Texas 2023 - 88th Regular

Texas House Bill HB2774 Compare Versions

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Version 2 (New)

Old	New	Differences
1	1	H.B. No. 2774
2	2
3	3
4	4	AN ACT
5	5	relating to the treatment of income tax expenses in rate
6	6	proceedings for water and sewer utilities.
7	7	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	8	SECTION 1. Section 13.185(f), Water Code, is amended to
9	9	read as follows:
10	10	(f) If an expense is allowed to be included in utility rates
11	11	or an investment is included in the utility rate base, the related
12	12	income tax benefit must be included in the computation of income tax
13	13	expense to reduce the rates. If an expense is not allowed to be
14	14	included in utility rates or an investment is not included in the
15	15	utility rate base, the related income tax benefit may not be
16	16	included in the computation of income tax expense to reduce the
17	17	rates. The income tax expense shall be computed using the statutory
18	18	income tax rates. The amount of income tax that a consolidated
19	19	group of which a utility is a member saves, because the consolidated
20	20	return eliminates the intercompany profit on purchases by the
21	21	utility from an affiliate, shall be applied to reduce the cost of
22	22	the property or service purchased from the affiliate. [If the
23	23	utility is a member of an affiliated group that is eligible to file
24	24	a consolidated income tax return and if it is advantageous to the
25	25	utility to do so, income taxes shall be computed as though a
26	26	consolidated return had been filed and the utility had realized its
27	27	fair share of the savings resulting from the consolidated return,
28	28	unless it is shown to the satisfaction of the regulatory authority
29	29	that it was reasonable to choose not to consolidate returns. The
30	30	amounts of income taxes saved by a consolidated group of which a
31	31	utility is a member due to the elimination in the consolidated
32	32	return of the intercompany profit on purchases by the utility from
33	33	an affiliate shall be applied to reduce the cost of those
34	34	purchases.] The investment tax credit allowed against federal
35	35	income taxes to the extent retained by the utility shall be applied
36	36	as a reduction in the rate-based contribution of the assets to which
37	37	the credit applies to the extent and at the rate as allowed by the
38	38	Internal Revenue Code.
39	39	SECTION 2. The changes in law made by this Act apply only to
40	40	a rate proceeding under Chapter 13, Water Code, that begins on or
41	41	after the effective date of this Act. A rate proceeding that begins
42	42	before the effective date of this Act is governed by the law in
43	43	effect on the date the rate proceeding began, and the former law is
44	44	continued in effect for that purpose.
45	45	SECTION 3. This Act takes effect September 1, 2023.
46	46	______________________________ ______________________________
47	47	President of the Senate Speaker of the House
48	48	I certify that H.B. No. 2774 was passed by the House on April
49	49	27, 2023, by the following vote: Yeas 147, Nays 1, 1 present, not
50	50	voting.
51	51	______________________________
52	52	Chief Clerk of the House
53	53	I certify that H.B. No. 2774 was passed by the Senate on May
54	54	17, 2023, by the following vote: Yeas 31, Nays 0.
55	55	______________________________
56	56	Secretary of the Senate
57	57	APPROVED: _____________________
58	58	Date
59	59	_____________________
60	60	Governor