SB740 - Relating to certain proceedings by the Public Utility Commission of Texas regarding water or sewer service.

      S.B. No. 740         AN ACT   relating to certain proceedings by the Public Utility Commission of   Texas regarding water or sewer service.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Sections 12.013(b) and (d), Water Code, are   amended to read as follows:          (b)  In this section, "political subdivision" means   municipalities [ incorporated cities, towns or villages ], counties,   river authorities, water districts, and other special purpose   districts.          (d)  The utility commission's jurisdiction under this   section relating to a municipality [ incorporated cities, towns, or   villages ] shall be limited to water furnished by the municipality   [ such city, town, or village ] to another political subdivision ,   other than another municipality, on a wholesale basis.          SECTION 2.  Section 13.002, Water Code, is amended by adding   Subdivision (16-a) to read as follows:                 (16-a) "Public utility agency" means a public utility   agency created under Chapter 572, Local Government Code.          SECTION 3.  Section 13.043, Water Code, is amended by adding   Subsection (f-1) and amending Subsection (j) to read as follows:           (f-1)     Subsection (f) does not apply to a decision of a   municipality regarding wholesale water or sewer service provided to   another municipality.          (j)  In an appeal under this section, the utility commission   shall ensure that every appealed rate is 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 utility commission   shall use a methodology that preserves the financial integrity of   the retail public utility. [ For agreements between municipalities   the utility commission shall consider the terms of any wholesale   water or sewer service agreement in an appellate rate proceeding. ]          SECTION 4.  Section 13.183, Water Code, is amended by   amending Subsection (c) and adding Subsections (c-1), (c-2), (c-3),   and (c-4) to read as follows:          (c)  To ensure that retail customers receive a higher   quality, more affordable, or more reliable water or sewer service,   to encourage regionalization, or to maintain financially stable and   technically sound utilities, the regulatory authority, by rule or   ordinance, as appropriate, may adopt specific alternative   ratemaking methodologies for water or sewer rates to allow for more   timely and efficient cost recovery.  Appropriate alternative   ratemaking methodologies are the introduction of new customer   classes, the cash needs method, and phased and multi-step rate   changes.  The regulatory authority may also adopt system   improvement charges that may be periodically adjusted to ensure   timely recovery of infrastructure investment.   If the utility   commission is the appropriate regulatory authority, the utility   commission shall enter a final order on a request for a system   improvement charge under this subsection not later than the 60th   day after the date the utility commission determines that a   complete application for a system improvement charge has been   filed. The utility commission may extend the deadline for not more   than 15 days for good cause. The utility commission by rule shall   establish a schedule that requires all utilities that have   implemented a system improvement charge approved by the utility   commission to make periodic filings with the utility commission to   modify or review base rates charged by the utility. Overall   revenues determined according to an alternative ratemaking   methodology adopted under this section must provide revenues to the   utility that satisfy the requirements of Subsection (a).  The   regulatory authority may not approve rates under an alternative   ratemaking methodology unless the regulatory authority adopts the   methodology before the date the rate application was   administratively complete.           (c-1)  The utility commission shall by rule:                 (1)     establish the information required for an   application for a system improvement charge to be considered   complete by the utility commission under this section, which must   include the documentation listed in Subsection (c-2); and                 (2)     prescribe a standard form for an application to   the utility commission for a system improvement charge under   Subsection (c).           (c-2)     An application for a system improvement charge under   Subsection (c) may not be considered complete by the utility   commission unless, to substantiate each claimed eligible cost of a   utility's eligible plant that is not already included in the   applying utility's rates, the application includes:                 (1)  receipts;                 (2)  invoices;                 (3)  contracts; or                 (4)  other documentation of eligible costs.           (c-3)     An application for a system improvement charge under   Subsection (c) may not be considered complete by the utility   commission before the 30th day after the date the application is   filed with the utility commission.           (c-4)     At the time an applicant files an application for a   system improvement charge under Subsection (c) with the utility   commission, the applicant shall provide a copy of the application   to the Office of Public Utility Counsel.   The utility commission   shall allow the office to comment on the application not later than   the 30th day after the date the application is filed.   The utility   commission shall provide to the office, at no cost and in electronic   form, any data related to the application held by the commission.     