Relating to expenses considered to determine net income for purposes of a rate proceeding for an investor-owned water and sewer utility.
Impact
The modification proposed by HB 1457 applies only to rate proceedings initiated on or after the effective date of the bill. Rate proceedings already in progress will continue to fall under the prior legal framework. This change signifies a shift in regulatory practices regarding how utility expenses are accounted for, which may lead to lower revenue requirements for these companies and affect their financial operations significantly. Stakeholders in the water utility sector, including investor-owned firms, will have to adapt to this new parameter when preparing for rate cases from September 1, 2013, onwards.
Summary
House Bill 1457 seeks to amend existing laws pertaining to the determination of net income for investor-owned water and sewer utilities, specifically impacting how expenses are calculated during rate proceedings. The bill stipulates that the regulatory authority can consider only 50% of the reasonable and necessary rate case expenses as part of the calculations of net income. This amendment aims to streamline the rate-setting process and potentially reduce the financial burden on the utilities during these proceedings.
Sentiment
The sentiment surrounding HB 1457 seems to lean towards favoring investor-owned utilities, as the bill aims to alleviate some of the financial pressures they face during rate proceedings. Supporters of the bill argue that by allowing only 50% of rate case expenses to be counted, it could lower the cost of doing business and promote efficiency. However, concerns may arise regarding the long-term implications for consumers and the adequacy of utility services, as some critics may feel that this change could ultimately affect the quality of services or lead to higher rates in the long run due to reduced regulatory oversight.
Contention
The primary contention surrounding HB 1457 revolves around balancing the interests of investor-owned utilities with those of consumers and regulatory bodies. While proponents argue that the bill simplifies the regulatory process and lessens the financial burden on businesses, opponents may highlight the potential risks involved, including the possibility that limiting expense recoveries could impede the capacity of utilities to maintain infrastructure and offer reliable service. This legislative change raises questions about how best to structure utility regulation in a manner that supports economic viability while ensuring that consumer protections are not undermined.
Relating to the transfer of functions relating to the economic regulation of water and sewer service from the Public Utility Commission of Texas and the Office of Public Utility Counsel to the Water Public Utility Commission and the Office of Water Public Utility Counsel; creating a criminal offense.