By: Kolkhorst S.B. No. 1977
A BILL TO BE ENTITLED
AN ACT
relating to the recovery and reimbursement of certain expenses by
an electric utility or a water and sewer utility in a rate
proceeding.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 33.023, Utilities Code, is amended by
adding Subsection (c) to read as follows:
(c) For purposes of Subsection (b), the electric utility may
not reimburse the governing body of a municipality for any legal
expenses that the regulatory authority determines were incurred due
to the municipality:
(1) filing a frivolous or groundless discovery motion;
or
(2) engaging in:
(A) an act intended to harass, delay, or
needlessly increase the expense incurred for participating in the
proceeding; or
(B) conduct not in the public interest.
SECTION 2. Section 36.061, Utilities Code, is amended by
adding Subsections (b-1), (b-2), and (b-3) to read as follows:
(b-1) For purposes of Subsection (b)(2), the regulatory
authority may not allow as a cost or expense legal expenses incurred
by an electric utility for participating in a rate proceeding under
this title that exceed a total of:
(1) $500,000; and
(2) 50 percent of the legal expenses incurred by the
electric utility to participate in the proceeding that exceed
$500,000.
(b-2) For purposes of Subsection (b)(2), the regulatory
authority may not allow as a cost or expense legal expenses incurred
by an electric utility for participating in a rate proceeding under
this title that the regulatory authority determines are
attributable to the following conduct by the utility:
(1) filing a frivolous or groundless discovery motion;
or
(2) engaging in:
(A) an act intended to harass, delay, or
needlessly increase the expense incurred for participating in the
proceeding; or
(B) conduct not in the public interest.
(b-3) Notwithstanding Subsection (b-1), the regulatory
authority shall allow as a cost or expense legal expenses incurred
by an electric utility in a rate proceeding under this title in any
amount if the expenses were:
(1) attributable to conduct described by Subsection
(b-2) by a party to the rate proceeding who was a non-utility
intervenor; and
(2) reasonable.
SECTION 3. Section 13.084, Water Code, is amended to read as
follows:
Sec. 13.084. AUTHORITY OF GOVERNING BODY; COST
REIMBURSEMENT. (a) The governing body of any municipality or the
commissioners court of an affected county shall have the right to
select and engage rate consultants, accountants, auditors,
attorneys, engineers, or any combination of these experts to
conduct investigations, present evidence, advise and represent the
governing body, and assist with litigation on water and sewer
utility ratemaking proceedings. The water and sewer utility
engaged in those proceedings shall be required to reimburse the
governing body or the commissioners court for the reasonable costs
of those services and shall be allowed to recover those expenses
through its rates with interest during the period of recovery.
(b) For purposes of Subsection (a), the water and sewer
utility may not reimburse the governing body of a municipality for
any legal expenses that the regulatory authority determines were
incurred due to the municipality:
(1) filing a frivolous or groundless discovery motion;
or
(2) engaging in:
(A) an act intended to harass, delay, or
needlessly increase the expense incurred for participating in the
proceeding; or
(B) conduct not in the public interest.
SECTION 4. Section 13.185, Water Code, is amended by
amending Subsection (h) and adding Subsections (h-1) and (h-2) to
read as follows:
(h) The regulatory authority may not include for ratemaking
purposes:
(1) legislative advocacy expenses, whether made
directly or indirectly, including legislative advocacy expenses
included in trade association dues;
(2) costs of processing a refund or credit under this
subchapter; [or]
(3) any expenditure found by the regulatory authority
to be unreasonable, unnecessary, or not in the public interest,
including executive salaries, advertising expenses, [legal
expenses,] and civil penalties or fines; or
(4) legal expenses for a rate proceeding found by the
regulatory authority to be unreasonable, unnecessary, or not in the
public interest or that exceed a total of:
(A) $500,000; and
(B) 50 percent of the legal expenses incurred by
the utility for the proceeding that exceed $500,000.
(h-1) An expense is not considered to be in the public
interest under Subsection (h)(4) if the expense is attributable to
the following conduct by the utility:
(1) filing a frivolous or groundless discovery motion;
or
(2) engaging in an act intended to harass, delay, or
needlessly increase the expense incurred for participating in the
ratemaking proceeding.
(h-2) Notwithstanding Subsection (h)(4), the regulatory
authority shall allow for ratemaking purposes expenses incurred by
a utility in a ratemaking proceeding in any amount if the expenses
were:
(1) attributable to conduct described by Subsection
(h-1) by a party to the ratemaking proceeding who was a non-utility
intervenor; and
(2) reasonable.
SECTION 5. The changes in law made by this Act apply only to
a rate proceeding under Title 2, Utilities Code, or Chapter 13,
Water Code, as applicable, that begins on or after the effective
date of this Act. A rate proceeding that begins before the
effective date of this Act is governed by the law in effect on the
date the rate proceeding began, and the former law is continued in
effect for that purpose.
SECTION 6. This Act takes effect September 1, 2025.