Water Code
CHAPTER 13. WATER RATES AND SERVICES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 1, eff. Sept. 1,
1989.
Sec. 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 76,
Acts of the 43rd Legislature, 1st Called Session, 1933 (Article
1434a, Vernon's Texas Civil Statutes) 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" has the meaning assigned by Section
232.021, Local Government Code.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Secs. 1, 2, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 2, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 678, Sec. 1, eff. Sept. 1, 1991;
Acts 1991, 72nd Leg., 1st C.S., ch. 3, Sec. 1.058, eff. Aug. 12,
1991; Acts 1995, 74th Leg., ch. 400, Sec. 1, eff. Sept. 1, 1995;
Acts 1995, 74th Leg., ch. 979, Sec. 6, eff. June 16, 1995; Acts
1997, 75th Leg., ch. 1010, Sec. 6.02, eff. Sept. 1, 1997.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(49), eff.
Sept. 1, 1995.
SUBCHAPTER B. ADMINISTRATIVE PROVISIONS
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 3, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 3, eff. Sept. 1,
1989.
Sec. 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, Sec. 4, eff. Sept. 1,
1987.
SUBCHAPTER C. JURISDICTION
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 5, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 4, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., 1st C.S., ch. 3, Sec. 4.02, eff.
Sept. 1, 1991.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 6, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 5, eff. Sept. 1,
1989.
Sec. 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, Sec. 8, eff. Sept. 1,
1989.
Sec. 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 76, Acts of the 43rd
Legislature, 1st Called Session, 1933 (Article 1434a, Vernon's
Texas Civil Statutes);
(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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 7, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 6, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 678, Sec. 2, eff. Sept. 1, 1991;
Acts 1991, 72nd Leg., ch. 852, Sec. 2, eff. June 16, 1991; Acts
1993, 73rd Leg., ch. 549, Sec. 1, eff. Sept. 1, 1993; Acts 1995,
74th Leg., ch. 400, Sec. 2, eff. Sept. 1, 1995; Acts 1995, 74th
Leg., ch. 979, Sec. 7, eff. June 16, 1995.
Sec. 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, Sec. 7, eff. Sept. 1,
1989.
Sec. 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, Sec. 6.28, eff. Sept. 1,
1997.
SUBCHAPTER D. MUNICIPALITIES AND COUNTIES
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 9, eff. Sept. 1,
1989.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 10, eff. Sept. 1,
1989; Acts 1995, 74th Leg., ch. 979, Sec. 9, eff. June 16, 1995.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1995, 74th Leg., ch. 979, Sec. 10, eff. June 16,
1995.
Sec. 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, Sec. 6.29, eff. Sept. 1,
1997.
SUBCHAPTER E. RECORDS, REPORTS, INSPECTIONS, RATES, AND SERVICES
Sec. 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, Sec. 32, eff.
Sept. 1, 1987.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 32, eff.
Sept. 1, 1987.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 11, eff. Sept. 1,
1989.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 8, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 12, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 678, Sec. 3, eff. Sept. 1, 1991.
Sec. 13.137. Office of Utility; Records; Removal From State.
(a) Every utility shall 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) 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 13, eff. Sept. 1,
1989.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 14, eff. Sept. 1,
1989.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 15, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 678, Sec. 4, eff. Sept. 1, 1991;
Acts 1995, 74th Leg., ch. 76, Sec. 11.285, eff. Sept. 1, 1995;
Acts 1995, 74th Leg., ch. 400, Sec. 3, eff. Sept. 1, 1995; Acts
1995, 74th Leg., ch. 979, Sec. 11, eff. June 16, 1995.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 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, Sec. 7, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 979, Sec. 12, eff.
June 16, 1995.
Sec. 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, Sec. 7, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(7),
eff. Sept. 1, 1995.
Sec. 13.143. Voluntary Contributions.
Text of section as added by Acts 1997, 75th Leg., ch. 409, Sec. 1
(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, Sec. 1, eff. May 28,
1997.
For text of section as added by Acts 1997, 75th Leg., ch. 1010,
Sec. 5.13, see Sec. 13.143, post.
Sec. 13.143. Notice of Wholesale Water Supply Contract.
Text of section as added by Acts 1997, 75th Leg., ch. 1010, Sec.
5.13
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, and any other condition or agreement relating to
the contract.
Added by Acts 1997, 75th Leg., ch. 1010, Sec. 5.13, eff. Sept. 1,
1997.
For text of section as added by Acts 1997, 75th Leg., ch. 409,
Sec. 1, see Sec. 13.143, ante.
SUBCHAPTER F. PROCEEDINGS BEFORE REGULATORY AUTHORITY
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 16, eff. Sept. 1,
1989; Acts 1993, 73rd Leg., ch. 652, Sec. 1, eff. Aug. 30, 1993;
Acts 1995, 74th Leg., ch. 979, Sec. 13, eff. June 16, 1995; Acts
1997, 75th Leg., ch. 1010, Sec. 6.03, eff. Sept. 1, 1997.
Sec. 13.182. Just and Reasonable Rates.
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. Rates shall not
be unreasonably preferential, prejudicial, or discriminatory but
shall be sufficient, equitable, and consistent in application to
each class of consumers. 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.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 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 or
more reliable water or sewer service, to encourage
regionalization, or to maintain financially stable and
technically sound utilities, the regulatory authority may develop
methodologies for water or sewer rates based on factors other
than rate of return and those specified in Section 13.185.
Overall revenues determined pursuant to an alternate methodology
developed under this section must provide revenues to the utility
that satisfy the requirements of Subsection (a). In determining
to use alternate ratemaking methodologies, 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 9, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 17, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 1010, Sec. 6.04, eff. Sept. 1,
1997.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1997, 75th Leg., ch. 1010, Sec. 6.05, eff. Sept.
1, 1997.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 10, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 18, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 1010, Sec. 6.06, eff. Sept. 1,
1997.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 19, eff. Sept. 1,
1989.
Sec. 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, Sec. 8, eff. Sept. 1,
1993.
Sec. 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 30
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 the information required by the
regulatory authority's rules. 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. 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. 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 5.235(n) of this code.
(b) If, within 60 days 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. 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. The hearing may be
informal. 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.
(c) 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. 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. 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. 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. If
the regulatory authority establishes interim rates or an escrow
account, the regulatory authority must make a final determination
on the rates within 335 days after the effective date of the
interim rates or escrowed rates or the rates are automatically
approved as requested by the utility.
(d) 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 11, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 20, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 678, Sec. 5, eff. Sept. 1, 1991;
Acts 1991, 72nd Leg., 1st C.S., ch. 3, Sec. 4.03, eff. Sept. 1,
1991; Acts 1993, 73rd Leg., ch. 402, Sec. 1, eff. Aug. 30, 1993;
Acts 1995, 74th Leg., ch. 400, Sec. 4, eff. Sept. 1, 1995.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
SUBCHAPTER G. CERTIFICATES OF CONVENIENCE AND NECESSITY
Sec. 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.
