CHAPTER 104. RATES AND SERVICES

UTILITIES CODE

TITLE 3. GAS REGULATION

SUBTITLE A. GAS UTILITY REGULATORY ACT

CHAPTER 104. RATES AND SERVICES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 104.001. AUTHORIZATION TO ESTABLISH AND REGULATE RATES.

(a) The railroad commission is vested with all the authority and

power of this state to ensure compliance with the obligations of

gas utilities in this subtitle.

(b) The regulatory authority may establish and regulate rates of

a gas utility and may adopt rules for determining:

(1) the classification of customers and services; and

(2) the applicability of rates.

(c) A rule or order of the regulatory authority may not conflict

with a ruling of a federal regulatory body.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.002. COMPLIANCE WITH SUBTITLE. A gas utility may not:

(1) charge, collect, or receive a rate for utility service

except as provided by this subtitle; or

(2) impose a rule or regulation except as provided by this

subtitle.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.003. JUST AND REASONABLE RATES. (a) The regulatory

authority shall ensure that each rate a gas utility or two or

more gas utilities jointly make, demand, or receive is just and

reasonable. A rate may not be unreasonably preferential,

prejudicial, or discriminatory but must be sufficient, equitable,

and consistent in application to each class of consumer. In

establishing a gas utility's rates, the railroad commission may

treat as a single class two or more municipalities that a gas

utility serves if the commission considers that treatment to be

appropriate.

(b) A rate for a pipeline-to-pipeline transaction or to a

transportation, industrial, or similar large volume contract

customer is considered to be just and reasonable and otherwise to

comply with this section and shall be approved by the regulatory

authority if:

(1) neither the gas utility nor the customer had an unfair

advantage during the negotiations;

(2) the rate is substantially the same as the rate between the

gas utility and at least two of those customers under the same or

similar conditions of service; or

(3) competition does or did exist with another gas utility,

another supplier of natural gas, or a supplier of an alternative

form of energy.

(c) Subsection (b) does not apply:

(1) if a complaint is filed with the railroad commission by a

transmission pipeline purchaser of gas sold or transported under

the pipeline-to-pipeline or transportation rate; or

(2) to a direct sale for resale to a gas distribution utility at

a city gate.

(d) The reasonableness of gas purchase costs included in a city

gate rate proposed to be charged for a sale for resale to a gas

distribution utility at a city gate may be reviewed at a city

gate rate proceeding even though the costs have been previously

approved as a rate for other parties under Subsection (b).

(e) Subsection (b)(1) does not apply to a rate charged or

offered to be charged to an affiliated pipeline utility.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.004. UNREASONABLE PREFERENCE OR PREJUDICE PROHIBITED.

A gas utility may not:

(1) grant an unreasonable preference or advantage concerning

rates or services to a person in a classification;

(2) subject a person in a classification to an unreasonable

prejudice or disadvantage concerning rates or services; or

(3) establish or maintain an unreasonable difference concerning

rates of services between localities or between classes of

service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.005. EQUALITY OF RATES AND SERVICES. (a) A gas

utility may not directly or indirectly charge, demand, collect,

or receive from a person a greater or lesser compensation for a

service provided or to be provided by the utility than the

compensation prescribed by the applicable schedule of rates filed

under Section 102.151.

(b) A person may not knowingly receive or accept a service from

a gas utility for a compensation greater or less than the

compensation prescribed by the schedules. A rate charged and

collected by a gas utility on September 1, 1983, may be continued

until schedules are filed.

(c) After notice and hearing, the railroad commission may, in

the public interest, order a gas utility to refund with interest

compensation received in violation of this section.

(d) This subtitle does not prevent a cooperative corporation

from returning to its members net earnings resulting from its

operations in proportion to the members' purchases from or

through the corporation.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.006. RATES FOR AREA NOT IN MUNICIPALITY. Without the

approval of the railroad commission, a gas utility's rates for an

area not in a municipality may not exceed 115 percent of the

average of all rates for similar services for all municipalities

served by the same utility in the same county as that area.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.007. DISCRIMINATION AND RESTRICTION ON COMPETITION. A

gas utility may not:

(1) discriminate against a person who sells or leases equipment

or performs services in competition with the gas utility; or

(2) engage in a practice that tends to restrict or impair that

competition.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.008. BURDEN OF PROOF. In a proceeding involving a

proposed rate change, the gas utility has the burden of proving

that:

