UTILITIES CODE
CHAPTER 36. RATES
SUBCHAPTER A. GENERAL PROVISIONS
§ 36.001. AUTHORIZATION TO ESTABLISH AND REGULATE
RATES. (a) The regulatory authority may establish and regulate
rates of an electric utility and may adopt rules for determining:
(1) the classification of customers and services; and
(2) the applicability of rates.
(b) A rule or order of the regulatory authority may not
conflict with a ruling of a federal regulatory body.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.002. COMPLIANCE WITH TITLE. An electric utility
may not charge or receive a rate for utility service except as
provided by this title.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.003. JUST AND REASONABLE RATES. (a) The
regulatory authority shall ensure that each rate an electric
utility or two or more electric utilities jointly make, demand, or
receive is just and reasonable.
(b) A rate may not be unreasonably preferential,
prejudicial, or discriminatory but must be sufficient, equitable,
and consistent in application to each class of consumer.
(c) An electric utility may not:
(1) grant an unreasonable preference or advantage
concerning rates to a person in a classification;
(2) subject a person in a classification to an
unreasonable prejudice or disadvantage concerning rates; or
(3) establish or maintain an unreasonable difference
concerning rates between localities or between classes of service.
(d) In establishing an electric utility's rates, the
commission may treat as a single class two or more municipalities
that an electric utility serves if the commission considers that
treatment to be appropriate.
(e) A charge to an individual customer for retail or
wholesale electric service that is less than the rate approved by
the regulatory authority does not constitute an impermissible
difference, preference, or advantage.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.004. EQUALITY OF RATES AND SERVICES. (a) An
electric utility may not directly or indirectly charge, demand, or
receive from a person a greater or lesser compensation for a service
provided or to be provided by the utility than the compensation
prescribed by the applicable tariff filed under Section 32.101.
(b) A person may not knowingly receive or accept a service
from an electric utility for a compensation greater or less than the
compensation prescribed by the tariff.
(c) Notwithstanding Subsections (a) and (b), an electric
utility may charge an individual customer for wholesale or retail
electric service in accordance with Section 36.007.
(d) This title does not prevent a cooperative corporation
from returning to its members net earnings resulting from its
operations in proportion to the members' purchases from or through
the corporation.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.005. RATES FOR AREA NOT IN MUNICIPALITY. Without
the approval of the commission, an electric utility's rates for an
area not in a municipality may not exceed 115 percent of the average
of all rates for similar services for all municipalities served by
the same utility in the same county as that area.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.006. BURDEN OF PROOF. In a proceeding involving a
proposed rate change, the electric utility has the burden of
proving that:
(1) the rate change is just and reasonable, if the
utility proposes the change; or
(2) an existing rate is just and reasonable, if the
proposal is to reduce the rate.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.007. DISCOUNTED WHOLESALE OR RETAIL
RATES. (a) On application by an electric utility, a regulatory
authority may approve wholesale or retail tariffs or contracts
containing charges that are less than rates approved by the
regulatory authority but not less than the utility's marginal cost.
The charges must be in accordance with the principles of this title
and may not be unreasonably preferential, prejudicial,
discriminatory, predatory, or anticompetitive.
(b) The method for computing the marginal cost of the
electric utility consists of energy and capacity components. The
energy component includes variable operation and maintenance
expense and marginal fuel or the energy component of purchased
power. The capacity component is based on the annual economic value
of deferring, accelerating, or avoiding the next increment of
needed capacity, without regard to whether the capacity is
purchased or built.
(c) The commission shall ensure that the method for
determining marginal cost is consistently applied among utilities
but may recognize the individual load and resource requirements of
the electric utility.
(d) Notwithstanding any other provision of this title, the
commission shall ensure that the electric utility's allocable costs
of serving customers paying discounted rates under this section are
not borne by the utility's other customers.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.008. STATE TRANSMISSION SYSTEM. In establishing
rates for an electric utility, the commission may review the
state's transmission system and make recommendations to the utility
on the need to build new power lines, upgrade power lines, and make
other necessary improvements and additions.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 23, eff. Sept. 1, 1999.