Added by Acts 1997, 75th Leg., ch. 1010, Sec. 6.07, eff. Sept. 1,
1997.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 13, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 21, eff. Sept. 1,
1989; Acts 1993, 73rd Leg., ch. 652, Sec. 2, eff. Aug. 30, 1993;
Acts 1995, 74th Leg., ch. 979, Sec. 14, eff. June 16, 1995.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 14, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 22, eff. Sept. 1,
1989.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 23, eff. Sept. 1,
1989; Acts 1995, 74th Leg., ch. 76, Sec. 11.286, eff. Sept. 1,
1995.
Sec. 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 to extend service to any economically distressed areas
located within the service areas certificated to the applicant.
For the purposes of this subsection, "economically distressed
area" has the meaning assigned by Section 15.001.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 15, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 24, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 678, Sec. 6, eff. Sept. 1, 1991;
Acts 1997, 75th Leg., ch. 1010, Sec. 6.08, eff. Sept. 1, 1997.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 25, eff. Sept. 1,
1989.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 26, eff. Sept. 1,
1989.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 16, eff.
Sept. 1, 1987; Acts 1987, 70th Leg., ch. 1102, Sec. 5, eff. Sept.
1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 27, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 678, Sec. 7, eff. Sept. 1, 1991;
Acts 1993, 73rd Leg., ch. 652, Sec. 3, eff. Aug. 30, 1993; Acts
1995, 74th Leg., ch. 400, Sec. 5, eff. Sept. 1, 1995.
Sec. 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, Sec. 6, eff. Sept. 1,
1987.
Amended by Acts 1989, 71st Leg., ch. 1, Sec. 46(f), eff. Aug. 28,
1989; Acts 1989, 71st Leg., ch. 624, Sec. 3.13, eff. Sept. 1,
1989.
Sec. 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, Sec. 6, eff. Sept. 1,
1995.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 17, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 28, eff. Sept. 1,
1989; Acts 1991 72nd Leg., ch. 678, Sec. 8, eff. Sept. 1, 1991.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 18, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 29, eff. Sept. 1,
1989.
Sec. 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, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 19, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 30, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 1010, Sec. 6.09, eff. Sept. 1,
1997.
Sec. 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 good cause for its failure to
file such action within the 180 days.
(b) Upon written request from the certificate holder, the
executive director may cancel the certificate of a utility or
water supply corporation authorized by rule to operate without a
certificate of public convenience and necessity under Section
13.242(c).
(c) If the certificate of any retail public utility is revoked
or amended, the commission may require one or more retail public
utilities with their consent to provide service in the area in
question. The order of the commission shall not be effective to
transfer property.
(d) A retail public utility may not in any way render retail
water or sewer service directly or indirectly to the public in an
area that has been decertified under this section without
providing compensation for any property that the commission
determines is rendered useless or valueless to the decertified
retail public utility as a result of the decertification.
(e) The determination of the monetary amount of compensation,
if any, shall be determined at the time another retail public
utility seeks to provide service in the previously decertified
area and before service is actually provided.
(f) The monetary amount shall be determined by a qualified
individual or firm serving as independent appraiser agreed upon
by the decertified retail public utility and the retail public
utility seeking to serve the area. The determination of
compensation by the independent appraiser shall be binding on the
commission. The costs of the independent appraiser shall be
borne by the retail public utility seeking to serve the area.
(g) For the purpose of implementing this section, the value of
real property shall be determined according to the standards set
forth in Chapter 21, Property Code, governing actions in eminent
domain and the value of personal property shall be determined
according to the factors in this subsection. The factors
ensuring that the compensation to a retail public utility for the
taking, damaging, or loss of personal property, including the
retail public utility's business, is just and adequate shall at a
minimum include: the impact on the existing indebtedness of the
retail public utility and its ability to repay that debt; the
value of the service facilities of the retail public utility
located within the area in question; the amount of any
expenditures for planning, design, or construction of service
facilities that are allocable to service to the area in question;
the amount of the retail public utility's contractual obligations
allocable to the area in question; any demonstrated impairment of
service or increase of cost to consumers of the retail public
utility remaining after the decertification; the impact on future
revenues and expenses of the retail public utility; necessary and
reasonable legal expenses and professional fees; factors relevant
to maintaining the current financial integrity of the retail
public utility; and other relevant factors.
(h) The commission shall determine whether payment of
compensation shall be in a lump sum or paid out over a specified
period of time. If there were no current customers in the area
decertified and no immediate loss of revenues or if there are
other valid reasons determined by the commission, installment
payments as new customers are added in the decertified area may
be an acceptable method of payment.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 20, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 31, eff. Sept. 1,
1989; Acts 1993, 73rd Leg., ch. 652, Sec. 4, eff. Aug. 30, 1993;
Acts 1997, 75th Leg., ch. 1010, Sec. 6.10, eff. Sept. 1, 1997.
Sec. 13.255. Single Certification in Incorporated or Annexed Areas.
(a) In the event that an area is incorporated or annexed by a
municipality, either before or after the effective date of this
section, the municipality and a retail public utility that
provides water or sewer service to all or part of the area
pursuant to a certificate of convenience and necessity may agree
in writing that all or part of the area may be served by a
municipally owned utility, by a franchised utility, or by the
retail public utility. In this section, the phrase "franchised
utility" shall mean a retail public utility that has been granted
a franchise by a municipality to provide water or sewer service
inside municipal boundaries. The agreement may provide for
single or dual certification of all or part of the area, for the
purchase of facilities or property, and for such other or
additional terms that the parties may agree on. If a franchised
utility is to serve the area, the franchised utility shall also
be a party to the agreement. The executed agreement shall be
filed with the commission, and the commission, on receipt of the
agreement, shall incorporate the terms of the agreement into the
respective certificates of convenience and necessity of the
parties to the agreement.
(b) If an agreement is not executed within 180 days after the
municipality, in writing, notifies the retail public utility of
its intent to provide service to the incorporated or annexed
area, and if the municipality desires and intends to provide
retail utility service to the area, the municipality, prior to
providing service to the area, shall file an application with the
commission to grant single certification to the municipally owned
water or sewer utility or to a franchised utility. If an
application for single certification is filed, the commission
shall fix a time and place for a hearing and give notice of the
hearing to the municipality and franchised utility, if any, and
notice of the application and hearing to the retail public
utility.
(c) The commission shall grant single certification to the
municipality. The commission shall also determine whether single
certification as requested by the municipality would result in
property of a retail public utility being rendered useless or
valueless to the retail public utility, and shall determine in
its order the monetary amount that is adequate and just to
compensate the retail public utility for such property. If the
municipality in its application has requested the transfer of
specified property of the retail public utility to the
municipality or to a franchised utility, the commission shall
also determine in its order the adequate and just compensation to
be paid for such property pursuant to the provisions of this
section, including an award for damages to property remaining in
the ownership of the retail public utility after single
certification. The order of the commission shall not be
effective to transfer property. A transfer of property may only
be obtained under this section by a court judgment rendered
pursuant to Subsection (d) or (e) of this section. The grant of
single certification by the commission shall go into effect on
the date the municipality or franchised utility, as the case may
be, pays adequate and just compensation pursuant to court order,
or pays an amount into the registry of the court or to the retail
public utility under Subsection (f). If the court judgment
provides that the retail public utility is not entitled to any
compensation, the grant of single certification shall go into
effect when the court judgment becomes final. The municipality
or franchised utility must provide to each customer of the retail
public utility being acquired an individual written notice within
60 days after the effective date for the transfer specified in
the court judgment. The notice must clearly advise the customer
of the identity of the new service provider, the reason for the
transfer, the rates to be charged by the new service provider,
and the effective date of those rates.
