WATER CODE
CHAPTER 13. WATER RATES AND SERVICES
SUBCHAPTER A. GENERAL PROVISIONS
§ 13.001. LEGISLATIVE POLICY AND PURPOSE. (a) This
chapter is adopted to protect the public interest inherent in the
rates and services of retail public utilities.
(b) The legislature finds that:
(1) retail public utilities are by definition
monopolies in the areas they serve;
(2) the normal forces of competition that operate to
regulate prices in a free enterprise society do not operate for the
reason stated in Subdivision (1) of this subsection; and
(3) retail public utility rates, operations, and
services are regulated by public agencies, with the objective that
this regulation will operate as a substitute for competition.
(c) The purpose of this chapter is to establish a
comprehensive regulatory system that is adequate to the task of
regulating retail public utilities to assure rates, operations, and
services that are just and reasonable to the consumers and to the
retail public utilities.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1989, 71st Leg., ch. 567, § 1, eff. Sept.
1, 1989.
§ 13.002. DEFINITIONS. In this chapter:
(1) "Affected person" means any retail public utility
affected by any action of the regulatory authority, any person or
corporation whose utility service or rates are affected by any
proceeding before the regulatory authority, or any person or
corporation that is a competitor of a retail public utility with
respect to any service performed by the retail public utility or
that desires to enter into competition.
(2) "Affiliated interest" or "affiliate" means:
(A) any person or corporation owning or holding
directly or indirectly five percent or more of the voting
securities of a utility;
(B) any person or corporation in any chain of
successive ownership of five percent or more of the voting
securities of a utility;
(C) any corporation five percent or more of the
voting securities of which is owned or controlled directly or
indirectly by a utility;
(D) any corporation five percent or more of the
voting securities of which is owned or controlled directly or
indirectly by any person or corporation that owns or controls
directly or indirectly five percent or more of the voting
securities of any utility or by any person or corporation in any
chain of successive ownership of five percent of those utility
securities;
(E) any person who is an officer or director of a
utility or of any corporation in any chain of successive ownership
of five percent or more of voting securities of a public utility;
(F) any person or corporation that the
commission, after notice and hearing, determines actually
exercises any substantial influence or control over the policies
and actions of a utility or over which a utility exercises such
control or that is under common control with a utility, such control
being the possession directly or indirectly of the power to direct
or cause the direction of the management and policies of another,
whether that power is established through ownership or voting of
securities or by any other direct or indirect means; or
(G) any person or corporation that the
commission, after notice and hearing, determines is exercising
substantial influence over the policies and actions of the utility
in conjunction with one or more persons or corporations with which
they are related by ownership or blood relationship, or by action in
concert, that together they are affiliated within the meaning of
this section, even though no one of them alone is so affiliated.
(3) "Allocations" means, for all retail public
utilities, the division of plant, revenues, expenses, taxes and
reserves between municipalities or between municipalities and
unincorporated areas, where those items are used for providing
water or sewer utility service in a municipality or for a
municipality and unincorporated areas.
(4) "Board" means the Texas Water Development Board.
(5) "Commission" means the Texas Natural Resource
Conservation Commission.
(6) "Commissioner" means a member of the commission.
(7) "Corporation" means any corporation, joint-stock
company, or association, domestic or foreign, and its lessees,
assignees, trustees, receivers, or other successors in interest,
having any of the powers or privileges of corporations not
possessed by individuals or partnerships but does not include
municipal corporations unless expressly provided in this chapter.
(8) "Executive director" means the executive director
of the Texas Natural Resource Conservation Commission.
(9) "Facilities" means all the plant and equipment of
a retail public utility, including all tangible and intangible real
and personal property without limitation, and any and all means and
instrumentalities in any manner owned, operated, leased, licensed,
used, controlled, furnished, or supplied for, by, or in connection
with the business of any retail public utility.
(10) "Incident of tenancy" means water or sewer
service, provided to tenants of rental property, for which no
separate or additional service fee is charged other than the rental
payment.
(11) "Member" means a person who holds a membership in
a water supply or sewer service corporation and is a record owner of
a fee simple title to property in an area served by a water supply or
sewer service corporation or a person who is granted a membership
and who either currently receives or will be eligible to receive
water or sewer utility service from the corporation. In
determining member control of a water supply or sewer service
corporation, a person is entitled to only one vote regardless of the
number of memberships the person owns.
(12) "Municipality" means cities existing, created,
or organized under the general, home-rule, or special laws of this
state.
(13) "Municipally owned utility" means any utility
owned, operated, and controlled by a municipality or by a nonprofit
corporation whose directors are appointed by one or more
municipalities.
(14) "Order" means the whole or a part of the final
disposition, whether affirmative, negative, injunctive, or
declaratory in form, of the regulatory authority in a matter other
than rulemaking, but including issuance of certificates of
convenience and necessity and rate setting.
(15) "Person" includes natural persons, partnerships
of two or more persons having a joint or common interest, mutual or
cooperative associations, water supply or sewer service
corporations, and corporations.
(16) "Proceeding" means any hearing, investigation,
inquiry, or other fact-finding or decision-making procedure under
this chapter and includes the denial of relief or the dismissal of a
complaint.
(17) "Rate" means every compensation, tariff, charge,
fare, toll, rental, and classification or any of those items
demanded, observed, charged, or collected whether directly or
indirectly by any retail public utility for any service, product,
or commodity described in Subdivision (23) of this section and any
rules, regulations, practices, or contracts affecting that
compensation, tariff, charge, fare, toll, rental, or
classification.
(18) "Regulatory authority" means, in accordance with
the context in which it is found, either the commission or the
governing body of a municipality.
(19) "Retail public utility" means any person,
corporation, public utility, water supply or sewer service
corporation, municipality, political subdivision or agency
operating, maintaining, or controlling in this state facilities for
providing potable water service or sewer service, or both, for
compensation.
(20) "Retail water or sewer utility service" means
potable water service or sewer service, or both, provided by a
retail public utility to the ultimate consumer for compensation.
(21) "Service" means any act performed, anything
furnished or supplied, and any facilities or lines committed or
used by a retail public utility in the performance of its duties
under this chapter to its patrons, employees, other retail public
utilities, and the public, as well as the interchange of facilities
between two or more retail public utilities.
(22) "Test year" means the most recent 12-month period
for which representative operating data for a retail public utility
are available. A utility rate filing must be based on a test year
that ended less than 12 months before the date on which the utility
made the rate filing.
(23) "Water and sewer utility," "public utility," or
"utility" means any person, corporation, cooperative corporation,
affected county, or any combination of these persons or entities,
other than a municipal corporation, water supply or sewer service
corporation, or a political subdivision of the state, except an
affected county, or their lessees, trustees, and receivers, owning
or operating for compensation in this state equipment or facilities
for the transmission, storage, distribution, sale, or provision of
potable water to the public or for the resale of potable water to
the public for any use or for the collection, transportation,
treatment, or disposal of sewage or other operation of a sewage
disposal service for the public, other than equipment or facilities
owned and operated for either purpose by a municipality or other
political subdivision of this state or a water supply or sewer
service corporation, but does not include any person or corporation
not otherwise a public utility that furnishes the services or
commodity only to itself or its employees or tenants as an incident
of that employee service or tenancy when that service or commodity
is not resold to or used by others.
(24) "Water supply or sewer service corporation" means
a nonprofit corporation organized and operating under Chapter 67
that provides potable water service or sewer service for
compensation and that has adopted and is operating in accordance
with by-laws or articles of incorporation which ensure that it is
member-owned and member-controlled. The term does not include a
corporation that provides retail water or sewer service to a person
who is not a member, except that the corporation may provide retail
water or sewer service to a person who is not a member if the person
only builds on or develops property to sell to another and the
service is provided on an interim basis before the property is sold.
(25) "Wholesale water or sewer service" means potable
water or sewer service, or both, provided to a person, political
subdivision, or municipality who is not the ultimate consumer of
the service.
(26) "Affected county" is a county to which Subchapter
B, Chapter 232, Local Government Code, applies.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 1, 2, eff.
Sept. 1, 1987; Acts 1989, 71st Leg., ch. 567, § 2, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 678, § 1, eff. Sept. 1, 1991;
Acts 1991, 72nd Leg., 1st C.S., ch. 3, § 1.058, eff. Aug. 12,
1991; Acts 1995, 74th Leg., ch. 400, § 1, eff. Sept. 1, 1995;
Acts 1995, 74th Leg., ch. 979, § 6, eff. June 16, 1995; Acts
1997, 75th Leg., ch. 1010, § 6.02, eff. Sept. 1, 1997; Acts
1999, 76th Leg., ch. 62, § 18.52, eff. Sept. 1, 1999; Acts 1999,
76th Leg., ch. 404, § 29, eff. Sept. 1, 1999.
§ 13.003. APPLICABILITY OF ADMINISTRATIVE PROCEDURE AND
TEXAS REGISTER ACT. Chapter 2001, Government Code applies to all
proceedings under this chapter except to the extent inconsistent
with this chapter.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1995, 74th Leg., ch. 76, § 5.95(49), eff.
Sept. 1, 1995.
SUBCHAPTER B. ADMINISTRATIVE PROVISIONS
§ 13.011. EMPLOYEES. (a) The executive director,
subject to approval by the commission, shall employ any
engineering, accounting, and administrative personnel necessary to
carry out this chapter.
(b) The executive director and the commission's staff are
responsible for the gathering of information relating to all
matters within the jurisdiction of the commission under this
subchapter. The duties of the executive director and the staff
include:
(1) accumulation of evidence and other information
from water and sewer utilities and from the commission and the board
and from other sources for the purposes specified by this chapter;
(2) preparation and presentation of evidence before
the commission or its appointed examiner in proceedings;
(3) conducting investigations of water and sewer
utilities under the jurisdiction of the commission;
(4) preparation of recommendations that the
commission undertake an investigation of any matter within its
jurisdiction;
(5) preparation of recommendations and a report for
inclusion in the annual report of the commission;
(6) protection and representation of the public
interest, together with the public interest advocate, before the
commission; and
(7) other activities that are reasonably necessary to
enable the executive director and the staff to perform their
duties.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985.
