is not
1874	1874	required to find that the proposed alternative provider is capable
1875	1875	of providing better service than the certificate holder, but only
1876	1876	that the proposed alternative provider is capable of providing the
1877	1877	requested service.
1878	1878	(b) Upon written request from the certificate holder, the
1879	1879	utility commission [executive director] may cancel the certificate
1880	1880	of a utility or water supply corporation authorized by rule to
1881	1881	operate without a certificate of public convenience and necessity
1882	1882	under Section 13.242(c).
1883	1883	(c) If the certificate of any retail public utility is
1884	1884	revoked or amended, the utility commission may require one or more
1885	1885	retail public utilities with their consent to provide service in
1886	1886	the area in question. The order of the utility commission shall not
1887	1887	be effective to transfer property.
1888	1888	(d) A retail public utility may not in any way render retail
1889	1889	water or sewer service directly or indirectly to the public in an
1890	1890	area that has been decertified under this section without providing
1891	1891	compensation for any property that the utility commission
1892	1892	determines is rendered useless or valueless to the decertified
1893	1893	retail public utility as a result of the decertification.
1894	1894	(e) The determination of the monetary amount of
1895	1895	compensation, if any, shall be determined at the time another
1896	1896	retail public utility seeks to provide service in the previously
1897	1897	decertified area and before service is actually provided. The
1898	1898	utility commission shall ensure that the monetary amount of
1899	1899	compensation is determined not later than the 90th calendar day
1900	1900	after the date on which a retail public utility notifies the utility
1901	1901	commission of its intent to provide service to the decertified
1902	1902	area.
1903	1903	(f) The monetary amount shall be determined by a qualified
1904	1904	individual or firm serving as independent appraiser agreed upon by
1905	1905	the decertified retail public utility and the retail public utility
1906	1906	seeking to serve the area. The determination of compensation by the
1907	1907	independent appraiser shall be binding on the utility commission.
1908	1908	The costs of the independent appraiser shall be borne by the retail
1909	1909	public utility seeking to serve the area.
1910	1910	(g) For the purpose of implementing this section, the value
1911	1911	of real property owned and utilized by the retail public utility for
1912	1912	its facilities shall be determined according to the standards set
1913	1913	forth in Chapter 21, Property Code, governing actions in eminent
1914	1914	domain and the value of personal property shall be determined
1915	1915	according to the factors in this subsection. The factors ensuring
1916	1916	that the compensation to a retail public utility is just and
1917	1917	adequate shall include: the amount of the retail public utility's
1918	1918	debt allocable for service to the area in question; the value of the
1919	1919	service facilities of the retail public utility located within the
1920	1920	area in question; the amount of any expenditures for planning,
1921	1921	design, or construction of service facilities that are allocable to
1922	1922	service to the area in question; the amount of the retail public
1923	1923	utility's contractual obligations allocable to the area in
1924	1924	question; any demonstrated impairment of service or increase of
1925	1925	cost to consumers of the retail public utility remaining after the
1926	1926	decertification; the impact on future revenues lost from existing
1927	1927	customers; necessary and reasonable legal expenses and
1928	1928	professional fees; and other relevant factors. The utility
1929	1929	commission shall adopt rules governing the evaluation of these
1930	1930	factors.
1931	1931	(g-1) If the retail public utilities cannot agree on an
1932	1932	independent appraiser within 10 calendar days after the date on
1933	1933	which the retail public utility notifies the utility commission of
1934	1934	its intent to provide service to the decertified area, each retail
1935	1935	public utility shall engage its own appraiser at its own expense,
1936	1936	and each appraisal shall be submitted to the utility commission
1937	1937	within 60 calendar days. After receiving the appraisals, the
1938	1938	utility commission shall appoint a third appraiser who shall make a
1939	1939	determination of the compensation within 30 days. The
1940	1940	determination may not be less than the lower appraisal or more than
1941	1941	the higher appraisal. Each retail public utility shall pay half the
1942	1942	cost of the third appraisal.
1943	1943	(h) A certificate holder that has land removed from its
1944	1944	certificated service area in accordance with this section may not
1945	1945	be required, after the land is removed, to provide service to the
1946	1946	removed land for any reason, including the violation of law or
1947	1947	utility commission or commission rules by a water or sewer system of
1948	1948	another person.
1949	1949	SECTION 54. Sections 13.255(a), (b), (c), (d), (e), (g-1),
1950	1950	(k), (l), and (m), Water Code, are amended to read as follows:
1951	1951	(a) In the event that an area is incorporated or annexed by a
1952	1952	municipality, either before or after the effective date of this
1953	1953	section, the municipality and a retail public utility that provides
1954	1954	water or sewer service to all or part of the area pursuant to a
1955	1955	certificate of convenience and necessity may agree in writing that
1956	1956	all or part of the area may be served by a municipally owned
1957	1957	utility, by a franchised utility, or by the retail public utility.
1958	1958	In this section, the phrase "franchised utility" shall mean a
1959	1959	retail public utility that has been granted a franchise by a
1960	1960	municipality to provide water or sewer service inside municipal
1961	1961	boundaries. The agreement may provide for single or dual
1962	1962	certification of all or part of the area, for the purchase of
1963	1963	facilities or property, and for such other or additional terms that
1964	1964	the parties may agree on. If a franchised utility is to serve the
1965	1965	area, the franchised utility shall also be a party to the agreement.
1966	1966	The executed agreement shall be filed with the utility commission,
1967	1967	and the utility commission, on receipt of the agreement, shall
1968	1968	incorporate the terms of the agreement into the respective
1969	1969	certificates of convenience and necessity of the parties to the
1970	1970	agreement.
1971	1971	(b) If an agreement is not executed within 180 days after
1972	1972	the municipality, in writing, notifies the retail public utility of
1973	1973	its intent to provide service to the incorporated or annexed area,
1974	1974	and if the municipality desires and intends to provide retail
1975	1975	utility service to the area, the municipality, prior to providing
1976	1976	service to the area, shall file an application with the utility
1977	1977	commission to grant single certification to the municipally owned
1978	1978	water or sewer utility or to a franchised utility. If an
1979	1979	application for single certification is filed, the utility
1980	1980	commission shall fix a time and place for a hearing and give notice
1981	1981	of the hearing to the municipality and franchised utility, if any,
1982	1982	and notice of the application and hearing to the retail public
1983	1983	utility.
1984	1984	(c) The utility commission shall grant single certification
1985	1985	to the municipality. The utility commission shall also determine
1986	1986	whether single certification as requested by the municipality would
1987	1987	result in property of a retail public utility being rendered
1988	1988	useless or valueless to the retail public utility, and shall
1989	1989	determine in its order the monetary amount that is adequate and just
1990	1990	to compensate the retail public utility for such property. If the
1991	1991	municipality in its application has requested the transfer of
1992	1992	specified property of the retail public utility to the municipality
1993	1993	or to a franchised utility, the utility commission shall also
1994	1994	determine in its order the adequate and just compensation to be paid
1995	1995	for such property pursuant to the provisions of this section,
1996	1996	including an award for damages to property remaining in the
1997	1997	ownership of the retail public utility after single certification.
1998	1998	The order of the utility commission shall not be effective to
1999	1999	transfer property. A transfer of property may only be obtained
2000	2000	under this section by a court judgment rendered pursuant to
2001	2001	Subsection (d) or (e) [of this section]. The grant of single
2002	2002	certification by the utility commission shall go into effect on the
2003	2003	date the municipality or franchised utility, as the case may be,
2004	2004	pays adequate and just compensation pursuant to court order, or
2005	2005	pays an amount into the registry of the court or to the retail
2006	2006	public utility under Subsection (f). If the court judgment
2007	2007	provides that the retail public utility is not entitled to any
2008	2008	compensation, the grant of single certification shall go into
2009	2009	effect when the court judgment becomes final. The municipality or
2010	2010	franchised utility must provide to each customer of the retail
2011	2011	public utility being acquired an individual written notice within
2012	2012	60 days after the effective date for the transfer specified in the
2013	2013	court judgment. The notice must clearly advise the customer of the
2014	2014	identity of the new service provider, the reason for the transfer,
2015	2015	the rates to be charged by the new service provider, and the
2016	2016	effective date of those rates.
2017	2017	(d) In the event the final order of the utility commission
2018	2018	is not appealed within 30 days, the municipality may request the
2019	2019	district court of Travis County to enter a judgment consistent with
2020	2020	the order of the utility commission. In such event, the court shall
2021	2021	render a judgment that:
2022	2022	(1) transfers to the municipally owned utility or
2023	2023	franchised utility title to property to be transferred to the
2024	2024	municipally owned utility or franchised utility as delineated by
2025	2025	the utility commission's final order and property determined by the
2026	2026	utility commission to be rendered useless or valueless by the
2027	2027	granting of single certification; and
2028	2028	(2) orders payment to the retail public utility of
2029	2029	adequate and just compensation for the property as determined by
2030	2030	the utility commission in its final order.