(d) In the event the final order of the commission is not
appealed within 30 days, the municipality may request the
district court of Travis County to enter a judgment consistent
with the order of the commission. In such event, the court shall
render a judgment that:
(1) transfers to the municipally owned utility or franchised
utility title to property to be transferred to the municipally
owned utility or franchised utility as delineated by the
commission's final order and property determined by the
commission to be rendered useless or valueless by the granting
of single certification; and
(2) orders payment to the retail public utility of adequate
and just compensation for the property as determined by the
commission in its final order.
(e) Any party that is aggrieved by a final order of the
commission under this section may file an appeal with the
district court of Travis County within 30 days after the order
becomes final. The hearing in such an appeal before the district
court shall be by trial de novo on all issues. After the
hearing, if the court determines that the municipally owned
utility or franchised utility is entitled to single certification
under the provisions of this section, the court shall enter a
judgment that:
(1) transfers to the municipally owned utility or franchised
utility title to property requested by the municipality to be
transferred to the municipally owned utility or franchised
utility and located within the singly certificated area and
property determined by the court or jury to be rendered useless
or valueless by the granting of single certification; and
(2) orders payment in accordance with Subsection (g) of this
section to the retail public utility of adequate and just
compensation for the property transferred and for the property
damaged as determined by the court or jury.
(f) Transfer of property shall be effective on the date the
judgment becomes final. However, after the judgment of the court
is entered, the municipality or franchised utility may take
possession of condemned property pending appeal if the
municipality or franchised utility pays the retail public utility
or pays into the registry of the court, subject to withdrawal by
the retail public utility, the amount, if any, established in the
court's judgment as just and adequate compensation. To provide
security in the event an appellate court, or the trial court in a
new trial or on remand, awards compensation in excess of the
original award, the municipality or franchised utility, as the
case may be, shall deposit in the registry of the court an
additional sum in the amount of the award, or a surety bond in
the same amount issued by a surety company qualified to do
business in this state, conditioned to secure the payment of an
award of damages in excess of the original award of the trial
court. On application by the municipality or franchised utility,
the court shall order that funds deposited in the registry of the
court be deposited in an interest-bearing account, and that
interest accruing prior to withdrawal of the award by the retail
public utility be paid to the municipality or to the franchised
utility. In the event the municipally owned utility or
franchised utility takes possession of property or provides
utility service in the singly certificated area pending appeal,
and a court in a final judgment in an appeal under this section
holds that the grant of single certification was in error, the
retail public utility is entitled to seek compensation for any
damages sustained by it in accordance with Subsection (g) of this
section.
(g) For the purpose of implementing this section, the value of
real property shall be determined according to the standards set
forth in Chapter 21, Property Code, governing actions in eminent
domain; the value of personal property shall be determined
according to the factors in this subsection. The factors
ensuring that the compensation to a retail public utility for the
taking, damaging, and/or loss of personal property, including the
retail public utility's business, is just and adequate, shall, at
a minimum, include: impact on the existing indebtedness of the
retail public utility and its ability to repay that debt, the
value of the service facilities of the retail public utility
located within the area in question, the amount of any
expenditures for planning, design, or construction of service
facilities outside the incorporated or annexed area that are
allocable to service to the area in question, the amount of the
retail public utility's contractual obligations allocable to the
area in question, any demonstrated impairment of service or
increase of cost to consumers of the retail public utility
remaining after the single certification, the impact on future
revenues and expenses of the retail public utility, necessary and
reasonable legal expenses and professional fees, factors relevant
to maintaining the current financial integrity of the retail
public utility, and other relevant factors.
(h) A municipality or a franchised utility may dismiss an
application for single certification without prejudice at any
time before a judgment becomes final provided the municipality or
the franchised public utility has not taken physical possession
of property of the retail public utility or made payment for such
right pursuant to Subsection (f) of this section.
(i) In the event that a municipality files an application for
single certification on behalf of a franchised utility, the
municipality shall be joined in such application by such
franchised utility, and the franchised utility shall make all
payments required in the court's judgment to adequately and
justly compensate the retail public utility for any taking or
damaging of property and for the transfer of property to such
franchised utility.
(j) This section shall apply only in a case where:
(1) the retail public utility that is authorized to serve in
the certificated area that is annexed or incorporated by the
municipality is a nonprofit water supply or sewer service
corporation or a special utility district under Chapter 65,
Water Code; or
(2) the retail public utility that is authorized to serve in
the certificated area that is annexed or incorporated by the
municipality is a retail public utility, other than a nonprofit
water supply or sewer service corporation, and whose service
area is located entirely within the boundaries of a
municipality with a population of 1.7 million or more according
to the most recent federal census.
(k) The following conditions apply when a municipality or
franchised utility makes an application to acquire the service
area or facilities of a retail public utility described in
Subsection (j)(2):
(1) the commission or court must determine that the service
provided by the retail public utility is substandard or its
rates are unreasonable in view of the reasonable expenses of
the utility;
(2) if the municipality abandons its application, the court
or the commission is authorized to award to the retail public
utility its reasonable expenses related to the proceeding
hereunder, including attorney fees; and
(3) unless otherwise agreed by the retail public utility,
the municipality must take the entire utility property of the
retail public utility in a proceeding hereunder.
(l) The compensation provided under Subsection (g) shall be
determined by a qualified individual or firm to serve as
independent appraiser, who shall be selected by the affected
retail public utility. The determination of compensation by the
independent appraiser shall be binding on the commission. The
costs of the independent appraiser shall be borne by the
municipality.
(m) The commission shall deny an application for single
certification by a municipality that fails to demonstrate
compliance with the commission's minimum requirements for public
drinking water systems.
Added by Acts 1987, 70th Leg., ch. 583, Sec. 1, eff. Aug. 31,
1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 32, eff. Sept. 1,
1989; Acts 1989, 71st Leg., ch. 926, Sec. 1, eff. Aug. 28, 1989;
Acts 1995, 74th Leg., ch. 814, Secs. 1 to 4, eff. Aug. 28, 1995.
Sec. 13.256. County Fee.
(a) Notwithstanding any other provision of law, a county with a
population of more than 2.8 million may not charge a water and
sewer utility a fee for the privilege of installing or replacing
a water or sewer line in the county's right-of-way.
(b) This section does not affect a franchise agreement or other
contract entered into before September 1, 1995.
Added by Acts 1995, 74th Leg., ch. 628, Sec. 1, eff. Sept. 1,
1995.
SUBCHAPTER H. SALE OF PROPERTY AND MERGERS
Sec. 13.301. Report of Sale, Merger, Etc.; Investigation; Disallowance of
Transaction.
