| 1 | 1 | | 85R890 NC-F |
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| 2 | 2 | | By: Buckingham S.B. No. 2070 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to limitations on the use of municipal electric utility |
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| 8 | 8 | | system revenues by certain municipalities. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Chapter 552, Local Government Code, is amended |
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| 11 | 11 | | by adding Subchapter I to read as follows: |
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| 12 | 12 | | SUBCHAPTER I. LIMITATIONS ON USE OF MUNICIPAL ELECTRIC UTILITY |
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| 13 | 13 | | SYSTEM REVENUES BY CERTAIN MUNICIPALITIES |
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| 14 | 14 | | Sec. 552.161. DEFINITION. In this subchapter, "revenues" |
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| 15 | 15 | | means the total amount of revenue received as rates for wholesale or |
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| 16 | 16 | | retail electric utility services by a municipal electric utility |
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| 17 | 17 | | system. The term does not include revenues from pass-through fuel |
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| 18 | 18 | | charges or power supply adjustment revenues. |
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| 19 | 19 | | Sec. 552.162. APPLICABILITY. This subchapter applies only |
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| 20 | 20 | | to a municipality with a population of less than 850,000 that owns |
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| 21 | 21 | | an electric utility system with 400,000 or more customers. |
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| 22 | 22 | | Sec. 552.163. LIMITATIONS ON USE OF REVENUE. (a) |
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| 23 | 23 | | Notwithstanding any other law, the governing body of a municipality |
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| 24 | 24 | | may use the revenues from the municipality's electric utility |
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| 25 | 25 | | system only for: |
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| 26 | 26 | | (1) paying the direct costs of operating the system as |
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| 27 | 27 | | described by Subsection (b); and |
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| 28 | 28 | | (2) transferring sums to the municipality as provided |
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| 29 | 29 | | by Section 552.164. |
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| 30 | 30 | | (b) The direct costs of operating the electric utility |
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| 31 | 31 | | system include only: |
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| 32 | 32 | | (1) the cost of operating and maintaining the system, |
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| 33 | 33 | | including the cost of salaries and wages, employee benefits, |
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| 34 | 34 | | vehicle purchases, vehicle maintenance, rents, legal services, and |
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| 35 | 35 | | facility maintenance; |
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| 36 | 36 | | (2) payments on indebtedness incurred by or on behalf |
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| 37 | 37 | | of the system that is secured by revenues of the system; |
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| 38 | 38 | | (3) the cost of replacing reserves required by |
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| 39 | 39 | | agreements entered into by the governing body of the municipality |
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| 40 | 40 | | in connection with the issuance of bonds or other indebtedness |
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| 41 | 41 | | incurred by or on behalf of the system; |
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| 42 | 42 | | (4) the cost of funding reserves considered necessary |
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| 43 | 43 | | by the governing body of the municipality to maintain the financial |
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| 44 | 44 | | and operational integrity of the system; |
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| 45 | 45 | | (5) the cost of funding a rate stabilization fund to |
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| 46 | 46 | | minimize the impact of rate increases on customers of the system; |
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| 47 | 47 | | (6) the cost of capital improvements or equipment for |
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| 48 | 48 | | the system; and |
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| 49 | 49 | | (7) required payments relating to the system to |
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| 50 | 50 | | governmental entities other than the municipality. |
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| 51 | 51 | | Sec. 552.164. TRANSFER OF REVENUE. The governing body of |
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| 52 | 52 | | the municipality may transfer annually to the general fund of the |
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| 53 | 53 | | municipality a sum not to exceed 12 percent of the amount of the |
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| 54 | 54 | | annual revenues of the municipality's electric utility system, as |
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| 55 | 55 | | reported in the municipality's audited financial statements for the |
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| 56 | 56 | | preceding fiscal year. |
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| 57 | 57 | | Sec. 552.165. ACCOUNTING SYSTEM; REPORTS. The governing |
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| 58 | 58 | | body of the municipality shall establish and maintain a discrete |
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| 59 | 59 | | system of accounts, books, financial statements, and reports for |
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| 60 | 60 | | the municipal electric utility system that is separate from the |
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| 61 | 61 | | accounts of the municipality and the municipality's other |
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| 62 | 62 | | utilities, departments, and agencies. |
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| 63 | 63 | | SECTION 2. (a) Subchapter I, Chapter 552, Local Government |
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| 64 | 64 | | Code, as added by this Act, applies only to revenues received by a |
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| 65 | 65 | | municipal electric utility system on or after September 1, 2019. |
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| 66 | 66 | | Revenues received by a municipal electric utility system before |
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| 67 | 67 | | September 1, 2019, are governed by the law applicable to the |
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| 68 | 68 | | revenues immediately before that date, and that law is continued in |
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| 69 | 69 | | effect for that purpose. |
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| 70 | 70 | | (b) Not later than September 1, 2018, the governing body of |
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| 71 | 71 | | a municipality shall establish the accounting system required by |
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| 72 | 72 | | Section 552.165, Local Government Code, as added by this Act. |
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| 73 | 73 | | SECTION 3. This Act takes effect September 1, 2017. |
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