2031	2031	(e) Any party that is aggrieved by a final order of the
2032	2032	utility commission under this section may file an appeal with the
2033	2033	district court of Travis County within 30 days after the order
2034	2034	becomes final. The hearing in such an appeal before the district
2035	2035	court shall be by trial de novo on all issues. After the hearing, if
2036	2036	the court determines that the municipally owned utility or
2037	2037	franchised utility is entitled to single certification under the
2038	2038	provisions of this section, the court shall enter a judgment that:
2039	2039	(1) transfers to the municipally owned utility or
2040	2040	franchised utility title to property requested by the municipality
2041	2041	to be transferred to the municipally owned utility or franchised
2042	2042	utility and located within the singly certificated area and
2043	2043	property determined by the court or jury to be rendered useless or
2044	2044	valueless by the granting of single certification; and
2045	2045	(2) orders payment in accordance with Subsection (g)
2046	2046	[of this section] to the retail public utility of adequate and just
2047	2047	compensation for the property transferred and for the property
2048	2048	damaged as determined by the court or jury.
2049	2049	(g-1) The utility commission shall adopt rules governing
2050	2050	the evaluation of the factors to be considered in determining the
2051	2051	monetary compensation under Subsection (g). The utility commission
2052	2052	by rule shall adopt procedures to ensure that the total
2053	2053	compensation to be paid to a retail public utility under Subsection
2054	2054	(g) is determined not later than the 90th calendar day after the
2055	2055	date on which the utility commission determines that the
2056	2056	municipality's application is administratively complete.
2057	2057	(k) The following conditions apply when a municipality or
2058	2058	franchised utility makes an application to acquire the service area
2059	2059	or facilities of a retail public utility described in Subsection
2060	2060	(j)(2):
2061	2061	(1) the utility commission or court must determine
2062	2062	that the service provided by the retail public utility is
2063	2063	substandard or its rates are unreasonable in view of the reasonable
2064	2064	expenses of the utility;
2065	2065	(2) if the municipality abandons its application, the
2066	2066	court or the utility commission is authorized to award to the retail
2067	2067	public utility its reasonable expenses related to the proceeding
2068	2068	hereunder, including attorney fees; and
2069	2069	(3) unless otherwise agreed by the retail public
2070	2070	utility, the municipality must take the entire utility property of
2071	2071	the retail public utility in a proceeding hereunder.
2072	2072	(l) For an area incorporated by a municipality, the
2073	2073	compensation provided under Subsection (g) shall be determined by a
2074	2074	qualified individual or firm to serve as independent appraiser, who
2075	2075	shall be selected by the affected retail public utility, and the
2076	2076	costs of the appraiser shall be paid by the municipality. For an
2077	2077	area annexed by a municipality, the compensation provided under
2078	2078	Subsection (g) shall be determined by a qualified individual or
2079	2079	firm to which the municipality and the retail public utility agree
2080	2080	to serve as independent appraiser. If the retail public utility and
2081	2081	the municipality are unable to agree on a single individual or firm
2082	2082	to serve as the independent appraiser before the 11th day after the
2083	2083	date the retail public utility or municipality notifies the other
2084	2084	party of the impasse, the retail public utility and municipality
2085	2085	each shall appoint a qualified individual or firm to serve as
2086	2086	independent appraiser. On or before the 10th business day after the
2087	2087	date of their appointment, the independent appraisers shall meet to
2088	2088	reach an agreed determination of the amount of compensation. If the
2089	2089	appraisers are unable to agree on a determination before the 16th
2090	2090	business day after the date of their first meeting under this
2091	2091	subsection, the retail public utility or municipality may petition
2092	2092	the utility commission or a person the utility commission
2093	2093	designates for the purpose to appoint a third qualified independent
2094	2094	appraiser to reconcile the appraisals of the two originally
2095	2095	appointed appraisers. The determination of the third appraiser may
2096	2096	not be less than the lesser or more than the greater of the two
2097	2097	original appraisals. The costs of the independent appraisers for
2098	2098	an annexed area shall be shared equally by the retail public utility
2099	2099	and the municipality. The determination of compensation under this
2100	2100	subsection is binding on the utility commission.
2101	2101	(m) The utility commission shall deny an application for
2102	2102	single certification by a municipality that fails to demonstrate
2103	2103	compliance with the commission's minimum requirements for public
2104	2104	drinking water systems.
2105	2105	SECTION 55. Section 13.2551, Water Code, is amended to read
2106	2106	as follows:
2107	2107	Sec. 13.2551. COMPLETION OF DECERTIFICATION. (a) As a
2108	2108	condition to decertification or single certification under Section
2109	2109	13.254 or 13.255, and on request by an affected retail public
2110	2110	utility, the utility commission may order:
2111	2111	(1) the retail public utility seeking to provide
2112	2112	service to a decertified area to serve the entire service area of
2113	2113	the retail public utility that is being decertified; and
2114	2114	(2) the transfer of the entire certificate of public
2115	2115	convenience and necessity of a partially decertified retail public
2116	2116	utility to the retail public utility seeking to provide service to
2117	2117	the decertified area.
2118	2118	(b) The utility commission shall order service to the entire
2119	2119	area under Subsection (a) if the utility commission finds that the
2120	2120	decertified retail public utility will be unable to provide
2121	2121	continuous and adequate service at an affordable cost to the
2122	2122	remaining customers.
2123	2123	(c) The utility commission shall require the retail public
2124	2124	utility seeking to provide service to the decertified area to
2125	2125	provide continuous and adequate service to the remaining customers
2126	2126	at a cost comparable to the cost of that service to its other
2127	2127	customers and shall establish the terms under which the service
2128	2128	must be provided. The terms may include:
2129	2129	(1) transferring debt and other contract obligations;
2130	2130	(2) transferring real and personal property;
2131	2131	(3) establishing interim service rates for affected
2132	2132	customers during specified times; and
2133	2133	(4) other provisions necessary for the just and
2134	2134	reasonable allocation of assets and liabilities.
2135	2135	(d) The retail public utility seeking decertification shall
2136	2136	not charge the affected customers any transfer fee or other fee to
2137	2137	obtain service other than the retail public utility's usual and
2138	2138	customary rates for monthly service or the interim rates set by the
2139	2139	utility commission, if applicable.
2140	2140	(e) The utility commission shall not order compensation to
2141	2141	the decertificated retail utility if service to the entire service
2142	2142	area is ordered under this section.
2143	2143	SECTION 56. Sections 13.257(e), (i), (r), and (s), Water
2144	2144	Code, are amended to read as follows:
2145	2145	(e) The notice must be given to the prospective purchaser
2146	2146	before the execution of a binding contract of purchase and sale.
2147	2147	The notice may be given separately or as an addendum to or paragraph
2148	2148	of the contract. If the seller fails to provide the notice required
2149	2149	by this section, the purchaser may terminate the contract. If the
2150	2150	seller provides the notice at or before the closing of the purchase
2151	2151	and sale contract and the purchaser elects to close even though the
2152	2152	notice was not timely provided before the execution of the
2153	2153	contract, it is conclusively presumed that the purchaser has waived
2154	2154	all rights to terminate the contract and recover damages or pursue
2155	2155	other remedies or rights under this section. Notwithstanding any
2156	2156	provision of this section to the contrary, a seller, title
2157	2157	insurance company, real estate broker, or examining attorney, or an
2158	2158	agent, representative, or person acting on behalf of the seller,
2159	2159	company, broker, or attorney, is not liable for damages under
2160	2160	Subsection (m) or (n) or liable for any other damages to any person
2161	2161	for:
2162	2162	(1) failing to provide the notice required by this
2163	2163	section to a purchaser before the execution of a binding contract of
2164	2164	purchase and sale or at or before the closing of the purchase and
2165	2165	sale contract if:
2166	2166	(A) the utility service provider did not file the
2167	2167	map of the certificated service area in the real property records of
2168	2168	the county in which the service area is located and with the utility
2169	2169	commission depicting the boundaries of the service area of the
2170	2170	utility service provider as shown in the real property records of
2171	2171	the county in which the service area is located; and
2172	2172	(B) the utility commission did not maintain an
2173	2173	accurate map of the certificated service area of the utility
2174	2174	service provider as required by this chapter; or
2175	2175	(2) unintentionally providing a notice required by
2176	2176	this section that is incorrect under the circumstances before the
2177	2177	execution of a binding contract of purchase and sale or at or before
2178	2178	the closing of the purchase and sale contract.