(a) A utility or a water supply or sewer service corporation, on
or before the 120th day before the effective date of a sale,
acquisition, lease, or rental of a water or sewer system that is
required by law to possess a certificate of public convenience
and necessity or the effective date of a merger or consolidation
with such a utility or water supply or sewer service corporation,
shall:
(1) file a written application with the commission; and
(2) unless public notice is waived by the executive director for
good cause shown, give public notice of the action.
(b) The commission may require that the person purchasing or
acquiring the water or sewer system demonstrate adequate
financial, managerial, and technical capability for providing
continuous and adequate service to the requested area and any
areas currently certificated to the person.
(c) If the person purchasing or acquiring the water or sewer
system cannot demonstrate adequate financial capability, the
commission may require that the person provide a bond or other
financial assurance in a form and amount specified by the
commission to ensure continuous and adequate utility service is
provided.
(d) The commission shall, with or without a public hearing,
investigate the sale, acquisition, lease, or rental to determine
whether the transaction will serve the public interest.
(e) Before the expiration of the 120-day notification period, the
executive director shall notify all known parties to the
transaction of the executive director's decision whether to
request that the commission hold a public hearing to determine if
the transaction will serve the public interest. The executive
director may request a hearing if:
(1) the application filed with the commission or the public
notice was improper;
(2) the person purchasing or acquiring the water or sewer system
has not demonstrated adequate financial, managerial, and
technical capability for providing continuous and adequate
service to the service area being acquired and to any areas
currently certificated to the person;
(3) the person or an affiliated interest of the person purchasing
or acquiring the water or sewer system has a history of:
(A) noncompliance with the requirements of the commission or the
Texas Department of Health; or
(B) continuing mismanagement or misuse of revenues as a utility
service provider;
(4) the person purchasing or acquiring the water or sewer system
cannot demonstrate the financial ability to provide the necessary
capital investment to ensure the provision of continuous and
adequate service to the customers of the water or sewer system;
or
(5) there are concerns that the transaction may not serve the
public interest, after the application of the considerations
provided by Section 13.246(c) for determining whether to grant a
certificate of convenience and necessity.
(f) Unless the executive director requests that a public hearing
be held, the sale, acquisition, lease, or rental may be completed
as proposed:
(1) at the end of the 120-day period; or
(2) at any time after the executive director notifies the utility
or water supply or sewer service corporation that a hearing will
not be requested.
(g) If a hearing is requested or if the utility or water supply
or sewer service corporation fails to make the application as
required or to provide public notice, the sale, acquisition,
lease, or rental may not be completed unless the commission
determines that the proposed transaction serves the public
interest.
(h) A sale, acquisition, lease, or rental of any water or sewer
system required by law to possess a certificate of public
convenience and necessity that is not completed in accordance
with the provisions of this section is void.
(i) This section does not apply to:
(1) the purchase of replacement property; or
(2) a transaction under Section 13.255 of this code.
(j) If a public utility facility or system is sold and the
facility or system was partially or wholly constructed with
customer contributions in aid of construction derived from
specific surcharges approved by the regulatory authority over and
above revenues required for normal operating expenses and return,
the public utility may not sell or transfer any of its assets,
its certificate of convenience and necessity, or its controlling
interest in an incorporated utility, unless the utility provides
to the purchaser or transferee before the date of the sale or
transfer a written disclosure relating to the contributions. The
disclosure must contain, at a minimum, the total dollar amount of
the contributions and a statement that the contributed property
or capital may not be included in invested capital or allowed
depreciation expense by the regulatory authority in rate-making
proceedings.
(k) A utility or a water supply or sewer service corporation that
proposes to sell, assign, lease, or rent its facilities shall
notify the other party to the transaction of the requirements of
this section before signing an agreement to sell, assign, lease,
or rent its facilities.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 21, eff.
Sept. 1, 1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 33, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 678, Sec. 9, eff. Sept. 1, 1991;
Acts 1995, 74th Leg., ch. 400, Sec. 7, eff. Sept. 1, 1995; Acts
1997, 75th Leg., ch. 1010, Sec. 6.11, eff. Sept. 1, 1997.
Sec. 13.302. Purchase of Voting Stock in Another Public Utility: Report.
(a) A utility may not purchase voting stock in another utility
doing business in this state and a person may not acquire a
controlling interest in a utility doing business in this state
unless the person or utility files a written application with the
commission not later than the 61st day before the date on which
the transaction is to occur.
(b) The commission may require that a person acquiring a
controlling interest in a utility demonstrate adequate financial,
managerial, and technical capability for providing continuous and
adequate service to the requested area and any areas currently
certificated to the person.
(c) If the person acquiring a controlling interest cannot
demonstrate adequate financial capability, the commission may
require that the person provide a bond or other financial
assurance in a form and amount specified by the commission to
ensure continuous and adequate utility service is provided.
(d) The executive director may request that the commission hold
a public hearing on the transaction if the executive director
believes that a criterion prescribed by Section 13.301(e)
applies.
(e) Unless the executive director requests that a public
hearing be held, the purchase or acquisition may be completed as
proposed:
(1) at the end of the 60-day period; or
(2) at any time after the executive director notifies the
person or utility that a hearing will not be requested.
(f) If a hearing is requested or if the person or utility fails
to make the application to the commission as required , the
purchase or acquisition may not be completed unless the
commission determines that the proposed transaction serves the
public interest. A purchase or acquisition that is not completed
in accordance with the provisions of this section is void.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 34, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 678, Sec. 10, eff. Sept. 1, 1991;
Acts 1997, 75th Leg., ch. 1010, Sec. 6.12, eff. Sept. 1, 1997.
Sec. 13.303. Loans to Stockholders: Report.
A utility may not loan money, stocks, bonds, notes, or other
evidences of indebtedness to any corporation or person owning or
holding directly or indirectly any stock of the utility unless
the utility reports the transaction to the commission within 60
days after the date of the transaction.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 35, eff. Sept. 1,
1989.
Sec. 13.304. Foreclosure Report.
(a) A utility that receives notice that all or a portion of the
utility's facilities or property used to provide utility service
are being posted for foreclosure shall notify the commission in
writing of that fact not later than the 10th day after the date
on which the utility receives the notice.
(b) A financial institution that forecloses on a utility or on
any part of the utility's facilities or property that are used to
provide utility service is not required to provide the 120-day
notice prescribed by Section 13.301, but shall provide written
notice to the commission before the 30th day preceding the date
on which the foreclosure is completed.
(c) The financial institution may operate the utility for an
interim period prescribed by commission rule before transferring
or otherwise obtaining a certificate of convenience and
necessity. A financial institution that operates a utility
during an interim period under this subsection is subject to each
commission rule to which the utility was subject and in the same
manner.
Added by Acts 1991, 72nd Leg., ch. 678, Sec. 11, eff. Sept. 1,
1991. Amended by Acts 1995, 74th Leg., ch. 400, Sec. 8, eff.
Sept. 1, 1995.
SUBCHAPTER I. RELATIONS WITH AFFILIATED INTERESTS
Sec. 13.341. Jurisdiction over Affiliated Interests.
