S.B. No. 700
 
 
 
 
AN ACT
  relating to retail public utilities that provide water or sewer
  service.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 13.002, Water Code, is amended by
  amending Subdivisions (4-b) and (4-c) and adding Subdivision (4-d)
  to read as follows:
               (4-b)  "Class B utility" means a public utility that
  provides retail water or sewer utility service through 2,300 [500]
  or more taps or connections but fewer than 10,000 taps or
  connections.
               (4-c)  "Class C utility" means a public utility that
  provides retail water or sewer utility service through 500 or more
  taps or connections but fewer than 2,300 [500] taps or connections.
               (4-d)  "Class D utility" means a public utility that
  provides retail water or sewer utility service through fewer than
  500 taps or connections.
         SECTION 2.  Section 13.041, Water Code, is amended by
  amending Subsection (d) and adding Subsections (h), (i), and (j) to
  read as follows:
         (d)  In accordance with Subchapter K-1, the utility
  commission may issue emergency orders, with or without a hearing:
               (1)  to compel a retail public utility [water or sewer
  service provider] that has obtained or is required to obtain a
  certificate of public convenience and necessity to provide
  continuous and adequate water service, sewer service, or both, if
  the discontinuance of the service is imminent or has occurred
  because of the retail public utility's [service provider's] actions
  or failure to act; and
               (2)  to compel a retail public utility to provide an
  emergency interconnection with a neighboring retail public utility
  for the provision of temporary water or sewer service, or both, for
  not more than 90 days if service discontinuance or serious
  impairment in service is imminent or has occurred.
         (h)  In accordance with Subchapter L, Chapter 5, the
  commission may issue emergency orders, with or without a hearing:
               (1)  to compel a retail public utility that has
  obtained a certificate of public convenience and necessity to
  provide water or sewer service, or both, that complies with all
  statutory and regulatory requirements of the commission if
  necessary to ensure safe drinking water or environmental
  protection; and
               (2)  to compel a retail public utility to provide an
  emergency interconnection with a neighboring retail public utility
  for the provision of temporary water or sewer service, or both, for
  not more than 90 days if necessary to ensure safe drinking water or
  environmental protection.
         (i)  On request by the commission, the utility commission
  may, on an expedited basis, establish reasonable compensation for
  the temporary service required under Subsection (h)(2) and may
  allow the retail public utility receiving the service to make a
  temporary adjustment to its rate structure to ensure proper
  payment.
         (j)  If an order is issued under Subsection (h) without a
  hearing, notice of a hearing under Section 5.504 to affirm, modify,
  or set aside the order is adequate if the notice is mailed or hand
  delivered to the last known address of the retail public utility's
  headquarters.
         SECTION 3.  Section 13.046, Water Code, is amended by adding
  Subsection (d) to read as follows:
         (d)  At the time the utility commission approves the
  acquisition of a nonfunctioning retail water or sewer utility
  service provider under Section 13.301, the utility commission
  shall:
               (1)  determine the duration of the temporary rates for
  the retail public utility, which must be for a reasonable period;
  and
               (2)  rule on the reasonableness of the temporary rates
  under Subsection (b) if the utility commission did not make a ruling
  before the application was filed under Section 13.301.
         SECTION 4.  Section 13.183(c), Water Code, is amended to
  read as follows:
         (c)  To ensure that retail customers receive a higher
  quality, more affordable, or more reliable water or sewer service,
  to encourage regionalization, or to maintain financially stable and
  technically sound utilities, the regulatory authority, by rule or
  ordinance, as appropriate, may adopt specific alternative
  ratemaking methodologies for water or sewer rates to allow for more
  timely and efficient cost recovery.  Appropriate alternative
  ratemaking methodologies are the introduction of new customer
  classes, the cash needs method, and phased and multi-step rate
  changes.  The regulatory authority may also adopt system
  improvement charges that may be periodically adjusted to ensure
  timely recovery of infrastructure investment.  The utility
  commission by rule shall establish a schedule that requires all
  utilities that have implemented a system improvement charge
  approved by the utility commission to make periodic filings with
  the utility commission to modify or review base rates charged by the
  utility [based on factors other than rate of return and those
  specified in Section 13.185].  Overall revenues determined
  according to an alternative ratemaking methodology adopted under
  this section must provide revenues to the utility that satisfy the
  requirements of Subsection (a).  The regulatory authority may not
  approve rates under an alternative ratemaking methodology unless
  the regulatory authority adopts the methodology before the date the
  rate application was administratively complete.
         SECTION 5.  Section 13.187(a-1), Water Code, is amended to
  read as follows:
         (a-1)  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 [10,000] gallons of water; and
                     (B)  10,000 [30,000] gallons of water;
               (3)  a billing comparison regarding the existing sewer
  rate and the new sewer rate computed for the use of 5,000 [10,000]
  gallons, unless the utility proposes a flat rate for sewer
  services; and
               (4)  a description of the process by which a ratepayer
  may intervene in the ratemaking proceeding.
