Court Opinion

ID: 9680855
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:39:49.790104+00
Date Added: 2024-06-11T18:17:30.950358
License: Public Domain

DANIEL, Justice,
dissenting.
I respectfully dissent.
The effect of the Court’s opinion is to permit regulation of electric utility rates by the Texas Public Utility Commission on a system-wide basis instead of allowing effective original rate-making jurisdiction by individual municipalities within their respective boundaries. This action is said to be *298justified, on appeals to the Commission, by the following statement:
“To hold otherwise would ignore the contemporary reality that the assets of an integrated utility simultaneously serve all its customers rendering the allocation of cost on a territorial basis an inappropriate method of rate setting in the context of present-day technology.”
This appears to be a policy decision which is in direct conflict with that adopted by the Legislature in the Public Utility Regulatory Act of 1975. Article 1446c, V.A.C.S. (1975).1 Prior to the adoption of the Act, municipalities were the only public agencies which had the power to regulate the rates here involved. See repealed Articles 1119 et seq. This very issue of state-wide or system-wide regulation by the Commission versus continued regulation by the municipalities within their territorial boundaries was thoroughly considered by the 64th Legislature. Utility companies advocated more centralized control and the Texas Municipal League opposed the whole idea of a State Commission until municipal regulation within the territorial boundaries of municipalities was reserved and retained.2
For instance, Senate Bill 42 of the 64th Leg., Reg. Sess. (1975), proposed that the new State Commission should regulate electric and telephone rates and services, without continued local regulation. Various other bills would have diminished the existing powers of the cities to regulate rates within their boundaries, but none of them were adopted. Instead, whether wisely or not, the conference committee opted for a combination of various proposals in a manner which would permit continued local regulation by the cities within their boundaries.3 The conference committee report, as adopted by the Legislature (Article 1446c), contains the following provisions relating to original municipal jurisdiction within the territorial limits of each municipality:
“Sec. 17. (a) Subject to the limitations imposed in this Act, and for the purpose of regulating rates and services so that such rates may be fair, just, and reasonable, and the services adequate and efficient, the governing body of each municipality shall have exclusive original jurisdiction over all electric, water, and sewer utility rates, operations, and services provided by an electric, water, and sewer utility within its city or town limits. (Emphasis added throughout.)
* * * * * ;fc
“(e) The commission shall have exclusive original jurisdiction over electric, water, and sewer utility rates, operations, and services not within the incorporated limits of a municipality exercising exclusive original jurisdiction over those rates, operations, and services as provided in this Act.
* * * * * *
“Sec. 22. . . . If a municipality does not surrender its jurisdiction, local utility service within the boundaries of the municipality shall be exempt from regulation by the commission under the provisions of this Act to the extent that this Act applies to local service, and the municipality shall have, regarding service within its boundaries, the right to exercise the same regulatory powers under the same standards and rules as the commission, or other standards and rules not inconsistent therewith. .
“Sec. 23. Any municipality regulating its public utilities pursuant to this Act shall require from those utilities all necessary data to make a reasonable determination of rate base, expenses, investment, and rate of return within the municipal. boundaries. The standards for such determination shall be based on the *299procedures and requirements of this Act and said municipality shall retain any and all personnel necessary to make the determination of reasonable rates required under this Act.”
In view of the above provisions, read in connection with the entire Act, it is difficult to understand how the Court has concluded that the Public Utility Commission properly considered system-wide data in determining rates for the thirty-two incorporated cities served by Central Power and Light instead of separated data as to “rate base, expenses, investment and rate of return within the municipal boundaries” of each of said cities. Surely, on appeal the Commission should base its decision on the same criteria prescribed for the separate municipalities rather than on a different system-wide criteria. Section 26(e) of Article 1446c clearly states that on appeal the Commission must set “rates as the municipality should have fixed in the ordinance from which the appeal was taken.” Whether a rate increase is justified for one municipality cannot be determined on overall system-wide criteria covering 107 incorporated cities in South Texas counties. Under the Act, a city cannot and should not be required to increase the rates within its boundaries simply because the utility has a revenue deficiency in other areas or places.
Prior to the 1975 Act, municipalities had authority to require that utilities provide the separated data referred to in Section 23 of Article 1446c. General Telephone Co. of the S.W. v. City of Garland, 509 S.W.2d 927 (Tex.Civ.App.1974, writ ref’d n. r. e.); City of Arlington v. Tex. Elec. Serv. Co., 540 S.W.2d 580 (Tex.Civ.App.1976, writ ref’d n. r. e.). There is nothing in the legislative history or the words of Section 23 that would indicate an intention of the Legislature to take away this authority from the municipalities. On the contrary, the provisions of Section 23 seem to confer by statute the same authority which had been previously held to exist under prior laws. Dr. Hopper states:
“HB 433 gave the commission authority to require separated data on each city, and have [sic] permitted cities to consider revenues and return in the area outside the city (non-exempt area), when setting rates in the city’s area (exempt area). Cities would retain the power to decide which to use, and whether to require separated data or not. This same language was put into Cl and remains in PURA.”4
It would seem that since the Legislature has provided municipalities with original jurisdiction to fix utility rates within their municipal boundaries and the power to require from utilities all necessary data set forth in Section 23 for the purpose of determining such rates, any appeal from a municipality’s decision should likewise be based on the separated data set forth in Section 23 rather than on system-wide data.. I would hold that municipalities may require utilities to furnish the separated data within their municipal boundaries, and that such separated data should be considered on appeal until and unless the Legislature changes the law so as to provide for data to be furnished and rates to be set on a system-wide basis in lieu of the present provisions of Article 1446c relating to original municipal jurisdiction.
CHADICK, J., joins in this dissent.

. All statutory references are to Vernon’s Annotated Texas Civil Statutes unless otherwise noted.

. See Hopper, “A Legislative History of the Texas Public Utility Regulatory Act of 1975,” 28 Baylor L.Rev. 777 (1976). Dr. Hopper, a consulting economist, was a consultant to the legislative Ad Hoc Committee on Utility Regulation and to the Senate Subcommittee on Consumer Affairs during the 64th legislative session in 1975.

.See 28 Baylor L.Rev. at 785-789.

. Id. 815. See also “Public Utility Commission: Appellate Procedure and Judicial Review,” 28 Baylor L.Rev. 1001, 1005 (1976), in which it is stated that under the new Act a municipality may “issue orders requesting utilities to provide data on these expenses, investments and rate of return within the municipality’s borders.”