Texas 2021 - 87th Regular

Texas House Bill HB4147 Compare Versions

Only one version of the bill is available at this time.

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1	1	87R13157 BRG-F
2	2	By: Larson H.B. No. 4147
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the regulation of rates for water sales and the
8	8	provision of wholesale water or sewer service.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 11.041(a), Water Code, is amended to
11	11	read as follows:
12	12	(a) Any person entitled to receive or use water from any
13	13	canal, ditch, flume, lateral, dam, reservoir, or lake or from any
14	14	conserved or stored supply may present to the commission a written
15	15	petition showing:
16	16	(1) that the person [he] is entitled to receive or use
17	17	the water;
18	18	(2) that the person [he] is willing and able to pay the
19	19	price demanded for the water [a just and reasonable price for the
20	20	water];
21	21	(3) that the party owning or controlling the water
22	22	supply has water not contracted to others and available for the
23	23	petitioner's use; and
24	24	(4) that the party owning or controlling the water
25	25	supply fails or refuses to supply the available water to the
26	26	petitioner[, or that the price or rental demanded for the available
27	27	water is not reasonable and just or is discriminatory].
28	28	SECTION 2. Section 13.043(h), Water Code, is amended to
29	29	read as follows:
30	30	(h) The utility commission may, on a motion by the utility
31	31	commission or by the appellant under Subsection (a) or [,] (b) [, or
32	32	(f)], establish interim rates to be in effect until a final decision
33	33	is made.
34	34	SECTION 3. Subtitle B, Title 2, Water Code, is amended by
35	35	adding Chapter 14 to read as follows:
36	36	CHAPTER 14. REGULATION OF RATES FOR RAW WATER SALES AND WHOLESALE
37	37	WATER OR SEWER SERVICE
38	38	SUBCHAPTER A. GENERAL PROVISIONS
39	39	Sec. 14.0101. PURPOSE. The purpose of this chapter is to
40	40	establish policies and procedures for regulating rates for raw
41	41	water sales and wholesale water and sewer service.
42	42	Sec. 14.0102. DEFINITIONS. In this chapter:
43	43	(1) "Commission" means the Texas Commission on
44	44	Environmental Quality.
45	45	(2) "Debt service and public security requirements"
46	46	means revenue or income sufficient to:
47	47	(A) meet all debt service requirements on a
48	48	public security;
49	49	(B) pay or repay any amounts required to be
50	50	deposited in any special or reserve fund required to be established
51	51	and maintained by the public security authorization for the public
52	52	security; and
53	53	(C) achieve and maintain compliance with all
54	54	revenue and income requirements set forth in the public security
55	55	authorization for the public security.
56	56	(3) "Facilities" means all the plant and equipment of
57	57	a seller required to accomplish a sale and purchase of water or the
58	58	provision of wholesale water or sewer service, including all
59	59	tangible and intangible real and personal property without
60	60	limitation, and any and all means and instrumentalities in any
61	61	manner owned, operated, leased, licensed, used, controlled,
62	62	furnished, or supplied for, by, or in connection with the business
63	63	of the seller.
64	64	(4) "Person" includes natural persons, partnerships
65	65	of two or more persons having a joint or common interest, mutual or
66	66	cooperative associations, water supply or sewer service
67	67	corporations, and corporations.
68	68	(5) "Political subdivision" includes a river
69	69	authority.
70	70	(6) "Purchaser" means a person who pays compensation
71	71	to another person for supply of raw water or a retail public utility
72	72	that pays compensation to a political subdivision or other retail
73	73	public utility for wholesale water or sewer service.
74	74	(7) "Public security" means an instrument, including a
75	75	bond, certificate, note, or other type of obligation issued or
76	76	authorized to be issued by a political subdivision under a statute,
77	77	a municipal home-rule charter, or the constitution of this state,
78	78	for the purpose or purposes of financing or refinancing the
79	79	acquisition, construction, or improvement of facilities and
80	80	payable wholly or partly from revenue or income derived from the
81	81	operation of the facilities.
82	82	(8) "Public security authorization" means a
83	83	resolution, order, or ordinance that is approved or adopted, or any
84	84	other action taken in a proceeding, by the governing body of a
85	85	political subdivision in authorizing the issuance of a public
86	86	security.
87	87	(9) "Rate" means the cost fixed, charged, or paid in
88	88	connection with the sale and purchase of water or the provision of
89	89	wholesale water or sewer service.
90	90	(10) "Raw water" means untreated surface water or
91	91	groundwater.