         SECTION 6.  Sections 13.1871(a), (b), and (d), Water Code,
  are amended to read as follows:
         (a)  Except as provided by Sections 13.18715 and [Section]
  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 [10,000] gallons of water; and
                     (B)  10,000 [30,000] gallons of water;
               (3)  a billing comparison regarding the existing sewer
  rate and the new sewer rate computed for the use of 5,000 [10,000]
  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).
         (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.  [In adopting
  rules relating to the information required in the application, the
  utility commission shall ensure that a utility can file a less
  burdensome and complex application than is required of a Class A
  utility.]  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.
         SECTION 7.  Subchapter F, Chapter 13, Water Code, is amended
  by adding Section 13.18715 to read as follows:
         Sec. 13.18715.  CLASS C UTILITIES:  STATEMENT OF INTENT TO
  CHANGE RATES; HEARING; DETERMINATION OF RATE LEVEL.  (a)  This
  section applies only to a Class C utility.
         (b)  A utility may not make changes in its rates except by
  complying with the procedures to change rates described by Section
  13.1871.
         (c)  Notwithstanding Section 13.1871(n), the utility may
  send the notice required by that subsection by mail or e-mail or may
  deliver a copy of the notice to the ratepayers.
         SECTION 8.  The heading to Section 13.1872, Water Code, is
  amended to read as follows:
         Sec. 13.1872.  CLASS D [C] UTILITIES:  RATE ADJUSTMENT.
         SECTION 9.  Section 13.1872, Water Code, is amended by
  amending Subsections (a) and (e) and adding Subsection (c-1) to
  read as follows:
         (a)  This section applies only to a Class D [C] utility.
         (c-1)  A utility that chooses to comply with Section 13.1871
  as authorized under Subsection (c)(2) of this section may send the
  notice required by Section 13.1871(n) by mail or e-mail or may
  deliver a copy of the notice to the ratepayers.
         (e)  The utility commission by rule shall adopt procedures to
  allow a utility to receive without a hearing an annual rate
  adjustment [based on changes in the price index].  The rules must:
               (1)  include standard language to be included in the
  notice described by Subsection (c)(1) describing the rate
  adjustment process; and
               (2)  provide that an annual rate adjustment described
  by this section may not result in a rate increase to any class or
  category of ratepayer of more than [the lesser of:
                     [(A)]  five percent[; or
                     [(B)     the percentage increase in the price index
  between the year preceding the year in which the utility requests
  the adjustment and the year in which the utility requests the
  adjustment].
         SECTION 10.  Subchapter F, Chapter 13, Water Code, is
  amended by adding Section 13.1873 to read as follows:
         Sec. 13.1873.  APPLICATION RULES.  In adopting rules
  relating to the information required in an application for a Class
  B, Class C, or Class D utility to change rates, the utility
  commission shall ensure that a:
               (1)  Class B utility can file a less burdensome and
  complex application than is required of a Class A utility; and
               (2)  Class C or Class D utility can file a less
  burdensome and complex application than is required of a Class A or
  Class B utility.
         SECTION 11.  Section 13.258(a), Water Code, is amended to
  read as follows:
         (a)  Notwithstanding any other provision of this chapter, a
  Class A utility may apply to the utility commission for an amendment
  of a certificate of convenience and necessity held by a municipal
  utility district to allow the utility to have the same rights and
  powers under the certificate as the municipal utility district.
         SECTION 12.  Section 5.501(c), Water Code, is amended to
  read as follows:
         (c)  The commission by order or rule may delegate to the
  executive director the authority to:
               (1)  receive applications and issue emergency orders
  under this subchapter and Section 13.041(h); and
               (2)  authorize, in writing, a representative or
  representatives to act on the executive director's behalf under
  this subchapter and Section 13.041(h).
         SECTION 13.  The change in law made by this Act applies only
  to an application for an amendment of a certificate of public
  convenience and necessity or an application for a rate change or
  adjustment filed on or after the effective date of this Act.  An
  application filed before the effective date of this Act is governed
  by the law in effect on the date the application is filed, and the
  former law is continued in effect for that purpose.
         SECTION 14.  Section 13.1872(b), Water Code, is repealed.
         SECTION 15.  This Act takes effect September 1, 2019.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 700 passed the Senate on
  April 9, 2019, by the following vote: Yeas 31, Nays 0; and that
  the Senate concurred in House amendment on May 21, 2019, by the
  following vote: Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 700 passed the House, with
  amendment, on May 17, 2019, by the following vote: Yeas 141,
  Nays 1, two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor