2023 Texas Statutes › Water Code › Title 2 - Water Administration › Subtitle B - Water Rights › Chapter 13 - Water Rates and Services › Subchapter F. Proceedings Before Regulatory Authority › Section 13.1871. Class B Utilities: Statement of Intent to Change Rates; Hearing; Determination of Rate Level

Sec. 13.1871.  CLASS B UTILITIES:  STATEMENT OF INTENT TO CHANGE RATES; HEARING; DETERMINATION OF RATE LEVEL.  (a)  Except as provided by Sections 13.18715 and 13.1872, this section applies only to a Class B utility.
(b)  A utility may not make changes in its rates except by sending by mail or e-mail a statement of intent to each ratepayer and to the regulatory authority having original jurisdiction at least 35 days before the effective date of the proposed change.  The utility may send the statement of intent to a ratepayer by e-mail only if the ratepayer has agreed to receive communications electronically.  The effective date of the new rates must be the first day of a billing period, and the new rates may not apply to service received before the effective date of the new rates.  The statement of intent must include:
(1)  the information required by the regulatory authority's rules;
(2)  a billing comparison regarding the existing water rate and the new water rate computed for the use of:
(A)  5,000 gallons of water; and
(B)  10,000 gallons of water;
(3)  a billing comparison regarding the existing sewer rate and the new sewer rate computed for the use of 5,000 gallons, unless the utility proposes a flat rate for sewer services; and
(4)  a description of the process by which a ratepayer may file a complaint under Subsection (i).
(c)  The utility shall mail, send by e-mail, or deliver a copy of the statement of intent to the appropriate offices of each affected municipality and to any other affected persons as required by the regulatory authority's rules.
(d)  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 and any appropriate cost and rate schedules supporting the requested rate increase.   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 costs or expenses.
(e)  Except as provided by Subsection (f) or (g), 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 utility 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 utility commission or if the utility is delinquent in paying the assessment and any applicable penalties or interest required by Section 5.701(n).
(f)  After written notice to the utility, a local regulatory authority may suspend the effective date of a rate change for not more than 90 days from the proposed effective date.  If the local regulatory authority does not make a final determination on the proposed rate before the expiration of the suspension period, the proposed rate shall be considered approved.  This approval is subject to the authority of the local regulatory authority thereafter to continue a hearing in progress.
(g)  After written notice to the utility, the utility commission may suspend the effective date of a rate change for not more than 265 days from the proposed effective date.  If the utility commission does not make a final determination on the proposed rate before the expiration of the suspension period, the proposed rate shall be considered approved.  This approval is subject to the authority of the utility commission thereafter to continue a hearing in progress.
(h)  The 265-day period described by Subsection (g) shall be extended by two days for each day a hearing exceeds 15 days.
(i)  If, before the 91st day after the effective date of the rate change, the regulatory authority receives a complaint from any affected municipality, or from the lesser of 1,000 or 10 percent of the ratepayers of the utility over whose rates the regulatory authority has original jurisdiction, the regulatory authority shall set the matter for hearing.
(j)  If the regulatory authority receives at least the number of complaints from ratepayers required for the regulatory authority to set a hearing under Subsection (i), the regulatory authority may, pending the hearing and a decision, suspend the date the rate change would otherwise be effective.  Except as provided by Subsection (h), the proposed rate may not be suspended for longer than:
(1)  90 days by a local regulatory authority; or
(2)  265 days by the utility commission.
(k)  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.
(l)  The hearing may be informal.
(m)  The regulatory authority shall give reasonable notice of the hearing, including notice to the governing body of each affected municipality and county.  The utility commission may delegate to an administrative law judge of the State Office of Administrative Hearings the responsibility and authority to give reasonable notice for the hearing, including notice to the governing body of each affected municipality and county.  The utility is not required to provide a formal answer or file any other formal pleading in response to the notice, and the absence of an answer does not affect an order for a hearing.
(n)  The utility shall mail notice of the hearing to each ratepayer before the hearing.  The notice must include a description of the process by which a ratepayer may intervene in the ratemaking proceeding.
(o)  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.
(p)  A utility may put a changed rate into effect throughout the area in which the utility sought to change its rates, including an area over which the utility commission is exercising appellate or original jurisdiction, by filing a bond with the utility commission if the suspension period has been extended under Subsection (h) and the utility commission fails to make a final determination before the 266th day after the date the rate change would otherwise be effective.
(q)  The bonded rate may not exceed the proposed rate.  The bond must be payable to the utility commission in an amount, in a form, and with a surety approved by the utility commission and conditioned on refund.
(r)  Unless otherwise agreed to by the parties to the rate proceeding, the utility shall refund or credit against future bills:
(1)  all sums collected under the bonded rates in excess of the rate finally ordered; and
(2)  interest on those sums at the current interest rate as determined by the regulatory authority.
(s)  At any time during the pendency of the rate proceeding the regulatory authority may fix interim rates to remain in effect during the applicable suspension period under Subsection (f) or Subsections (g) and (h) or until a final determination is made on the proposed rate.  If the regulatory authority does not establish interim rates, the rates in effect when the application described by Subsection (d) was filed continue in effect during the suspension period.
(t)  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.
(u)  For good cause shown, the regulatory authority may at any time during the proceeding require the utility to refund money collected under a proposed rate before the rate was suspended or an interim rate was established to the extent the proposed rate exceeds the existing rate or the interim rate.
(v)  If a regulatory authority other than the utility commission establishes interim rates or bonded rates, the regulatory authority must make a final determination on the rates not later than the first anniversary of the effective date of the interim rates or bonded rates or the rates are automatically approved as requested by the utility.
(w)  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 2013, 83rd Leg., R.S., Ch. 170 (H.B. 1600), Sec. 2.40, eff. September 1, 2013.
Added by Acts 2013, 83rd Leg., R.S., Ch. 171 (S.B. 567), Sec. 40, eff. September 1, 2013.
Amended by:
Acts 2015, 84th Leg., R.S., Ch. 853 (S.B. 1148), Sec. 6, eff. September 1, 2015.
Acts 2015, 84th Leg., R.S., Ch. 1236 (S.B. 1296), Sec. 18.001, eff. September 1, 2015.
Acts 2019, 86th Leg., R.S., Ch. 967 (S.B. 700), Sec. 6, eff. September 1, 2019.