§ 13.014. ATTORNEY GENERAL TO REPRESENT
COMMISSION. The attorney general shall represent the commission
under this chapter in all matters before the state courts and any
court of the United States.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985.
§ 13.015. INFORMAL PROCEEDING. A proceeding involving
a retail public utility as defined by Section 13.002 of this code
may be an informal proceeding, except that the proceeding is
subject to the public notice requirements of this chapter and the
rules and orders of the regulatory authority involved.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 3, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 3, eff. Sept. 1, 1989.
§ 13.016. RECORD OF PROCEEDINGS; RIGHT TO HEARING. A
record shall be kept of all proceedings before the regulatory
authority, unless all parties waive the keeping of the record, and
all the parties are entitled to be heard in person or by attorney.
Added by Acts 1987, 70th Leg., ch. 539, § 4, eff. Sept. 1, 1987.
SUBCHAPTER C. JURISDICTION
§ 13.041. GENERAL POWER; RULES; HEARINGS. (a) The
commission may regulate and supervise the business of every water
and sewer utility within its jurisdiction and may do all things,
whether specifically designated in this chapter or implied in this
chapter, necessary and convenient to the exercise of this power and
jurisdiction.
(b) The commission shall adopt and enforce rules reasonably
required in the exercise of its powers and jurisdiction, including
rules governing practice and procedure before the commission.
(c) The commission may call and hold hearings, administer
oaths, receive evidence at hearings, issue subpoenas to compel the
attendance of witnesses and the production of papers and documents,
and make findings of fact and decisions with respect to
administering this chapter or the rules, orders, or other actions
of the commission.
(d) The commission may issue emergency orders, with or
without a hearing:
(1) to compel a water or sewer service provider that
has obtained or is required to obtain a certificate of public
convenience and necessity to provide continuous and adequate water
service, sewer service, or both, if the discontinuance of the
service is imminent or has occurred because of the service
provider's actions or failure to act; and
(2) to compel a retail public utility to provide an
emergency interconnection with a neighboring retail public utility
for the provision of temporary water or sewer service, or both, for
not more than 90 days if service discontinuance or serious
impairment in service is imminent or has occurred.
(e) The commission may establish reasonable compensation
for the temporary service required under Subsection (d)(2) of this
section and may allow the retail public utility receiving the
service to make a temporary adjustment to its rate structure to
ensure proper payment.
(f) If an order is issued under Subsection (d) without a
hearing, the order shall fix a time, as soon after the emergency
order is issued as is practicable, and place for a hearing to be
held before the commission.
(g) The regulatory assessment required by Section 5.235(n)
of this code is not a rate and is not reviewable by the commission
under Section 13.043 of this code. The commission has the authority
to enforce payment and collection of the regulatory assessment.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 5, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 4, eff. Sept. 1, 1989;
Acts 1991, 72nd Leg., 1st C.S., ch. 3, § 4.02, eff. Sept. 1,
1991.
§ 13.042. JURISDICTION OF MUNICIPALITY; ORIGINAL AND
APPELLATE JURISDICTION OF COMMISSION. (a) Subject to the
limitations imposed in this chapter and for the purpose of
regulating rates and services so that those rates may be fair, just,
and reasonable and the services adequate and efficient, the
governing body of each municipality has exclusive original
jurisdiction over all water and sewer utility rates, operations,
and services provided by a water and sewer utility within its
corporate limits.
(b) The governing body of a municipality by ordinance may
elect to have the commission exercise exclusive original
jurisdiction over the utility rates, operation, and services of
utilities, within the incorporated limits of the municipality.
(c) The governing body of a municipality that surrenders its
jurisdiction to the commission may reinstate its jurisdiction by
ordinance at any time after the second anniversary of the date on
which the municipality surrendered its jurisdiction to the
commission, except that the municipality may not reinstate its
jurisdiction during the pendency of a rate proceeding before the
commission. The municipality may not surrender its jurisdiction
again until the second anniversary of the date on which the
municipality reinstates jurisdiction.
(d) The commission shall have exclusive appellate
jurisdiction to review orders or ordinances of those municipalities
as provided in this chapter.
(e) The commission shall have exclusive original
jurisdiction over water and sewer utility rates, operations, and
services not within the incorporated limits of a municipality
exercising exclusive original jurisdiction over those rates,
operations, and services as provided in this chapter.
(f) This subchapter does not give the commission power or
jurisdiction to regulate or supervise the rates or service of a
utility owned and operated by a municipality, directly or through a
municipally owned corporation, within its corporate limits or to
affect or limit the power, jurisdiction, or duties of a
municipality that regulates land and supervises water and sewer
utilities within its corporate limits, except as provided by this
code.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 6, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 5, eff. Sept. 1, 1989.
§ 13.0421. RATES CHARGED BY CERTAIN MUNICIPALLY OWNED
UTILITIES. (a) This section applies to a municipally owned water
and sewer utility that on January 1, 1989, required some or all of
its wholesale customers to assess a surcharge for service against
residential customers who reside outside the municipality's
municipal boundaries.
(b) A municipality may not require a municipal utility
district to assess a surcharge against users of water or sewer
service prior to the annexation of the municipal utility district.
Added by Acts 1989, 71st Leg., ch. 567, § 8, eff. Sept. 1, 1989.
§ 13.043. APPELLATE JURISDICTION. (a) Any party to a
rate proceeding before the governing body of a municipality may
appeal the decision of the governing body to the commission. This
subsection does not apply to a municipally owned utility. An appeal
under this subsection must be initiated within 90 days after the
date of notice of the final decision by the governing body by filing
a petition for review with the commission and by serving copies on
all parties to the original rate proceeding. The commission shall
hear the appeal de novo and shall fix in its final order the rates
the governing body should have fixed in the action from which the
appeal was taken and may include reasonable expenses incurred in
the appeal proceedings. The commission may establish the effective
date for the commission's rates at the original effective date as
proposed by the utility provider and may order refunds or allow a
surcharge to recover lost revenues. The commission may consider
only the information that was available to the governing body at the
time the governing body made its decision and evidence of
reasonable expenses incurred in the appeal proceedings.
(b) Ratepayers of the following entities may appeal the
decision of the governing body of the entity affecting their water,
drainage, or sewer rates to the commission:
(1) a nonprofit water supply or sewer service
corporation created and operating under Chapter 67;
(2) a utility under the jurisdiction of a municipality
inside the corporate limits of the municipality;
(3) a municipally owned utility, if the ratepayers
reside outside the corporate limits of the municipality;
(4) a district or authority created under Article III,
Section 52, or Article XVI, Section 59, of the Texas Constitution
that provides water or sewer service to household users; and
(5) a utility owned by an affected county, if the
ratepayer's rates are actually or may be adversely affected. For
the purposes of this section ratepayers who reside outside the
boundaries of the district or authority shall be considered a
separate class from ratepayers who reside inside those boundaries.
(c) An appeal under Subsection (b) of this section must be
initiated by filing a petition for review with the commission and
the entity providing service within 90 days after the effective day
of the rate change or, if appealing under Subdivision (b)(2) or (5)
of this section, within 90 days after the date on which the
governing body of the municipality or affected county makes a final
decision. The petition must be signed by the lesser of 10,000 or 10
percent of those ratepayers whose rates have been changed and who
are eligible to appeal under Subsection (b) of this section.
(d) In an appeal under Subsection (b) of this section, each
person receiving a separate bill is considered a ratepayer, but one
person may not be considered more than one ratepayer regardless of
the number of bills the person receives. The petition for review is
considered properly signed if signed by a person, or the spouse of a
person, in whose name utility service is carried.
(e) In an appeal under Subsection (b) of this section, the
commission shall hear the appeal de novo and shall fix in its final
order the rates the governing body should have fixed in the action
from which the appeal was taken. The commission may establish the
effective date for the commission's rates at the original effective
date as proposed by the service provider, may order refunds or allow
a surcharge to recover lost revenues, and may allow recovery of
reasonable expenses incurred by the retail public utility in the
appeal proceedings. The commission may consider only the
information that was available to the governing body at the time the
governing body made its decision and evidence of reasonable
expenses incurred by the retail public utility in the appeal
proceedings. The rates established by the commission in an appeal
under Subsection (b) of this section remain in effect until the
first anniversary of the effective date proposed by the retail
public utility for the rates being appealed or until changed by the
service provider, whichever date is later, unless the commission
determines that a financial hardship exists.
(f) A retail public utility that receives water or sewer
service from another retail public utility or political subdivision
of the state, including an affected county, may appeal to the
commission a decision of the provider of water or sewer service
affecting the amount paid for water or sewer service. An appeal
under this subsection must be initiated within 90 days after the
date of notice of the decision is received from the provider of
water or sewer service by the filing of a petition by the retail
public utility.
(g) An applicant for service from an affected county or a
water supply or sewer service corporation may appeal to the
commission a decision of the county or water supply or sewer service
corporation affecting the amount to be paid to obtain service other
than the regular membership or tap fees. In addition to the factors
specified under Subsection (j), in an appeal brought under this
subsection the commission shall determine whether the amount paid
by the applicant is consistent with the tariff of the water supply
or sewer service corporation and is reasonably related to the cost
of installing on-site and off-site facilities to provide service to
that applicant. If the commission finds the amount charged to be
clearly unreasonable, it shall establish the fee to be paid for that
applicant. An appeal under this subsection must be initiated
within 90 days after the date written notice is provided to the
applicant or member of the decision of an affected county or water
supply or sewer service corporation relating to the applicant's
initial request for that service. A determination made by the
commission on an appeal under this subsection is binding on all
similarly situated applicants for service, and the commission may
not consider other appeals on the same issue until the applicable
provisions of the tariff of the water supply or sewer service
corporation are amended.
(h) The commission may, on a motion by the executive
director or by the appellant under Subsection (a), (b), or (f) of
this section, establish interim rates to be in effect until a final
decision is made.
