S.B. No. 700
AN ACT
relating to retail public utilities that provide water or sewer
service.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 13.002, Water Code, is amended by
amending Subdivisions (4-b) and (4-c) and adding Subdivision (4-d)
to read as follows:
(4-b) "Class B utility" means a public utility that
provides retail water or sewer utility service through 2,300 [500]
or more taps or connections but fewer than 10,000 taps or
connections.
(4-c) "Class C utility" means a public utility that
provides retail water or sewer utility service through 500 or more
taps or connections but fewer than 2,300 [500] taps or connections.
(4-d) "Class D utility" means a public utility that
provides retail water or sewer utility service through fewer than
500 taps or connections.
SECTION 2. Section 13.041, Water Code, is amended by
amending Subsection (d) and adding Subsections (h), (i), and (j) to
read as follows:
(d) In accordance with Subchapter K-1, the utility
commission may issue emergency orders, with or without a hearing:
(1) to compel a retail public utility [water or sewer
service provider] that has obtained or is required to obtain a
certificate of public convenience and necessity to provide
continuous and adequate water service, sewer service, or both, if
the discontinuance of the service is imminent or has occurred
because of the retail public utility's [service provider's] actions
or failure to act; and
(2) to compel a retail public utility to provide an
emergency interconnection with a neighboring retail public utility
for the provision of temporary water or sewer service, or both, for
not more than 90 days if service discontinuance or serious
impairment in service is imminent or has occurred.
(h) In accordance with Subchapter L, Chapter 5, the
commission may issue emergency orders, with or without a hearing:
(1) to compel a retail public utility that has
obtained a certificate of public convenience and necessity to
provide water or sewer service, or both, that complies with all
statutory and regulatory requirements of the commission if
necessary to ensure safe drinking water or environmental
protection; and
(2) to compel a retail public utility to provide an
emergency interconnection with a neighboring retail public utility
for the provision of temporary water or sewer service, or both, for
not more than 90 days if necessary to ensure safe drinking water or
environmental protection.
(i) On request by the commission, the utility commission
may, on an expedited basis, establish reasonable compensation for
the temporary service required under Subsection (h)(2) and may
allow the retail public utility receiving the service to make a
temporary adjustment to its rate structure to ensure proper
payment.
(j) If an order is issued under Subsection (h) without a
hearing, notice of a hearing under Section 5.504 to affirm, modify,
or set aside the order is adequate if the notice is mailed or hand
delivered to the last known address of the retail public utility's
headquarters.
SECTION 3. Section 13.046, Water Code, is amended by adding
Subsection (d) to read as follows:
(d) At the time the utility commission approves the
acquisition of a nonfunctioning retail water or sewer utility
service provider under Section 13.301, the utility commission
shall:
(1) determine the duration of the temporary rates for
the retail public utility, which must be for a reasonable period;
and
(2) rule on the reasonableness of the temporary rates
under Subsection (b) if the utility commission did not make a ruling
before the application was filed under Section 13.301.
SECTION 4. Section 13.183(c), Water Code, is amended to
read as follows:
(c) To ensure that retail customers receive a higher
quality, more affordable, or more reliable water or sewer service,
to encourage regionalization, or to maintain financially stable and
technically sound utilities, the regulatory authority, by rule or
ordinance, as appropriate, may adopt specific alternative
ratemaking methodologies for water or sewer rates to allow for more
timely and efficient cost recovery. Appropriate alternative
ratemaking methodologies are the introduction of new customer
classes, the cash needs method, and phased and multi-step rate
changes. The regulatory authority may also adopt system
improvement charges that may be periodically adjusted to ensure
timely recovery of infrastructure investment. The utility
commission by rule shall establish a schedule that requires all
utilities that have implemented a system improvement charge
approved by the utility commission to make periodic filings with
the utility commission to modify or review base rates charged by the
utility [based on factors other than rate of return and those
specified in Section 13.185]. Overall revenues determined
according to an alternative ratemaking methodology adopted under
this section must provide revenues to the utility that satisfy the
requirements of Subsection (a). The regulatory authority may not
approve rates under an alternative ratemaking methodology unless
the regulatory authority adopts the methodology before the date the
rate application was administratively complete.
SECTION 5. Section 13.187(a-1), Water Code, is amended to
read as follows:
(a-1) A utility may not make changes in its rates except by
sending by mail or e-mail a statement of intent to each ratepayer
and to the regulatory authority having original jurisdiction at
least 35 days before the effective date of the proposed change. The
utility may send the statement of intent to a ratepayer by e-mail
only if the ratepayer has agreed to receive communications
electronically. The effective date of the new rates must be the
first day of a billing period, and the new rates may not apply to
service received before the effective date of the new rates. The
statement of intent must include:
(1) the information required by the regulatory
authority's rules;
(2) a billing comparison regarding the existing water
rate and the new water rate computed for the use of:
(A) 5,000 [10,000] gallons of water; and
(B) 10,000 [30,000] gallons of water;
(3) a billing comparison regarding the existing sewer
rate and the new sewer rate computed for the use of 5,000 [10,000]
gallons, unless the utility proposes a flat rate for sewer
services; and
(4) a description of the process by which a ratepayer
may intervene in the ratemaking proceeding.
