86R5758 JXC-D
By: King of Uvalde H.B. No. 1826
A BILL TO BE ENTITLED
AN ACT
relating to the procedure for amending or revoking certificates of
public convenience and necessity issued to certain water utilities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 13.254, Water Code, is amended to read as
follows:
Sec. 13.254. REVOCATION OR AMENDMENT OF CERTIFICATE. (a)
The utility commission at any time after notice and hearing may
revoke or amend any certificate of public convenience and
necessity:
(1) with the written consent of the certificate
holder; or
(2) if the utility commission finds that:
(A) [(1)] the certificate holder has never
provided, is no longer providing, is incapable of providing, or has
failed to provide continuous and adequate service in the area, or
part of the area, covered by the certificate;
(B) [(2)] in an affected county as defined in
Section 16.341, the cost of providing service by the certificate
holder is so prohibitively expensive as to constitute denial of
service, provided that, for commercial developments or for
residential developments started after September 1, 1997, in an
affected county as defined in Section 16.341, the fact that the cost
of obtaining service from the currently certificated retail public
utility makes the development economically unfeasible does not
render such cost prohibitively expensive in the absence of other
relevant factors;
(C) [(3)] the certificate holder has agreed in
writing to allow another retail public utility to provide service
within its service area, except for an interim period, without
amending its certificate; or
(D) [(4)] the certificate holder has failed to
file a cease and desist action pursuant to Section 13.252 within 180
days of the date that it became aware that another retail public
utility was providing service within its service area, unless the
certificate holder demonstrates good cause for its failure to file
such action within the 180 days.
(b) For a proceeding under Subsection (a) in which another
retail public utility proposes to provide service in the
decertified area and the certificate holder has not agreed to the
decertification, the utility commission shall issue an initial
order to revoke or amend the certificate and follow the process in
this section to require that the alternate retail public utility
provide compensation to the certificate holder.
(c) [(a-1)] As an alternative to decertification under
Subsection (a), the owner of a tract of land that is at least 50
acres and that is not in a platted subdivision actually receiving
water or sewer service may petition the utility commission under
this subsection for expedited release of the area from a
certificate of public convenience and necessity so that the area
may receive service from another retail public utility. The fact
that a certificate holder is a borrower under a federal loan program
is not a bar to a request under this subsection for the release of
the petitioner's land and the receipt of services from an
alternative provider. [On the day the petitioner submits the
petition to the utility commission, the petitioner shall send, via
certified mail, a copy of the petition to the certificate holder,
who may submit information to the utility commission to controvert
information submitted by the petitioner.] The petitioner must
demonstrate in the petition that:
(1) a written request for service, other than a
request for standard residential or commercial service, has been
submitted to the certificate holder, identifying:
(A) the area for which service is sought;
(B) the timeframe within which service is needed
for current and projected service demands in the area;
(C) the level and manner of service needed for
current and projected service demands in the area;
(D) the approximate cost for the alternative
provider to provide the service at the same level and manner that is
requested from the certificate holder;
(E) the flow and pressure requirements and
specific infrastructure needs, including line size and system
capacity for the required level of fire protection requested; and
(F) any additional information requested by the
certificate holder that is reasonably related to determination of
the capacity or cost for providing the service;
(2) the certificate holder has been allowed at least
90 calendar days to review and respond to the written request and
the information it contains;
(3) the certificate holder:
(A) has refused to provide the service;
(B) is not capable of providing the service on a
continuous and adequate basis within the timeframe, at the level,
at the approximate cost that the alternative provider is capable of
providing for a comparable level of service, or in the manner
reasonably needed or requested by current and projected service
demands in the area; or
(C) conditions the provision of service on the
payment of costs not properly allocable directly to the
petitioner's service request, as determined by the utility
commission; and
(4) the alternate retail public utility from which the
petitioner will be requesting service possesses the financial,
managerial, and technical capability to provide continuous and
adequate service within the timeframe, at the level, at the cost,
and in the manner reasonably needed or requested by current and
projected service demands in the area.
(d) A landowner who intends to file a petition under
Subsection (c) shall provide to the certificate holder notice of
the landowner's intent to file the petition at least 30 days before
the date the landowner files the petition. The notice must specify
the tract of land to be decertified. On the day the landowner
submits the petition to the utility commission under Subsection
(c), the landowner by certified mail shall send a copy of the
petition to the certificate holder. The certificate holder may
submit to the utility commission information to controvert
information submitted by the landowner.
(e) [(a-2)] A landowner is not entitled to make the election
described in Subsection (c) [(a-1)] or (h) [(a-5)] but is entitled
to contest under Subsection (a) the involuntary certification of
its property in a hearing held by the utility commission if the
landowner's property is located:
(1) within the boundaries of any municipality or the
extraterritorial jurisdiction of a municipality with a population
of more than 500,000 and the municipality or retail public utility
owned by the municipality is the holder of the certificate; or
(2) in a platted subdivision actually receiving water
or sewer service.