(i) The governing body of a municipally owned utility or a
political subdivision, within 30 days after the date of a final
decision on a rate change, shall provide individual written notice
to each ratepayer eligible to appeal who resides outside the
boundaries of the municipality or the political subdivision. The
notice must include, at a minimum, the effective date of the new
rates, the new rates, and the location where additional information
on rates can be obtained.
(j) In an appeal under this section, the commission shall
ensure that every rate made, demanded, or received by any retail
public utility or by any two or more retail public utilities jointly
shall be just and reasonable. Rates shall not be unreasonably
preferential, prejudicial, or discriminatory but shall be
sufficient, equitable, and consistent in application to each class
of customers. The commission shall use a methodology that
preserves the financial integrity of the retail public utility.
For agreements between municipalities the commission shall
consider the terms of any wholesale water or sewer service
agreement in an appellate rate proceeding.
(k) Not later than the 30th day after the date of a final
decision on a rate change, the commissioners court of an affected
county shall provide written notice to each ratepayer eligible to
appeal. The notice must include the effective date of the new
rates, the new rates, and the location where additional information
on rates may be obtained.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 7, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 6, eff. Sept. 1, 1989;
Acts 1991, 72nd Leg., ch. 678, § 2, eff. Sept. 1, 1991; Acts
1991, 72nd Leg., ch. 852, § 2, eff. June 16, 1991; Acts 1993,
73rd Leg., ch. 549, § 1, eff. Sept. 1, 1993; Acts 1995, 74th
Leg., ch. 400, § 2, eff. Sept. 1, 1995; Acts 1995, 74th Leg., ch.
979, § 7, eff. June 16, 1995; Acts 1999, 76th Leg., ch. 62, §
18.53, eff. Sept. 1, 1999.
§ 13.044. RATES CHARGED BY MUNICIPALITY TO
DISTRICT. (a) This section applies to rates charged by a
municipality for water or sewer service to a district created
pursuant to Article XVI, Section 59, of the Texas Constitution, or
to the residents of such district, which district is located within
the corporate limits or the extraterritorial jurisdiction of the
municipality and the resolution, ordinance, or agreement of the
municipality consenting to the creation of the district requires
the district to purchase water or sewer service from the
municipality.
(b) Notwithstanding the provisions of any resolution,
ordinance, or agreement, a district may appeal the rates imposed by
the municipality by filing a petition with the commission. The
commission shall hear the appeal de novo and the municipality shall
have the burden of proof to establish that the rates are just and
reasonable. The commission shall fix the rates to be charged by the
municipality and the municipality may not increase such rates
without the approval of the commission.
Added by Acts 1989, 71st Leg., ch. 567, § 7, eff. Sept. 1, 1989.
§ 13.045. NOTIFICATION REGARDING USE OF REVENUE. At
least annually and before any rate increase, a municipality shall
notify in writing each water and sewer retail customer of any
service or capital expenditure not water or sewer related funded in
whole or in part by customer revenue.
Added by Acts 1997, 75th Leg., ch. 1010, § 6.28, eff. Sept. 1,
1997.
SUBCHAPTER D. MUNICIPALITIES AND COUNTIES
§ 13.081. FRANCHISES. This chapter may not be construed
as in any way limiting the rights and powers of a municipality to
grant or refuse franchises to use the streets and alleys within its
limits and to make the statutory charges for their use, but no
provision of any franchise agreement may limit or interfere with
any power conferred on the commission by this chapter. If a
municipality performs regulatory functions under this chapter, it
may make such other charges as may be provided in the applicable
franchise agreement, together with any other charges permitted by
this chapter.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985.
§ 13.082. LOCAL UTILITY SERVICE; EXEMPT AND NONEXEMPT
AREAS. (a) Notwithstanding any other provision of this section,
municipalities shall continue to regulate each kind of local
utility service inside their boundaries until the commission has
assumed jurisdiction over the respective utility pursuant to this
chapter.
(b) If a municipality does not surrender its jurisdiction,
local utility service within the boundaries of the municipality
shall be exempt from regulation by the commission under this
chapter to the extent that this chapter applies to local service,
and the municipality shall have, regarding service within its
boundaries, the right to exercise the same regulatory powers under
the same standards and rules as the commission or other standards
and rules not inconsistent with them. The commission's rules
relating to service and response to requests for service for
utilities operating within a municipality's corporate limits apply
unless the municipality adopts its own rules.
(c) Notwithstanding any election, the commission may
consider water and sewer utilities' revenues and return on
investment in exempt areas in fixing rates and charges in nonexempt
areas and may also exercise the powers conferred necessary to give
effect to orders under this chapter for the benefit of nonexempt
areas. Likewise, in fixing rates and charges in the exempt area,
the governing body may consider water and sewer utilities' revenues
and return on investment in nonexempt areas.
(d) Utilities serving exempt areas are subject to the
reporting requirements of this chapter. Those reports and tariffs
shall be filed with the governing body of the municipality as well
as with the commission.
(e) This section does not limit the duty and power of the
commission to regulate service and rates of municipally regulated
water and sewer utilities for service provided to other areas in
Texas.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1989, 71st Leg., ch. 567, § 9, eff. Sept.
1, 1989.
§ 13.083. RATE DETERMINATION. A municipality
regulating its water and sewer utilities under this chapter shall
require from those utilities all necessary data to make a
reasonable determination of rate base, expenses, investment, and
rate of return within the municipal boundaries. The standards for
this determination shall be based on the procedures and
requirements of this chapter, and the municipality shall retain any
personnel necessary to make the determination of reasonable rates
required under this chapter.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985.
§ 13.084. AUTHORITY OF GOVERNING BODY; COST
REIMBURSEMENT. 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.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1989, 71st Leg., ch. 567, § 10, eff. Sept.
1, 1989; Acts 1995, 74th Leg., ch. 979, § 9, eff. June 16, 1995.
§ 13.085. ASSISTANCE BY COMMISSION. On request, the
commission may advise and assist municipalities and affected
counties in connection with questions and proceedings arising under
this chapter. This assistance may include aid to municipalities or
an affected county in connection with matters pending before the
commission, the courts, the governing body of any municipality, or
the commissioners court of an affected county, including making
members of the staff available to them as witnesses and otherwise
providing evidence.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1995, 74th Leg., ch. 979, § 10, eff. June
16, 1995.
§ 13.086. FAIR WHOLESALE RATES FOR WHOLESALE WATER SALES
TO A WATER DISTRICT. (a) A municipality that makes a wholesale
sale of water to a special district created under Section 52,
Article III, or Section 59, Article XVI, Texas Constitution, and
that operates under Title 4 or under Chapter 36 shall determine the
rates for that sale on the same basis as for other similarly
situated wholesale purchasers of the municipality's water.
(b) This section does not apply to a sale of water under a
contract executed before the effective date of this section.
Added by Acts 1997, 75th Leg., ch. 1010, § 6.29, eff. Sept. 1,
1997.
SUBCHAPTER E. RECORDS, REPORTS, INSPECTIONS, RATES, AND SERVICES
§ 13.131. RECORDS OF UTILITY; RATES, METHODS, AND
ACCOUNTS. (a) Every water and sewer utility shall keep and render
to the regulatory authority in the manner and form prescribed by the
commission uniform accounts of all business transacted. The
commission may also prescribe forms of books, accounts, records,
and memoranda to be kept by those utilities, including the books,
accounts, records, and memoranda of the rendition of and capacity
for service as well as the receipts and expenditures of money, and
any other forms, records, and memoranda that in the judgment of the
commission may be necessary to carry out this chapter.
(b) In the case of a utility subject to regulation by a
federal regulatory agency, compliance with the system of accounts
prescribed for the particular class of utilities by that agency may
be considered a sufficient compliance with the system prescribed by
the commission. However, the commission may prescribe forms of
books, accounts, records, and memoranda covering information in
addition to that required by the federal agency. The system of
accounts and the forms of books, accounts, records, and memoranda
prescribed by the commission for a utility or class of utilities may
not conflict or be inconsistent with the systems and forms
established by a federal agency for that utility or class of
utilities.
(c) The commission shall fix proper and adequate rates and
methods of depreciation, amortization, or depletion of the several
classes of property of each utility and shall require every utility
to carry a proper and adequate depreciation account in accordance
with those rates and methods and with any other rules the commission
prescribes. Those rates, methods, and accounts shall be utilized
uniformly and consistently throughout the rate-setting and appeal
proceedings.
(d) Every utility shall keep separate accounts to show all
profits or losses resulting from the sale or lease of appliances,
fixtures, equipment, or other merchandise. A profit or loss may not
be taken into consideration by the regulatory authority in arriving
at any rate to be charged for service by a utility to the extent that
the merchandise is not integral to the provision of utility
service.
(e) Every utility is required to keep and render its books,
accounts, records, and memoranda accurately and faithfully in the
manner and form prescribed by the commission and to comply with all
directions of the regulatory authority relating to those books,
accounts, records, and memoranda. The regulatory authority may
require the examination and audit of all accounts.
(f) In determining the allocation of tax savings derived
from application of methods such as liberalized depreciation and
amortization and the investment tax credit, the regulatory
authority shall equitably balance the interests of present and
future customers and shall apportion those benefits between
consumers and the utilities accordingly. If any portion of the
investment tax credit has been retained by a utility, that amount
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.
(g) Repealed by Acts 1987, 70th Leg., ch. 539, § 32, eff.
Sept. 1, 1987.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 32, eff. Sept.
1, 1987.
§ 13.132. POWERS OF COMMISSION. (a) The commission
may:
(1) require that water and sewer utilities report to
it any information relating to themselves and affiliated interests
both inside and outside this state that it considers useful in the
administration of this chapter;
(2) establish forms for all reports;
(3) determine the time for reports and the frequency
with which any reports are to be made;
(4) require that any reports be made under oath;
(5) require that a copy of any contract or arrangement
between any utility and any affiliated interest be filed with it and
require that such a contract or arrangement that is not in writing
be reduced to writing;
(6) require that a copy of any report filed with any
federal agency or any governmental agency or body of any other state
be filed with it; and
(7) require that a copy of annual reports showing all
payments of compensation, other than salary or wages subject to the
withholding of federal income tax, made to residents of Texas, or
with respect to legal, administrative, or legislative matters in
Texas, or for representation before the Texas Legislature or any
governmental agency or body be filed with it.