92	92	(11) "Retail public utility" means any person,
93	93	corporation, public utility, water supply or sewer service
94	94	corporation, municipality, political subdivision, or agency
95	95	operating, maintaining, or controlling in this state facilities for
96	96	providing potable water service or sewer service, or both, for
97	97	compensation.
98	98	(12) "Retail water or sewer utility service" means
99	99	potable water service or sewer service, or both, provided by a
100	100	retail public utility to the ultimate consumer for compensation.
101	101	(13) "Sale and purchase of water" means the provision
102	102	of raw water for compensation.
103	103	(14) "Seller" means a retail public utility or
104	104	political subdivision that sells raw water or provides wholesale
105	105	water or sewer service.
106	106	(15) "Utility commission" means the Public Utility
107	107	Commission of Texas.
108	108	(16) "Weather emergencies" means severe local storms,
109	109	winter storms, drought, flooding, coastal hazards including
110	110	tropical cyclones, and non-precipitation hazards, including
111	111	extreme hot or cold conditions and high winds.
112	112	(17) "Wholesale water or sewer service" means potable
113	113	water or sewer service, or both, provided for compensation to a
114	114	person or political subdivision who is not the ultimate consumer of
115	115	the service.
116	116	(18) "Written contract" means a written agreement
117	117	between a purchaser and seller relating to the sale and purchase of
118	118	water or to the provision of wholesale water or sewer service that
119	119	is sufficiently definite in its material terms to ascertain the
120	120	parties' intent. The term includes the following:
121	121	(A) a contract that obligates the seller to make
122	122	available and the purchaser to pay for a minimum volume of raw or
123	123	potable water, or sewer treatment capacity, regardless of the
124	124	amount actually delivered or used by the purchaser;
125	125	(B) a contract for the sale and purchase of water
126	126	or for wholesale water or sewer service in which the exact amount of
127	127	raw water purchased and sold or the volume of wholesale water or
128	128	sewer service required by the purchaser is not specifically
129	129	determined and under which the seller guarantees to meet the needs
130	130	of the purchaser;
131	131	(C) a contract that provides for the price to be
132	132	initially fixed and adjusted by the seller over time;
133	133	(D) a contract that extends for any period for
134	134	which the parties agree or provide that such contracts will
135	135	continue in effect until bonds specified by the contract and any
136	136	refunding bonds issued to pay those bonds are paid;
137	137	(E) a contract that provides that the purchaser
138	138	may not obtain water or services from a source other than the seller
139	139	except as provided by the written contract; and
140	140	(F) a contract entered into under Section
141	141	791.026, Government Code.
142	142	Sec. 14.0103. APPLICABILITY. This chapter applies to the
143	143	rates fixed, charged, or paid for the sale and purchase of water or
144	144	the provision of wholesale water or sewer service that are subject
145	145	to the jurisdiction of the utility commission under any provision
146	146	of Chapters 11 and 12. This chapter does not apply to rates,
147	147	agreements, or contracts subject to regulation under Subchapter F,
148	148	Chapter 13, or rates for retail water or sewer utility service
149	149	charged under a tariff, a rate order, or ordinance.
150	150	Sec. 14.0104. APPLICABILITY OF ADMINISTRATIVE PROCEDURE
151	151	ACT. Chapter 2001, Government Code, applies to all proceedings
152	152	under this chapter except to the extent inconsistent with this
153	153	chapter.
154	154	SUBCHAPTER B. JURISDICTION
155	155	Sec. 14.0151. RATES. (a) The utility commission shall fix
156	156	reasonable rates for the sale and purchase of water for any purpose
157	157	mentioned in Chapter 11 or 12 and for wholesale water and sewer
158	158	service.
159	159	(b) The utility commission in reviewing and fixing
160	160	reasonable rates for the sale and purchase of water or for wholesale
161	161	water or sewer service under this chapter may use any reasonable
162	162	basis for fixing rates as may be determined by the utility
163	163	commission to be appropriate under the circumstances of the case
164	164	being reviewed. The utility commission may not fix a rate which a
165	165	political subdivision may charge that is less than the amount
166	166	required to meet:
167	167	(1) the debt service and public security requirements
168	168	of that political subdivision or that impairs the political
169	169	subdivision's financial integrity; and
170	170	(2) the costs of preparedness for weather emergencies.
171	171	(c) The utility commission's jurisdiction under this
172	172	section relating to a municipality is limited to water furnished by
173	173	the municipality to another political subdivision on a wholesale
174	174	basis.
