Texas Administrative Code › Title 16 - ECONOMIC REGULATION › Part 2 - PUBLIC UTILITY COMMISSION OF TEXAS › Chapter 25 - SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS › Subchapter J - COSTS, RATES AND TARIFFS › Division 1 - RETAIL RATES › Section 25.232 - Adjustment for House Bill 11, Acts of 72nd Legislature, First Called Special Session 1991

Current through Reg. 49, No. 28; July 12, 2024
(a) Each electric
					 utility that is subject to the commission's rate setting jurisdiction, pays
					 state franchise taxes, and has not had a rate proceeding under the Public
					 Utility Regulatory Act §36.103 and §36.151, in which the effects of
					 House Bill 11 were considered when setting the rates, shall be subject to this
					 subsection. Except as provided in the following sentence, on or before December
					 1 of each year, each electric utility subject to this subsection shall file
					 with the commission a tariff sheet, or tariff sheets, applicable to each rate
					 class setting forth an interim House Bill 11 tax adjustment factor. If an
					 electric utility chooses not to request an increase under this subsection or if
					 the electric utility has otherwise limited itself by agreement to recovering
					 tax changes that are the subject of this subsection by a method different from
					 that prescribed in this subsection, the electric utility need not file tariff
					 sheets but shall make an informational filing showing its calculations,
					 including an explanation and all underlying supporting documentation showing
					 the effect of House Bill 11 on its taxes. If the adjustment is a decrease that
					 amounts to less than $1.00 per customer for electric utilities on an annual
					 basis, the tariff shall not include a factor, but shall state that the
					 reduction will be applied against the adjustment for future years. In all other
					 tariffs, the factors set forth in the tariff sheets shall be calculated as set
					 forth in the following paragraphs. Electric utilities that are required to file
					 tariff sheets shall include an explanation of how the interim factor was
					 calculated and showing all the calculations.
(b) If the adjustment is a decrease requiring
					 a factor, or the electric utility affirmatively requests that an adjustment be
					 made to its billings to account for the effect of House Bill 11 on its state
					 taxes, the tariff filing will be docketed and will automatically go into effect
					 on January 1 of the year following the filing. If the adjustment is a decrease
					 being carried forward to future years, the filing will be treated as a tariff
					 filing except that it shall take effect on January 1 of the year following the
					 filing. An electric utility may amend a tariff filed under this subsection to
					 make mid-course corrections as necessary. For all amended filings, all tariffs
					 will take effect on the date specified by the electric utility, but in no event
					 earlier than ten days after the filing.
(c) The interim House Bill 11 tax adjustment
					 factor shall be calculated by allocating the effect on the electric utility's
					 state taxes for the next calendar year of House Bill 11 as provided in
					 subsection (f) of this section. The effect on the electric utility's state
					 taxes for the coming calendar year shall be calculated by subtracting the
					 estimated state taxes attributable to the calendar year if the law prior to
					 House Bill 11 were still in effect, from the estimated state taxes due or
					 attributable to the calendar year under House Bill 11. In calculating the state
					 taxes that would be due during the calendar year if the law prior to House Bill
					 11 were still in effect, four-twelfths of the franchise tax paid or that would
					 have been paid in the previous year and eight-twelfths of the franchise tax
					 that would have been paid in the calendar year in question will be considered
					 attributable to the calendar year in question. In performing the calculation,
					 the various fees imposed by House Bill 11 will not be considered taxes. In
					 calculating the taxes that are estimated to be paid, changes resulting from
					 audits or amended returns for previous periods that were covered by this rule
					 shall be considered. The state franchise tax imposed by House Bill 11 will be
					 considered to be a franchise tax and not an income tax regardless of the method
					 of calculation.
(d) If an interim
					 factor goes into effect, it shall be subject to surcharge or refund to the
					 extent it differs from the factor finally set by the commission. If a surcharge
					 or refund is necessary, a credit or surcharge will be made to the existing
					 customers' bills. If the refund or surcharge amount is less than either $10,000
					 in total or $1.00 per customer, calculated by dividing the total refund or
					 surcharge by the total number of customers, the electric utility may make the
					 refund or surcharge by carrying it forward until a year when the cumulative
					 total refund or surcharge is not less than either $10,000 or $1.00 per
					 customer. Simple interest will be added to the amount due at the rate set by
					 the commission for overbillings and underbillings starting at the beginning of
					 the month in which the obligation accrued and ending on the last day of the
					 month preceding the refund or surcharge. The month, or months, in which the
					 obligation accrues will be determined by comparing the collections each month
					 under the tariff filed by the electric utility with the amount that should have
					 been collected had the electric utility been able to precisely predict its tax
					 bill and its sales. The number of days in each month shall be considered for
					 purposes of the interest calculation. Interest will be added to decreases that
					 are carried to future years and will be calculated by the same
					 method.
(e) The electric utility
					 shall file, on or before the first business day after March 1 of the year
					 following the year when a particular factor was in effect, testimony supporting
					 the final adjustment factor that it is requesting to account for the effect of
					 House Bill 11 on its state taxes for that year. The electric utility's filing
					 will include a copy of the Franchise Tax Return filed with the Comptroller's
					 Office and the details of their computation of the tax that would have been due
					 had House Bill 11 not been enacted. The hearing on the merits for purposes of
					 setting the final factor, if necessary, shall be convened no earlier than 45
					 days after the filing of the electric utility's testimony and shall be strictly
					 limited to issues under this subsection. For purposes of administrative
					 efficiency, the presiding officer assigned to a case may grant an electric
					 utility's request that the final hearing on a particular year's factor be
					 delayed for up to three years; however, if such a request is granted, any
					 interest to be paid by the electric utility shall be at the utility's cost of
					 capital as determined in the electric utility's last rate case. Requests to
					 delay the final hearing on a particular year's factor shall be filed with the
					 testimony supporting the final adjustment factor.
(f) The billing adjustment should apply over
					 the entire year; however, if the adjustment necessary to account for the effect
					 of House Bill 11 is so small that it would be difficult to apply on a monthly
					 basis, the electric utility may make the billing adjustment during a single
					 month. Cost allocation and rate design are as follows.
(1) If the adjustment factor results in a
					 lower cost to the ratepayers, the revenue decrease shall be allocated to the
					 customers on the same basis as the franchise taxes were allocated in the
					 electric utility's last rate case.
(2) If the adjustment factor results in a
					 greater cost to the ratepayers, the revenue increase will be allocated to the
					 customers in the same manner as were federal income taxes in the electric
					 utility's last rate case.
(3) The
					 factor for each customer within a class will then be calculated based on
					 expected kilowatt-hour (kwh) sales and charged on a per kwh basis, except that
					 the factor for each customer within an industrial class served at
					 transmission-level voltage will be calculated as a percentage of the base
					 revenues (excluding fuel, any applicable power cost recovery factor (PCRF)
					 charges, and add-on revenue taxes) received from that class during the most
					 recent 12-month period.