(b) On the request of the governing body of any
municipality, the commission may provide sufficient staff members
to advise and consult with the municipality on any pending matter.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985.
§ 13.133. INSPECTIONS; EXAMINATION UNDER OATH;
COMPELLING PRODUCTION OF RECORDS; INQUIRY INTO MANAGEMENT AND
AFFAIRS. (a) Any regulatory authority and, when authorized by
the regulatory authority, its counsel, agents, and employees may,
at reasonable times and for reasonable purposes, inspect and obtain
copies of the papers, books, accounts, documents, and other
business records and inspect the plant, equipment, and other
property of any utility within its jurisdiction. The regulatory
authority may examine under oath or may authorize the person
conducting the investigation to examine under oath any officer,
agent, or employee of any utility in connection with the
investigation.
(b) The regulatory authority may require, by order or
subpoena served on any utility, the production within this state at
the time and place it may designate of any books, accounts, papers,
or records kept by that utility outside the state or verified copies
of them if the commission so orders. A utility failing or refusing
to comply with such an order or subpoena violates this chapter.
(c) A member, agent, or employee of the regulatory authority
may enter the premises occupied by a utility to make inspections,
examinations, and tests and to exercise any authority provided by
this chapter.
(d) A member, agent, or employee of the regulatory authority
may act under this section only during reasonable hours and after
giving reasonable notice to the utility.
(e) The utility is entitled to be represented when
inspections, examinations, and tests are made on its premises.
Reasonable time for the utility to secure a representative shall be
allowed before beginning an inspection, examination, or test.
(f) The regulatory authority may inquire into the
management and affairs of all utilities and shall keep itself
informed as to the manner and method in which they are conducted and
may obtain all information to enable it to perform management
audits. The utility shall report to the regulatory authority on the
status of the implementation of the recommendations of the audit
and shall file subsequent reports at the times the regulatory
authority considers appropriate.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1989, 71st Leg., ch. 567, § 11, eff. Sept.
1, 1989.
§ 13.134. REPORT OF ADVERTISING OR PUBLIC RELATIONS
EXPENSES. (a) The regulatory authority may require an annual
report from each utility company of all its expenditures for
business gifts and entertainment and institutional,
consumption-inducing, and other advertising or public relations
expenses.
(b) The regulatory authority shall not allow as costs or
expenses for ratemaking purposes any of the expenditures that the
regulatory authority determines not to be in the public interest.
The cost of legislative advocacy expenses shall not in any case be
allowed as costs or expenses for ratemaking purposes.
(c) Reasonable charitable or civic contributions may be
allowed not to exceed the amount approved by the regulatory
authority.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985.
§ 13.135. UNLAWFUL RATES, RULES, AND REGULATIONS. A
utility may not charge, collect, or receive any rate for utility
service or impose any rule or regulation other than as provided in
this chapter.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985.
§ 13.136. FILING TARIFFS OF RATES, RULES, AND
REGULATIONS; ANNUAL FINANCIAL REPORT. (a) Every utility shall
file with each regulatory authority tariffs showing all rates that
are subject to the original or appellate jurisdiction of the
regulatory authority and that are in force at the time for any
utility service, product, or commodity offered. Every utility
shall file with and as a part of those tariffs all rules and
regulations relating to or affecting the rates, utility service,
product, or commodity furnished.
(b) Each utility annually shall file a service and financial
report in a form and at times specified by commission rule.
(c) Every water supply or sewer service corporation shall
file with the commission tariffs showing all rates that are subject
to the appellate jurisdiction of the commission and that are in
force at the time for any utility service, product, or commodity
offered. Every water supply or sewer service corporation shall
file with and as a part of those tariffs all rules and regulations
relating to or affecting the rates, utility service, product, or
commodity furnished. The filing required under this subsection
shall be for informational purposes only.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 8, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 12, eff. Sept. 1, 1989;
Acts 1991, 72nd Leg., ch. 678, § 3, eff. Sept. 1, 1991.
§ 13.137. OFFICE AND OTHER BUSINESS LOCATIONS OF
UTILITY; RECORDS; REMOVAL FROM STATE. (a) Every utility shall:
(1) make available and notify its customers of a
business location where its customers may make payments to prevent
disconnection of or to restore service:
(A) in each county in which the utility provides
service; or
(B) not more than 20 miles from the residence of
any residential customer if there is no location to receive
payments in the county; and
(2) have an office in a county of this state or in the
immediate area in which its property or some part of its property is
located in which it shall keep all books, accounts, records, and
memoranda required by the commission to be kept in this state.
(b) The commission by rule may provide for waiving the
requirements of Subsection (a)(1) for a utility for which meeting
those requirements would cause a rate increase or otherwise harm or
inconvenience customers. The rules must provide for an additional
14 days to be given for a customer to pay before a utility that is
granted a waiver may disconnect service for late payment.
(c) Books, accounts, records, or memoranda required by the
regulatory authority to be kept in the state may not be removed from
the state, except on conditions prescribed by the commission.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1989, 71st Leg., ch. 567, § 13, eff. Sept.
1, 1989; Acts 2001, 77th Leg., ch. 966, § 10.01, eff. Sept. 1,
2001.
§ 13.138. COMMUNICATIONS BY UTILITIES WITH REGULATORY
AUTHORITY; REGULATIONS AND RECORDS. The regulatory authority may
prescribe regulations governing communications by utilities and
their affiliates and their representatives with the regulatory
authority or any member or employee of the regulatory authority.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1989, 71st Leg., ch. 567, § 14, eff. Sept.
1, 1989.
§ 13.139. STANDARDS OF SERVICE. (a) Every retail
public utility that possesses or is required to possess a
certificate of public convenience and necessity and every district
and affected county that furnishes retail water or sewer utility
service, shall furnish the service, instrumentalities, and
facilities as are safe, adequate, efficient, and reasonable.
(b) The governing body of a municipality, as the regulatory
authority for public utilities operating within its corporate
limits, and the commission as the regulatory authority for public
utilities operating outside the corporate limits of any
municipality, after reasonable notice and hearing on its own
motion, may:
(1) ascertain and fix just and reasonable standards,
classifications, regulations, service rules, minimum service
standards or practices to be observed and followed with respect to
the service to be furnished;
(2) ascertain and fix adequate and reasonable
standards for the measurement of the quantity, quality, pressure,
or other condition pertaining to the supply of the service;
(3) prescribe reasonable regulations for the
examination and testing of the service and for the measurement of
service; and
(4) establish or approve reasonable rules,
regulations, specifications, and standards to secure the accuracy
of all meters, instruments, and equipment used for the measurement
of any utility service.
(c) Any standards, classifications, regulations, or
practices observed or followed by any utility may be filed by it
with the regulatory authority and shall continue in force until
amended by the utility or until changed by the regulatory authority
in accordance with this section.
(d) Not later than the 90th day after the date on which a
retail public utility that has a certificate of public convenience
and necessity reaches 85 percent of its capacity, as compared to the
commission's minimum capacity requirements for a public drinking
water system, the retail public utility shall submit to the
executive director a planning report that includes details on how
the retail public utility will provide the expected service to the
remaining areas within the boundaries of its certificated area.
The executive director may waive the reporting requirement if the
executive director finds that the projected growth of the area will
not require the utility to exceed its capacity. The commission by
rule may require the submission of revised reports at specified
intervals.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1989, 71st Leg., ch. 567, § 15, eff. Sept.
1, 1989; Acts 1991, 72nd Leg., ch. 678, § 4, eff. Sept. 1, 1991;
Acts 1995, 74th Leg., ch. 76, § 11.285, eff. Sept. 1, 1995; Acts
1995, 74th Leg., ch. 400, § 3, eff. Sept. 1, 1995; Acts 1995,
74th Leg., ch. 979, § 11, eff. June 16, 1995.
§ 13.140. EXAMINATION AND TEST OF EQUIPMENT. (a) The
regulatory authority may examine and test any meter, instrument, or
equipment used for the measurement of service of any utility and may
enter any premises occupied by any utility for the purpose of making
the examinations and tests and exercising any power provided for in
this chapter and may set up and use on those premises any apparatus
and appliances necessary for those purposes. The utility may be
represented at the making of the examinations, tests, and
inspections.
(b) The utility and its officers and employees shall
facilitate the examinations, tests, and inspections by giving every
reasonable aid to the regulatory authority and any person or
persons designated by the regulatory authority for those duties.
(c) Any consumer or user may have a meter or measuring
device tested by the utility once without charge after a reasonable
period to be fixed by the regulatory authority by rule and at
shorter intervals on payment of reasonable fees fixed by the
regulatory authority. The regulatory authority shall declare and
establish reasonable fees to be paid for other examining and
testing of those meters and other measuring devices on the request
of the consumer.
(d) If the test is requested to be made within the period of
presumed accuracy as fixed by the regulatory authority since the
last test of the same meter or other measuring device, the fee to be
paid by the consumer or user at the time of his request shall be
refunded to the consumer or user if the meter or measuring device is
found unreasonably defective or incorrect to the substantial
disadvantage of the consumer or user. If the consumer's request is
made at a time beyond the period of presumed accuracy fixed by the
regulatory authority since the last test of the same meter or
measuring device, the utility shall make the test without charge to
the consumer or user.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985.
§ 13.141. BILLING FOR SERVICE TO STATE. A utility,
utility owned by an affected county, or municipally owned utility
may not bill or otherwise require the state or a state agency or
institution to pay for service before the service is rendered.
Added by Acts 1993, 73rd Leg., ch. 660, § 7, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 979, § 12, eff. June 16,
1995.
§ 13.142. TIME OF PAYMENT OF UTILITY BILLS BY
STATE. (a) In this section, "utility" includes a municipally
owned utility.
(b) The commission shall adopt rules concerning payment of
utility bills that are consistent with Chapter 2251, Government
Code.
(c) This Act does not prohibit a utility from entering into
an agreement with the state or a state agency to establish a
levelized or average monthly service billing plan. The agreement
must require reconciliation of the levelized or equalized bills
quarterly.
Added by Acts 1993, 73rd Leg., ch. 660, § 7, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 76, § 5.95(7), eff. Sept. 1,
1995.
§ 13.143. VOLUNTARY CONTRIBUTIONS. (a) A utility may
implement as part of its billing process a program under which the
utility collects from its customers a voluntary contribution,
including a voluntary membership or subscription fee, on behalf of
a volunteer fire department or an emergency medical service.
(b) A utility that collects contributions under this
section shall provide each customer at the time that the customer
first becomes a customer, and at least annually thereafter, a
written statement:
(1) describing the procedure by which the customer may
make a contribution with the customer's bill payment;
(2) designating the volunteer fire department or
emergency medical service to which the utility will deliver the
contribution;
(3) informing the customer that a contribution is
voluntary; and
(4) describing the deductibility status of the
contribution under federal income tax law.
(c) A billing by the utility that includes a voluntary
contribution under this section must clearly state that the
contribution is voluntary and that it may be deducted from the
billed amount.
(d) The utility shall promptly deliver contributions that
it collects under this section to the designated volunteer fire
department or emergency medical service, except that the utility
may keep from the contributions an amount equal to the lesser of:
(1) the utility's expenses in administering the
contribution program; or
(2) five percent of the amount collected as
contributions.
(e) Amounts collected under this section are not rates and
are not subject to regulatory assessments, late payment penalties,
or other utility-related fees and are not required to be shown in
tariffs filed with the regulatory authority.
Added by Acts 1997, 75th Leg., ch. 409, § 1, eff. May 28, 1997.
§ 13.144. NOTICE OF WHOLESALE WATER SUPPLY CONTRACT. A
district or authority created under Section 52, Article III, or
Section 59, Article XVI, Texas Constitution, a retail public
utility, a wholesale water service, or other person providing a
retail public utility with a wholesale water supply shall provide
the commission with a certified copy of any wholesale water supply
contract with a retail public utility within 30 days after the date
of the execution of the contract. The submission must include the
amount of water being supplied, term of the contract, consideration
being given for the water, purpose of use, location of use, source
of supply, point of delivery, limitations on the reuse of water, a
disclosure of any affiliated interest between the parties to the
contract, and any other condition or agreement relating to the
contract.
Added by Acts 1997, 75th Leg., ch. 1010, § 5.13, eff. Sept. 1,
1997. Renumbered from § 13.143 by Acts 1999, 76th Leg., ch. 62,
§ 19.01(110), eff. Sept. 1, 1999. Amended by Acts 2001, 77th
Leg., ch. 966, § 10.02, eff. Sept. 1, 2001.
§ 13.145. MULTIPLE SYSTEMS CONSOLIDATED UNDER
TARIFF. A utility may consolidate more than one system under a
single tariff only if:
(1) the systems under the tariff are substantially
similar in terms of facilities, quality of service, and cost of
service; and
(2) the tariff provides for rates that promote water
conservation for single-family residences and landscape
irrigation.
Added by Acts 2001, 77th Leg., ch. 966, § 10.03, eff. Sept. 1,
2001.
SUBCHAPTER F. PROCEEDINGS BEFORE REGULATORY AUTHORITY
§ 13.181. POWER TO ENSURE COMPLIANCE; RATE
REGULATION. (a) Except for the provisions of Section 13.192,
this subchapter shall apply only to a utility and shall not be
applied to municipalities, counties, districts, or water supply or
sewer service corporations.
(b) Subject to this chapter, the commission has all
authority and power of the state to ensure compliance with the
obligations of utilities under this chapter. For this purpose the
regulatory authority may fix and regulate rates of utilities,
including rules and regulations for determining the classification
of customers and services and for determining the applicability of
rates. A rule or order of the regulatory authority may not conflict
with the rulings of any federal regulatory body. The commission may
adopt rules which authorize a utility which is permitted under
Section 13.242(c) to provide service without a certificate of
public convenience and necessity to request or implement a rate
increase and operate according to rules, regulations, and standards
of service other than those otherwise required under this chapter
provided that rates are just and reasonable for customers and the
utility and that service is safe, adequate, efficient, and
reasonable.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1989, 71st Leg., ch. 567, § 16, eff. Sept.
1, 1989; Acts 1993, 73rd Leg., ch. 652, § 1, eff. Aug. 30, 1993;
Acts 1995, 74th Leg., ch. 979, § 13, eff. June 16, 1995; Acts
1997, 75th Leg., ch. 1010, § 6.03, eff. Sept. 1, 1997.
§ 13.182. JUST AND REASONABLE RATES. (a) The
regulatory authority shall ensure that every rate made, demanded,
or received by any utility or by any two or more utilities jointly
shall be just and reasonable.
(b) Rates shall not be unreasonably preferential,
prejudicial, or discriminatory but shall be sufficient, equitable,
and consistent in application to each class of consumers.
(c) For ratemaking purposes, the commission may treat two or
more municipalities served by a utility as a single class wherever
the commission considers that treatment to be appropriate.
(d) The commission by rule shall establish a preference that
rates under a consolidated tariff be consolidated by region. The
regions under consolidated tariffs must be determined on a
case-by-case basis.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 2001, 77th Leg., ch. 966, § 10.04, eff.
Sept. 1, 2001.
§ 13.183. FIXING OVERALL REVENUES. (a) In fixing the
rates for water and sewer services, the regulatory authority shall
fix its overall revenues at a level that will:
(1) permit the utility a reasonable opportunity to
earn a reasonable return on its invested capital used and useful in
rendering service to the public over and above its reasonable and
necessary operating expenses; and
(2) preserve the financial integrity of the utility.
(b) In a rate proceeding, the regulatory authority may
authorize collection of additional revenues from the customers to
provide funds for capital improvements necessary to provide
facilities capable of providing adequate and continuous utility
service if an accurate accounting of the collection and use of those
funds is provided to the regulatory authority. A facility
constructed with surcharge funds is considered customer
contributed capital or contributions in aid of construction and may
not be included in invested capital, and depreciation expense is
not allowed.
(c) To ensure that retail customers receive a higher
quality, more affordable, or more reliable water or sewer service,
to encourage regionalization, or to maintain financially stable and
technically sound utilities, the regulatory authority, by rule or
ordinance, as appropriate, may adopt specific alternative
ratemaking methodologies for water or sewer rates based on factors
other than rate of return and those specified in Section 13.185.
Overall revenues determined according to an alternative ratemaking
methodology adopted under this section must provide revenues to the
utility that satisfy the requirements of Subsection (a). The
regulatory authority may not approve rates under an alternative
ratemaking methodology unless the regulatory authority adopts the
methodology before the date the rate application was
administratively complete.
(d) A regulatory authority other than the commission may not
approve an acquisition adjustment for a system purchased before the
effective date of an ordinance authorizing acquisition
adjustments.
(e) In determining to use an alternative ratemaking
methodology, the regulatory authority shall assure that rates,
operations, and services are just and reasonable to the consumers
and to the utilities.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 9, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 17, eff. Sept. 1, 1989;
Acts 1997, 75th Leg., ch. 1010, § 6.04, eff. Sept. 1, 1997; Acts
2001, 77th Leg., ch. 966, § 10.05, eff. Sept. 1, 2001.
§ 13.184. FAIR RETURN; BURDEN OF PROOF. (a) Unless
the commission establishes alternate rate methodologies in
accordance with Section 13.183(c), the commission may not prescribe
any rate that will yield more than a fair return on the invested
capital used and useful in rendering service to the public. The
governing body of a municipality exercising its original
jurisdiction over rates and services may use alternate ratemaking
methodologies established by ordinance or by commission rule in
accordance with Section 13.183(c). Unless the municipal regulatory
authority uses alternate ratemaking methodologies established by
ordinance or by commission rule in accordance with Section
13.183(c), it may not prescribe any rate that will yield more than a
fair return on the invested capital used and useful in rendering
service to the public.
(b) In fixing a reasonable return on invested capital, the
regulatory authority shall consider, in addition to other
applicable factors, the efforts and achievements of the utility in
the conservation of resources, the quality of the utility's
services, the efficiency of the utility's operations, and the
quality of the utility's management.
(c) In any proceeding involving any proposed change of
rates, the burden of proof shall be on the utility to show that the
proposed change, if proposed by the utility, or that the existing
rate, if it is proposed to reduce the rate, is just and reasonable.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1997, 75th Leg., ch. 1010, § 6.05, eff.
Sept. 1, 1997.
§ 13.185. COMPONENTS OF INVESTED CAPITAL AND NET
INCOME. (a) Unless alternate methodologies are adopted as
provided in Sections 13.183(c) and 13.184(a), the components of
invested capital and net income shall be determined according to
the rules stated in this section.
(b) Utility rates shall be based on the original cost of
property used by and useful to the utility in providing service,
including, if necessary to the financial integrity of the utility,
construction work in progress at cost as recorded on the books of
the utility. The inclusion of construction work in progress is an
exceptional form of rate relief to be granted only on the
demonstration by the utility by clear and convincing evidence that
the inclusion is in the ratepayers' best interest and is necessary
to the financial integrity of the utility. Construction work in
progress may not be included in the rate base for major projects
under construction to the extent that those projects have been
inefficiently or imprudently planned or managed. Original cost is
the actual money cost or the actual money value of any consideration
paid, other than money, of the property at the time it shall have
been dedicated to public use, whether by the utility that is the
present owner or by a predecessor, less depreciation. Utility
property funded by explicit customer agreements or customer
contributions in aid of construction such as surcharges may not be
included in invested capital.