SUBCHAPTER B. COMPUTATION OF RATES
§ 36.051. ESTABLISHING OVERALL REVENUES. In
establishing an electric utility's rates, the regulatory authority
shall establish the utility's overall revenues at an amount that
will permit the utility a reasonable opportunity to earn a
reasonable return on the utility's invested capital used and useful
in providing service to the public in excess of the utility's
reasonable and necessary operating expenses.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.052. ESTABLISHING REASONABLE RETURN. In
establishing a reasonable return on invested capital, the
regulatory authority shall consider applicable factors, including:
(1) the efforts and achievements of the utility in
conserving resources;
(2) the quality of the utility's services;
(3) the efficiency of the utility's operations; and
(4) the quality of the utility's management.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 24, eff. Sept. 1, 1999.
§ 36.053. COMPONENTS OF INVESTED
CAPITAL. (a) Electric utility rates shall be based on the
original cost, less depreciation, of property used by and useful to
the utility in providing service.
(b) The original cost of property shall be determined at the
time the property is dedicated to public use, whether by the utility
that is the present owner or by a predecessor.
(c) In this section, the term "original cost" means the
actual money cost or the actual money value of consideration paid
other than money.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.054. CONSTRUCTION WORK IN
PROGRESS. (a) Construction work in progress, at cost as recorded
on the electric utility's books, may be included in the utility's
rate base. The inclusion of construction work in progress is an
exceptional form of rate relief that the regulatory authority may
grant only if the utility demonstrates that inclusion is necessary
to the utility's financial integrity.
(b) Construction work in progress may not be included in the
rate base for a major project under construction to the extent that
the project has been inefficiently or imprudently planned or
managed.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.055. SEPARATIONS AND ALLOCATIONS. Costs of
facilities, revenues, expenses, taxes, and reserves shall be
separated or allocated as prescribed by the regulatory authority.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.056. DEPRECIATION, AMORTIZATION, AND
DEPLETION. (a) The commission shall establish proper and
adequate rates and methods of depreciation, amortization, or
depletion for each class of property of an electric or municipally
owned utility.
(b) The rates and methods established under this section and
the depreciation account required by Section 32.102 shall be used
uniformly and consistently throughout rate-setting and appeal
proceedings.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.057. NET INCOME; DETERMINATION OF REVENUES AND
EXPENSES. (a) An electric utility's net income is the total
revenues of the utility less all reasonable and necessary expenses
as determined by the regulatory authority.
(b) The regulatory authority shall determine revenues and
expenses in a manner consistent with this subchapter.
(c) The regulatory authority may adopt reasonable rules
with respect to whether an expense is allowed for ratemaking
purposes.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.058. CONSIDERATION OF PAYMENT TO
AFFILIATE. (a) Except as provided by Subsection (b), the
regulatory authority may not allow as capital cost or as expense a
payment to an affiliate for:
(1) the cost of a service, property, right, or other
item; or
(2) interest expense.
(b) The regulatory authority may allow a payment described
by Subsection (a) only to the extent that the regulatory authority
finds the payment is reasonable and necessary for each item or class
of items as determined by the commission.
(c) A finding under Subsection (b) must include:
(1) a specific finding of the reasonableness and
necessity of each item or class of items allowed; and
(2) a finding that the price to the electric utility is
not higher than the prices charged by the supplying affiliate to its
other affiliates or divisions or to a nonaffiliated person for the
same item or class of items.
(d) In making a finding regarding an affiliate transaction,
the regulatory authority shall:
(1) determine the extent to which the conditions and
circumstances of that transaction are reasonably comparable
relative to quantity, terms, date of contract, and place of
delivery; and
(2) allow for appropriate differences based on that
determination.
(e) This section does not require a finding to be made
before payments made by an electric utility to an affiliate are
included in the utility's charges to consumers if there is a
mechanism for making the charges subject to refund pending the
making of the finding.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 25, eff. Sept. 1, 1999.