2179	2179	(i) If the notice is given at closing as provided by
2180	2180	Subsection (g), a purchaser, or the purchaser's heirs, successors,
2181	2181	or assigns, may not maintain an action for damages or maintain an
2182	2182	action against a seller, title insurance company, real estate
2183	2183	broker, or lienholder, or any agent, representative, or person
2184	2184	acting on behalf of the seller, company, broker, or lienholder, by
2185	2185	reason of the seller's use of the information filed with the utility
2186	2186	commission by the utility service provider or the seller's use of
2187	2187	the map of the certificated service area of the utility service
2188	2188	provider filed in the real property records to determine whether
2189	2189	the property to be purchased is within the certificated service
2190	2190	area of the utility service provider. An action may not be
2191	2191	maintained against a title insurance company for the failure to
2192	2192	disclose that the described real property is included within the
2193	2193	certificated service area of a utility service provider if the
2194	2194	utility service provider did not file in the real property records
2195	2195	or with the utility commission the map of the certificated service
2196	2196	area.
2197	2197	(r) A utility service provider shall:
2198	2198	(1) record in the real property records of each county
2199	2199	in which the service area or a portion of the service area is
2200	2200	located a certified copy of the map of the certificate of public
2201	2201	convenience and necessity and of any amendment to the certificate
2202	2202	as contained in the utility commission's records, and a boundary
2203	2203	description of the service area by:
2204	2204	(A) a metes and bounds survey certified by a
2205	2205	licensed state land surveyor or a registered professional land
2206	2206	surveyor;
2207	2207	(B) the Texas State Plane Coordinate System;
2208	2208	(C) verifiable landmarks, including a road,
2209	2209	creek, or railroad line; or
2210	2210	(D) if a recorded plat of the area exists, lot and
2211	2211	block number; and
2212	2212	(2) submit to the utility commission [executive
2213	2213	director] evidence of the recording.
2214	2214	(s) Each county shall accept and file in its real property
2215	2215	records a utility service provider's map presented to the county
2216	2216	clerk under this section if the map meets filing requirements, does
2217	2217	not exceed 11 inches by 17 inches in size, and is accompanied by the
2218	2218	appropriate fee. The recording required by this section must be
2219	2219	completed not later than the 31st day after the date a utility
2220	2220	service provider receives a final order from the utility commission
2221	2221	granting an application for a new certificate or for an amendment to
2222	2222	a certificate that results in a change in the utility service
2223	2223	provider's service area.
2224	2224	SECTION 57. Sections 13.301(a), (b), (c), (d), (e), (f),
2225	2225	and (g), Water Code, are amended to read as follows:
2226	2226	(a) A utility or a water supply or sewer service
2227	2227	corporation, on or before the 120th day before the effective date of
2228	2228	a sale, acquisition, lease, or rental of a water or sewer system
2229	2229	that is required by law to possess a certificate of public
2230	2230	convenience and necessity or the effective date of a merger or
2231	2231	consolidation with such a utility or water supply or sewer service
2232	2232	corporation, shall:
2233	2233	(1) file a written application with the utility
2234	2234	commission; and
2235	2235	(2) unless public notice is waived by the utility
2236	2236	commission [executive director] for good cause shown, give public
2237	2237	notice of the action.
2238	2238	(b) The utility commission may require that the person
2239	2239	purchasing or acquiring the water or sewer system demonstrate
2240	2240	adequate financial, managerial, and technical capability for
2241	2241	providing continuous and adequate service to the requested area and
2242	2242	any areas currently certificated to the person.
2243	2243	(c) If the person purchasing or acquiring the water or sewer
2244	2244	system cannot demonstrate adequate financial capability, the
2245	2245	utility commission may require that the person provide a bond or
2246	2246	other financial assurance in a form and amount specified by the
2247	2247	utility commission to ensure continuous and adequate utility
2248	2248	service is provided.
2249	2249	(d) The utility commission shall, with or without a public
2250	2250	hearing, investigate the sale, acquisition, lease, or rental to
2251	2251	determine whether the transaction will serve the public interest.
2252	2252	(e) Before the expiration of the 120-day notification
2253	2253	period, the utility commission [executive director] shall notify
2254	2254	all known parties to the transaction and the Office of Public
2255	2255	Utility Counsel whether [of] the utility commission will [executive
2256	2256	director's decision whether to request that the commission] hold a
2257	2257	public hearing to determine if the transaction will serve the
2258	2258	public interest. The utility commission may hold [executive
2259	2259	director may request] a hearing if:
2260	2260	(1) the application filed with the utility commission
2261	2261	or the public notice was improper;
2262	2262	(2) the person purchasing or acquiring the water or
2263	2263	sewer system has not demonstrated adequate financial, managerial,
2264	2264	and technical capability for providing continuous and adequate
2265	2265	service to the service area being acquired and to any areas
2266	2266	currently certificated to the person;
2267	2267	(3) the person or an affiliated interest of the person
2268	2268	purchasing or acquiring the water or sewer system has a history of:
2269	2269	(A) noncompliance with the requirements of the
2270	2270	utility commission, the commission, or the [Texas] Department of
2271	2271	State Health Services; or
2272	2272	(B) continuing mismanagement or misuse of
2273	2273	revenues as a utility service provider;
2274	2274	(4) the person purchasing or acquiring the water or
2275	2275	sewer system cannot demonstrate the financial ability to provide
2276	2276	the necessary capital investment to ensure the provision of
2277	2277	continuous and adequate service to the customers of the water or
2278	2278	sewer system; or
2279	2279	(5) there are concerns that the transaction may not
2280	2280	serve the public interest, after the application of the
2281	2281	considerations provided by Section 13.246(c) for determining
2282	2282	whether to grant a certificate of convenience and necessity.
2283	2283	(f) Unless the utility commission holds [executive director
2284	2284	requests that] a public hearing [be held], the sale, acquisition,
2285	2285	lease, or rental may be completed as proposed:
2286	2286	(1) at the end of the 120-day period; or
2287	2287	(2) at any time after the utility commission
2288	2288	[executive director] notifies the utility or water supply or sewer
2289	2289	service corporation that a hearing will not be held [requested].
2290	2290	(g) If the utility commission decides to hold a hearing [is
2291	2291	requested] or if the utility or water supply or sewer service
2292	2292	corporation fails to make the application as required or to provide
2293	2293	public notice, the sale, acquisition, lease, or rental may not be
2294	2294	completed unless the utility commission determines that the
2295	2295	proposed transaction serves the public interest.
2296	2296	SECTION 58. Section 13.302, Water Code, is amended to read
2297	2297	as follows:
2298	2298	Sec. 13.302. PURCHASE OF VOTING STOCK IN ANOTHER PUBLIC
2299	2299	UTILITY: REPORT. (a) A utility may not purchase voting stock in
2300	2300	another utility doing business in this state and a person may not
2301	2301	acquire a controlling interest in a utility doing business in this
2302	2302	state unless the person or utility files a written application with
2303	2303	the utility commission not later than the 61st day before the date
2304	2304	on which the transaction is to occur.
2305	2305	(b) The utility commission may require that a person
2306	2306	acquiring a controlling interest in a utility demonstrate adequate
2307	2307	financial, managerial, and technical capability for providing
2308	2308	continuous and adequate service to the requested area and any areas
2309	2309	currently certificated to the person.
2310	2310	(c) If the person acquiring a controlling interest cannot
2311	2311	demonstrate adequate financial capability, the utility commission
2312	2312	may require that the person provide a bond or other financial
2313	2313	assurance in a form and amount specified by the utility commission
2314	2314	to ensure continuous and adequate utility service is provided.
2315	2315	(d) The utility commission [executive director] may
2316	2316	[request that the commission] hold a public hearing on the
2317	2317	transaction if the utility commission [executive director]
2318	2318	believes that a criterion prescribed by Section 13.301(e) applies.
2319	2319	(e) Unless the utility commission holds [executive director
2320	2320	requests that] a public hearing [be held], the purchase or
2321	2321	acquisition may be completed as proposed:
2322	2322	(1) at the end of the 60-day period; or
2323	2323	(2) at any time after the utility commission
2324	2324	[executive director] notifies the person or utility that a hearing
2325	2325	will not be held [requested].
2326	2326	(f) If the utility commission decides to hold a hearing [is
2327	2327	requested] or if the person or utility fails to make the application
2328	2328	to the utility commission as required, the purchase or acquisition
2329	2329	may not be completed unless the utility commission determines that
2330	2330	the proposed transaction serves the public interest. A purchase or
2331	2331	acquisition that is not completed in accordance with the provisions
2332	2332	of this section is void.
2333	2333	SECTION 59. Section 13.303, Water Code, is amended to read
2334	2334	as follows:
2335	2335	Sec. 13.303. LOANS TO STOCKHOLDERS: REPORT. A utility may
2336	2336	not loan money, stocks, bonds, notes, or other evidences of
2337	2337	indebtedness to any corporation or person owning or holding
2338	2338	directly or indirectly any stock of the utility unless the utility
2339	2339	reports the transaction to the utility commission within 60 days
2340	2340	after the date of the transaction.
