BILL ANALYSIS Senate Research Center S.B. 1977 89R14642 CXP-D By: Kolkhorst Business & Commerce 3/20/2025 As Filed AUTHOR'S / SPONSOR'S STATEMENT OF INTENT S.B. 1977 amends the Utilities Code and the Water Code to regulate the recovery of legal expenses by electric and water utilities during rate proceedings. Specifically, it introduces a new provision in Section 36.061 that prohibits regulatory authorities from allowing legal expenses exceeding the greater of $50,000 or 50 percent of the total legal expenses incurred by an electric utility in a rate proceeding. Additionally, it modifies Section 13.185(h) of the Water Code to include similar restrictions on legal expenses for water and sewer utilities, while also removing references to certain legal expenses that were previously included in the list of costs not allowed for ratemaking purposes. The changes outlined in this bill will only apply to rate proceedings that commence on or after the effective date of September 1, 2025. Rate proceedings that begin before this date will continue to be governed by the existing laws in effect at that time. This legislation aims to ensure that utilities do not incur excessive legal costs that could ultimately impact consumer rates. As proposed, S.B. 1977 amends current law relating to the recovery of certain expenses by an electric utility or a water and sewer utility in a rate proceeding. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 36.061, Utilities Code, by adding Subsection (b-1), as follows: (b-1) Prohibits the regulatory authority, for purposes of Subsection (b)(2) (relating to authorizing the regulatory authority to allow certain reasonable costs or expenses), from allowing as a cost or expense legal expenses incurred by an electric utility for participating in a rate proceeding under Title 2 (Public Utility Regulatory Act) that exceed the greater of $50,000 or 50 percent of the total legal expenses incurred by the electric utility to participate in the proceeding. SECTION 2. Amends Section 13.185(h), Water Code, as follows: (h) Prohibits the regulatory authority from including for ratemaking purposes certain costs or expenses, including legal expenses for a rate proceeding that exceed the greater of $50,000 or 50 percent of the total legal expenses incurred by the utility for the proceeding or any other legal expenses found by the regulatory authority to be unreasonable, unnecessary, or not in the public interest. Makes nonsubstantive changes. SECTION 3. Makes application of this Act prospective. SECTION 4. Effective date: September 1, 2025.
BILL ANALYSIS
Senate Research Center S.B. 1977
89R14642 CXP-D By: Kolkhorst
Business & Commerce
3/20/2025
As Filed
Senate Research Center
S.B. 1977
89R14642 CXP-D
By: Kolkhorst
Business & Commerce
3/20/2025
As Filed
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
S.B. 1977 amends the Utilities Code and the Water Code to regulate the recovery of legal expenses by electric and water utilities during rate proceedings. Specifically, it introduces a new provision in Section 36.061 that prohibits regulatory authorities from allowing legal expenses exceeding the greater of $50,000 or 50 percent of the total legal expenses incurred by an electric utility in a rate proceeding. Additionally, it modifies Section 13.185(h) of the Water Code to include similar restrictions on legal expenses for water and sewer utilities, while also removing references to certain legal expenses that were previously included in the list of costs not allowed for ratemaking purposes. The changes outlined in this bill will only apply to rate proceedings that commence on or after the effective date of September 1, 2025. Rate proceedings that begin before this date will continue to be governed by the existing laws in effect at that time. This legislation aims to ensure that utilities do not incur excessive legal costs that could ultimately impact consumer rates.
As proposed, S.B. 1977 amends current law relating to the recovery of certain expenses by an electric utility or a water and sewer utility in a rate proceeding.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 36.061, Utilities Code, by adding Subsection (b-1), as follows:
(b-1) Prohibits the regulatory authority, for purposes of Subsection (b)(2) (relating to authorizing the regulatory authority to allow certain reasonable costs or expenses), from allowing as a cost or expense legal expenses incurred by an electric utility for participating in a rate proceeding under Title 2 (Public Utility Regulatory Act) that exceed the greater of $50,000 or 50 percent of the total legal expenses incurred by the electric utility to participate in the proceeding.
SECTION 2. Amends Section 13.185(h), Water Code, as follows:
(h) Prohibits the regulatory authority from including for ratemaking purposes certain costs or expenses, including legal expenses for a rate proceeding that exceed the greater of $50,000 or 50 percent of the total legal expenses incurred by the utility for the proceeding or any other legal expenses found by the regulatory authority to be unreasonable, unnecessary, or not in the public interest. Makes nonsubstantive changes.
SECTION 3. Makes application of this Act prospective.
SECTION 4. Effective date: September 1, 2025.