§ 36.059. TREATMENT OF CERTAIN TAX BENEFITS. (a) In
determining the allocation of tax savings derived from liberalized
depreciation and amortization, the investment tax credit, and the
application of similar methods, the regulatory authority shall:
(1) balance equitably the interests of present and
future customers; and
(2) apportion accordingly the benefits between
consumers and the electric or municipally owned utility.
(b) If an electric utility or a municipally owned utility
retains a portion of the investment tax credit, that portion shall
be deducted from the original cost of the facilities or other
addition to the rate base to which the credit applied to the extent
allowed by the Internal Revenue Code.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.060. CONSOLIDATED INCOME TAX RETURNS. (a) Unless
it is shown to the satisfaction of the regulatory authority that it
was reasonable to choose not to consolidate returns, an electric
utility's income taxes shall be computed as though a consolidated
return had been filed and the utility had realized its fair share of
the savings resulting from that return, if:
(1) the utility is a member of an affiliated group
eligible to file a consolidated income tax return; and
(2) it is advantageous to the utility to do so.
(b) The amount of income tax that a consolidated group of
which an electric utility is a member saves, because the
consolidated return eliminates the intercompany profit on
purchases by the utility from an affiliate, shall be applied to
reduce the cost of the property or service purchased from the
affiliate.
(c) The investment tax credit allowed against federal
income taxes, to the extent retained by the electric utility, shall
be applied as a reduction in the rate-based contribution of the
assets to which the credit applies, to the extent and at the rate
allowed by the Internal Revenue Code.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.061. ALLOWANCE OF CERTAIN EXPENSES. (a) The
regulatory authority may not allow as a cost or expense for
ratemaking purposes:
(1) an expenditure for legislative advocacy; or
(2) an expenditure described by Section 32.104 that
the regulatory authority determines to be not in the public
interest.
(b) The regulatory authority may allow as a cost or expense:
(1) reasonable charitable or civic contributions not
to exceed the amount approved by the regulatory authority; and
(2) reasonable costs of participating in a proceeding
under this title not to exceed the amount approved by the regulatory
authority.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.062. CONSIDERATION OF CERTAIN EXPENSES. The
regulatory authority may not consider for ratemaking purposes:
(1) an expenditure for legislative advocacy, made
directly or indirectly, including legislative advocacy expenses
included in trade association dues;
(2) a payment made to cover costs of an accident,
equipment failure, or negligence at a utility facility owned by a
person or governmental entity not selling power in this state,
other than a payment made under an insurance or risk-sharing
arrangement executed before the date of loss;
(3) an expenditure for costs of processing a refund or
credit under Section 36.110; or
(4) any other expenditure, including an executive
salary, advertising expense, legal expense, or civil penalty or
fine, the regulatory authority finds to be unreasonable,
unnecessary, or not in the public interest.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.063. CONSIDERATION OF PROFIT OR LOSS FROM SALE OR
LEASE OF MERCHANDISE. In establishing an electric or municipally
owned utility's rates, the regulatory authority may not consider
any profit or loss that results from the sale or lease of
merchandise, including appliances, fixtures, or equipment, to the
extent that merchandise is not integral to providing utility
service.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.064. SELF-INSURANCE. (a) An electric utility may
self-insure all or part of the utility's potential liability or
catastrophic property loss, including windstorm, fire, and
explosion losses, that could not have been reasonably anticipated
and included under operating and maintenance expenses.
(b) The commission shall approve a self-insurance plan
under this section if the commission finds that:
(1) the coverage is in the public interest;
(2) the plan, considering all costs, is a lower cost
alternative to purchasing commercial insurance; and
(3) ratepayers will receive the benefits of the
savings.
(c) In computing an electric utility's reasonable and
necessary expenses under this subchapter, the regulatory
authority, to the extent the regulatory authority finds is in the
public interest, shall allow as a necessary expense the money
credited to a reserve account for self-insurance. The regulatory
authority shall determine reasonableness under this subsection:
(1) from information provided at the time the
self-insurance plan and reserve account are established; and
(2) on the filing of a rate case by an electric utility
that has a reserve account.
(d) After a reserve account for self-insurance is
established, the regulatory authority shall:
(1) determine whether the reserve account has a
surplus or shortage under Subsection (e); and
(2) subtract any surplus from or add any shortage to
the utility's rate base.
(e) A surplus in the reserve account exists if the charges
against the account are less than the money credited to the account.
A shortage in the reserve account exists if the charges against the
account are greater than the money credited to the account.
(f) The allowance for self-insurance under this title for
ratemaking purposes is not applicable to nuclear plant investment.
(g) The commission shall adopt rules governing
self-insurance under this section.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
SUBCHAPTER C. GENERAL PROCEDURES FOR RATE CHANGES PROPOSED BY
UTILITY
§ 36.101. DEFINITION. In this subchapter, "major
change" means an increase in rates that would increase the
aggregate revenues of the applicant more than the greater of
$100,000 or 2-1/2 percent. The term does not include an increase in
rates that the regulatory authority allows to go into effect or the
electric utility makes under an order of the regulatory authority
after hearings held with public notice.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.102. STATEMENT OF INTENT TO CHANGE
RATES. (a) Except as provided by Section 33.024, an electric
utility may not change its rates unless the utility files a
statement of its intent with the regulatory authority that has
original jurisdiction over those rates at least 35 days before the
effective date of the proposed change.
(b) The electric utility shall also mail or deliver a copy
of the statement of intent to the appropriate officer of each
affected municipality.
(c) The statement of intent must include:
(1) proposed revisions of tariffs; and
(2) a detailed statement of:
(A) each proposed change;
(B) the effect the proposed change is expected to
have on the revenues of the utility;
(C) each class and number of utility consumers
affected; and
(D) any other information required by the
regulatory authority's rules.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.103. NOTICE OF INTENT TO CHANGE RATES. (a) The
electric utility shall:
(1) publish, in conspicuous form and place, notice to
the public of the proposed change once each week for four successive
weeks before the effective date of the proposed change in a
newspaper having general circulation in each county containing
territory affected by the proposed change; and
(2) mail notice of the proposed change to any other
affected person as required by the regulatory authority's rules.
(b) The regulatory authority may waive the publication of
notice requirement prescribed by Subsection (a) in a proceeding
that involves only a rate reduction for each affected ratepayer.
The applicant shall give notice of the proposed rate change by mail
to each affected utility customer.
(c) The regulatory authority by rule shall define other
proceedings for which the publication of notice requirement
prescribed by Subsection (a) may be waived on a showing of good
cause. A waiver may not be granted in a proceeding involving a rate
increase to any class or category of ratepayer.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.104. EARLY EFFECTIVE DATE OF RATE CHANGE. (a) For
good cause shown, the regulatory authority may allow a rate change,
other than a major change, to take effect:
(1) before the end of the 35-day period prescribed by
Section 36.102; and
(2) under conditions the regulatory authority
prescribes, subject to suspension as provided by this subchapter.
(b) The electric utility shall immediately revise its
tariffs to include the change.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.105. DETERMINATION OF PROPRIETY OF RATE CHANGE;
HEARING. (a) If a tariff changing rates is filed with a
regulatory authority, the regulatory authority shall, on complaint
by an affected person, or may, on its own motion, not later than the
30th day after the effective date of the change, enter on a hearing
to determine the propriety of the change.
(b) The regulatory authority shall hold a hearing in every
case in which the change constitutes a major change. The regulatory
authority may, however, use an informal proceeding if the
regulatory authority does not receive a complaint before the 46th
day after the date notice of the change is filed.
(c) The regulatory authority shall give reasonable notice
of the hearing, including notice to the governing body of each
affected municipality and county. The electric utility is not
required to provide a formal answer or file any other formal
pleading in response to the notice, and the absence of an answer
does not affect an order for a hearing.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.106. REGIONAL HEARING. The commission shall hold a
regional hearing at an appropriate location in a case in which the
commission determines it is in the public interest to hear
testimony at a regional hearing for inclusion in the record.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.107. PREFERENCE TO HEARING. The regulatory
authority shall:
(1) give preference to a hearing under this subchapter
and to deciding questions arising under this subchapter and
Subchapter E over any other question pending before it; and
(2) decide the questions as quickly as possible.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.108. RATE SUSPENSION; DEADLINE. (a) Pending the
hearing and a decision:
(1) the local regulatory authority, after delivering
to the electric utility a written statement of the regulatory
authority's reasons, may suspend the rate change for not longer
than 90 days after the date the rate change would otherwise be
effective; and
(2) the commission may suspend the rate change for not
longer than 150 days after the date the rate change would otherwise
be effective.
(b) The 150-day period prescribed by Subsection (a)(2)
shall be extended two days for each day the actual hearing on the
merits of the case exceeds 15 days.
(c) If the regulatory authority does not make a final
determination concerning a rate change before expiration of the
applicable suspension period, the regulatory authority is
considered to have approved the change. This approval is subject to
the authority of the regulatory authority thereafter to continue a
hearing in progress.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.109. TEMPORARY RATES. (a) The regulatory
authority may establish temporary rates to be in effect during the
applicable suspension period under Section 36.108.
(b) If the regulatory authority does not establish
temporary rates, the rates in effect when the suspended tariff was
filed continue in effect during the suspension period.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.110. BONDED RATES. (a) An electric utility may
put a changed rate into effect throughout the area in which the
utility sought to change its rates, including an area over which the
commission is exercising appellate or original jurisdiction, by
filing a bond with the commission if:
(1) the 150-day suspension period has been extended
under Section 36.108(b); and
(2) the commission fails to make a final determination
before the 151st day after the date the rate change would otherwise
be effective.
(b) The bonded rate may not exceed the proposed rate.
(c) The bond must be:
(1) payable to the commission in an amount, in a form,
and with a surety approved by the commission; and
(2) conditioned on refund.
(d) The electric utility shall refund or credit against
future bills:
(1) money collected under the bonded rates in excess
of the rate finally ordered; and
(2) interest on that money, at the current interest
rate as determined by the commission.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.111. ESTABLISHMENT OF FINAL RATES. (a) If, after
hearing, the regulatory authority finds the rates are unreasonable
or in violation of law, the regulatory authority shall:
(1) enter an order establishing the rates the electric
utility shall charge or apply for the service in question; and
(2) serve a copy of the order on the electric utility.
(b) The rates established in the order shall be observed
thereafter until changed as provided by this title.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
SUBCHAPTER D. RATE CHANGES PROPOSED BY REGULATORY AUTHORITY
§ 36.151. UNREASONABLE OR VIOLATIVE EXISTING
RATES. (a) If the regulatory authority, on its own motion or on
complaint by an affected person, after reasonable notice and
hearing, finds that the existing rates of an electric utility for a
service are unreasonable or in violation of law, the regulatory
authority shall:
(1) enter an order establishing the just and
reasonable rates to be observed thereafter, including maximum or
minimum rates; and
(2) serve a copy of the order on the electric utility.
(b) The rates established under Subsection (a) constitute
the legal rates of the electric utility until changed as provided by
this title.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.152. INVESTIGATING COSTS OF OBTAINING SERVICE FROM
ANOTHER SOURCE. If an electric utility does not produce or
generate the service that it distributes, transmits, or furnishes
to the public for compensation but obtains the service from another
source, the regulatory authority may investigate the cost of that
production or generation in an investigation of the reasonableness
of the electric utility's rates.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.153. RATE-FILING PACKAGE. (a) An electric
utility shall file a rate-filing package with the regulatory
authority not later than the 120th day after the date the authority
notifies the utility that the authority will proceed with an
inquiry under Section 36.151.
(b) The regulatory authority may grant an extension of the
120-day period prescribed by Subsection (a) or waive the
rate-filing package requirement on agreement of the parties.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.154. DEADLINE. (a) The regulatory authority
shall make a final determination not later than the 185th day after
the date the electric utility files the rate-filing package
required by Section 36.153.
(b) The deadline prescribed by Subsection (a) is extended
two days for each day the actual hearing on the merits of the case
exceeds 15 days.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.155. INTERIM ORDER ESTABLISHING TEMPORARY
RATES. (a) At any time after an initial complaint is filed under
Section 36.151, the regulatory authority may issue an interim order
establishing temporary rates for the electric utility to be in
effect until a final determination is made.
(b) On issuance of a final order, the regulatory authority:
(1) may require the electric utility to refund to
customers or to credit against future bills:
(A) money collected under the temporary rates in
excess of the rate finally ordered; and
(B) interest on that money, at the current
interest rate as determined by the commission; or
(2) shall authorize the electric utility to surcharge
bills to recover:
(A) the amount by which the money collected under
the temporary rates is less than the money that would have been
collected under the rate finally ordered; and
(B) interest on that amount, at the current
interest rate as determined by the commission.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.156. AUTOMATIC TEMPORARY RATES. (a) The rates
charged by the electric utility on the 185th day after the date the
utility files the rate-filing package required by Section 36.153
automatically become temporary rates if:
(1) the 185-day period has been extended under Section
36.154(b); and
(2) the regulatory authority has not issued a final
order or established temporary rates for the electric utility on or
before the 185th day.
(b) On issuance of a final order, the regulatory authority:
(1) shall require the electric utility to refund to
customers or to credit against future bills:
(A) money collected under the temporary rates in
excess of the rate finally ordered; and
(B) interest on that money, at the current
interest rate as determined by the commission; or
(2) shall authorize the electric utility to surcharge
bills to recover:
(A) the amount by which the money collected under
the temporary rates is less than the money that would have been
collected under the rate finally ordered; and
(B) interest on that amount, at the current
interest rate as determined by the commission.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
SUBCHAPTER E. COST RECOVERY AND RATE ADJUSTMENT
§ 36.201. AUTOMATIC ADJUSTMENT FOR CHANGES IN
COSTS. Except as permitted by Section 36.204, the commission may
not establish a rate or tariff that authorizes an electric utility
to automatically adjust and pass through to the utility's customers
a change in the utility's fuel or other costs.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 26, eff. Sept. 1, 1999.
§ 36.202. ADJUSTMENT FOR CHANGE IN TAX
LIABILITY. (a) The commission, on its own motion or on the
petition of an electric utility, shall provide for the adjustment
of the utility's billing to reflect an increase or decrease in the
utility's tax liability to this state if the increase or decrease:
(1) results from Chapter 5, Acts of the 72nd
Legislature, 1st Called Session, 1991; and
(2) is attributable to an activity subject to the
commission's jurisdiction.
(b) The commission shall apportion pro rata to each type and
class of service provided by the utility any billing adjustment
under this section. The adjustment:
(1) shall be made effective at the same time as the
increase or decrease of tax liability described by Subsection
(a)(1) or as soon after that increase or decrease as is reasonably
practical; and
(2) remains effective only until the commission alters
the adjustment as provided by this section or enters an order for
the utility under Subchapter C or D.
(c) Each year after an original adjustment, the commission
shall:
(1) review the utility's increase or decrease of tax
liability described by Subsection (a)(1); and
(2) alter the adjustment as necessary to reflect the
increase or decrease.
(d) A proceeding under this section is not a rate case under
Subchapter C.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.203. FUEL COST RECOVERY; ADJUSTMENT OF FUEL
FACTOR. (a) Section 36.201 does not prohibit the commission from
reviewing and providing for adjustments of a utility's fuel factor.
(b) The commission by rule shall implement procedures that
provide for the timely adjustment of a utility's fuel factor, with
or without a hearing. The procedures must require that:
(1) the findings required by Section 36.058 regarding
fuel transactions with affiliated interests are made in a fuel
reconciliation proceeding or in a rate case filed under Subchapter
C or D; and
(2) an affected party receive notice and have the
opportunity to request a hearing before the commission.
(c) The commission may adjust a utility's fuel factor
without a hearing if the commission determines that a hearing is not
necessary. If the commission holds a hearing, the commission may
consider at the hearing any evidence that is appropriate and in the
public interest.
