By: Workman, Isaac (Senate Sponsor - Fraser) H.B. No. 2532
(In the Senate - Received from the House May 8, 2013;
May 9, 2013, read first time and referred to Committee on Natural
Resources; May 20, 2013, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 8, Nays 0;
May 20, 2013, sent to printer.)
COMMITTEE SUBSTITUTE FOR H.B. No. 2532 By: Fraser
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of propane distribution system
retailers; authorizing a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 3, Utilities Code, is amended by adding
Subtitle C to read as follows:
SUBTITLE C. PROPANE GAS DISTRIBUTION SYSTEMS
CHAPTER 141. STANDARDS FOR DISTRIBUTION SYSTEM RETAILERS
Sec. 141.001. DEFINITIONS. In this chapter:
(1) "Allowable markup" means the two-calendar-year
rolling average of the differences between the monthly E.I.A.
retail prices per gallon reported during the two calendar years
immediately preceding the calendar year in which a billing month
occurs and the corresponding spot prices per gallon reported for
the same month an E.I.A. retail price was reported during those two
calendar years. As an example of the calculated allowable markup,
for 2013, the allowable markup is $1.48 per gallon.
(2) "Allowable spot price" means the average of the
spot prices for the two months preceding the billing month. As an
example of the calculated allowable spot price, for the billing
month of January 2013, the allowable spot price was $0.844 per
gallon. The commission shall identify the allowable spot price each
month and publish that price on the commission's website.
(3) "Commission" means the Railroad Commission of
Texas or its successor agency.
(4) "Customer" means a retail customer of propane gas
purchased from and delivered by a distribution system retailer
through a propane gas system.
(5) "Distribution system retailer":
(A) means a retail propane dealer that:
(i) owns or operates for compensation in
this state a propane gas system; and
(ii) has a Category E or K license issued by
the applicable license and permit section of the commission; and
(B) does not include a person that furnishes
propane gas only to the person, to the person's employees, or to the
person's tenants as an incident of employment or tenancy, if the
service is not resold to customers.
(6) "E.I.A. retail price" means the monthly U.S.
Propane Residential Price as reported by the United States Energy
Information Administration or its successor agency in dollars per
gallon. As an example of the calculated E.I.A. retail price, for
January 2013, the E.I.A. retail price was $2.449 per gallon.
(7) "Propane gas" means a normally gaseous hydrocarbon
defined as propane by the United States Energy Information
Administration or its successor agency.
(8) "Propane gas system" means one or more propane
storage containers, equipment, and facilities connected to a
contiguous piping system through which propane gas is supplied by a
distribution system retailer to at least 10 customers.
(9) "Rate" means the price per cubic foot of gas
passing through the meter levied, charged, or collected by a
distribution system retailer from a customer for propane gas
provided through a propane gas system to the customer exclusive of
any fees, taxes, or other charges. A conversion factor of 36.4
cubic feet of propane gas per gallon shall be used for purposes of
determining a rate.
(10) "Spot price" means the Mont Belvieu, TX monthly
Propane Spot Price FOB per gallon as reported by the United States
Energy Information Administration or its successor agency in
dollars per gallon. In January 2013, the spot price was $0.838 per
gallon.
Sec. 141.002. APPLICABILITY. This chapter applies only to
the retail sale of propane gas made by a distribution system
retailer through a propane gas system. This chapter does not apply
to any other retail or wholesale sale of propane gas.
Sec. 141.003. RATE AND FEE CEILINGS. (a) In each billing
month, a distribution system retailer shall charge a customer a
just and reasonable rate for propane gas provided through a propane
gas system to the customer. For the purposes of this section, a just
and reasonable rate charged monthly for propane gas is a rate for
propane gas provided through a propane gas system to the customer if
it is less than or equal to the allowable spot price plus the
allowable markup. For a customer's bill that contains days in more
than one month, the month with the most days covered by the bill
shall be considered the billing month. The price per gallon shall
be converted to the cubic foot rate by dividing the price per gallon
by 36.4.