SECTION 6. Sections 13.1871(a), (b), and (d), Water Code,
are amended to read as follows:
(a) Except as provided by Sections 13.18715 and [Section]
13.1872, this section applies only to a Class B utility.
(b) A utility may not make changes in its rates except by
sending by mail or e-mail a statement of intent to each ratepayer
and to the regulatory authority having original jurisdiction at
least 35 days before the effective date of the proposed change. The
utility may send the statement of intent to a ratepayer by e-mail
only if the ratepayer has agreed to receive communications
electronically. The effective date of the new rates must be the
first day of a billing period, and the new rates may not apply to
service received before the effective date of the new rates. The
statement of intent must include:
(1) the information required by the regulatory
authority's rules;
(2) a billing comparison regarding the existing water
rate and the new water rate computed for the use of:
(A) 5,000 [10,000] gallons of water; and
(B) 10,000 [30,000] gallons of water;
(3) a billing comparison regarding the existing sewer
rate and the new sewer rate computed for the use of 5,000 [10,000]
gallons, unless the utility proposes a flat rate for sewer
services; and
(4) a description of the process by which a ratepayer
may file a complaint under Subsection (i).
(d) When the statement of intent is delivered, the utility
shall file with the regulatory authority an application to change
rates. The application must include information the regulatory
authority requires by rule and any appropriate cost and rate
schedules supporting the requested rate increase. [In adopting
rules relating to the information required in the application, the
utility commission shall ensure that a utility can file a less
burdensome and complex application than is required of a Class A
utility.] If the utility fails to provide within a reasonable time
after the application is filed the necessary documentation or other
evidence that supports the costs and expenses that are shown in the
application, the regulatory authority may disallow the
nonsupported costs or expenses.
SECTION 7. Subchapter F, Chapter 13, Water Code, is amended
by adding Section 13.18715 to read as follows:
Sec. 13.18715. CLASS C UTILITIES: STATEMENT OF INTENT TO
CHANGE RATES; HEARING; DETERMINATION OF RATE LEVEL. (a) This
section applies only to a Class C utility.
(b) A utility may not make changes in its rates except by
complying with the procedures to change rates described by Section
13.1871.
(c) Notwithstanding Section 13.1871(n), the utility may
send the notice required by that subsection by mail or e-mail or may
deliver a copy of the notice to the ratepayers.
SECTION 8. The heading to Section 13.1872, Water Code, is
amended to read as follows:
Sec. 13.1872. CLASS D [C] UTILITIES: RATE ADJUSTMENT.
SECTION 9. Section 13.1872, Water Code, is amended by
amending Subsections (a) and (e) and adding Subsection (c-1) to
read as follows:
(a) This section applies only to a Class D [C] utility.
(c-1) A utility that chooses to comply with Section 13.1871
as authorized under Subsection (c)(2) of this section may send the
notice required by Section 13.1871(n) by mail or e-mail or may
deliver a copy of the notice to the ratepayers.
(e) The utility commission by rule shall adopt procedures to
allow a utility to receive without a hearing an annual rate
adjustment [based on changes in the price index]. The rules must:
(1) include standard language to be included in the
notice described by Subsection (c)(1) describing the rate
adjustment process; and
(2) provide that an annual rate adjustment described
by this section may not result in a rate increase to any class or
category of ratepayer of more than [the lesser of:
[(A)] five percent[; or
[(B) the percentage increase in the price index
between the year preceding the year in which the utility requests
the adjustment and the year in which the utility requests the
adjustment].
SECTION 10. Subchapter F, Chapter 13, Water Code, is
amended by adding Section 13.1873 to read as follows:
Sec. 13.1873. APPLICATION RULES. In adopting rules
relating to the information required in an application for a Class
B, Class C, or Class D utility to change rates, the utility
commission shall ensure that a:
(1) Class B utility can file a less burdensome and
complex application than is required of a Class A utility; and
(2) Class C or Class D utility can file a less
burdensome and complex application than is required of a Class A or
Class B utility.
SECTION 11. Section 13.258(a), Water Code, is amended to
read as follows:
(a) Notwithstanding any other provision of this chapter, a
Class A utility may apply to the utility commission for an amendment
of a certificate of convenience and necessity held by a municipal
utility district to allow the utility to have the same rights and
powers under the certificate as the municipal utility district.
SECTION 12. Section 5.501(c), Water Code, is amended to
read as follows:
(c) The commission by order or rule may delegate to the
executive director the authority to:
(1) receive applications and issue emergency orders
under this subchapter and Section 13.041(h); and
(2) authorize, in writing, a representative or
representatives to act on the executive director's behalf under
this subchapter and Section 13.041(h).
SECTION 13. The change in law made by this Act applies only
to an application for an amendment of a certificate of public
convenience and necessity or an application for a rate change or
adjustment filed on or after the effective date of this Act. An
application filed before the effective date of this Act is governed
by the law in effect on the date the application is filed, and the
former law is continued in effect for that purpose.
SECTION 14. Section 13.1872(b), Water Code, is repealed.
SECTION 15. This Act takes effect September 1, 2019.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 700 passed the Senate on
April 9, 2019, by the following vote: Yeas 31, Nays 0; and that
the Senate concurred in House amendment on May 21, 2019, by the
following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 700 passed the House, with
amendment, on May 17, 2019, by the following vote: Yeas 141,
Nays 1, two present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor