Relating to the treatment of income tax expenses in rate proceedings for water and sewer utilities.
If enacted, HB 2774 would amend the Water Code, particularly Section 13.185, to ensure that income tax benefits are factored into rate calculations appropriately, providing a unified approach for both water and electric utilities regulated under the Public Utility Commission of Texas. This harmonization could reduce administrative burdens for both utilities and the commission, making the process of updating tax calculations more efficient.
House Bill 2774 aims to standardize the treatment of income tax expenses for water and sewer utilities in Texas, aligning them with the existing regulations for electric utilities. The bill stipulates that income tax expenses must be calculated on a standalone basis which allows for consistent and equitable treatment in utility rate proceedings. By doing so, the bill seeks to streamline the rate-setting process, ultimately benefiting ratepayers by potentially lowering the cost of service for water and wastewater utilities.
The discussion around HB 2774 indicated a generally favorable sentiment towards the bill, especially from representatives of the Texas Water Utilities and the Texas Association of Water Companies who testified in support. Proponents assert that the bill would help create a more predictable regulatory environment for utilities and thus benefit consumers. However, there may be concerns regarding the implementation and the precise impacts on existing utilities and their operations.
While the bill received broad support in committee and legislative votes, some opposition may stem from potential complexities in implementation and the fear that it may pave the way for increased regulation at the state level. Critics argue that while harmonization is beneficial, requiring calculations on a standalone basis may not fully reflect operational realities for utilities that are part of larger corporate structures.