(b) In addition to the rate authorized by Subsection (a), a
distribution system retailer may charge customers special fees for
services, including a connection fee, a disconnection fee, a
monthly account fee to maintain an active account, a late payment
fee, a disconnect or termination fee, a reconnection fee, an
accelerated reconnection fee, a dishonored or canceled payment fee,
a service initiation fee, and a tampering fee or an unauthorized gas
consumption or diversion fee, if the fees are reasonable and
customary. For purposes of this section, the fees described above
that were charged or adopted by a distribution system retailer as of
January 1, 2013, as adjusted pursuant to Subsection (c), are deemed
reasonable and customary for that distribution system retailer and
its successors regarding any systems owned or operated currently or
in the future.
(c) The distribution system retailer may adjust the fees
described by Subsection (b) up or down based on the 12-month changes
in the Consumer Price Index for All Urban Consumers, U.S. City
Average, All Items, CPI-U, Not Seasonally Adjusted, published by
the Bureau of Labor Statistics of the United States Department of
Labor or a similar index if that index is unavailable. For
calculation purposes, the beginning base month is December 2012.
(d) Nothing in this section limits a distribution system
retailer's ability to pass through to a customer as a separate
charge on a pro rata actual-cost basis:
(1) a tax, other than a tax assessed on the basis of
income, gross income, property, or margins;
(2) an assessment, surcharge, levy, fee, or other
charge imposed by a governmental entity, any one of which begins or
is increased on or after January 1, 2013, either:
(A) directly on a propane gas system or any
portion; or
(B) on a distribution system retailer by virtue
of its ownership or operation of a propane gas system; or
(3) a sales tax or franchise fee.
(e) A fee passed through to a customer under Subsection (d)
shall be:
(1) passed through without any additional markup; and
(2) identified as a separate item on a customer's bill.
(f) Notwithstanding any other provision in this section,
this subtitle does not apply to a new gas line construction charge,
a gas line repair charge, or an appliance repair charge.
(g) In the event either or both the E.I.A. retail price or
the Mont Belvieu, TX monthly Propane Spot Price FOB per gallon cease
to be available, the commission shall designate a reasonably
similar available substitute index or indices as necessary for
purposes of calculation of the rate deemed just and reasonable for
purposes of this section. Until the commission publishes an order
designating the substitute index or indices, distribution system
retailers shall charge a rate not to exceed the most recent
available allowable markup plus the most recent available Mont
Belvieu, TX monthly Propane Spot Price FOB per gallon. If the Mont
Belvieu, TX monthly Propane Spot Price FOB per gallon is not
available from the United States Energy Information
Administration, the distribution system retailer, for the purpose
of defining the spot price, may identify and use the Mont Belvieu,
TX monthly Propane Spot Price FOB per gallon as reported by an
alternative publicly available published source.
Sec. 141.004. DISCONNECTION OF PROPANE GAS SERVICE. (a) A
distribution system retailer may not disconnect propane gas service
to a residential customer on a weekend day or holiday officially
observed by the State of Texas unless personnel of the distribution
system retailer are available on that day to receive payments and
reconnect service.
(b) A distribution system retailer may not disconnect
propane gas service to a residential customer during an extreme
weather emergency, as defined by Section 104.258. The distribution
system retailer shall defer collection of the full payment of bills
that are due during an extreme weather emergency, as defined by
Section 104.258, until after the emergency is over.
Sec. 141.005. CONTINUITY OF SERVICE. (a) A distribution
system retailer shall make all reasonable efforts to prevent
interruptions of service. When an interruption occurs, the
distribution system retailer shall reestablish service within the
shortest possible time consistent with prudent operating
principles so that the smallest number of customers are affected.
(b) Excluding service interruptions under Section 141.006,
a distribution system retailer shall keep complete records of all
emergency and scheduled service interruptions lasting more than six
hours and affecting more than two customers. The records must
describe the cause, date, length, and location of each
interruption, the approximate number of customers affected by the
interruption, and, in the case of an emergency interruption, the
remedy and steps taken to prevent a recurrence, if applicable. The
distribution system retailer shall submit copies of the service
interruption records to the commission quarterly.
(c) The distribution system retailer shall notify the
commission in writing not later than 48 hours after an interruption
in service that affects the entire propane gas system, lasts more
than four hours, represents an existing or probable hazard to
persons or property, and requires immediate repair or continuous
action until the conditions are no longer hazardous. The notice
shall include the distribution system report of a service
interruption. A written report of a service interruption in another
form, including a part of a safety report, is sufficient to comply
with this subsection.