(c) Cost of facilities, revenues, expenses, taxes, and
reserves shall be separated or allocated as prescribed by the
regulatory authority.
(d) Net income is the total revenues of the utility less all
reasonable and necessary expenses as determined by the regulatory
authority. The regulatory authority shall determine expenses and
revenues in a manner consistent with Subsections (e) through (h) of
this section.
(e) Payment to affiliated interests for costs of any
services, or any property, right or thing, or for interest expense
may not be allowed either as capital cost or as expense except to
the extent that the regulatory authority finds that payment to be
reasonable and necessary. A finding of reasonableness and
necessity must include specific statements setting forth the cost
to the affiliate of each item or class of items in question and a
finding that the price to the utility is no higher than prices
charged by the supplying affiliate to its other affiliates or
divisions for the same item or items, or to unaffiliated persons or
corporations.
(f) If the utility is a member of an affiliated group that is
eligible to file a consolidated income tax return and if it is
advantageous to the utility to do so, 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 the
consolidated return, unless it is shown to the satisfaction of the
regulatory authority that it was reasonable to choose not to
consolidate returns. The amounts of income taxes saved by a
consolidated group of which a utility is a member due to the
elimination in the consolidated return of the intercompany profit
on purchases by the utility from an affiliate shall be applied to
reduce the cost of those purchases. The investment tax credit
allowed against federal income taxes to the extent retained by the
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 as allowed by the Internal Revenue Code.
(g) The regulatory authority may promulgate reasonable
rules and regulations with respect to the allowance or disallowance
of certain expenses for ratemaking purposes.
(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
Section 13.187 of this chapter; 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.
(i) Water and sewer utility property in service that was
acquired from an affiliate or developer before September 1, 1976,
and that is included by the utility in its rate base shall be
included in all ratemaking formulas at the installed cost of the
property rather than the price set between the entities. Unless the
funds for this property are provided by explicit customer
agreements, the property is considered invested capital and not
contributions in aid of construction or customer-contributed
capital.
(j) Depreciation expense included in the cost of service
includes depreciation on all currently used, depreciable utility
property owned by the utility except for property provided by
explicit customer agreements or funded by customer contributions in
aid of construction. Depreciation on all currently used and useful
developer or governmental entity contributed property shall be
allowed in the cost of service.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 10, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 18, eff. Sept. 1, 1989;
Acts 1997, 75th Leg., ch. 1010, § 6.06, eff. Sept. 1, 1997.
§ 13.186. UNREASONABLE OR VIOLATIVE EXISTING RATES;
INVESTIGATING COSTS OF OBTAINING SERVICE FROM ANOTHER
SOURCE. (a) If the regulatory authority, after reasonable notice
and hearing, on its own motion or on complaint by any affected
person, finds that the existing rates of any utility for any service
are unreasonable or in any way in violation of any law, the
regulatory authority shall determine the just and reasonable rates,
including maximum or minimum rates, to be observed and in force, and
shall fix the same by order to be served on the utility. Those rates
constitute the legal rates of the utility until changed as provided
in this chapter.
(b) If a utility does not itself produce that which it
distributes, transmits, or furnishes to the public for
compensation, but obtains it from another source, the regulatory
authority may investigate the cost of that production in any
investigation of the reasonableness of the rates of the utility.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1989, 71st Leg., ch. 567, § 19, eff. Sept.
1, 1989.
§ 13.1861. RATES CHARGED STATE. The rates that a
utility or municipally owned utility charges the state or a state
agency or institution may not include an amount representing a
gross receipts assessment, regulatory assessment, or other similar
expense. A regulatory authority may adopt reasonable rules
specifying similar expenses to be excluded.
Added by Acts 1993, 73rd Leg., ch. 660, § 8, eff. Sept. 1, 1993.
§ 13.187. STATEMENT OF INTENT TO CHANGE RATES; HEARING;
DETERMINATION OF RATE LEVEL. (a) A utility may not make changes
in its rates except by delivering a statement of intent to each
ratepayer and with the regulatory authority having original
jurisdiction at least 60 days before the effective date of the
proposed change. The effective date of the new rates must be the
first day of a billing period, and the new rates may not apply to
service received before the effective date of the new rates. The
statement of intent must include:
(1) the information required by the regulatory
authority's rules;
(2) a billing comparison regarding the existing water
rate and the new water rate computed for the use of:
(A) 10,000 gallons of water; and
(B) 30,000 gallons of water; and
(3) a billing comparison regarding the existing sewer
rate and the new sewer rate computed for the use of 10,000 gallons,
unless the utility proposes a flat rate for sewer services.
(b) A copy of the statement of intent shall be mailed or
delivered to the appropriate offices of each affected municipality,
and to any other affected persons as required by the regulatory
authority's rules.
(c) When the statement of intent is delivered, the utility
shall file with the regulatory authority an application to change
rates. The application must include information the regulatory
authority requires by rule. If the utility fails to provide within
a reasonable time after the application is filed the necessary
documentation or other evidence that supports the costs and
expenses that are shown in the application, the regulatory
authority may disallow the nonsupported expenses.
(d) If the application or the statement of intent is not
substantially complete or does not comply with the regulatory
authority's rules, it may be rejected and the effective date of the
rate change may be suspended until a properly completed application
is accepted by the regulatory authority and a proper statement of
intent is provided. The commission may also suspend the effective
date of any rate change if the utility does not have a certificate
of public convenience and necessity or a completed application for
a certificate or to transfer a certificate pending before the
commission or if the utility is delinquent in paying the assessment
and any applicable penalties or interest required by Section
5.701(n) of this code.
(e) If, before the 91st day after the effective date of the
rate change, the regulatory authority receives a complaint from any
affected municipality, or from the lesser of 1,000 or 10 percent of
the ratepayers of the utility over whose rates the regulatory
authority has original jurisdiction, the regulatory authority
shall set the matter for hearing.
(f) The regulatory authority may set the matter for hearing
on its own motion at any time within 120 days after the effective
date of the rate change. If more than half of the ratepayers of the
utility receive service in a county with a population of more than
2.5 million, the hearing must be held at a location in that county.
(g) The hearing may be informal.
(h) If, after hearing, the regulatory authority finds the
rates currently being charged or those proposed to be charged are
unreasonable or in violation of law, the regulatory authority shall
determine the rates to be charged by the utility and shall fix the
rates by order served on the utility.
(i) The regulatory authority, pending final action in a rate
proceeding, may order the utility to deposit all or part of the rate
increase received or to be received into an escrow account with a
financial institution approved by the regulatory authority. Unless
otherwise agreed to by the parties to the rate proceeding, the
utility shall refund or credit against future bills all sums
collected during the pendency of the rate proceeding in excess of
the rate finally ordered plus interest as determined by the
regulatory authority.
(j) For good cause shown, the regulatory authority may
authorize the release of funds to the utility from the escrow
account during the pendency of the proceeding.
(k) If the regulatory authority receives at least the number
of complaints from ratepayers required for the regulatory authority
to set a hearing under Subsection (e), the regulatory authority
may, pending the hearing and a decision, suspend the date the rate
change would otherwise be effective. The proposed rate may not be
suspended for longer than:
(1) 90 days by a local regulatory authority; or
(2) 150 days by the commission.
(l) At any time during the pendency of the rate proceeding
the regulatory authority may fix interim rates to remain in effect
until a final determination is made on the proposed rate.
(m) If the regulatory authority sets a final rate that is
higher than the interim rate, the utility shall be allowed to
collect the difference between the interim rate and final rate
unless otherwise agreed to by the parties to the rate proceeding.
(n) For good cause shown, the regulatory authority may at
any time during the proceeding require the utility to refund money
collected under a proposed rate before the rate was suspended or an
interim rate was established to the extent the proposed rate
exceeds the existing rate or the interim rate.
(o) If a regulatory authority other than the commission
establishes interim rates or an escrow account, the regulatory
authority must make a final determination on the rates not later
than the first anniversary of the effective date of the interim
rates or escrowed rates or the rates are automatically approved as
requested by the utility.
(p) Except to implement a rate adjustment provision
approved by the regulatory authority by rule or ordinance, as
applicable, or to adjust the rates of a newly acquired utility
system, a utility or two or more utilities under common control and
ownership may not file a statement of intent to increase its rates
more than once in a 12-month period, unless the regulatory
authority determines that a financial hardship exists. If the
regulatory authority requires the utility to deliver a corrected
statement of intent, the utility is not considered to be in
violation of the 12-month filing requirement.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 11, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 20, eff. Sept. 1, 1989;
Acts 1991, 72nd Leg., ch. 678, § 5, eff. Sept. 1, 1991; Acts
1991, 72nd Leg., 1st C.S., ch. 3, § 4.03, eff. Sept. 1, 1991;
Acts 1993, 73rd Leg., ch. 402, § 1, eff. Aug. 30, 1993; Acts
1995, 74th Leg., ch. 400, § 4, eff. Sept. 1, 1995; Acts 2001,
77th Leg., ch. 965, § 3.10, eff. Sept. 1, 2001; Acts 2001, 77th
Leg., ch. 966, § 10.06, eff. Sept. 1, 2001.
§ 13.189. UNREASONABLE PREFERENCE OR PREJUDICE AS TO
RATES OR SERVICES. (a) A water and sewer utility as to rates or
services may not make or grant any unreasonable preference or
advantage to any corporation or person within any classification or
subject any corporation or person within any classification to any
unreasonable prejudice or disadvantage.
(b) A utility may not establish and maintain any
unreasonable differences as to rates of service either as between
localities or as between classes of service.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985.
§ 13.190. EQUALITY OF RATES AND SERVICES. (a) A water
and sewer utility may not directly or indirectly by any device or in
any manner charge, demand, collect, or receive from any person a
greater or lesser compensation for any service rendered or to be
rendered by the utility than that prescribed in the schedule of
rates of the utility applicable to that service when filed in the
manner provided in this chapter, and a person may not knowingly
receive or accept any service from a utility for a compensation
greater or less than that prescribed in the schedules, provided
that all rates being charged and collected by a utility on the
effective date of this chapter may be continued until schedules are
filed.
(b) This chapter does not prevent a cooperative corporation
from returning to its members the whole or any part of the net
earnings resulting from its operations in proportion to their
purchases from or through the corporation.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985.
§ 13.191. DISCRIMINATION; RESTRICTION ON
COMPETITION. A water and sewer utility may not discriminate
against any person or corporation that sells or leases equipment or
performs services in competition with the utility, and a utility
may not engage in any other practice that tends to restrict or
impair that competition.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985.
§ 13.192. PAYMENTS IN LIEU OF TAXES. Payments made in
lieu of taxes by a water and sewer utility to the municipality by
which it is owned may not be considered an expense of operation for
the purpose of determining, fixing, or regulating the rates to be
charged for the provision of utility service to a school district or
hospital district. No rates received by a utility from a school
district or hospital district may be used to make or to cover the
cost of making payments in lieu of taxes to the municipality by
which the utility is owned.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985.
SUBCHAPTER G. CERTIFICATES OF CONVENIENCE AND NECESSITY
§ 13.241. GRANTING CERTIFICATES. (a) In determining
whether to grant a certificate of public convenience and necessity,
the commission shall ensure that the applicant possesses the
financial, managerial, and technical capability to provide
continuous and adequate service.
(b) For water utility service, the commission shall ensure
that the applicant:
(1) is capable of providing drinking water that meets
the requirements of Chapter 341, Health and Safety Code, and
requirements of this code; and
(2) has access to an adequate supply of water.
(c) For sewer utility service, the commission shall ensure
that the applicant is capable of meeting the commission's design
criteria for sewer treatment plants and the requirements of this
code.
(d) Before the commission grants a new certificate of
convenience and necessity for an area which would require
construction of a physically separate water or sewer system, the
applicant must demonstrate that regionalization or consolidation
with another retail public utility is not economically feasible.
(e) The commission by rule shall develop a standardized
method for determining under Section 13.246(f) which of two or more
retail public utilities or water supply or sewer service
corporations that apply for a certificate of public convenience and
necessity to provide water or sewer utility service to an
uncertificated area located in an economically distressed area is
more capable financially, managerially, and technically of
providing continuous and adequate service. In this subsection,
"economically distressed area" has the meaning assigned by Section
15.001.
Added by Acts 1997, 75th Leg., ch. 1010, § 6.07, eff. Sept. 1,
1997. Amended by Acts 1999, 76th Leg., ch. 404, § 30, eff. Sept.
1, 1999.
§ 13.242. CERTIFICATE REQUIRED. (a) Unless otherwise
specified, a utility, a utility operated by an affected county, or a
water supply or sewer service corporation may not in any way render
retail water or sewer utility service directly or indirectly to the
public without first having obtained from the commission a
certificate that the present or future public convenience and
necessity will require that installation, operation, or extension,
and except as otherwise provided by this subchapter, a retail
public utility may not furnish, make available, render, or extend
retail water or sewer utility service to any area to which retail
water or sewer utility service is being lawfully furnished by
another retail public utility without first having obtained a
certificate of public convenience and necessity that includes the
area in which the consuming facility is located.
(b) A person that is not a retail public utility or a utility
or water supply corporation that is operating under provisions
pursuant to Subsection (c) may not construct facilities to provide
water or sewer service to more than one service connection not on
the property owned by the person and that are within the
certificated area of a retail public utility without first
obtaining written consent from the retail public utility. A person
that violates this section or the reasonable and legal terms and
conditions of any written consent is subject to the administrative
penalties described by Section 13.4151 of this code.
(c) The commission may by rule allow a municipality or
utility or water supply corporation to render retail water service
without a certificate of public convenience and necessity if the
municipality has given notice under Section 13.255 of this code
that it intends to provide retail water service to an area or if the
utility or water supply corporation has less than 15 potential
connections and is not within the certificated area of another
retail public utility.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 13, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 21, eff. Sept. 1, 1989;
Acts 1993, 73rd Leg., ch. 652, § 2, eff. Aug. 30, 1993; Acts
1995, 74th Leg., ch. 979, § 14, eff. June 16, 1995.
§ 13.243. EXCEPTIONS FOR EXTENSION OF SERVICE. A retail
public utility is not required to secure a certificate of public
convenience and necessity for:
(1) an extension into territory contiguous to that
already served by it, if the point of ultimate use is within
one-quarter mile of the boundary of the certificated area, and not
receiving similar service from another retail public utility and
not within the area of public convenience and necessity of another
retail public utility; or
(2) an extension within or to territory already served
by it or to be served by it under a certificate of public
convenience and necessity.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 14, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 22, eff. Sept. 1, 1989.
§ 13.244. APPLICATION; MAPS; EVIDENCE AND
CONSENT. (a) A public utility or water supply or sewer service
corporation shall submit to the commission an application to obtain
a certificate of public convenience and necessity or an amendment
of a certificate.
(b) On request by the commission, each public utility and
water supply or sewer service corporation shall file with the
commission a map or maps showing all its facilities and
illustrating separately facilities for production, transmission,
and distribution of its services, and each certificated retail
public utility shall file with the commission a map or maps showing
any facilities, customers, or area currently being served outside
its certificated areas.
(c) Each applicant for a certificate shall file with the
commission evidence required by the commission to show that the
applicant has received the required consent, franchise, or permit
of the proper municipality or other public authority.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1989, 71st Leg., ch. 567, § 23, eff. Sept.
1, 1989; Acts 1995, 74th Leg., ch. 76, § 11.286, eff. Sept. 1,
1995.
§ 13.246. NOTICE AND HEARING; ISSUANCE OR REFUSAL;
FACTORS CONSIDERED. (a) If an application for a certificate of
public convenience and necessity is filed, the commission shall
cause notice of the application to be given to affected parties and,
if requested, shall fix a time and place for a hearing and give
notice of the hearing. Any person affected by the application may
intervene at the hearing.
(b) The commission may grant applications and issue
certificates only if the commission finds that a certificate is
necessary for the service, accommodation, convenience, or safety of
the public. The commission may issue a certificate as requested, or
refuse to issue it, or issue it for the construction of only a
portion of the contemplated system or facility or extension, or for
the partial exercise only of the right or privilege and may impose
special conditions necessary to ensure that continuous and adequate
service is provided.
(c) Certificates of convenience and necessity shall be
granted on a nondiscriminatory basis after consideration by the
commission of the adequacy of service currently provided to the
requested area, the need for additional service in the requested
area, the effect of the granting of a certificate on the recipient
of the certificate and on any retail public utility of the same kind
already serving the proximate area, the ability of the applicant to
provide adequate service, the feasibility of obtaining service from
an adjacent retail public utility, the financial stability of the
applicant, including, if applicable, the adequacy of the
applicant's debt-equity ratio, environmental integrity, and the
probable improvement of service or lowering of cost to consumers in
that area resulting from the granting of the certificate.
(d) The commission may require an applicant utility to
provide a bond or other financial assurance in a form and amount
specified by the commission to ensure that continuous and adequate
utility service is provided.
(e) Where applicable, in addition to the other factors in
this section the commission shall consider the efforts of the
applicant:
(1) to extend service to any economically distressed
areas located within the service areas certificated to the
applicant; and
(2) to enforce the rules adopted under Section 16.343.
(f) If two or more retail public utilities or water supply
or sewer service corporations apply for a certificate of public
convenience and necessity to provide water or sewer utility service
to an uncertificated area located in an economically distressed
area and otherwise meet the requirements for obtaining a new
certificate, the commission shall grant the certificate to the
retail public utility or water supply or sewer service corporation
that is more capable financially, managerially, and technically of
providing continuous and adequate service.
(g) In this section, "economically distressed area" has the
meaning assigned by Section 15.001.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 15, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 24, eff. Sept. 1, 1989;
Acts 1991, 72nd Leg., ch. 678, § 6, eff. Sept. 1, 1991; Acts
1997, 75th Leg., ch. 1010, § 6.08, eff. Sept. 1, 1997; Acts
1999, 76th Leg., ch. 404, § 31, eff. Sept. 1, 1999.
§ 13.247. AREA INCLUDED WITHIN CITY, TOWN, OR
VILLAGE. (a) If an area has been or is included within the
boundaries of a city as the result of annexation, incorporation, or
otherwise, all retail public utilities certified or entitled to
certification under this chapter to provide service or operate
facilities in that area before the inclusion may continue and
extend service in its area of public convenience and necessity
within the annexed or incorporated area pursuant to the rights
granted by its certificate and this chapter. Except as provided by
Section 13.255 of this code, a municipally owned or operated
utility may not provide retail water and sewer utility service
within the area certificated to another retail public utility
without first having obtained from the commission a certificate of
public convenience and necessity that includes the areas to be
served.
(b) Notwithstanding any other provision of law, a retail
public utility may continue and extend service within its area of
public convenience and necessity and utilize the roads, streets,
highways, alleys, and public property to furnish retail utility
service, subject to the authority of the governing body of a
municipality to require any retail public utility, at its own
expense, to relocate its facilities to permit the widening or
straightening of streets, by giving to the retail public utility 30
days' notice and specifying the new location for the facilities
along the right-of-way of the street or streets.
(c) This section may not be construed as limiting the power
of cities to incorporate or extend their boundaries by annexation,
or as prohibiting any city from levying taxes and other special
charges for the use of the streets as are authorized by Section
182.025, Tax Code.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1989, 71st Leg., ch. 567, § 25, eff. Sept.
1, 1989.
§ 13.248. CONTRACTS VALID AND ENFORCEABLE. Contracts
between retail public utilities designating areas to be served and
customers to be served by those retail public utilities, when
approved by the commission after public notice and hearing, are
valid and enforceable and are incorporated into the appropriate
areas of public convenience and necessity.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1989, 71st Leg., ch. 567, § 26, eff. Sept.
1, 1989.
