SB1977 - Relating to the recovery and reimbursement of certain expenses by an electric utility or a water and sewer utility in a rate proceeding.

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