The commission has jurisdiction over affiliated interests having
transactions with utilities under the jurisdiction of the
commission to the extent of access to all accounts and records of
those affiliated interests relating to such transactions,
including but in no way limited to accounts and records of joint
or general expenses, any portion of which may be applicable to
those transactions.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 13.342. Disclosure of Substantial Interest in Voting Securities.
The commission may require the disclosure of the identity and
respective interests of every owner of any substantial interest
in the voting securities of any utility or its affiliated
interest. One percent or more is a substantial interest within
the meaning of this section.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
SUBCHAPTER J. JUDICIAL REVIEW
Sec. 13.381. Right to Judicial Review; Evidence.
Any party to a proceeding before the commission is entitled to
judicial review under the substantial evidence rule.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 13.382. Costs and Attorney's Fees.
(a) Any party represented by counsel who alleges that existing
rates are excessive or that rates prescribed by the commission
are excessive and who is a prevailing party in proceedings for
review of a commission order or decision may in the same action
recover against the regulation fund reasonable fees for attorneys
and expert witnesses and other costs incurred by him before the
commission and the court. The amount of the attorney's fees
shall be fixed by the court.
(b) On a finding by the court that an action under this
subchapter was groundless and brought in bad faith and for the
purpose of harassment, the court may award to the defendant
retail public utility reasonable attorney's fees.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 36, eff. Sept. 1,
1989.
SUBCHAPTER K. VIOLATIONS AND ENFORCEMENT
Sec. 13.411. Action to Enjoin or Require Compliance.
(a) If the commission has reason to believe that any retail
public utility or any other person or corporation is engaged in
or is about to engage in any act in violation of this chapter or
of any order or rule of the commission entered or adopted under
this chapter or that any retail public utility or any other
person or corporation is failing to comply with this chapter or
with any rule or order, the attorney general on request of the
commission, in addition to any other remedies provided in this
chapter, shall bring an action in a court of competent
jurisdiction in the name of and on behalf of the commission
against the retail public utility or other person or corporation
to enjoin the commencement or continuation of any act or to
require compliance with this chapter or the rule or order.
(b) If the executive director has reason to believe that the
failure of the owner or operator of a water utility to properly
operate, maintain, or provide adequate facilities presents an
imminent threat to human health or safety, the executive director
shall immediately:
(1) notify the utility's representative; and
(2) initiate enforcement action consistent with:
(A) this subchapter; and
(B) procedural rules adopted by the commission.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 37, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 1010, Sec. 6.30, eff. Sept. 1,
1997.
Sec. 13.412. Receivership.
(a) At the request of the commission, the attorney general
shall bring suit for the appointment of a receiver to collect the
assets and carry on the business of a water or sewer utility
that:
(1) has abandoned operation of its facilities;
(2) informs the commission that the owner is abandoning the
system;
(3) violates a final order of the commission; or
(4) allows any property owned or controlled by it to be used
in violation of a final order of the commission.
(b) The court shall appoint a receiver if an appointment is
necessary:
(1) to guarantee the collection of assessments, fees,
penalties, or interest;
(2) to guarantee continuous and adequate service to the
customers of the utility; or
(3) to prevent continued or repeated violation of the final
order.
(c) The receiver shall execute a bond to assure the proper
performance of the receiver's duties in an amount to be set by
the court.
(d) After appointment and execution of bond, the receiver shall
take possession of the assets of the utility specified by the
court. Until discharged by the court, the receiver shall perform
the duties that the court directs to preserve the assets and
carry on the business of the utility and shall strictly observe
the final order involved.
(e) On a showing of good cause by the utility, the court may
dissolve the receivership and order the assets and control of the
business returned to the utility.
(f) For purposes of this section and Section 13.4132,
abandonment may include but is not limited to:
(1) failure to pay a bill or obligation owed to a retail
public utility or to an electric or gas utility with the result
that the utility service provider has issued a notice of
discontinuance of necessary services;
(2) failure to provide appropriate water or wastewater
treatment so that a potential health hazard results;
(3) failure to adequately maintain facilities, resulting in
potential health hazards, extended outages, or repeated service
interruptions;
(4) failure to provide customers adequate notice of a health
hazard or potential health hazard;
(5) failure to secure an alternative available water supply
during an outage;
(6) displaying a pattern of hostility toward or repeatedly
failing to respond to the commission or the utility's
customers; and
(7) failure to provide the commission with adequate
information on how to contact the utility for normal business
and emergency purposes.
(g) Notwithstanding Section 64.021, Civil Practice and Remedies
Code, a receiver appointed under this section may seek commission
approval to acquire the water or sewer utility's facilities and
transfer the utility's certificate of convenience and necessity.
The receiver must apply in accordance with Subchapter H .
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1991, 72nd Leg., ch. 678, Sec. 12, eff. Sept. 1,
1991; Acts 1997, 75th Leg., ch. 1010, Sec. 6.13, eff. Sept. 1,
1997.
Sec. 13.413. Payment of Costs of Receivership.
The receiver may, subject to the approval of the court and
after giving notice to all interested parties, sell or otherwise
dispose of all or part of the real or personal property of a
water or sewer utility against which a proceeding has been
brought under this subchapter to pay the costs incurred in the
operation of the receivership. The costs include:
(1) payment of fees to the receiver for his services;
(2) payment of fees to attorneys, accountants, engineers, or
any other person or entity that provides goods or services
necessary to the operation of the receivership; and
(3) payment of costs incurred in ensuring that any property
owned or controlled by a water or sewer utility is not used in
violation of a final order of the commission.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 13.4131. Supervision of Certain Utilities.
(a) The commission, after providing to the utility notice and
an opportunity for a hearing, may place a utility under
supervision for gross or continuing mismanagement, gross or
continuing noncompliance with this chapter or commission rules,
or noncompliance with commission orders.
(b) While supervising a utility, the commission may require the
utility to abide by conditions and requirements prescribed by the
commission, including:
(1) management requirements;
(2) additional reporting requirements;
(3) restrictions on hiring, salary or benefit increases,
capital investment, borrowing, stock issuance or dividend
declarations, and liquidation of assets; and
(4) a requirement that the utility place the utility's funds
into an account in a financial institution approved by the
commission and use of those funds shall be restricted to
reasonable and necessary utility expenses.
(c) While supervising a utility, the commission may require
that the utility obtain commission approval before taking any
action that may be restricted under Subsection (b) of this
section. Any action or transaction which occurs without
commission approval may be voided by the commission.
Added by Acts 1991, 72nd Leg., ch. 678, Sec. 13, eff. Sept. 1,
1991.
Sec. 13.4132. Operation of Utility That Discontinues Operation or is
Referred for Appointment of Receiver.
(a) The commission, after providing to the utility notice and
an opportunity to be heard by the commissioners at a commission
meeting , may authorize a willing person to temporarily manage
and operate a utility if the utility:
(1) has discontinued or abandoned operations or the
provision of services; or
(2) has been or is being referred to the attorney general
for the appointment of a receiver under Section 13.412.
(b) The commission may appoint a person under this section by
emergency order, and notice of the action is adequate if the
notice is mailed or hand-delivered to the last known address of
the utility's headquarters.