§ 13.250. CONTINUOUS AND ADEQUATE SERVICE;
DISCONTINUANCE, REDUCTION, OR IMPAIRMENT OF SERVICE. (a) Except
as provided by this section or Section 13.2501 of this code, any
retail public utility that possesses or is required to possess a
certificate of public convenience and necessity shall serve every
consumer within its certified area and shall render continuous and
adequate service within the area or areas.
(b) Unless the commission issues a certificate that neither
the present nor future convenience and necessity will be adversely
affected, the holder of a certificate or a person who possesses
facilities used to provide utility service shall not discontinue,
reduce, or impair service to a certified service area or part of a
certified service area except for:
(1) nonpayment of charges for services provided by the
certificate holder or a person who possesses facilities used to
provide utility service;
(2) nonpayment of charges for sewer service provided
by another retail public utility under an agreement between the
retail public utility and the certificate holder or a person who
possesses facilities used to provide utility service or under a
commission-ordered arrangement between the two service providers;
(3) nonuse; or
(4) other similar reasons in the usual course of
business.
(c) Any discontinuance, reduction, or impairment of
service, whether with or without approval of the commission, shall
be in conformity with and subject to conditions, restrictions, and
limitations that the commission prescribes.
(d) Except as provided by this subsection, a retail public
utility that has not been granted a certificate of public
convenience and necessity may not discontinue, reduce, or impair
retail water or sewer service to any ratepayer without approval of
the regulatory authority. Except as provided by this subsection, a
utility or water supply corporation that is allowed to operate
without a certificate of public convenience and necessity under
Section 13.242(c) may not discontinue, reduce, or impair retail
water or sewer service to any ratepayer without the approval of the
regulatory authority. Subject to rules of the regulatory
authority, a retail public utility, utility, or water supply
corporation described in this subsection may discontinue, reduce,
or impair retail water or sewer service for:
(1) nonpayment of charges;
(2) nonuse; or
(3) other similar reasons in the usual course of
business.
(e) Not later than the 48th hour after the hour in which a
utility files a bankruptcy petition, the utility shall report this
fact to the commission in writing.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 16, eff. Sept.
1, 1987; Acts 1987, 70th Leg., ch. 1102, § 5, eff. Sept. 1, 1987;
Acts 1989, 71st Leg., ch. 567, § 27, eff. Sept. 1, 1989; Acts
1991, 72nd Leg., ch. 678, § 7, eff. Sept. 1, 1991; Acts 1993,
73rd Leg., ch. 652, § 3, eff. Aug. 30, 1993; Acts 1995, 74th
Leg., ch. 400, § 5, eff. Sept. 1, 1995.
§ 13.2501. CONDITIONS REQUIRING REFUSAL OF
SERVICE. The holder of a certificate of public convenience and
necessity shall refuse to serve a customer within its certified
area if the holder of the certificate is prohibited from providing
the service under Section 212.012 or 232.0047, Local Government
Code.
Added by Acts 1987, 70th Leg., ch. 1102, § 6, eff. Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 1, § 46(f), eff. Aug. 28,
1989; Acts 1989, 71st Leg., ch. 624, § 3.13, eff. Sept. 1, 1989.
§ 13.2502. SERVICE EXTENSIONS BY WATER SUPPLY AND SEWER
SERVICE CORPORATION OR SPECIAL UTILITY
DISTRICT. (a) Notwithstanding Section 13.250, a water supply or
sewer service corporation or a special utility district organized
under Chapter 65 is not required to extend retail water or sewer
utility service within the certificated area of the corporation or
special utility district to a service applicant in a subdivision if
the corporation or special utility district documents that:
(1) the developer of the subdivision has failed to
comply with the subdivision service extension policy of the
corporation or special utility district as set forth in the tariff
of the corporation or the policies of the special utility district;
and
(2) the service applicant purchased the property after
the corporation or special utility district gave notice as provided
by this section of the rules of the corporation or special utility
district applicable to service to subdivisions from the corporation
or special utility district.
(b) Publication of notice in a newspaper of general
circulation in each county in which the corporation or special
utility district is certificated for utility service of the
requirement to comply with the subdivision service extension policy
constitutes notice under this section. The notice must be
published once a week for two consecutive weeks on a biennial basis
and must contain information describing the subdivision service
extension policy of the corporation or special utility district.
The corporation or special utility district must be able to provide
proof of publication through an affidavit of the publisher of the
newspaper that specifies each county in which the newspaper is
generally circulated.
(c) As an alternative to publication of notice as provided
by Subsection (b), a corporation or special utility district may
demonstrate by any reasonable means that a developer has been
notified for purposes of this section, including:
(1) an agreement executed by the developer;
(2) correspondence with the developer that sets forth
the subdivision service extension policy; or
(3) any other documentation that reasonably
establishes that the developer should be aware of the subdivision
service extension policy.
(d) This section does not limit or extend the jurisdiction
of the commission under Section 13.043(g).
(e) For purposes of this section:
(1) "Developer" means a person who subdivides land or
requests more than two water or sewer service connections on a
single contiguous tract of land.
(2) "Service applicant" means a person, other than a
developer, who applies for retail water or sewer utility service.
Added by Acts 1995, 74th Leg., ch. 400, § 6, eff. Sept. 1, 1995.
§ 13.251. SALE, ASSIGNMENT, OR LEASE OF
CERTIFICATE. Except as provided by Section 13.255 of this code, a
utility or a water supply or sewer service corporation may not sell,
assign, or lease a certificate of public convenience and necessity
or any right obtained under a certificate unless the commission has
determined that the purchaser, assignee, or lessee is capable of
rendering adequate and continuous service to every consumer within
the certified area, after considering the factors under Section
13.246(c) of this code. The sale, assignment, or lease shall be on
the conditions prescribed by the commission.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 17, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 28, eff. Sept. 1, 1989;
Acts 1991, 72nd Leg., ch. 678, § 8, eff. Sept. 1, 1991.
§ 13.252. INTERFERENCE WITH OTHER RETAIL PUBLIC
UTILITY. If a retail public utility in constructing or extending a
line, plant, or system interferes or attempts to interfere with the
operation of a line, plant, or system of any other retail public
utility, or furnishes, makes available, renders, or extends retail
water or sewer utility service to any portion of the service area of
another retail public utility that has been granted or is not
required to possess a certificate of public convenience and
necessity, the commission may issue an order prohibiting the
construction, extension, or provision of service or prescribing
terms and conditions for locating the line, plant, or system
affected or for the provision of the service.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 18, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 29, eff. Sept. 1, 1989.
§ 13.253. IMPROVEMENTS IN SERVICE; INTERCONNECTING
SERVICE. (a) After notice and hearing, the commission may:
(1) order any retail public utility that is required
by law to possess a certificate of public convenience and necessity
or any retail public utility that possesses a certificate of public
convenience and necessity and is located in an affected county as
defined in Section 16.341 to:
(A) provide specified improvements in its
service in a defined area if service in that area is inadequate or
is substantially inferior to service in a comparable area and it is
reasonable to require the retail public utility to provide the
improved service; or
(B) develop, implement, and follow financial,
managerial, and technical practices that are acceptable to the
commission to ensure that continuous and adequate service is
provided to any areas currently certificated to the retail public
utility if the retail public utility has not provided continuous
and adequate service to any of those areas and, for a utility, to
provide financial assurance of the utility's ability to operate the
system in accordance with applicable laws and rules, in the form of
a bond or other financial assurance in a form and amount specified
by the commission;
(2) order two or more public utilities or water supply
or sewer service corporations to establish specified facilities for
interconnecting service;
(3) order a public utility or water supply or sewer
service corporation that has not demonstrated that it can provide
continuous and adequate service from its drinking water source or
sewer treatment facility to obtain service sufficient to meet its
obligation to provide continuous and adequate service on at least a
wholesale basis from another consenting utility service provider;
or
(4) issue an emergency order, with or without a
hearing, under Section 13.041.
(b) If the commission has reason to believe that
improvements and repairs to a water or sewer service system are
necessary to enable a retail public utility to provide continuous
and adequate service in any portion of its service area and the
retail public utility has provided financial assurance under
Section 341.0355, Health and Safety Code, or under this chapter,
the commission, after providing to the retail public utility notice
and an opportunity to be heard by the commissioners at a commission
meeting, may immediately order specified improvements and repairs
to the water or sewer system, the costs of which may be paid by the
bond or other financial assurance in an amount determined by the
commission not to exceed the amount of the bond or financial
assurance. The order requiring the improvements may be an
emergency order if it is issued after the retail public utility has
had an opportunity to be heard by the commissioners at a commission
meeting. After notice and hearing, the commission may require a
retail public utility to obligate additional money to replace the
financial assurance used for the improvements.
Added by Acts 1985, 69th Leg., ch. 795, § 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, § 19, eff. Sept.
1, 1987; Acts 1989, 71st Leg., ch. 567, § 30, eff. Sept. 1, 1989;
Acts 1997, 75th Leg., ch. 1010, § 6.09, eff. Sept. 1, 1997.
§ 13.254. REVOCATION OR AMENDMENT OF
CERTIFICATE. (a) The commission at any time after notice and
hearing may revoke or amend any certificate of public convenience
and necessity with the written consent of the certificate holder or
if it finds that:
(1) the certificate holder has never provided, is no
longer providing, or has failed to provide continuous and adequate
service in the area, or part of the area, covered by the
certificate;
(2) in an affected county as defined in Section
16.341, the cost of providing service by the certificate holder is
so prohibitively expensive as to constitute denial of service,
provided that, for commercial developments or for residential
developments started after September 1, 1997, in an affected county
as defined in Section 16.341, the fact that the cost of obtaining
service from the currently certificated retail public utility makes
the development economically unfeasible does not render such cost
prohibitively expensive in the absence of other relevant factors;
(3) the certificate holder has agreed in writing to
allow another retail public utility to provide service within its
service area, except for an interim period, without amending its
certificate; or
(4) the certificate holder has failed to file a cease
and desist action pursuant to Section 13.252 within 180 days of the
date that it became aware that another retail public utility was
providing service within its service area, unless the certificate
holder demonstrates