Information provided to the office under this subsection that is   confidential and not subject to disclosure by the utility   commission under Chapter 552, Government Code, or other law is   confidential and not subject to disclosure by the office.            SECTION 5.  Section 13.301(l), Water Code, is amended to   read as follows:          (l)  Notwithstanding any other provision of this section or   Section 13.302 , the utility commission by rule shall adopt a [ an   expedited ] process to expedite an application for the acquisition   of the stock or ownership interest under Section 13.302, or of   assets under this section, of a utility in receivership under   Section 13.412, a utility in supervision under Section 13.4131, or   a utility in temporary management under Section 13.4132, and, if   applicable, its certificated service area, by a Class A or Class B   utility.   The applicant must have been appointed as a temporary   manager or supervisor for the utility by the utility commission or   commission or have been appointed as a receiver for the utility at   the request of the utility commission or commission before filing   the application [ that allows a person appointed by the utility   commission or commission under Section 13.4132 as a temporary   manager of a utility, utility in receivership, or utility in   supervision, who is also an operator of a Class A or Class B utility   to apply for utility commission approval of the person's   acquisition of the stock, ownership interest, or assets of the   temporarily managed and operated utility, utility in receivership,   or utility in supervision, its facilities, and, if applicable, its   certificated service area ]. The [ expedited ] process must:                (1)  waive public notice requirements regardless of   whether the applicant [ person ] elects to charge initial rates in   accordance with Section 13.3011 or use a voluntary valuation   determined under Section 13.305;                (2)  require approval of the acquisition transaction if   the transaction is considered to be in the public interest; and                (3)  provide that:                      (A)  the applicant's [ person's ] appointment is   considered sufficient to demonstrate adequate financial,   managerial, and technical capability for providing continuous and   adequate service to the service area to be acquired and any areas   currently certificated to the applicant [ person ]; and                      (B)  all used and useful invested capital and just   and reasonable operations and maintenance costs incurred by the   applicant [ person ] during the applicant's [ person's ] appointment as   temporary manager and operator of the utility, utility in   receivership, or utility in supervision to be acquired are   considered to be a regulatory asset for the applicant [ person ] and   are recoverable in the applicant's [ person's ] next comprehensive   rate proceeding or system improvement charge application.          SECTION 6.  Subchapter H, Chapter 13, Water Code, is amended   by adding Section 13.3021 to read as follows:           Sec.   13.3021.     SALES, TRANSFERS, AND MERGERS FOR CERTAIN   RETAIL PUBLIC UTILITIES.   (a)     The utility commission by rule shall   adopt an expedited process to authorize a municipally owned   utility, a county, a water supply or sewer service corporation, a   public utility agency, or a district or authority created under   Section 52, Article III, or Section 59, Article XVI, Texas   Constitution, to acquire the stock or ownership interest under   Section 13.302, or assets under Section 13.301, of a utility in   receivership under Section 13.412, a utility in supervision under   Section 13.4131, or a utility in temporary management under Section   13.4132, and, if applicable, its certificated service area, in the   manner provided by Sections 13.301 and 13.302.           (b)     The municipally owned utility, county, water supply or   sewer service corporation, public utility agency, district, or   authority must have been appointed as a temporary manager or   supervisor for the utility by the utility commission or commission   or as a receiver for the utility at the request of the utility   commission or commission before filing an acquisition application   under this section.           (c)  The process must:                 (1)     be based on the expedited process adopted under   Section 13.301(l), except for any aspects of the process that   cannot be applied to an entity over which the utility commission   does not have original rate jurisdiction;                 (2)  waive public notice requirements;                 (3)     require approval of the acquisition transaction if   the transaction is considered to be in the public interest; and                 (4)     provide that the municipally owned utility's,   county's, water supply or sewer service corporation's, public   utility agency's, district's, or authority's appointment is   considered sufficient to demonstrate adequate financial,   managerial, and technical capability for providing continuous and   adequate service to the service area to be acquired and any areas   currently certificated to the municipally owned utility, county,   corporation, public utility agency, district, or authority.          SECTION 7.  Section 13.412(g), Water Code, is amended to   read as follows:          (g)  Notwithstanding Section 64.021, Civil Practice and   Remedies Code, a receiver appointed under this section may be a   person, a municipally owned utility, a county, a water supply or   sewer service corporation, a public utility agency, or a district   or authority created under Section 52, Article III, or Section 59,   Article XVI, Texas Constitution, and may seek approval from the   utility commission and the commission to acquire [Text truncated for display. 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