175	175	(d) In a proceeding under Section 14.0204, the utility
176	176	commission may establish interim rates and compel continuing
177	177	service during the pendency of a rate proceeding under this
178	178	chapter. The utility commission may not fix an interim rate for a
179	179	political subdivision which is less than the amount required to
180	180	meet:
181	181	(1) the debt service and public security requirements
182	182	of that political subdivision or that impairs the political
183	183	subdivision's financial integrity; and
184	184	(2) the costs of preparedness for weather emergencies.
185	185	(e) The utility commission may order a refund or assess
186	186	additional charges from the date a petition for rate review is
187	187	received by the utility commission of the difference between the
188	188	rate actually charged and the rate fixed by the utility commission,
189	189	plus interest at the statutory rate.
190	190	Sec. 14.0152. REGULATION AND REVIEW OF RATES. (a) The
191	191	utility commission shall review rates charged for the sale and
192	192	purchase of water or the provision of wholesale water or sewer
193	193	service under this chapter.
194	194	(b) The utility commission may consult with the commission
195	195	as necessary in carrying out its duties related to the regulation of
196	196	the sale and purchase of water or the provision of wholesale water
197	197	or sewer service.
198	198	Sec. 14.0153. APPELLATE JURISDICTION. (a) A retail public
199	199	utility that receives wholesale water or sewer service from another
200	200	retail public utility or political subdivision of the state,
201	201	including an affected county, may appeal to the utility commission
202	202	a rate change.
203	203	(b) An appeal of a rate change under this section must be
204	204	initiated not later than the 91st day after the date of notice of
205	205	the rate change by the filing of a petition by the retail public
206	206	utility.
207	207	SUBCHAPTER C. PROCEEDINGS BEFORE UTILITY COMMISSION ON RATES SET
208	208	UNDER WRITTEN CONTRACT
209	209	Sec. 14.0201. GENERAL POLICY. (a) This subchapter is
210	210	adopted to protect the sanctity of written contracts governed by
211	211	this chapter.
212	212	(b) It is the policy of the state that sales under written
213	213	contracts governed by this chapter shall be regulated in a fashion
214	214	that accords deference to a contract's terms unless a contract
215	215	seriously harms the public interest.
216	216	(c) The legislature finds that the use of cost of service
217	217	evidence to determine whether a rate seriously harms the public
218	218	interest does not give sufficient deference to contractual
219	219	agreements.
220	220	Sec. 14.0202. PRESUMPTION OF REASONABLENESS.
221	221	Notwithstanding any other provision of law, written contracts, and
222	222	their requirements regarding the rates paid, including
223	223	cost-allocation terms, shall be presumed to be just and reasonable
224	224	and without discrimination, unless the utility commission finds,
225	225	after hearing, that public necessity or extraordinary
226	226	circumstances require the rate to be set aside as seriously harming
227	227	the public interest. A rate may seriously harm the public interest
228	228	if the rate:
229	229	(1) significantly impairs the ability of the seller or
230	230	purchaser to continue its service;
231	231	(2) casts on other consumers an excessive burden;
232	232	(3) constitutes an abuse of monopoly power; or
233	233	(4) is unduly discriminatory.
234	234	Sec. 14.0203. LIMITATION ON CONSIDERATION OF COST OF
235	235	SERVICE. (a) The public interest does not require that rates
236	236	collected from a purchaser under a written contract equal the
237	237	seller's cost of providing service to the purchaser.
238	238	(b) The utility commission may not determine whether a rate
239	239	subject to the provisions of this subchapter seriously harms the
240	240	public interest based on an analysis of the seller's cost of
241	241	service. Cost-of-service evidence is not relevant to determine
242	242	whether a rate seriously harms the public interest in a proceeding
243	243	under this section.
244	244	Sec. 14.0204. PROCEDURE TO CHALLENGE REASONABLENESS. (a)
245	245	In any proceeding in which a rate charged under a written contract
246	246	is challenged, the utility commission must determine that the rate
247	247	seriously harms the public interest before holding a hearing on or
248	248	otherwise determining or prescribing just and reasonable rates. A
249	249	finding by the commission that the rate charged under a written
250	250	contract harms the public interest is final for purposes of appeal
251	251	in accordance with Section 2001.144, Government Code.
252	252	(b) A party adversely affected by a determination of the
253	253	utility commission that a rate charged under a written contract
254	254	seriously harms the public interest may seek judicial review of the
255	255	utility commission's determination before any utility commission
256	256	proceeding to determine or prescribe just and reasonable rates.