2341	2341	SECTION 60. Section 13.304, Water Code, is amended to read
2342	2342	as follows:
2343	2343	Sec. 13.304. FORECLOSURE REPORT. (a) A utility that
2344	2344	receives notice that all or a portion of the utility's facilities or
2345	2345	property used to provide utility service are being posted for
2346	2346	foreclosure shall notify the utility commission and the commission
2347	2347	in writing of that fact not later than the 10th day after the date on
2348	2348	which the utility receives the notice.
2349	2349	(b) A financial institution that forecloses on a utility or
2350	2350	on any part of the utility's facilities or property that are used to
2351	2351	provide utility service is not required to provide the 120-day
2352	2352	notice prescribed by Section 13.301, but shall provide written
2353	2353	notice to the utility commission and the commission before the 30th
2354	2354	day preceding the date on which the foreclosure is completed.
2355	2355	(c) The financial institution may operate the utility for an
2356	2356	interim period prescribed by utility commission rule before
2357	2357	transferring or otherwise obtaining a certificate of convenience
2358	2358	and necessity. A financial institution that operates a utility
2359	2359	during an interim period under this subsection is subject to each
2360	2360	utility commission rule to which the utility was subject and in the
2361	2361	same manner.
2362	2362	SECTION 61. Section 13.341, Water Code, is amended to read
2363	2363	as follows:
2364	2364	Sec. 13.341. JURISDICTION OVER AFFILIATED INTERESTS. The
2365	2365	utility commission has jurisdiction over affiliated interests
2366	2366	having transactions with utilities under the jurisdiction of the
2367	2367	utility commission to the extent of access to all accounts and
2368	2368	records of those affiliated interests relating to such
2369	2369	transactions, including but in no way limited to accounts and
2370	2370	records of joint or general expenses, any portion of which may be
2371	2371	applicable to those transactions.
2372	2372	SECTION 62. Section 13.342, Water Code, is amended to read
2373	2373	as follows:
2374	2374	Sec. 13.342. DISCLOSURE OF SUBSTANTIAL INTEREST IN VOTING
2375	2375	SECURITIES. The utility commission may require the disclosure of
2376	2376	the identity and respective interests of every owner of any
2377	2377	substantial interest in the voting securities of any utility or its
2378	2378	affiliated interest. One percent or more is a substantial interest
2379	2379	within the meaning of this section.
2380	2380	SECTION 63. Section 13.343(a), Water Code, is amended to
2381	2381	read as follows:
2382	2382	(a) The owner of a utility that supplies retail water
2383	2383	service may not contract to purchase from an affiliated supplier
2384	2384	wholesale water service for any of that owner's systems unless:
2385	2385	(1) the wholesale service is provided for not more
2386	2386	than 90 days to remedy an emergency condition, as defined by utility
2387	2387	commission or commission rule; or
2388	2388	(2) the utility commission [executive director]
2389	2389	determines that the utility cannot obtain wholesale water service
2390	2390	from another source at a lower cost than from the affiliate.
2391	2391	SECTION 64. Section 13.381, Water Code, is amended to read
2392	2392	as follows:
2393	2393	Sec. 13.381. RIGHT TO JUDICIAL REVIEW; EVIDENCE. Any party
2394	2394	to a proceeding before the utility commission or the commission is
2395	2395	entitled to judicial review under the substantial evidence rule.
2396	2396	SECTION 65. Section 13.382(a), Water Code, is amended to
2397	2397	read as follows:
2398	2398	(a) Any party represented by counsel who alleges that
2399	2399	existing rates are excessive or that rates prescribed by the
2400	2400	utility commission are excessive and who is a prevailing party in
2401	2401	proceedings for review of a utility commission order or decision
2402	2402	may in the same action recover against the regulation fund
2403	2403	reasonable fees for attorneys and expert witnesses and other costs
2404	2404	incurred by him before the utility commission and the court. The
2405	2405	amount of the attorney's fees shall be fixed by the court.
2406	2406	SECTION 66. Section 13.411, Water Code, is amended to read
2407	2407	as follows:
2408	2408	Sec. 13.411. ACTION TO ENJOIN OR REQUIRE COMPLIANCE. (a)
2409	2409	If the utility commission or the commission has reason to believe
2410	2410	that any retail public utility or any other person or corporation is
2411	2411	engaged in or is about to engage in any act in violation of this
2412	2412	chapter or of any order or rule of the utility commission or the
2413	2413	commission entered or adopted under this chapter or that any retail
2414	2414	public utility or any other person or corporation is failing to
2415	2415	comply with this chapter or with any rule or order, the attorney
2416	2416	general on request of the utility commission or the commission, in
2417	2417	addition to any other remedies provided in this chapter, shall
2418	2418	bring an action in a court of competent jurisdiction in the name of
2419	2419	and on behalf of the utility commission or the commission against
2420	2420	the retail public utility or other person or corporation to enjoin
2421	2421	the commencement or continuation of any act or to require
2422	2422	compliance with this chapter or the rule or order.
2423	2423	(b) If the utility commission or the executive director of
2424	2424	the commission has reason to believe that the failure of the owner
2425	2425	or operator of a water utility to properly operate, maintain, or
2426	2426	provide adequate facilities presents an imminent threat to human
2427	2427	health or safety, the utility commission or the executive director
2428	2428	shall immediately:
2429	2429	(1) notify the utility's representative; and
2430	2430	(2) initiate enforcement action consistent with:
2431	2431	(A) this subchapter; and
2432	2432	(B) procedural rules adopted by the utility
2433	2433	commission or the commission.
2434	2434	SECTION 67. Section 13.4115, Water Code, is amended to read
2435	2435	as follows:
2436	2436	Sec. 13.4115. ACTION TO REQUIRE ADJUSTMENT TO CONSUMER
2437	2437	CHARGE; PENALTY. In regard to a customer complaint arising out of a
2438	2438	charge made by a public utility, if the utility commission [the
2439	2439	executive director] finds that the utility has failed to make the
2440	2440	proper adjustment to the customer's bill after the conclusion of
2441	2441	the complaint process established by the utility commission, the
2442	2442	utility commission may issue an order requiring the utility to make
2443	2443	the adjustment. Failure to comply with the order within 30 days of
2444	2444	receiving the order is a violation for which the utility commission
2445	2445	may impose an administrative penalty under Section 13.4151.
2446	2446	SECTION 68. Sections 13.412(a), (f), and (g), Water Code,
2447	2447	are amended to read as follows:
2448	2448	(a) At the request of the utility commission or the
2449	2449	commission, the attorney general shall bring suit for the
2450	2450	appointment of a receiver to collect the assets and carry on the
2451	2451	business of a water or sewer utility that:
2452	2452	(1) has abandoned operation of its facilities;
2453	2453	(2) informs the utility commission or the commission
2454	2454	that the owner is abandoning the system;
2455	2455	(3) violates a final order of the utility commission
2456	2456	or the commission; or
2457	2457	(4) allows any property owned or controlled by it to be
2458	2458	used in violation of a final order of the utility commission or the
2459	2459	commission.
2460	2460	(f) For purposes of this section and Section 13.4132,
2461	2461	abandonment may include but is not limited to:
2462	2462	(1) failure to pay a bill or obligation owed to a
2463	2463	retail public utility or to an electric or gas utility with the
2464	2464	result that the utility service provider has issued a notice of
2465	2465	discontinuance of necessary services;
2466	2466	(2) failure to provide appropriate water or wastewater
2467	2467	treatment so that a potential health hazard results;
2468	2468	(3) failure to adequately maintain facilities,
2469	2469	resulting in potential health hazards, extended outages, or
2470	2470	repeated service interruptions;
2471	2471	(4) failure to provide customers adequate notice of a
2472	2472	health hazard or potential health hazard;
2473	2473	(5) failure to secure an alternative available water
2474	2474	supply during an outage;
2475	2475	(6) displaying a pattern of hostility toward or
2476	2476	repeatedly failing to respond to the utility commission or the
2477	2477	commission or the utility's customers; and
2478	2478	(7) failure to provide the utility commission or the
2479	2479	commission with adequate information on how to contact the utility
2480	2480	for normal business and emergency purposes.
2481	2481	(g) Notwithstanding Section 64.021, Civil Practice and
2482	2482	Remedies Code, a receiver appointed under this section may seek
2483	2483	[commission] approval from the utility commission and the
2484	2484	commission to acquire the water or sewer utility's facilities and
2485	2485	transfer the utility's certificate of convenience and necessity.
2486	2486	The receiver must apply in accordance with Subchapter H.
2487	2487	SECTION 69. Section 13.413, Water Code, is amended to read
2488	2488	as follows:
2489	2489	Sec. 13.413. PAYMENT OF COSTS OF RECEIVERSHIP. The
2490	2490	receiver may, subject to the approval of the court and after giving
2491	2491	notice to all interested parties, sell or otherwise dispose of all
2492	2492	or part of the real or personal property of a water or sewer utility
2493	2493	against which a proceeding has been brought under this subchapter
2494	2494	to pay the costs incurred in the operation of the receivership. The
2495	2495	costs include:
2496	2496	(1) payment of fees to the receiver for his services;
2497	2497	(2) payment of fees to attorneys, accountants,
2498	2498	engineers, or any other person or entity that provides goods or
2499	2499	services necessary to the operation of the receivership; and
2500	2500	(3) payment of costs incurred in ensuring that any
2501	2501	property owned or controlled by a water or sewer utility is not used
2502	2502	in violation of a final order of the utility commission or the
2503	2503	commission.
2504	2504	SECTION 70. Section 13.4131, Water Code, is amended to read
2505	2505	as follows:
2506	2506	Sec. 13.4131. SUPERVISION OF CERTAIN UTILITIES. (a) The
2507	2507	utility commission, after providing to the utility notice and an
2508	2508	opportunity for a hearing, may place a utility under supervision
2509	2509	for gross or continuing mismanagement, gross or continuing
2510	2510	noncompliance with this chapter or a rule adopted under this
2511	2511	chapter [commission rules], or noncompliance with an order issued
2512	2512	under this chapter [commission orders].
2513	2513	(b) While supervising a utility, the utility commission may
2514	2514	require the utility to abide by conditions and requirements
2515	2515	prescribed by the utility commission, including:
2516	2516	(1) management requirements;
2517	2517	(2) additional reporting requirements;
2518	2518	(3) restrictions on hiring, salary or benefit
2519	2519	increases, capital investment, borrowing, stock issuance or
2520	2520	dividend declarations, and liquidation of assets; and
2521	2521	(4) a requirement that the utility place the utility's
2522	2522	funds into an account in a financial institution approved by the
2523	2523	utility commission and use of those funds shall be restricted to
2524	2524	reasonable and necessary utility expenses.
2525	2525	(c) While supervising a utility, the utility commission may
2526	2526	require that the utility obtain [commission] approval from the
2527	2527	utility commission before taking any action that may be restricted
2528	2528	under Subsection (b) [of this section]. Any action or transaction
2529	2529	which occurs without [commission] approval may be voided by the
2530	2530	utility commission.
2531	2531	SECTION 71. Sections 13.4132(a), (b), and (d), Water Code,
2532	2532	are amended to read as follows:
2533	2533	(a) The utility commission or the commission, after
2534	2534	providing to the utility notice and an opportunity to be heard by
2535	2535	the commissioners at a utility commission or commission meeting,
2536	2536	may authorize a willing person to temporarily manage and operate a
2537	2537	utility if the utility:
2538	2538	(1) has discontinued or abandoned operations or the
2539	2539	provision of services; or
2540	2540	(2) has been or is being referred to the attorney
2541	2541	general for the appointment of a receiver under Section 13.412.
2542	2542	(b) The utility commission or the commission may appoint a
2543	2543	person under this section by emergency order, and notice of the
2544	2544	action is adequate if the notice is mailed or hand-delivered to the
2545	2545	last known address of the utility's headquarters.
2546	2546	(d) This section does not affect the authority of the
2547	2547	utility commission or the commission to pursue an enforcement claim
2548	2548	against a utility or an affiliated interest.
2549	2549	SECTION 72. Sections 13.4133(a) and (c), Water Code, are
2550	2550	amended to read as follows:
2551	2551	(a) Notwithstanding the requirements of Subchapter F
2552	2552	[Section 13.187 of this code], the utility commission may authorize
2553	2553	an emergency rate increase for a utility for which a person has been
2554	2554	appointed under Section 13.4132 [of this code] or for which a
2555	2555	receiver has been appointed under Section 13.412 [of this code] if
2556	2556	the increase is necessary to ensure the provision of continuous and
2557	2557	adequate services to the utility's customers.
2558	2558	(c) The utility commission shall schedule a hearing to
2559	2559	establish a final rate within 15 months after the date on which an
2560	2560	emergency rate increase takes effect. The utility commission shall
2561	2561	require the utility to provide notice of the hearing to each
2562	2562	customer. The additional revenues collected under an emergency
2563	2563	rate increase are subject to refund if the utility commission finds
2564	2564	that the rate increase was larger than necessary to ensure
2565	2565	continuous and adequate service.
2566	2566	SECTION 73. Sections 13.414(a) and (c), Water Code, are
2567	2567	amended to read as follows:
2568	2568	(a) Any retail public utility or affiliated interest that
2569	2569	violates this chapter, fails to perform a duty imposed on it, or
2570	2570	fails, neglects, or refuses to obey an order, rule, direction, or
2571	2571	requirement of the utility commission or the commission or decree
2572	2572	or judgment of a court is subject to a civil penalty of not less than
2573	2573	$100 nor more than $5,000 for each violation.
2574	2574	(c) The attorney general shall institute suit on his own
2575	2575	initiative or at the request of, in the name of, and on behalf of the
2576	2576	utility commission or the commission in a court of competent
2577	2577	jurisdiction to recover the penalty under this section.
2578	2578	SECTION 74. Sections 13.4151(a), (b), (c), (d), (e), (f),
2579	2579	(g), (h), (i), (j), (k), and (m), Water Code, are amended to read as
2580	2580	follows:
2581	2581	(a) If a person, affiliated interest, or entity subject to
2582	2582	the jurisdiction of the utility commission or the commission
2583	2583	violates this chapter or a rule or order adopted under this chapter,
2584	2584	the utility commission or the commission, as applicable, may assess
2585	2585	a penalty against that person, affiliated interest, or entity as
2586	2586	provided by this section. The penalty may be in an amount not to
2587	2587	exceed $5,000 a day. Each day a violation continues may be
2588	2588	considered a separate violation.
2589	2589	(b) In determining the amount of the penalty, the utility
2590	2590	commission or the commission shall consider:
2591	2591	(1) the nature, circumstances, extent, duration, and
2592	2592	gravity of the prohibited acts or omissions;
2593	2593	(2) with respect to the alleged violator:
2594	2594	(A) the history and extent of previous
2595	2595	violations;
2596	2596	(B) the degree of culpability, including whether
2597	2597	the violation was attributable to mechanical or electrical failures
2598	2598	and whether the violation could have been reasonably anticipated
2599	2599	and avoided;
2600	2600	(C) the demonstrated good faith, including
2601	2601	actions taken by the person, affiliated interest, or entity to
2602	2602	correct the cause of the violation;
2603	2603	(D) any economic benefit gained through the
2604	2604	violation; and
2605	2605	(E) the amount necessary to deter future
2606	2606	violations; and
2607	2607	(3) any other matters that justice requires.
2608	2608	(c) If, after examination of a possible violation and the
2609	2609	facts surrounding that possible violation, the utility commission
2610	2610	or the executive director of the commission concludes that a
2611	2611	violation has occurred, the utility commission or the executive
2612	2612	director may issue a preliminary report stating the facts on which
2613	2613	that conclusion is based, recommending that a penalty under this
2614	2614	section be imposed on the person, affiliated interest, or retail
2615	2615	public utility charged, and recommending the amount of that
2616	2616	proposed penalty. The utility commission or the executive director
2617	2617	shall base the recommended amount of the proposed penalty on the
2618	2618	factors provided by Subsection (b) [of this section], and shall
2619	2619	analyze each factor for the benefit of the appropriate agency
2620	2620	[commission].
2621	2621	(d) Not later than the 10th day after the date on which the
2622	2622	report is issued, the utility commission or the executive director
2623	2623	of the commission shall give written notice of the report to the
2624	2624	person, affiliated interest, or retail public utility charged with
2625	2625	the violation. The notice shall include a brief summary of the
2626	2626	charges, a statement of the amount of the penalty recommended, and a
2627	2627	statement of the right of the person, affiliated interest, or
2628	2628	retail public utility charged to a hearing on the occurrence of the
2629	2629	violation, the amount of the penalty, or both.
2630	2630	(e) Not later than the 20th day after the date on which
2631	2631	notice is received, the person, affiliated interest, or retail
2632	2632	public utility charged may give the appropriate agency [commission]
2633	2633	written consent to the [executive director's] report described by
2634	2634	Subsection (c), including the recommended penalty, or may make a
2635	2635	written request for a hearing.