(1) the rate change is just and reasonable, if the utility

proposes the change; or

(2) an existing rate is just and reasonable, if the proposal is

to reduce the rate.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER B. COMPUTATION OF RATES

Sec. 104.051. ESTABLISHING OVERALL REVENUES. In establishing a

gas utility's rates, the regulatory authority shall establish the

utility's overall revenues at an amount that will permit the

utility a reasonable opportunity to earn a reasonable return on

the utility's invested capital used and useful in providing

service to the public in excess of its reasonable and necessary

operating expenses.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.052. ESTABLISHING FAIR RATE OF RETURN. The regulatory

authority may not establish a rate that yields more than a fair

return on the adjusted value of the invested capital used and

useful in providing service to the public.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.053. COMPONENTS OF ADJUSTED VALUE OF INVESTED CAPITAL.

(a) Gas utility rates shall be based on the adjusted value of

invested capital used and useful to the utility in providing

service and that adjusted value shall be computed on the basis of

a reasonable balance between:

(1) original cost, less depreciation; and

(2) current cost, less an adjustment for present age and

condition.

(b) The regulatory authority may determine a reasonable balance

that reflects:

(1) not less than 60 percent nor more than 75 percent of the

original cost of the property at the time the property was

dedicated to public use, whether by the gas utility that is the

present owner or by a predecessor, less depreciation; and

(2) not less than 25 percent nor more than 40 percent of the

current cost less an adjustment for present age and condition.

(c) In determining a reasonable balance, the regulatory

authority may consider inflation, deflation, quality of service

being provided, growth rate of the service area, and need for the

gas utility to attract new capital.

(d) Construction work in progress, at cost as recorded on the

gas utility's books, may be included as part of the adjusted

value of invested capital used by and useful to the utility in

providing service, as necessary to the financial integrity of the

utility.

(e) Costs of facilities, revenues, expenses, taxes, and reserves

shall be separated or allocated as prescribed by the regulatory

authority.

(f) In this section, "original cost" means the actual money cost

or the actual money value of consideration paid other than money.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.054. DEPRECIATION, AMORTIZATION, AND DEPLETION. (a)

The railroad commission shall establish proper and adequate rates

and methods of depreciation, amortization, or depletion for each

class of property of a gas utility or municipally owned utility.

(b) The rates and methods established under this section and the

depreciation account required under Section 102.152 shall be used

uniformly and consistently throughout rate-setting and appeal

proceedings.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.055. NET INCOME; ALLOWABLE EXPENSES. (a) Net income

shall be used to establish just and reasonable rates. For that

purpose, "net income" means the total revenues of the gas utility

from gas utility service less all reasonable and necessary

expenses related to that gas utility service. The regulatory

authority shall determine those revenues and expenses in a manner

consistent with this subchapter.

(b) In establishing a gas utility's rates, the regulatory

authority may not allow a gas utility's payment to an affiliate

for the cost of a service, property, right, or other item or for

an interest expense to be included as capital cost or as expense

related to gas utility service except to the extent that the

regulatory authority finds the payment is reasonable and

necessary for each item or class of items as determined by the

regulatory authority. That finding must include:

(1) a specific finding of the reasonableness and necessity of

each item or class of items allowed; and

(2) a finding that the price to the gas utility is not higher

than the prices charged by the supplying affiliate to its other

affiliates or divisions or to a nonaffiliated person for the same

item or class of items.

(c) If an expense is allowed to be included in utility rates, or

an investment is included in the utility rate base, the related

income tax deduction or benefit shall be included in the

computation of income tax expense to reduce the rates. If an

expense is disallowed or not included in utility rates, or an

investment is not included in the utility rate base, the related

income tax deduction or benefit may not be included in the

computation of income tax expense to reduce the rates. The income

tax expense shall be computed using the statutory income tax

rates.

(d) The regulatory authority may adopt reasonable rules

complying with this section with respect to including and

excluding certain expenses in computing the rates to be

established.