(c) A person appointed under this section has the powers and
duties necessary to ensure the continued operation of the utility
and the provision of continuous and adequate services to
customers, including the power and duty to:
(1) read meters;
(2) bill for utility services;
(3) collect revenues;
(4) disburse funds;
(5) access all system components; and
(6) request rate increases.
(d) This section does not affect the authority of the
commission to pursue an enforcement claim against a utility or an
affiliated interest.
Added by Acts 1991, 72nd Leg., ch. 678, Sec. 13, eff. Sept. 1,
1991. Amended by Acts 1997, 75th Leg., ch. 1010, Sec. 6.14, eff.
Sept. 1, 1997.
Sec. 13.4133. Emergency Rate Increase in Certain Circumstances.
(a) Notwithstanding the requirements of Section 13.187 of this
code, the commission may authorize an emergency rate increase for
a utility for which a person has been appointed under Section
13.4132 of this code or for which a receiver has been appointed
under Section 13.412 of this code if the increase is necessary to
ensure the provision of continuous and adequate services to the
utility's customers.
(b) A utility that receives an emergency rate increase under
this section shall provide to each ratepayer notice of the
increase as soon as possible, but not later than the first
utility bill issued at the new rate.
(c) The commission shall schedule a hearing to establish a
final rate within 15 months after the date on which an emergency
rate increase takes effect. The commission shall require the
utility to provide notice of the hearing to each customer. The
additional revenues collected under an emergency rate increase
are subject to refund if the commission finds that the rate
increase was larger than necessary to ensure continuous and
adequate service.
Added by Acts 1991, 72nd Leg., ch. 678, Sec. 13, eff. Sept. 1,
1991.
Sec. 13.414. Penalty Against Retail Public Utility or Affiliated Interest.
(a) Any retail public utility or affiliated interest that
violates this chapter, fails to perform a duty imposed on it, or
fails, neglects, or refuses to obey an order, rule, direction, or
requirement of the commission or decree or judgment of a court is
subject to a civil penalty of not less than $100 nor more than
$5,000 for each violation.
(b) A retail public utility or affiliated interest commits a
separate violation each day it continues to violate Subsection
(a) of this section.
(c) The attorney general shall institute suit on his own
initiative or at the request of, in the name of, and on behalf of
the commission in a court of competent jurisdiction to recover
the penalty under this section.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 38, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 678, Sec. 14, eff. Sept. 1, 1991.
Sec. 13.415. Personal Penalty.
Any person who wilfully and knowingly violates this chapter is
guilty of a third degree felony.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 13.4151. Administrative Penalty.
(a) If a person, affiliated interest, or entity subject to the
jurisdiction of the commission violates this chapter or a rule or
order adopted under this chapter, the commission may assess a
penalty against that person, affiliated interest, or entity as
provided by this section. The penalty may be in an amount not to
exceed $500 a day. Each day a violation continues may be
considered a separate violation.
(b) In determining the amount of the penalty, the commission
shall consider:
(1) the nature, circumstances, extent, duration, and gravity
of the prohibited acts or omissions;
(2) with respect to the alleged violator:
(A) the history and extent of previous violations;
(B) the degree of culpability, including whether the
violation was attributable to mechanical or electrical
failures and whether the violation could have been
reasonably anticipated and avoided;
(C) the demonstrated good faith, including actions taken
by the person, affiliated interest, or entity to correct the
cause of the violation;
(D) any economic benefit gained through the violation;
and
(E) the amount necessary to deter future violations; and
(3) any other matters that justice requires.
(c) If, after examination of a possible violation and the facts
surrounding that possible violation, the executive director
concludes that a violation has occurred, the executive director
may issue a preliminary report stating the facts on which that
conclusion is based, recommending that a penalty under this
section be imposed on the person, affiliated interest, or retail
public utility charged, and recommending the amount of that
proposed penalty. The executive director shall base the
recommended amount of the proposed penalty on the factors
provided by Subsection (b) of this section, and shall analyze
each factor for the benefit of the commission.
(d) Not later than the 10th day after the date on which the
report is issued, the executive director shall give written
notice of the report to the person, affiliated interest, or
retail public utility charged with the violation. The notice
shall include a brief summary of the charges, a statement of the
amount of the penalty recommended, and a statement of the right
of the person, affiliated interest, or retail public utility
charged to a hearing on the occurrence of the violation, the
amount of the penalty, or both.
(e) Not later than the 20th day after the date on which notice
is received, the person, affiliated interest, or retail public
utility charged may give the commission written consent to the
executive director's report, including the recommended penalty,
or may make a written request for a hearing.
(f) If the person, affiliated interest, or retail public
utility charged with the violation consents to the penalty
recommended by the executive director or fails to timely respond
to the notice, the commission by order shall assess that penalty
or order a hearing to be held on the findings and recommendations
in the executive director's report. If the commission assesses
the penalty recommended by the report, the commission shall give
written notice to the person, affiliated interest, or retail
public utility charged of its decision.
(g) If the person, affiliated interest, or retail public
utility charged requests or the commission orders a hearing, the
commission shall call a hearing and give notice of the hearing.
As a result of the hearing, the commission by order may find that
a violation has occurred and may assess a civil penalty, may find
that a violation has occurred but that no penalty should be
assessed, or may find that no violation has occurred. All
proceedings under this subsection are subject to Chapter 2001,
Government Code. In making any penalty decision, the commission
shall analyze each of the factors provided by Subsection (b) of
this section.
(h) The commission shall give notice of its decision to the
person, affiliated interest, or retail public utility charged,
and if the commission finds that a violation has occurred and has
assessed a penalty, the commission shall give written notice to
the person, affiliated interest, or retail public utility charged
of its findings, of the amount of the penalty, and of the
person's, affiliated interest's, or retail public utility's right
to judicial review of the commission's order. If the commission
is required to give notice of a penalty under this subsection or
Subsection (f) of this section, the commission shall file notice
of its decision in the Texas Register not later than the 10th day
after the date on which the decision is adopted.
(i) Within the 30-day period immediately following the day on
which the commission's order is final, as provided by Subchapter
F, Chapter 2001, Government Code, the person, affiliated
interest, or retail public utility charged with the penalty
shall:
(1) pay the penalty in full; or
(2) if the person, affiliated interest, or retail public
utility seeks judicial review of the fact of the violation, the
amount of the penalty, or both:
(A) forward the amount of the penalty to the commission
for placement in an escrow account; or
(B) post with the commission a supersedeas bond in a
form approved by the commission for the amount of the
penalty to be effective until all judicial review of the
order or decision is final.
(j) Failure to forward the money to or to post the bond with
the commission within the time provided by Subsection (i) of this
section constitutes a waiver of all legal rights to judicial
review. If the person, affiliated interest, or retail public
utility charged fails to forward the money or post the bond as
provided by Subsection (i) of this section, the commission or the
executive director may forward the matter to the attorney general
for enforcement.
(k) Judicial review of the order or decision of the commission
assessing the penalty shall be under the substantial evidence
rule and may be instituted by filing a petition with a district
court in Travis County, as provided by Subchapter G, Chapter
2001, Government Code.
