| 1 | 1 | | 88R19380 CXP-F |
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| 2 | 2 | | By: Thompson of Harris H.B. No. 4763 |
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| 3 | 3 | | Substitute the following for H.B. No. 4763: |
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| 4 | 4 | | By: King of Uvalde C.S.H.B. No. 4763 |
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| 5 | 5 | | |
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| 6 | 6 | | |
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| 7 | 7 | | A BILL TO BE ENTITLED |
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| 8 | 8 | | AN ACT |
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| 9 | 9 | | relating to requirements for the purchase or acquisition of certain |
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| 10 | 10 | | water and sewer systems. |
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| 11 | 11 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 12 | 12 | | SECTION 1. Section 13.301, Water Code, is amended by |
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| 13 | 13 | | amending Subsection (h) and adding Subsections (l), (m), and (n) to |
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| 14 | 14 | | read as follows: |
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| 15 | 15 | | (h) A sale, acquisition, lease, or rental of any water or |
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| 16 | 16 | | sewer system owned by an entity required by law to possess a |
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| 17 | 17 | | certificate of public convenience and necessity, or a sale or |
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| 18 | 18 | | acquisition of or merger or consolidation with such an entity, that |
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| 19 | 19 | | is not completed in accordance with the provisions of this section |
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| 20 | 20 | | is void. The utility commission shall approve a transaction to |
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| 21 | 21 | | which this section applies without an owner's signature required by |
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| 22 | 22 | | other law if the owner has abandoned operation of the facilities |
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| 23 | 23 | | that are the subject of the transaction and cannot be located or |
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| 24 | 24 | | does not respond to an application filed under Subsection (l). |
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| 25 | 25 | | (l) Notwithstanding any other provision of this section, |
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| 26 | 26 | | the utility commission by rule shall adopt an expedited process |
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| 27 | 27 | | that allows a person appointed by the utility commission or |
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| 28 | 28 | | commission under Section 13.4132 as a temporary manager of a |
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| 29 | 29 | | utility, utility in receivership, or utility in supervision, who is |
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| 30 | 30 | | also an operator of a Class A or Class B utility to apply for utility |
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| 31 | 31 | | commission approval of the person's acquisition of the stock, |
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| 32 | 32 | | ownership interest, or assets of the temporarily managed and |
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| 33 | 33 | | operated utility, utility in receivership, or utility in |
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| 34 | 34 | | supervision, its facilities, and, if applicable, its certificated |
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| 35 | 35 | | service area. The expedited process must: |
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| 36 | 36 | | (1) waive public notice requirements regardless of |
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| 37 | 37 | | whether the person elects to charge initial rates in accordance |
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| 38 | 38 | | with Section 13.3011 or use a voluntary valuation determined under |
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| 39 | 39 | | Section 13.305; |
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| 40 | 40 | | (2) require approval of the acquisition transaction if |
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| 41 | 41 | | the transaction is considered to be in the public interest; and |
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| 42 | 42 | | (3) provide that: |
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| 43 | 43 | | (A) the person's appointment is considered |
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| 44 | 44 | | sufficient to demonstrate adequate financial, managerial, and |
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| 45 | 45 | | technical capability for providing continuous and adequate service |
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| 46 | 46 | | to the service area to be acquired and any areas currently |
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| 47 | 47 | | certificated to the person; and |
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| 48 | 48 | | (B) all used and useful invested capital and just |
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| 49 | 49 | | and reasonable operations and maintenance costs incurred by the |
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| 50 | 50 | | person during the person's appointment as temporary manager and |
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| 51 | 51 | | operator of the utility, utility in receivership, or utility in |
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| 52 | 52 | | supervision to be acquired are considered to be a regulatory asset |
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| 53 | 53 | | for the person and are recoverable in the person's next |
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| 54 | 54 | | comprehensive rate proceeding or system improvement charge |
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| 55 | 55 | | application. |
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| 56 | 56 | | (m) If a temporary rate under Section 13.046 is adopted |
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| 57 | 57 | | during the period described by Subsection (l)(3)(B), all used and |
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| 58 | 58 | | useful invested capital and just and reasonable operations and |
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| 59 | 59 | | maintenance costs incurred by the person in excess of costs covered |
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| 60 | 60 | | by the temporary rate are considered to be a regulatory asset for |
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| 61 | 61 | | the person and are recoverable in the person's next comprehensive |
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| 62 | 62 | | rate proceeding or system improvement charge application. |
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| 63 | 63 | | (n) The utility commission and commission shall provide a |
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| 64 | 64 | | reasonable period for a person acquiring a utility under Subsection |
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| 65 | 65 | | (l) to bring the acquired utility into compliance with utility |
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| 66 | 66 | | commission and commission rules before imposing a penalty for any |
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| 67 | 67 | | violation committed by the acquired utility for which no |
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| 68 | 68 | | enforcement action has been completed at the time of acquisition. |
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| 69 | 69 | | SECTION 2. This Act takes effect September 1, 2023. |
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