2636	2636	(f) If the person, affiliated interest, or retail public
2637	2637	utility charged with the violation consents to the penalty
2638	2638	recommended in the report described by Subsection (c) [by the
2639	2639	executive director] or fails to timely respond to the notice, the
2640	2640	utility commission or the commission by order shall assess that
2641	2641	penalty or order a hearing to be held on the findings and
2642	2642	recommendations in the [executive director's] report. If the
2643	2643	utility commission or the commission assesses the penalty
2644	2644	recommended by the report, the utility commission or the commission
2645	2645	shall give written notice to the person, affiliated interest, or
2646	2646	retail public utility charged of its decision.
2647	2647	(g) If the person, affiliated interest, or retail public
2648	2648	utility charged requests or the utility commission or the
2649	2649	commission orders a hearing, the appropriate agency [commission]
2650	2650	shall call a hearing and give notice of the hearing. As a result of
2651	2651	the hearing, the appropriate agency [commission] by order may find
2652	2652	that a violation has occurred and may assess a civil penalty, may
2653	2653	find that a violation has occurred but that no penalty should be
2654	2654	assessed, or may find that no violation has occurred. All
2655	2655	proceedings under this subsection are subject to Chapter 2001,
2656	2656	Government Code. In making any penalty decision, the appropriate
2657	2657	agency [commission] shall analyze each of the factors provided by
2658	2658	Subsection (b) [of this section].
2659	2659	(h) The utility commission or the commission shall give
2660	2660	notice of its decision to the person, affiliated interest, or
2661	2661	retail public utility charged, and if the appropriate agency
2662	2662	[commission] finds that a violation has occurred and has assessed a
2663	2663	penalty, that agency [the commission] shall give written notice to
2664	2664	the person, affiliated interest, or retail public utility charged
2665	2665	of its findings, of the amount of the penalty, and of the person's,
2666	2666	affiliated interest's, or retail public utility's right to judicial
2667	2667	review of the agency's [commission's] order. If the utility
2668	2668	commission or the commission is required to give notice of a penalty
2669	2669	under this subsection or Subsection (f) [of this section], the
2670	2670	appropriate agency [commission] shall file notice of that agency's
2671	2671	[its] decision in the Texas Register not later than the 10th day
2672	2672	after the date on which the decision is adopted.
2673	2673	(i) Within the 30-day period immediately following the day
2674	2674	on which the utility commission's or commission's order is final, as
2675	2675	provided by Subchapter F, Chapter 2001, Government Code, the
2676	2676	person, affiliated interest, or retail public utility charged with
2677	2677	the penalty shall:
2678	2678	(1) pay the penalty in full; or
2679	2679	(2) if the person, affiliated interest, or retail
2680	2680	public utility seeks judicial review of the fact of the violation,
2681	2681	the amount of the penalty, or both:
2682	2682	(A) forward the amount of the penalty to the
2683	2683	appropriate agency [commission] for placement in an escrow account;
2684	2684	or
2685	2685	(B) post with the appropriate agency
2686	2686	[commission] a supersedeas bond in a form approved by the agency
2687	2687	[commission] for the amount of the penalty to be effective until all
2688	2688	judicial review of the order or decision is final.
2689	2689	(j) Failure to forward the money to or to post the bond with
2690	2690	the utility commission or the commission within the time provided
2691	2691	by Subsection (i) [of this section] constitutes a waiver of all
2692	2692	legal rights to judicial review. If the person, affiliated
2693	2693	interest, or retail public utility charged fails to forward the
2694	2694	money or post the bond as provided by Subsection (i) [of this
2695	2695	section], the appropriate agency [commission] or the executive
2696	2696	director of that agency may forward the matter to the attorney
2697	2697	general for enforcement.
2698	2698	(k) Judicial review of the order or decision of the utility
2699	2699	commission or the commission assessing the penalty shall be under
2700	2700	the substantial evidence rule and may be instituted by filing a
2701	2701	petition with a district court in Travis County, as provided by
2702	2702	Subchapter G, Chapter 2001, Government Code.
2703	2703	(m) Notwithstanding any other provision of law, the utility
2704	2704	commission or the commission may compromise, modify, extend the
2705	2705	time for payment of, or remit, with or without condition, any
2706	2706	penalty imposed under this section.
2707	2707	SECTION 75. Section 13.417, Water Code, is amended to read
2708	2708	as follows:
2709	2709	Sec. 13.417. CONTEMPT PROCEEDINGS. If any person or retail
2710	2710	public utility fails to comply with any lawful order of the utility
2711	2711	commission or the commission or with any subpoena or subpoena duces
2712	2712	tecum or if any witness refuses to testify about any matter on which
2713	2713	he may be lawfully interrogated, the utility commission or the
2714	2714	commission may apply to any court of competent jurisdiction to
2715	2715	compel obedience by proceedings for contempt.
2716	2716	SECTION 76. Section 13.418, Water Code, is amended to read
2717	2717	as follows:
2718	2718	Sec. 13.418. DISPOSITION OF FINES AND PENALTIES; WATER
2719	2719	UTILITY IMPROVEMENT ACCOUNT. (a) Fines and penalties collected
2720	2720	under this chapter from a retail public utility that is not a public
2721	2721	utility in other than criminal proceedings shall be [paid to the
2722	2722	commission and] deposited in the general revenue fund.
2723	2723	(b) Fines and penalties collected from a public utility
2724	2724	under this chapter in other than criminal proceedings shall be
2725	2725	[paid to the commission and] deposited in the water utility
2726	2726	improvement account as provided by Section 341.0485, Health and
2727	2727	Safety Code.
2728	2728	SECTION 77. Section 13.501(7), Water Code, is amended to
2729	2729	read as follows:
2730	2730	(7) "Multiple use facility" means commercial or
2731	2731	industrial parks, office complexes, marinas, and others
2732	2732	specifically identified in utility commission rules with five or
2733	2733	more units.
2734	2734	SECTION 78. Section 13.502(e), Water Code, is amended to
2735	2735	read as follows:
2736	2736	(e) An owner of an apartment house, manufactured home rental
2737	2737	community, or multiple use facility or a manager of a condominium
2738	2738	may not change from submetered billing to allocated billing unless:
2739	2739	(1) the utility commission [executive director]
2740	2740	approves of the change in writing after a demonstration of good
2741	2741	cause, including meter reading or billing problems that could not
2742	2742	feasibly be corrected or equipment failures; and
2743	2743	(2) the property owner meets rental agreement
2744	2744	requirements established by the utility commission.
2745	2745	SECTION 79. Sections 13.503(a), (b), and (e), Water Code,
2746	2746	are amended to read as follows:
2747	2747	(a) The utility commission shall encourage submetering of
2748	2748	individual rental or dwelling units by master meter operators or
2749	2749	building owners to enhance the conservation of water resources.
2750	2750	(b) Notwithstanding any other law, the utility commission
2751	2751	shall adopt rules and standards under which an owner, operator, or
2752	2752	manager of an apartment house, manufactured home rental community,
2753	2753	or multiple use facility that is not individually metered for water
2754	2754	for each rental or dwelling unit may install submetering equipment
2755	2755	for each individual rental or dwelling unit for the purpose of
2756	2756	fairly allocating the cost of each individual rental or dwelling
2757	2757	unit's water consumption, including wastewater charges based on
2758	2758	water consumption. In addition to other appropriate safeguards for
2759	2759	the tenant, the rules shall require that, except as provided by this
2760	2760	section, an apartment house owner, manufactured home rental
2761	2761	community owner, multiple use facility owner, or condominium
2762	2762	manager may not impose on the tenant any extra charges, over and
2763	2763	above the cost per gallon and any other applicable taxes and
2764	2764	surcharges that are charged by the retail public utility to the
2765	2765	owner or manager, and that the rental unit or apartment house owner
2766	2766	or manager shall maintain adequate records regarding submetering
2767	2767	and make the records available for inspection by the tenant during
2768	2768	reasonable business hours. The rules shall allow an owner or
2769	2769	manager to charge a tenant a fee for late payment of a submetered
2770	2770	water bill if the amount of the fee does not exceed five percent of
2771	2771	the bill paid late. All submetering equipment is subject to the
2772	2772	rules and standards established by the utility commission for
2773	2773	accuracy, testing, and record keeping of meters installed by
2774	2774	utilities and to the meter-testing requirements of Section 13.140
2775	2775	[of this code].
2776	2776	(e) The utility commission may authorize a building owner to
2777	2777	use submetering equipment that relies on integrated radio based
2778	2778	meter reading systems and remote registration in a building
2779	2779	plumbing system using submeters that comply with nationally
2780	2780	recognized plumbing standards and are as accurate as utility water
2781	2781	meters in single application conditions.