257	257	(c) Appeals under Subsection (b) shall be governed by the
258	258	procedures specified by Chapter 2001, Government Code, including
259	259	the requirement that a timely motion for rehearing is a
260	260	prerequisite to an appeal. Judicial review of an agency
261	261	determination regarding whether a rate seriously harms the public
262	262	interest shall be by trial de novo.
263	263	(d) The utility commission shall abate proceedings in the
264	264	event of an appeal under Subsection (b) until the entry of a final
265	265	judicial determination that a rate that is charged under a written
266	266	contract harms the public interest.
267	267	(e) After a final judicial determination that affirms a
268	268	determination by the utility commission that a rate charged under a
269	269	written contract seriously harms the public interest under
270	270	Subsection (b), or if no judicial review under Subsection (b) is
271	271	sought, the utility commission shall, before holding a hearing on,
272	272	or otherwise determining or prescribing a just and reasonable rate,
273	273	provide the contracting parties at least 60 days to amend the
274	274	contract. If the parties amend their contract, no challenge of the
275	275	contract may be brought before the utility commission by the
276	276	parties for five years from the effective date of the amended
277	277	contract.
278	278	(f) In a proceeding under this chapter, if the seller and
279	279	purchaser do not agree that the protested rate is charged under a
280	280	written contract, or if the purchaser alleges that the seller
281	281	failed to comply with any terms of a written contract, the utility
282	282	commission shall abate the proceeding until the contract dispute
283	283	has been resolved by a court of proper jurisdiction.
284	284	Sec. 14.0205. FIXING RATES. (a) On the expiration of the
285	285	60-day period required by Section 14.0204(e) or where the sale and
286	286	purchase of water or the provision of wholesale water or sewer
287	287	service is not under a written contract, the utility commission
288	288	shall, after hearing, fix just and reasonable rates to be charged.
289	289	(b) In fixing the rates under this chapter for the sale and
290	290	purchase of water and for the provision of wholesale water or sewer
291	291	service provided by a seller that is a political subdivision, the
292	292	utility commission shall fix rates that will be sufficient:
293	293	(1) to meet the political subdivision's debt service
294	294	and public security requirements or that do not impair the
295	295	political subdivision's financial integrity; and
296	296	(2) to permit the political subdivision to provide
297	297	continuity of service in weather emergencies.
298	298	(c) In determining the sufficiency of rates under
299	299	Subsection (b), the utility commission shall consider any testimony
300	300	or evidence provided by the political subdivision concerning the
301	301	political subdivision's debt service and public security
302	302	requirements or regarding impairment of the political
303	303	subdivision's financial integrity.
304	304	(d) The utility commission may not disallow the recovery of
305	305	a seller's costs or debt service and public security requirements
306	306	associated with facilities related to the provision of service on
307	307	the basis that the facilities are not used and useful in rendering
308	308	service to the purchaser or on the basis that the costs or debt
309	309	service and public security requirements were imprudently
310	310	incurred.
311	311	(e) The utility commission may, on a showing that the seller
312	312	acted arbitrarily or capriciously in including costs in a rate,
313	313	other than debt service and public security requirements, disallow
314	314	the recovery of the costs.
315	315	(f) The utility commission may not disallow costs
316	316	associated with a facility:
317	317	(1) incurred in a manner consistent with a state or a
318	318	regional water plan approved or adopted under Chapter 16; and
319	319	(2) incurred to permit the political subdivision to
320	320	provide continuity of service in weather emergencies.
321	321	Sec. 14.0206. SYSTEM RATES. A seller may charge a single
322	322	consolidated system rate for providing service to geographically
323	323	separate and distinct areas served by one or more separate
324	324	facilities. The reasonableness of the decision to charge a
325	325	consolidated system rate is not subject to review under this
326	326	chapter absent a showing that the seller acted arbitrarily or
327	327	capriciously.
328	328	Sec. 14.0207. COST ALLOCATION. In fixing the rates for sale
329	329	and purchase of water and for the provision of wholesale water or
330	330	sewer service under this chapter, the utility commission may not
331	331	allocate costs among purchasers in a manner inconsistent with the
332	332	allocation of costs contained in any contract between the seller
333	333	and another purchaser or purchasers, absent a showing that the
334	334	seller acted arbitrarily or capriciously.
335	335	SECTION 4. Sections 12.013 and 13.043(f), Water Code, are
336	336	repealed.
337	337	SECTION 5. This Act takes effect September 1, 2021.