(f) Not later than the 60th day after [(a-3) Within 60
calendar days from] the date the utility commission determines a
[the] petition filed pursuant to Subsection (c) [(a-1)] to be
administratively complete, the utility commission shall issue an
initial order granting [grant] the petition unless the utility
commission makes an express finding that the petitioner failed to
satisfy the elements required in Subsection (c) [(a-1)] and
supports its finding with separate findings and conclusions for
each element based solely on the information provided by the
petitioner and the certificate holder. The utility commission may
grant or deny a petition subject to terms and conditions
specifically related to the service request of the petitioner and
all relevant information submitted by the petitioner and the
certificate holder. [In addition, the utility commission may
require an award of compensation as otherwise provided by this
section.]
(g) [(a-4)] Chapter 2001, Government Code, does not apply to
a [any] petition filed under Subsection (c) [(a-1)]. The decision
of the utility commission on the petition is final after any
reconsideration authorized by the utility commission's rules and
may not be appealed.
(h) [(a-5)] As an alternative to decertification under
Subsection (a) and expedited release under Subsection (c) [(a-1)],
the owner of a tract of land that is at least 25 acres and that is
not receiving water or sewer service may petition for expedited
release of the area from a certificate of public convenience and
necessity and is entitled to that release if the landowner's
property:
(1) is located in a county:
(A) with a population of at least one million or
that is[, a county] adjacent to a county with a population of at
least one million; or
(B) [, or a county] with a population of more than
200,000 and less than 220,000 that does not contain a public or
private university that had a total enrollment in the most recent
fall semester of 40,000 or more; and
(2) is not located[, and not] in a county that has a
population of more than 45,500 and less than 47,500.
(i) A landowner who intends to file a petition under
Subsection (h) shall provide to the certificate holder notice of
the landowner's intent to file the petition at least 30 days before
the date the landowner files the petition. The notice must specify
the tract of land to be decertified.
(j) [(a-6)] The utility commission shall issue an initial
order granting [grant] a petition received under Subsection (h)
[(a-5)] not later than the 60th day after the date the landowner
files the petition. The utility commission may not deny a petition
received under Subsection (h) [(a-5)] based on the fact that a
certificate holder is a borrower under a federal loan program. [The
utility commission may require an award of compensation by the
petitioner to a decertified retail public utility that is the
subject of a petition filed under Subsection (a-5) as otherwise
provided by this section.]
(k) A [(a-7) The] utility shall include with the statement
of intent provided to each landowner or ratepayer a notice of:
(1) a proceeding under this section related to
certification or decertification;
(2) the reason or reasons for the proposed rate
change; and
(3) any bill payment assistance program available to
low-income ratepayers.
(l) [(a-8)] If a certificate holder has never made service
available through planning, design, construction of facilities, or
contractual obligations to serve the area a petitioner seeks to
have released under Subsection (c) [(a-1)], the utility commission
is not required to find that the proposed alternative provider is
capable of providing better service than the certificate holder,
but only that the proposed alternative provider is capable of
providing the requested service.
(m) [(a-9)] Subsection (l) [(a-8)] does not apply to a
county:
(1) that borders the United Mexican States and the
Gulf of Mexico or a county adjacent to a county that borders the
United Mexican States and the Gulf of Mexico;
(2) [.
[(a-10) Subsection (a-8) does not apply to a county:
[(1)] with a population of more than 30,000 and less
than 35,000 that borders the Red River;
(3) [or
[(2)] with a population of more than 100,000 and less
than 200,000 that borders a county described by Subdivision (2);
(4) [(1).
[(a-11) Subsection (a-8) does not apply to a county:
[(1)] with a population of 130,000 or more that is
adjacent to a county with a population of 1.5 million or more that
is within 200 miles of an international border; or
(5) [(2)] with a population of more than 40,000 and
less than 50,000 that contains a portion of the San Antonio River.
(n) [(b)] Upon written request from the certificate holder,
the utility commission may cancel the certificate of a utility or
water supply corporation authorized by rule to operate without a
certificate of public convenience and necessity under Section
13.242(c).
(o) [(c)] If the certificate of any retail public utility is
revoked or amended under this section, the utility commission may
require one or more retail public utilities with their consent to
provide service in the decertified area [in question]. An [The]
order of the utility commission issued under this subsection shall
not be effective to transfer property.
(p) In an initial order issued under Subsection (b), (f), or
(j), the utility commission shall require the certificate holder,
not later than the 20th day after the date the order is issued, to
submit to the utility commission and, as applicable, the petitioner
and any retail public utility that intends to provide service to the
decertified area the following information, which must be current
as of the date the information is provided:
(1) the number of potable water connections the
certificate holder could have served in the decertified area at a
density of one connection per acre while maintaining 0.6 gallons
per minute of potable water supply to each connection with the
groundwater supply, surface water supply, and treated water
purchase contract supply available to the certificate holder;
(2) the number of wastewater connections the
certificate holder could have served in the decertified area at a
density of one connection per acre while maintaining 200 gallons
per day of wastewater treatment capacity to each connection with
the combined wastewater treatment plant capacity and wastewater
treatment wholesale contract capacity available to the certificate
holder;
(3) the certificate holder's base monthly retail rate;
and
(4) any additional supporting evidence or
documentation for the information described by Subdivision (1),
(2), or (3) if required by the utility commission.