(l) A penalty collected under this section shall be deposited
in the state treasury to the credit of the general revenue fund.
(m) Notwithstanding any other provision of law, the commission
may compromise, modify, extend the time for payment of, or remit,
with or without condition, any penalty imposed under this
section.
(n) Payment of a penalty under this section is full and
complete satisfaction of the violation for which the penalty is
assessed and precludes any other civil or criminal penalty for
the same violation.
Added by Acts 1987, 70th Leg., ch. 539, Sec. 22, eff. Sept. 1,
1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 39, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 678, Sec. 15, eff. Sept. 1, 1991;
Acts 1995, 74th Leg., ch. 76, Sec. 5.95(49), (53), (59), eff.
Sept. 1, 1995.
Sec. 13.416. Penalties cumulative.
All penalties accruing under this chapter are cumulative and a
suit for the recovery of any penalty does not bar or affect the
recovery of any other penalty or bar any criminal prosecution
against any retail public utility or any officer, director,
agent, or employee or any other corporation or person.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 40, eff. Sept. 1,
1989.
Sec. 13.417. Contempt Proceedings.
If any person or retail public utility fails to comply with any
lawful order of the commission or with any subpoena or subpoena
duces tecum or if any witness refuses to testify about any matter
on which he may be lawfully interrogated, the commission may
apply to any court of competent jurisdiction to compel obedience
by proceedings for contempt.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 41, eff. Sept. 1,
1989.
Sec. 13.418. Disposition of Fines and Penalties; Water Utility Improvement
Account.
(a) Fines and penalties collected under this chapter from a
retail public utility that is not a public utility in other than
criminal proceedings shall be paid to the commission and
deposited in the general revenue fund.
(b) Fines and penalties collected from a public utility under
this chapter in other than criminal proceedings shall be paid to
the commission and deposited in the water utility improvement
account as provided by Section 341.0485, Health and Safety Code.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1997, 75th Leg., ch. 1010, Sec. 6.31, eff. Sept.
1, 1997.
Sec. 13.419. Venue.
Suits for injunction or penalties under this chapter may be
brought in Travis County, in any county where this violation is
alleged to have occurred, or in the county or residence of any
defendant.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
SUBCHAPTER L. COMMISSION FINANCING
Sec. 13.4521. Filing Rate Change Request; Fee.
(a) A rate change application filed with the commission must be
accompanied by a filing fee, the amount of which is based on the
number of connections to which the change applies as follows:
(1) fewer than 100 connections--$50
(2) 100-200 connections--$100
(3) 201-500 connections--$200
(4) more than 500 connections--$500.
(b) This fee is in lieu of the application fee required by
Section 5.235(d) of this code.
Added by Acts 1987, 70th Leg., ch. 539, Sec. 23, eff. Sept. 1,
1987.
Sec. 13.4522. Certificate of Public Convenience and Necessity; Sale,
Transfer, or Merger; Application Fee.
(a) An application for a certificate of public convenience and
necessity under Section 13.244 of this code must be accompanied
by an application fee of $100.
(b) An application for sale, assignment, or lease of a
certificate of public convenience and necessity under Section
13.251 of this code or for a sale, acquisition, lease, or rental
of a water or sewer system under Section 13.301 of this code must
be accompanied by an application fee the amount of which is based
on the number of connections affected as follows:
(1) fewer than 100 connections--$50
(2) 100-200 connections--$100
(3) 201-500 connections--$200
(4) more than 500 connections--$500.
(c) The fees under this section are in lieu of the application
fee required by Section 5.235(b) of this code.
Added by Acts 1987, 70th Leg., ch. 539, Sec. 24, eff. Sept. 1,
1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 42, eff. Sept. 1,
1989.
Sec. 13.453. Collection and Disposition of Fees .
All fees paid under Sections 13.4521 and 13.4522 of this code
shall be collected by the executive director and paid into the
water resource management account.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985. Amended by Acts 1987, 70th Leg., ch. 539, Sec. 25, eff.
Sept. 1, 1987.
Amended by Acts 1991, 72nd Leg., 1st C.S., ch. 3, Sec. 4.04, eff.
Sept. 1, 1991; Acts 1997, 75th Leg., ch. 333, Sec. 5, eff. Sept.
1, 1997.
Sec. 13.454. Approval of Budget.
The budget of the commission is subject to legislative approval
as part of the General Appropriations Act.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Sec. 13.455. Accounting Records; Audit.
The transactions of the commission are subject to audit by the
State Auditor in accordance with Chapter 321, Government Code.
Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1,
1985.
Amended by Acts 1991, 72nd Leg., ch. 599, Sec. 16, eff. Sept. 1,
1991.
SUBCHAPTER M. SUBMETERING AND NONSUBMETERING FOR APARTMENTS AND
MOBILE
HOME PARKS AND OTHER MULTIPLE USE FACILITIES
Sec. 13.501. Definitions.
In this subchapter:
(1) "Apartment house" means one or more buildings containing five
or more dwelling units which are occupied primarily for
nontransient use, including a residential condominium whether
rented or owner occupied, and having rental paid, if a dwelling
unit is rented, at intervals of one month or longer.
(2) "Dwelling unit" means:
(A) one or more rooms in an apartment house or condominium,
suitable for occupancy as a residence, and containing kitchen and
bathroom facilities; or
(B) a mobile home in a mobile home park.
(3) "Customer" means the individual, firm, or corporation in
whose name a master meter has been connected by the utility
service provider.
(4) "Nonsubmetered master metered utility service" means water
utility service that is master metered for the apartment house
but not submetered, and wastewater utility service based on
master metered water utility service.
(5) "Owner" means the legal titleholder of an apartment house,
mobile home park, or multiple use facility and any individual,
firm, or corporation that purports to be the landlord of tenants
in the apartment house, mobile home park, or multiple use
facility.
(6) "Tenant" means a person who is entitled to occupy a dwelling
unit or multiple use facility unit to the exclusion of others and
who is obligated to pay for the occupancy under a written or oral
rental agreement.
(7) "Multiple use facility" means commercial or industrial parks,
office complexes, marinas, and others specifically identified in
commission rules with five or more units.
(8) "Mobile home park" means a property on which parking spaces
are rented to mobile dwelling units primarily for nontransient
use and for which rental is paid at intervals of one month or
longer.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 43, eff. Sept. 1,
1989.
Sec. 13.502. Submetering.
An apartment house owner, mobile home park owner, multiple use
facility owner, or condominium manager may provide for
submetering of each dwelling unit or rental unit for the
measurement of the quantity of water, if any, consumed by the
occupants of that unit.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 43, eff. Sept. 1,
1989.
Sec. 13.503. Submetering Rules.