(d) The commission shall render a timely decision
approving, disapproving, or modifying the adjustment to the
utility's fuel factor.
(e) The commission by rule shall provide for the
reconciliation of a utility's fuel costs on a timely basis.
(f) A proceeding under this section is not a rate case under
Subchapter C.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.204. COST RECOVERY AND INCENTIVES. In
establishing rates for an electric utility, the commission may:
(1) allow timely recovery of the reasonable costs of
conservation, load management, and purchased power,
notwithstanding Section 36.201; and
(2) authorize additional incentives for conservation,
load management, purchased power, and renewable resources.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 27, eff. Sept. 1, 1999.
§ 36.205. PURCHASED POWER COST RECOVERY. (a) This
section applies only to an increase or decrease in the cost of
purchased electricity that has been:
(1) accepted by a federal regulatory authority; or
(2) approved after a hearing by the commission.
(b) The commission may use any appropriate method to provide
for the adjustment of the cost of purchased electricity on terms
determined by the commission.
(c) Purchased electricity costs may be recovered:
(1) concurrently with the effective date of the
changed costs to the purchasing electric utility; or
(2) as soon after the effective date as reasonably
practical.
(d) The commission may provide a mechanism to allow an
electric utility that has a noncontiguous geographical service area
and that purchases power for resale for that noncontiguous service
area from electric utilities that are not members of the Electric
Reliability Council of Texas to recover purchased power costs for
the area in a manner that reflects the purchased power cost for that
specific geographical noncontiguous area. The commission may not
require an electric cooperative corporation to use the mechanism
provided under this section unless the electric cooperative
corporation requests its use.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.206. MARK-UPS. (a) A cost recovery factor
established for the recovery of purchased power costs may include:
(1) the cost the electric utility incurs in purchasing
capacity and energy;
(2) a mark-up added to the cost or another mechanism
the commission determines will reasonably compensate the utility
for any financial risk associated with purchased power obligations;
and
(3) the value added by the utility in making the
purchased power available to customers.
(b) The mark-ups and cost recovery factors, if allowed, may
be those necessary to encourage the electric utility to include
economical purchased power as part of the utility's energy and
capacity resource supply plan.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.207. USE OF MARK-UPS. Any mark-ups approved under
Section 36.206 are an exceptional form of rate relief that the
electric utility may recover from ratepayers only on a finding by
the commission that the relief is necessary to maintain the
utility's financial integrity.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997. Amended
by Acts1999, 76th Leg., ch. 405, § 28, eff. Sept. 1, 1999.
§ 36.208. PAYMENT TO QUALIFYING FACILITY. In
establishing an electric utility's rates, the regulatory authority
shall:
(1) consider a payment made to a qualifying facility
under an agreement certified under Subchapter C, Chapter 35, to be a
reasonable and necessary operating expense of the electric utility
during the period for which the certification is effective; and
(2) allow full, concurrent, and monthly recovery of
the amount of the payment.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
SUBCHAPTER H. RATES FOR GOVERNMENTAL ENTITIES
§ 36.351. DISCOUNTED RATES FOR CERTAIN INSTITUTIONS OF
HIGHER EDUCATION. (a) Notwithstanding any other provision of
this title, each electric utility and municipally owned utility
shall discount charges for electric service provided to a facility
of a four-year state university, upper-level institution, Texas
State Technical College, or college.
(b) The discount is a 20-percent reduction of the utility's
base rates that would otherwise be paid under the applicable
tariffed rate.
(c) An electric or municipally owned utility is exempt from
this section if the 20-percent discount results in a reduction
equal to more than one percent of the utility's total annual
revenues.
(d) A municipally owned utility is exempt from this section
if the municipally owned utility, on September 1, 1995, discounted
base commercial rates for electric service provided to all
four-year state universities or colleges in its service area by 20
percent or more.
(e) This section does not apply to a rate charged to an
institution of higher education by a municipally owned utility that
provides a discounted rate to the state for electric services below
rates in effect on January 1, 1995, if the discounted rate provides
a greater financial discount to the state than is provided to the
institution of higher education through the discount provided by
this section.