2782	2782	SECTION 80. Section 13.5031, Water Code, is amended to read
2783	2783	as follows:
2784	2784	Sec. 13.5031. NONSUBMETERING RULES. Notwithstanding any
2785	2785	other law, the utility commission shall adopt rules and standards
2786	2786	governing billing systems or methods used by manufactured home
2787	2787	rental community owners, apartment house owners, condominium
2788	2788	managers, or owners of other multiple use facilities for prorating
2789	2789	or allocating among tenants nonsubmetered master metered utility
2790	2790	service costs. In addition to other appropriate safeguards for the
2791	2791	tenant, those rules shall require that:
2792	2792	(1) the rental agreement contain a clear written
2793	2793	description of the method of calculation of the allocation of
2794	2794	nonsubmetered master metered utilities for the manufactured home
2795	2795	rental community, apartment house, or multiple use facility;
2796	2796	(2) the rental agreement contain a statement of the
2797	2797	average manufactured home, apartment, or multiple use facility unit
2798	2798	monthly bill for all units for any allocation of those utilities for
2799	2799	the previous calendar year;
2800	2800	(3) except as provided by this section, an owner or
2801	2801	condominium manager may not impose additional charges on a tenant
2802	2802	in excess of the actual charges imposed on the owner or condominium
2803	2803	manager for utility consumption by the manufactured home rental
2804	2804	community, apartment house, or multiple use facility;
2805	2805	(4) the owner or condominium manager shall maintain
2806	2806	adequate records regarding the utility consumption of the
2807	2807	manufactured home rental community, apartment house, or multiple
2808	2808	use facility, the charges assessed by the retail public utility,
2809	2809	and the allocation of the utility costs to the tenants;
2810	2810	(5) the owner or condominium manager shall maintain
2811	2811	all necessary records concerning utility allocations, including
2812	2812	the retail public utility's bills, and shall make the records
2813	2813	available for inspection by the tenants during normal business
2814	2814	hours; and
2815	2815	(6) the owner or condominium manager may charge a
2816	2816	tenant a fee for late payment of an allocated water bill if the
2817	2817	amount of the fee does not exceed five percent of the bill paid
2818	2818	late.
2819	2819	SECTION 81. Section 13.505, Water Code, is amended to read
2820	2820	as follows:
2821	2821	Sec. 13.505. ENFORCEMENT. In addition to the enforcement
2822	2822	provisions contained in Subchapter K [of this chapter], if an
2823	2823	apartment house owner, condominium manager, manufactured home
2824	2824	rental community owner, or other multiple use facility owner
2825	2825	violates a rule of the utility commission regarding submetering of
2826	2826	utility service consumed exclusively within the tenant's dwelling
2827	2827	unit or multiple use facility unit or nonsubmetered master metered
2828	2828	utility costs, the tenant may recover three times the amount of any
2829	2829	overcharge, a civil penalty equal to one month's rent, reasonable
2830	2830	attorney's fees, and court costs from the owner or condominium
2831	2831	manager. However, an owner of an apartment house, manufactured
2832	2832	home rental community, or other multiple use facility or
2833	2833	condominium manager is not liable for a civil penalty if the owner
2834	2834	or condominium manager proves the violation was a good faith,
2835	2835	unintentional mistake.
2836	2836	SECTION 82. Section 13.512, Water Code, is amended to read
2837	2837	as follows:
2838	2838	Sec. 13.512. AUTHORITY TO ENTER INTO PRIVATIZATION
2839	2839	CONTRACTS. Any eligible city is authorized to enter into
2840	2840	privatization contracts if such action is recommended by the board
2841	2841	of utility trustees and authorized by the governing body of the
2842	2842	eligible city pursuant to an ordinance. Any privatization contract
2843	2843	entered into prior to the effective date of this Act is validated,
2844	2844	ratified, and approved. Each eligible city shall file a copy of its
2845	2845	privatization contract with the utility commission, for
2846	2846	information purposes only, within 60 days of execution or the
2847	2847	effective date of this Act, whichever is later.
2848	2848	SECTION 83. Section 13.513, Water Code, is amended to read
2849	2849	as follows:
2850	2850	Sec. 13.513. ELECTION BY ELIGIBLE CITY TO EXEMPT SERVICE
2851	2851	PROVIDER FROM UTILITY COMMISSION JURISDICTION. A service provider
2852	2852	shall not constitute a "water and sewer utility," a "public
2853	2853	utility," a "utility," or a "retail public utility" within the
2854	2854	meaning of this chapter [Chapter 13] as a result of entering into or
2855	2855	performing a privatization contract, if the governing body of the
2856	2856	eligible city shall so elect by ordinance and provide notice
2857	2857	thereof in writing to the utility commission; provided, however,
2858	2858	this provision shall not affect the application of this chapter
2859	2859	[Chapter 13] to an eligible city itself. Notwithstanding anything
2860	2860	contained in this section, any service provider who seeks to extend
2861	2861	or render sewer service to any person or municipality other than, or
2862	2862	in addition to, an eligible city may be a "public utility" for the
2863	2863	purposes of this chapter [Chapter 13] with respect to such other
2864	2864	person or municipality.
2865	2865	SECTION 84. Section 49.352(c), Water Code, is amended to
2866	2866	read as follows:
2867	2867	(c) For purposes of this section, a municipality may obtain
2868	2868	single certification in the manner provided by Section 13.255,
2869	2869	except that the municipality may file an application with the
2870	2870	Public Utility Commission of Texas [commission] to grant single
2871	2871	certification immediately after the municipality provides notice
2872	2872	of intent to provide service as required by Section 13.255(b).
2873	2873	SECTION 85. Section 552.047(e), Local Government Code, is
2874	2874	amended to read as follows:
2875	2875	(e) Users residing within the established service area, but
2876	2876	outside the municipality's boundaries, may appeal rates
2877	2877	established for drainage charges under [to the Texas Natural
2878	2878	Resource Conservation Commission as authorized by] Section
2879	2879	13.043(b), [of the] Water Code.
2880	2880	SECTION 86. Section 7201.004(b), Special District Local
2881	2881	Laws Code, is amended to read as follows:
2882	2882	(b) This section does not apply to:
2883	2883	(1) rules or regulations concerning potable water
2884	2884	quality standards; or
2885	2885	(2) conflicts relating to service areas or
2886	2886	certificates issued to the corporation or district by the Public
2887	2887	Utility Commission of Texas or the Texas Commission on
2888	2888	Environmental Quality.
2889	2889	SECTION 87. Section 7201.005(c), Special District Local
2890	2890	Laws Code, is amended to read as follows:
2891	2891	(c) District boundaries may be modified in accordance with
2892	2892	Chapters 13 and 49, Water Code, except that the boundaries must
2893	2893	include all territory in any area included under a certificate of
2894	2894	convenience and necessity issued by the Public Utility Commission
2895	2895	of Texas or the Texas Commission on Environmental Quality to the
2896	2896	district.
2897	2897	SECTION 88. Section 7201.102, Special District Local Laws
2898	2898	Code, is amended to read as follows:
2899	2899	Sec. 7201.102. PROVISION OF SERVICE. The district shall at
2900	2900	all times operate and construct necessary improvements within the
2901	2901	certificated areas established by the Public Utility Commission of
2902	2902	Texas or the Texas Commission on Environmental Quality [commission]
2903	2903	to provide uninterrupted, continuous, and adequate service to
2904	2904	existing and future customers for water, sewer, and contract
2905	2905	services.
2906	2906	SECTION 89. Section 8363.106(b), Special District Local
2907	2907	Laws Code, is amended to read as follows:
2908	2908	(b) In relation to a retail public utility that provides
2909	2909	water or sewer service to all or part of the area of the district
2910	2910	under a certificate of public convenience and necessity, the
2911	2911	district may exercise the powers given to a municipality provided
2912	2912	by Section 13.255, Water Code, as if the district were a
2913	2913	municipality that had annexed the area of the district. The Public
2914	2914	Utility Commission of Texas [commission] shall grant single
2915	2915	certification as to the city as provided by Section 13.255(c),
2916	2916	Water Code, in the event that the district applies for the
2917	2917	certification on the city's behalf in the manner provided by
2918	2918	Section 13.255(b), Water Code.
2919	2919	SECTION 90. Section 8363.251(a), Special District Local
2920	2920	Laws Code, is amended to read as follows:
2921	2921	(a) The city may dissolve the district by ordinance after
2922	2922	provision is made for all debts incurred by the district if one or
2923	2923	more of the following does not occur:
2924	2924	(1) on or before the 90th day after the effective date
2925	2925	of the Act enacting this chapter, the city receives one or more
2926	2926	petitions requesting annexation of all territory in the district
2927	2927	remaining in the extraterritorial jurisdiction of the city;
2928	2928	(2) on or before the last day of the ninth month after
2929	2929	the effective date of the Act enacting this chapter, the city adopts
2930	2930	one or more ordinances annexing all territory in the district
2931	2931	remaining in the city's extraterritorial jurisdiction;
2932	2932	(3) on or before the last day of the third year after
2933	2933	the effective date of the Act enacting this chapter, the Public
2934	2934	Utility Commission of Texas [commission] issues an order approving
2935	2935	the sale and transfer of a certificate of public convenience and
2936	2936	necessity authorizing the city to provide retail water service to
2937	2937	territory in the district; or
2938	2938	(4) by the end of the fifth year after the effective
2939	2939	date of the Act enacting this chapter, the district has completed
2940	2940	construction of internal streets and water and sanitary sewer
2941	2941	facilities sufficient to serve at least 100 residential lots in the
2942	2942	district.
