The Honorable Ron Glower Opinion No. H-919

Chairman Consumer Affairs Sub-Committee Re: Effective date of State Senate State Capitol Austin, Texas Building

78711 section 24of the Public Utility Regulatory Act, article 1446c, V.T.C.S., authorizing municipalities tohire rate consultants andbe reimbursed by utilities.
Dear Senator Clower:
You have requested our opinion concerning the effective date of section 24of the Public Utility Regulatory Act, article 1446c,V.T.C.S. This section provides:

The governing body of anymunicipality shall have the right to select and engage rate consultants, accountants, auditors, attorneys, engineers, or any combination thereof, to conduct investigations, present evidence, advise and represent the governing bodyrand assist with litigation on public utility ratemaking proceedings; and the public utility engaged in such proceedings shall be required to reimburse thegoverning body for the reasonable costs of such services. The effective date of theAct was September 1, 1975, as provided in section 88. This is the applicable date unless section 87was intended todelay the exercise of the section 24power bymunicipalities. Section 87provides:

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(a)The regulatory authority shall assume jurisdiction and allpowers and duties of regulation under thisAct on January 1, 1976, except as provided in Subsection (b)of this section. (b)The regulatory authority shall assume jurisdiction over rates and service of public utilities on September 1, 1976. The definitions section of theAct provides in section 2(g) ,that: The term 'regulatory authority,'

when used in thisAct, means, in accordance with the context where it is found, either the commission, the railroad commission, or the governing,body of anymunicipality.
It isclear that regulatory authority as used in section 87means the Public Utility Commission, and we so applied it inAttorney General Opinion H-752 (1975). It isnot so clear that the termwas also intended to include municipalities so as to limit the exercise of the power given in section 24. The general plan of theAct is thatmunicipalities were to continue to regulate utilities within their boundaries while the commission was being organized and phased in to assume portions of that jurisdiction. See sections 2, 5, 22, - 87, 88, 90. Section 24 isan unequivocal grant of authori.tyto municipalities. It isnot dependent upon a concurrent assumption of new jurisdiction. Section 24 isapower which could be exercised in conjunction with the jurisdiction which themunicipalities already had, andwhich theAct required that they continue to exercise during the transition period. Sec. 22.
It isobvious that section 24was intended to change the law concerning the expenses of rate proceedings from the ruling of the-court in the case of Southwestern Bell Telephone Co.v. City of Port Arthur, 491 S.W.2d 187-x. Civ. ADD. -- Beaumont 1973.writ ref'd n.r.e.). That case held tgt a city's attempt.to charge such expenses to the

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utility inaddition to charges provided ina franchise agreement was void. The legislative intent to change the law on this point is clear. Section 21provides:

If amunicipality performs regulatory functions under thisAct, itmay make such other charges asmay be provided,in the applicable franchise agreement, together with any other charges permitted by this Act.
We believe that "under thisAct" in this section refers to amunicipality's performance of regulatory functions as authorized or required by theAct, which includes the continued exercise of their pre-existing jurisdiction and authority between September 1, 1975 and September 1, 1976, the transition period during which the commission was being established and phased in.
We do not believe that the Legislature intended section 87 todelay or limit the exercise of the section 24authority bymunicipalities, and thus the general effective date of September 1, 1975, is the applicable one for section 24. This interpretation is in accord with the general plan of theAct, thepurpose stated in section 2 "to establish a comprehensive regulatory system which isadequate to the task of regulating public utilities

. . ."and with the requirement of section 89 that theAct be liberally construed "topromote the effectiveness and efficiency of regulation of public utilities."
You also askwhether amunicipality must enact an enabling ordinance or take any other action inorder to exercise its authority under section 24. The Legislature may give municipalities suchpowers as it sees fit. Blessing v. City of Galveston, 42 Tex. 641 (Tex.Sup. 1875). The exercise of the Power given under section 24 isnot conditioned upon any action by the-municipality, and thus none isnecessary.

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SUMMARY (H-919)

The effective date of section 24of the Public Utility Regulatory Act, giving municipalities authority to require regulated utilities to reimburse the reasonable costs of rate consultants and other experts in ratemaking proceedings, is September 1, 1975. truly yours,

Attorney General of Texas APPROVED: qcsb

DAVID M. KENDALL, First Assistant

(-I!&&JA&mR C. ROBERT HEATH, Chalrman Opinion Committee

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