(d) The commission shall establish and maintain a toll-free
telephone number to enable a customer to notify the commission of a
service interruption that does not involve a refusal to serve under
Section 141.006. The commission shall immediately investigate the
notification. A distribution system retailer shall notify the
customer of the commission phone number on each billing statement.
(e) To restore and maintain service, the commission may
assume temporary operational control of a propane gas system that
experiences a service interruption that affects the entire propane
gas system and that:
(1) continues to affect the entire propane gas system
after the distribution system retailer has had direct access to and
control of the system for more than 48 hours after the service
interruption began;
(2) occurs more than three times in one month; or
(3) is the result of the distribution system
retailer's failure or refusal to replenish the primary propane tank
for a reason other than a general local market disruption, a
restriction on wholesale propane supplies, mechanical failure,
criminal activity, or an act of God.
(f) The commission may draw down all or part of the
financial surety posted under Section 141.009, as required, to
restore and maintain service under Subsection (e).
(g) At the request of the commission, the attorney general
shall bring suit for the appointment of a receiver to collect the
assets and carry on the business of a distribution system retailer
that:
(1) has abandoned operation of its facilities;
(2) informs the commission that the owner is
abandoning the system; or
(3) experiences a service interruption as described
under Subsection (e).
(h) The court shall appoint a receiver if an appointment is
necessary to guarantee:
(1) the collection of assessments, fees, penalties, or
interest; or
(2) continuous and adequate service to the customers
of the utility.
(i) The receiver shall execute a bond to assure the proper
performance of the receiver's duties in an amount to be set by the
court.
(j) After appointment and execution of bond, the receiver
shall take possession of the assets of the utility specified by the
court. Until discharged by the court, the receiver shall perform
the duties that the court directs to preserve the assets and carry
on the business of the utility and shall strictly observe the final
order involved.
(k) On a showing of good cause by the distribution system
retailer, the court may dissolve the receivership and order the
assets and control of the business returned to the distribution
system retailer.
(l) Notwithstanding Section 64.021, Civil Practice and
Remedies Code, a receiver appointed under this section may seek
commission approval to acquire the distribution system retailer's
facilities.
(m) Subject to the approval of the court and after giving
notice to all interested parties, the receiver may sell or
otherwise dispose of all or part of the real or personal property of
a propane gas system against which a proceeding has been brought
under this subchapter to pay the costs incurred in the operation of
the receivership. The costs include:
(1) payment of fees to the receiver for the receiver's
services;
(2) payment of fees to attorneys, accountants,
engineers, or any other persons or entities that provide goods or
services necessary to the operation of the receivership; and
(3) payment of costs incurred ensuring that any
property owned or controlled by a distribution system retailer is
not used in violation of a final order of the court.
Sec. 141.006. GROUNDS FOR REFUSAL TO SERVE. (a) A
distribution system retailer may refuse service to an applicant for
new service or to an existing customer for continued service or
reconnection if:
(1) an applicant or customer fails to pay fees,
advances, contributions, or deposits required for service under the
distribution system retailer's policies;
(2) an applicant or customer fails to furnish a
service or meter location specified for service by the distribution
system retailer;
(3) the existence or repeated creation of an unsafe
condition, such as impaired meter access or a leak in the
applicant's piping system, may potentially create bodily harm or
endanger life or property in the distribution system retailer's
opinion;
(4) an applicant, customer, or service location owner
is delinquent in payment for services provided by a distribution
system retailer service location owner; or
(5) a current resident or occupant of the premises to
receive service is delinquent in payment for services provided by a
distribution system retailer.
(b) The right to refuse service ends when the cause for the
refusal to serve is corrected.
Sec. 141.007. REASONABLE TIME TO BEGIN SERVICE. A
distribution system retailer may delay providing service following
an application or execution of an agreement for service for a
reasonable amount of time considering required approvals,
inspections, or permits, the extent of the facilities to be built,
and the distribution system retailer's workload at the time.
Sec. 141.008. CUSTOMER COMPLAINTS. (a) A distribution
system retailer that receives a written complaint shall promptly
and suitably investigate the complaint and advise the complainant
of the results of the investigation. A distribution system
retailer shall keep for at least three years after the final
disposition of each complaint a record that includes each
complainant's name and address, the date and nature of the
complaint, and the adjustment or disposition of the complaint. A
distribution system retailer is not required to keep a record of a
complaint that does not require the distribution system retailer to
take specific further action. A distribution system retailer shall
notify each complainant of the right to file a complaint with the
commission if the complainant is not satisfied by the distribution
system retailer's resolution of the matter.