(f) An investor-owned electric utility may not recover from
residential customers or any other customer class the assigned and
allocated costs of serving a state university or college that
receives a discount under this section.
(g) Each electric utility shall file tariffs with the
commission reflecting the discount required under this section.
The initial tariff filing is not a rate change for purposes of
Subchapter C.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.352. SPECIAL RATE CLASS. Notwithstanding any
other provision of this title, if the commission, on or before
September 1, 1995, approved the establishment of a separate rate
class for electric service for a university and grouped public
schools in a separate rate class, the commission shall include
community colleges in the rate class with public school customers.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.353. PAYMENT IN LIEU OF TAX. (a) A payment made
in lieu of a tax by a municipally owned utility to the municipality
by which the utility is owned may not be considered an expense of
operation in establishing the utility's rate for providing utility
service to a school district or hospital district.
(b) A rate a municipally owned utility receives from a
school district or hospital district may not be used to make or to
cover the cost of making payments in lieu of taxes to the
municipality that owns the utility.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 36.354. DISCOUNTED RATES FOR MILITARY
BASES. (a) Notwithstanding any other provision of this title,
each municipally owned utility, electric cooperative, or electric
utility in an area where customer choice is not available or the
commission has delayed the implementation of full customer choice
in accordance with Section 39.103 shall discount charges for
electric service provided to a military base.
(b) The discount under Subsection (a) is a 20 percent
reduction of the base commercial rate that the municipally owned
utility, electric cooperative, or electric utility would otherwise
charge the military installation.
(c) An electric utility, municipally owned utility, or
electric cooperative may assess a surcharge to all of the utility's
retail customers in the state to recover the difference in revenue
between the revenues from the discounted rate for military bases
provided under Subsection (a) and the base commercial rate. This
subsection does not apply to an electric utility, municipally owned
utility, or electric cooperative that was providing electric
service to a military base on December 31, 2002, at a rate
constituting a discount of 20 percent or more from the utility's
base commercial rate that the utility would otherwise charge the
military base.
(d) Each electric utility shall file a tariff with the
commission reflecting the discount required by Subsection (a) and
may file a tariff reflecting the surcharge provided by Subsection
(c). Not later than the 30th day after the date the commission
receives the electric utility's tariff reflecting the surcharge,
the commission shall approve the tariff. A proceeding under this
subsection is not a rate change for purposes of Subchapter C.
(e) An electric utility, municipally owned utility, or
electric cooperative is exempt from the requirements of Subsection
(a) if:
(1) the 20 percent discount would result in a
reduction of revenue in an amount that is greater than one percent
of the utility's total annual revenues; or
(2) the utility:
(A) was providing electric service to a military
base on December 31, 2002, at a rate constituting a discount of 20
percent or more from the utility's base commercial rate that the
utility would otherwise charge the military base; and
(B) continues to provide electric service to the
military base at a rate constituting a discount of 20 percent or
more from the utility's base commercial rate that the utility would
otherwise charge the military base.
(f) Each electric utility shall provide the Texas Military
Preparedness Commission with the base commercial rate that the
utility would otherwise charge the military base and the rate the
utility is charging the military base.
(g) For the purposes of this section, the term "military
base" does not include a military base:
(1) that has been closed or realigned under the
Defense Base Closure and Realignment Act of 1990 (10 U.S.C. Section
2687) and its subsequent amendments;
(2) that is administered by an authority established
by a municipality under Chapter 378, Local Government Code, as
added by Chapter 1221, Acts of the 76th Legislature, Regular
Session, 1999;
(3) that is operated by or for the benefit of the Texas
National Guard, as defined by Section 431.001, Government Code,
unless the base is served by a municipally owned utility owned by a
city with a population of 650,000 or more; or
(4) for which a municipally owned utility has acquired
the electric distribution system under 10 U.S.C. Section 2688.
Added by Acts 2003, 78th Leg., ch. 149, § 21, eff. May 27, 2003.