(q) Not later than the 30th day after the date the utility
commission receives the information required to be submitted under
Subsection (p), the utility commission shall issue a second order
requiring that just and adequate compensation be paid to the
certificate holder and establishing the amount of compensation.
Compensation is just and adequate if the compensation is in an
amount equal to the certificate holder's base monthly retail rate
multiplied by the number of water and wastewater connections the
certificate holder could have served in the decertified area for a
period of 10 years. For an area decertified under Subsection (a),
the alternate retail public utility that intends to serve the area
shall pay the compensation. For an area decertified under
Subsection (c) or (h), the petitioner shall pay the compensation.
(r) Notwithstanding Subsection (q), the retail public
utility or petitioner may, before the date the utility commission
is authorized to issue a second order under Subsection (q), request
that the utility commission notify the retail public utility or
petitioner of the amount of compensation the utility commission
intends to order and request a hearing on the issue of compensation
before the utility commission to be held before the second order may
be issued. The utility commission is not required to hold the
hearing unless the requestor deposits the amount of compensation
the utility commission intends to order into the registry of the
district court of Travis County, pending the outcome of the
hearing.
(s) The utility commission shall conduct a hearing under
Subsection (r) not later than the 60th day after the date of the
request. At the hearing, the utility commission shall consider
evidence relating to all information submitted under Subsection
(p). The utility commission shall issue the second order after the
hearing.
(t) When compensation has been paid according to the
requirements of the second order, the utility commission shall
issue a third order to finalize the decertification of the retail
public utility. The third order must be made effective as of the
date the compensation is paid.
(u) [(d) A retail public utility may not in any way render
retail water or sewer service directly or indirectly to the public
in an area that has been decertified under this section without
providing compensation for any property that the utility commission
determines is rendered useless or valueless to the decertified
retail public utility as a result of the decertification.
[(e) The determination of the monetary amount of
compensation, if any, shall be determined at the time another
retail public utility seeks to provide service in the previously
decertified area and before service is actually provided. The
utility commission shall ensure that the monetary amount of
compensation is determined not later than the 90th calendar day
after the date on which a retail public utility notifies the utility
commission of its intent to provide service to the decertified
area.
[(f) The monetary amount shall be determined by a qualified
individual or firm serving as independent appraiser agreed upon by
the decertified retail public utility and the retail public utility
seeking to serve the area. The determination of compensation by the
independent appraiser shall be binding on the utility commission.
The costs of the independent appraiser shall be borne by the retail
public utility seeking to serve the area.
[(g) For the purpose of implementing this section, the value
of real property owned and utilized by the retail public utility for
its facilities shall be determined according to the standards set
forth in Chapter 21, Property Code, governing actions in eminent
domain and the value of personal property shall be determined
according to the factors in this subsection. The factors ensuring
that the compensation to a retail public utility is just and
adequate shall include: the amount of the retail public utility's
debt allocable for service to the area in question; the value of the
service facilities of the retail public utility located within the
area in question; the amount of any expenditures for planning,
design, or construction of service facilities that are allocable to
service to the area in question; the amount of the retail public
utility's contractual obligations allocable to the area in
question; any demonstrated impairment of service or increase of
cost to consumers of the retail public utility remaining after the
decertification; the impact on future revenues lost from existing
customers; necessary and reasonable legal expenses and
professional fees; and other relevant factors. The utility
commission shall adopt rules governing the evaluation of these
factors.
[(g-1) If the retail public utilities cannot agree on an
independent appraiser within 10 calendar days after the date on
which the retail public utility notifies the utility commission of
its intent to provide service to the decertified area, each retail
public utility shall engage its own appraiser at its own expense,
and each appraisal shall be submitted to the utility commission
within 60 calendar days. After receiving the appraisals, the
utility commission shall appoint a third appraiser who shall make a
determination of the compensation within 30 days. The determination
may not be less than the lower appraisal or more than the higher
appraisal. Each retail public utility shall pay half the cost of the
third appraisal.
[(h)] A certificate holder that has land removed from its
certificated service area in accordance with this section may not
be required, after the land is removed, to provide service to the
removed land for any reason, including the violation of law or
utility commission or commission rules by a water or sewer system of
another person.
SECTION 2. The changes in law made by this Act apply only to
a proceeding affecting a certificate of public convenience and
necessity that commences on or after the effective date of this Act.
A proceeding affecting a certificate of public convenience and
necessity that commenced before the effective date of this Act is
governed by the law in effect on the date the proceeding is
commenced, and that law is continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2019.