2943	2943	SECTION 91. Section 8801.201, Special District Local Laws
2944	2944	Code, is amended to read as follows:
2945	2945	Sec. 8801.201. APPEAL OF SURFACE WATER RATES. (a) A person
2946	2946	who is required to convert to surface water under this chapter and
2947	2947	who purchases that water supply wholesale from a political
2948	2948	subdivision as defined by Section 12.013(b), Water Code, may appeal
2949	2949	to the Public Utility Commission of Texas [commission] the rates
2950	2950	the political subdivision charges to the person. Chapter 12, Water
2951	2951	Code, and rules adopted under that chapter apply to an appeal under
2952	2952	this section.
2953	2953	(b) The Public Utility Commission of Texas [commission]
2954	2954	shall hear the appeal not later than the 180th day after the date
2955	2955	the appeal is filed.
2956	2956	(c) The Public Utility Commission of Texas [commission]
2957	2957	shall issue a final decision on the appeal not later than the 60th
2958	2958	day after the date the hearing ends.
2959	2959	SECTION 92. (a) On September 1, 2014, the following are
2960	2960	transferred from the Texas Commission on Environmental Quality to
2961	2961	the Public Utility Commission of Texas:
2962	2962	(1) the powers, duties, functions, programs, and
2963	2963	activities of the Texas Commission on Environmental Quality
2964	2964	relating to the economic regulation of water and sewer service,
2965	2965	including the issuance and transfer of certificates of convenience
2966	2966	and necessity, the determination of rates, and the administration
2967	2967	of hearings and proceedings involving those matters, under Sections
2968	2968	11.041 and 12.013 and Chapter 13, Water Code, as provided by this
2969	2969	Act;
2970	2970	(2) any obligations and contracts of the Texas
2971	2971	Commission on Environmental Quality that are directly related to
2972	2972	implementing a power, duty, function, program, or activity
2973	2973	transferred under this Act; and
2974	2974	(3) all property and records in the custody of the
2975	2975	Texas Commission on Environmental Quality that are related to a
2976	2976	power, duty, function, program, or activity transferred under this
2977	2977	Act and all funds appropriated by the legislature for that power,
2978	2978	duty, function, program, or activity.
2979	2979	(b) The Texas Commission on Environmental Quality shall
2980	2980	continue to carry out the commission's duties related to the
2981	2981	economic regulation of water and sewer service under the law as it
2982	2982	existed immediately before the effective date of this Act until
2983	2983	September 1, 2014, and the former law is continued in effect for
2984	2984	that purpose.
2985	2985	(c) The Texas Commission on Environmental Quality and the
2986	2986	Public Utility Commission of Texas shall enter into a memorandum of
2987	2987	understanding that:
2988	2988	(1) identifies in detail the applicable powers and
2989	2989	duties that are transferred by this Act;
2990	2990	(2) establishes a plan for the identification and
2991	2991	transfer of the records, personnel, property, and unspent
2992	2992	appropriations of the Texas Commission on Environmental Quality
2993	2993	that are used for purposes of the commission's powers and duties
2994	2994	directly related to the economic regulation of water and sewer
2995	2995	service under Sections 11.041 and 12.013 and Chapter 13, Water
2996	2996	Code, as amended by this Act; and
2997	2997	(3) establishes a plan for the transfer of all pending
2998	2998	applications, hearings, rulemaking proceedings, and orders
2999	2999	relating to the economic regulation of water and sewer service
3000	3000	under Sections 11.041 and 12.013 and Chapter 13, Water Code, as
3001	3001	amended by this Act, from the Texas Commission on Environmental
3002	3002	Quality to the Public Utility Commission of Texas.
3003	3003	(d) The memorandum of understanding under this section:
3004	3004	(1) is not required to be adopted by rule under Section
3005	3005	5.104, Water Code; and
3006	3006	(2) must be completed by August 1, 2014.
3007	3007	(e) The executive directors of the Texas Commission on
3008	3008	Environmental Quality and the Public Utility Commission of Texas
3009	3009	may agree in the memorandum of understanding under this section to
3010	3010	transfer to the Public Utility Commission of Texas any personnel of
3011	3011	the Texas Commission on Environmental Quality whose functions
3012	3012	predominantly involve powers, duties, obligations, functions, and
3013	3013	activities related to the economic regulation of water and sewer
3014	3014	service under Sections 11.041 and 12.013 and Chapter 13, Water
3015	3015	Code, as amended by this Act.
3016	3016	(f) The Texas Commission on Environmental Quality and the
3017	3017	Public Utility Commission of Texas shall periodically update the
3018	3018	Office of Public Utility Counsel on the anticipated contents of the
3019	3019	memorandum of understanding under this section during the
3020	3020	development of the memorandum.
3021	3021	(g) On or after September 1, 2013, the Office of Public
3022	3022	Utility Counsel may initiate or intervene in a contested case
3023	3023	before the Texas Commission on Environmental Quality that the
3024	3024	office would be entitled to initiate or intervene in if the case
3025	3025	were before the Public Utility Commission of Texas, as authorized
3026	3026	by Chapter 13, Water Code, as amended by this Act.
3027	3027	(h) The Texas Commission on Environmental Quality and the
3028	3028	Public Utility Commission of Texas shall appoint a transition team
3029	3029	to accomplish the purposes of this section. The transition team may
3030	3030	consult with the Office of Public Utility Counsel to accomplish the
3031	3031	purposes of this section. The transition team shall establish
3032	3032	guidelines on how the two agencies will cooperate regarding:
3033	3033	(1) meeting federal drinking water standards;
3034	3034	(2) maintaining adequate supplies of water;
3035	3035	(3) meeting established design criteria for
3036	3036	wastewater treatment plants;
3037	3037	(4) demonstrating the economic feasibility of
3038	3038	regionalization; and
3039	3039	(5) serving the needs of economically distressed
3040	3040	areas.
3041	3041	(i) The transition team appointed under Subsection (h) of
3042	3042	this section shall provide monthly updates to the executive
3043	3043	directors of the Texas Commission on Environmental Quality and the
3044	3044	Public Utility Commission of Texas on the implementation of this
3045	3045	Act and provide a final report on the implementation to the
3046	3046	executive directors not later than September 1, 2014.
3047	3047	(j) A rule, form, policy, procedure, or decision of the
3048	3048	Texas Commission on Environmental Quality related to a power, duty,
3049	3049	function, program, or activity transferred under this Act continues
3050	3050	in effect as a rule, form, policy, procedure, or decision of the
3051	3051	Public Utility Commission of Texas and remains in effect until
3052	3052	amended or replaced by that agency. Notwithstanding any other law,
3053	3053	beginning September 1, 2013, the Public Utility Commission of Texas
3054	3054	may propose rules, forms, policies, and procedures related to a
3055	3055	function to be transferred to the Public Utility Commission of
3056	3056	Texas under this Act.
3057	3057	(k) The Public Utility Commission of Texas and the Texas
3058	3058	Commission on Environmental Quality shall adopt rules to implement
3059	3059	the changes in law made by this Act to Sections 11.041 and 12.013
3060	3060	and Chapter 13, Water Code, not later than September 1, 2015.
3061	3061	(l) An affiliate of a Class A utility, as those terms are
3062	3062	defined by Section 13.002, Water Code, as amended by this Act, may
3063	3063	not file an application for a rate change on or after the effective
3064	3064	date of this Act unless the affiliated Class A utility has filed for
3065	3065	a rate change on or after that date. In relation to the application
3066	3066	filed by the affiliate of the Class A utility, the Public Utility
3067	3067	Commission of Texas:
3068	3068	(1) may not approve the rate change application until
3069	3069	the Public Utility Commission of Texas approves the rate change
3070	3070	application filed by the affiliated Class A utility; and
3071	3071	(2) may require the affiliate to comply with the Class
3072	3072	A utility rate change process prescribed by Section 13.187, Water
3073	3073	Code, regardless of whether the affiliate is classified as a Class
3074	3074	A, B, or C utility under Section 13.002, Water Code, as added by
3075	3075	this Act.
3076	3076	SECTION 93. This Act takes effect September 1, 2013.