Notwithstanding any other law, the commission shall adopt rules
and standards under which an owner, operator, or manager of an
apartment house, mobile home park, or multiple use facility that
is not individually metered for water for each rental or dwelling
unit may install submetering equipment for each individual rental
or dwelling unit for the purpose of fairly allocating the cost of
each individual rental or dwelling unit's water consumption,
including wastewater charges based on water consumption. In
addition to other appropriate safeguards for the tenant, the
rules shall require that an apartment house owner, mobile home
park owner, multiple use facility owner, or condominium manager
may not impose on the tenant any extra charges, over and above
the cost per gallon that is charged by the retail public utility
to the owner or manager, and that the rental unit or apartment
house owner or manager shall maintain adequate records regarding
submetering and make the records available for inspection by the
tenant during reasonable business hours. All submetering
equipment is subject to the rules and standards established by
the commission for accuracy, testing, and record keeping of
meters installed by utilities and to the meter-testing
requirements of Section 13.140 of this code.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 43, eff. Sept. 1,
1989.
Sec. 13.5031. Nonsubmetering Rules.
Notwithstanding any other law, the commission shall adopt rules
and standards governing billing systems or methods used by
apartment house owners, condominium managers, or owners of other
multiple use facilities for prorating or allocating among tenants
nonsubmetered master metered utility service costs. In addition
to other appropriate safeguards for the tenant, those rules shall
require that:
(1) the rental agreement contain a clear written description
of the method of calculation of the allocation of nonsubmetered
master metered utilities for the apartment house or multiple
use facility;
(2) the rental agreement contain a statement of the average
apartment or multiple use facility unit monthly bill for all
units for any allocation of those utilities for the previous
calendar year;
(3) an owner or condominium manager may not impose
additional charges on a tenant in excess of the actual charges
imposed on the owner or condominium manager for utility
consumption by the apartment house or multiple use facility;
(4) the owner or condominium manager shall maintain adequate
records regarding the utility consumption of the apartment
house or multiple use facility, the charges assessed by the
retail public utility, and the allocation of the utility costs
to the tenants; and
(5) the owner or condominium manager shall maintain all
necessary records concerning utility allocations, including the
retail public utility's bills, and shall make the records
available for inspection by the tenants during normal business
hours.
Added by Acts 1989, 71st Leg., ch. 567, Sec. 43, eff. Sept. 1,
1989.
Sec. 13.504. Improper Rental Rate Increase.
If, during the 90-day period preceding the installation of
individual meters or submeters, an owner, operator, or manager of
an apartment house, mobile home park or other multiple use
facility has increased rental rates and the increase is
attributable to increased costs of utilities, the owner,
operator, or manager shall immediately reduce the rental rate by
the amount of the increase and refund all of the increase that
has previously been collected within the 90-day period.
Amended by Acts 1987, 70th Leg., ch. 539, Sec. 26, eff. Sept. 1,
1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 43, eff. Sept. 1,
1989.
Sec. 13.505. Enforcement.
In addition to the enforcement provisions contained in
Subchapter K of this chapter, if an apartment house owner,
condominium manager, mobile home park owner, or other multiple
use facility owner violates a rule of the commission regarding
submetering of utility service consumed exclusively within the
tenant's dwelling unit or multiple use facility unit or
nonsubmetered master metered utility costs, the tenant may
recover three times the amount of any overcharge, a civil penalty
equal to one month's rent, reasonable attorney's fees, and court
costs from the owner or condominium manager. However, an owner
of an apartment house, mobile home park, or other multiple use
facility or condominium manager is not liable for a civil penalty
if the owner or condominium manager proves the violation was a
good faith, unintentional mistake.
Amended by Acts 1987, 70th Leg., ch. 539, Sec. 26, eff. Sept. 1,
1987.
Amended by Acts 1989, 71st Leg., ch. 567, Sec. 43, eff. Sept. 1,
1989.
SUBCHAPTER N. PRIVATIZATION CONTRACTS
Sec. 13.511. Definitions.
In this subchapter:
(1) "Eligible city" means any municipality whose waterworks and
sewer system is operated by a board of utility trustees pursuant
to provisions of a home-rule charter.
(2) "Privatization contract" means any contract, agreement, or
letter of intent or group of the same by which any eligible city
contracts with a service provider to provide for the financing,
acquisition, improvement, or construction of sewage treatment and
disposal facilities pursuant to which such service provider or
its assignee or subcontractor will own, operate, and maintain
such facilities and provide sewage treatment and disposal
services to the eligible city or any contract pursuant to which
such service provider agrees to operate and maintain, or have its
subcontractor operate and maintain all or any part of the
eligible city's sewage treatment and disposal facilities.
(3) "Service provider" means any person or group of persons who
is a party to a privatization contract which thereby contracts to
provide sewage treatment and disposal services to an eligible
city.
Added by Acts 1987, 70th Leg., ch. 88, Sec. 1, eff. May 14, 1987.
Renumbered from Sec. 13.501 and amended by Acts 1989, 71st Leg.,
ch. 567, Sec. 44, eff. Sept. 1, 1989.
Sec. 13.512. Authority to Enter Into Privatization Contracts.
Any eligible city is authorized to enter into privatization
contracts if such action is recommended by the board of utility
trustees and authorized by the governing body of the eligible
city pursuant to an ordinance. Any privatization contract
entered into prior to the effective date of this Act is
validated, ratified, and approved. Each eligible city shall file
a copy of its privatization contract with the commission, for
information purposes only, within 60 days of execution or the
effective date of this Act, whichever is later.
Added by Acts 1987, 70th Leg., ch. 88, Sec. 1, eff. May 14, 1987.
Renumbered from Sec. 13.502 by Acts 1989, 71st Leg., ch. 567,
Sec. 44, eff. Sept. 1, 1989.
Sec. 13.513. Election by Eligible City to Exempt Service Provider From
Commission Jurisdiction.
A service provider shall not constitute a "water and sewer
utility," a "public utility," a "utility," or a "retail public
utility" within the meaning of Chapter 13 as a result of entering
into or performing a privatization contract, if the governing
body of the eligible city shall so elect by ordinance and provide
notice thereof in writing to the commission; provided, however,
this provision shall not affect the application of Chapter 13 to
an eligible city itself. Notwithstanding anything contained in
this section, any service provider who seeks to extend or render
sewer service to any person or municipality other than, or in
addition to, an eligible city may be a "public utility" for the
purposes of Chapter 13 with respect to such other person or
municipality.
Added by Acts 1987, 70th Leg., ch. 88, Sec. 1, eff. May 14, 1987.
Renumbered from Sec. 13.503 by Acts 1989, 71st Leg., ch. 567,
Sec. 44, eff. Sept. 1, 1989.
Sec. 13.514. Term and Provisions of a Privatization Contract.
A privatization contract may be for a term and contain
provisions that the governing body of an eligible city determines
are in the best interests of the eligible city, including
provisions relating to allocation of liabilities,
indemnification, and purchase of all or a portion of the
facilities.
Added by Acts 1989, 71st Leg., ch. 567, Sec. 44, eff. Sept. 1,
1989.
Sec. 13.515. Payments Under a Privatization Contract.
Payments by an eligible city under a privatization contract
shall, if so provided, constitute an operating expense of the
eligible city's sanitary sewer system or combined waterworks and
sanitary sewer system, except that any payment for purchase of
the facilities is payable from a pledge and lien on the net
revenues of the eligible city's sanitary sewer system or combined
waterworks and sanitary sewer system.
Added by Acts 1989, 71st Leg., ch. 567, Sec. 44, eff. Sept. 1,
198