(b) On receipt of a written complaint from the commission on
behalf of a customer, a distribution system retailer promptly and
suitably shall investigate and notify the commission and
complainant of the results of the investigation. An initial
response must be made not later than the third business day after
the date the distribution system retailer receives the complaint
electronically delivered to a minimum of two electronic addresses
designated by the distribution system retailer. A distribution
system retailer shall send a final and complete response to the
commission and complainant not later than the 15th day after the
date the complaint was received, unless the commission grants
additional time before the expiration of the 15-day period.
(c) The commission may impose sanctions on a distribution
system retailer if, after an investigation, the commission
determines that the distribution system retailer has violated
Section 141.003. Sanctions may include:
(1) adopting an order requiring a distribution system
retailer to refund the amounts of any overcharges to the
distribution system retailer's customers;
(2) drawing down all or a portion of the financial
surety for the purpose of refunding the amounts of any overcharges
to the distribution system retailer's customers not refunded before
the 61st day after the date the commission orders a refund; or
(3) adopting an order setting rates and fees for the
distribution system retailer in accordance with Section 141.003.
Sec. 141.009. PERFORMANCE GUARANTEE. A distribution system
retailer shall post, in favor of the commission, financial surety
in the form of a letter of credit, bond, or other acceptable form of
financial surety with the commission in an amount equal to the
lesser of $3 multiplied by the number of gallons of aggregate
storage capacity in all of the propane gas systems operated by the
distribution system retailer or $50,000. The issuer of the
financial surety used to meet this requirement shall honor the
financial surety if the issuer receives from the commission notice
that the financial surety is due and payable. The commission may
draw down all or a portion of the financial surety. The distribution
system retailer shall provide the commission with verification of
the adequacy of the financial surety, and the commission may order
the distribution system retailer to adjust the amount of the
financial surety annually.
Sec. 141.010. DISCLOSURE TO HOMEOWNERS. (a) A
distribution system retailer shall record in the real property
records of each county in which the distribution system retailer
owns or operates a propane gas system a notice of disclosure of the
existence of the propane gas system and the service the retailer
provides. The notice shall include:
(1) a service map reflecting the location of the
subdivisions or areas the distribution system retailer serves in
the county;
(2) a copy of this chapter or a summary of the
customer's rights under this chapter; and
(3) for development agreements entered into after
September 1, 2013, a statement disclosing the existence of any
financial interest held by a homeowners' association, municipal
utility district, or developer in the propane gas system.
(b) If a person proposes to sell or convey real property
located in a propane gas system service area owned by a distribution
system retailer, the person must give to the purchaser written
notice as prescribed by this subsection. The notice must include a
copy of the notice recorded in the real property records as required
by Subsection (a), must be executed by the seller, and must read as
follows: "The real property, described below, that you are about to
purchase may be located in a propane gas system service area, which
is authorized by law to provide propane gas service to the
properties in the area pursuant to Chapter 141, Utilities Code. If
your property is located in a propane gas system service area, there
may be special costs or charges that you will be required to pay
before you can receive propane gas service. There may be a period
required to construct lines or other facilities necessary to
provide propane gas service to your property. You are advised to
determine if the property is in a propane gas system service area
and contact the distribution system retailer to determine the cost
that you will be required to pay and the period, if any, that is
required to provide propane gas service to your property.
"The undersigned purchaser hereby acknowledges receipt of
the foregoing notice at or before the execution of a binding
contract for the purchase of the real property described in the
notice or at closing of purchase of the real property.
________________________________
Date
________________________________
Signature of Purchaser"
(c) Each county shall accept and record in its real property
records a distribution system retailer's service map presented to
the county clerk under this section if the map meets filing
requirements, does not exceed 11 inches by 17 inches in size, and is
accompanied by the appropriate fee. The recording required by this
section must be completed not later than the later of January 1,
2014, or the 90th day after the date a distribution system retailer
completes construction of a new propane gas system in the county.
SECTION 2. This Act takes effect September 1, 2013.
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