(e) This section is not intended to increase gas utility rates

to the customer not caused by utility service. Utility rates may

include only expenses caused by utility service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.056. TREATMENT OF CERTAIN TAX BENEFITS. (a) In

determining the allocation of tax savings derived from

liberalized depreciation and amortization, the investment tax

credit, and the application of similar methods, the regulatory

authority shall:

(1) balance equitably the interests of present and future

customers; and

(2) apportion accordingly the benefits between consumers and the

gas utility or municipally owned utility.

(b) If a gas utility or municipally owned utility retains a

portion of the investment tax credit, that portion shall be

deducted from the original cost of the facilities or other

addition to the rate base to which the credit applied to the

extent allowed by the Internal Revenue Code.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.057. CONSIDERATION OF CERTAIN EXPENSES. (a) In

establishing a gas utility's rates, the regulatory authority may

not allow as a cost or expense an expenditure:

(1) described by Section 102.154 that the regulatory authority

determines to be not in the public interest; or

(2) for legislative advocacy.

(b) The regulatory authority may allow as a cost or expense

reasonable charitable or civic contributions not to exceed the

amount approved by the regulatory authority.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.058. CONSIDERATION OF PROFIT OR LOSS FROM SALE OR LEASE

OF MERCHANDISE. In establishing a gas utility's or municipally

owned utility's rates, the regulatory authority may not consider

a profit or loss that results from the sale or lease of

merchandise, including appliances, fixtures, or equipment, to the

extent that merchandise is not integral to providing utility

service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER C. RATE CHANGES PROPOSED BY UTILITY

Sec. 104.101. DEFINITION. In this subchapter, "major change"

means an increase in rates that would increase the aggregate

revenues of the applicant more than the greater of $100,000 or

2-1/2 percent. The term does not include an increase in rates

that the regulatory authority allows to go into effect or the gas

utility makes under an order of the regulatory authority after

hearings held with public notice.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.102. STATEMENT OF INTENT TO INCREASE RATES. (a) A gas

utility may not increase its rates unless the utility files a

statement of its intent with the regulatory authority that has

original jurisdiction over those rates at least 35 days before

the effective date of the proposed increase.

(b) The gas utility shall also mail or deliver a copy of the

statement of intent to the appropriate officer of each affected

municipality.

(c) The statement of intent must include:

(1) proposed revisions of tariffs and schedules; and

(2) a detailed statement of:

(A) each proposed increase;

(B) the effect the proposed increase is expected to have on the

revenues of the utility;

(C) each class and number of utility consumers affected; and

(D) any other information required by the regulatory authority's

rules and regulations.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.103. NOTICE OF INTENT TO INCREASE RATES. (a) The gas

utility shall:

(1) publish, in conspicuous form, notice to the public of the

proposed increase once each week for four successive weeks in a

newspaper having general circulation in each county containing

territory affected by the proposed increase; and

(2) provide notice of the proposed increase to any other

affected person as required by the regulatory authority's rules.

(b) Instead of publishing newspaper notice, a gas utility may

provide notice to the public in an area outside the affected

municipality or in a municipality with a population of less than

2,500 by:

(1) mailing the notice by United States mail, postage prepaid,

to the billing address of each directly affected customer; or

(2) including the notice, in conspicuous form, in the bill of

each directly affected customer.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.104. EARLY EFFECTIVE DATE OF RATE INCREASE. (a) For

good cause shown, the regulatory authority may allow a rate

increase, other than a major change, to take effect:

(1) before the end of the 35-day period prescribed by Section

104.102; and

(2) under conditions the regulatory authority prescribes,

subject to suspension as provided by this subchapter.

(b) The gas utility shall immediately revise its schedules to

include the increase.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.105. DETERMINATION OF PROPRIETY OF RATE CHANGE;

HEARING. (a) If a schedule modifying or increasing rates is

filed with a regulatory authority, the regulatory authority

shall, on complaint by an affected person, or may, on its own

motion, not later than the 30th day after the effective date of

the increase, enter on a hearing to determine the propriety of

the increase.

(b) The regulatory authority shall hold a hearing in every case

in which the increase constitutes a major change. The regulatory

authority may, however, use an informal proceeding if the

regulatory authority does not receive a complaint before the

expiration of 45 days after the date notice of the increase is

filed.

(c) The regulatory authority shall give reasonable notice of the

hearing, including notice to the governing body of each affected

municipality and county. The gas 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.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.106. PREFERENCE TO HEARING. The regulatory authority

shall:

(1) give preference to the hearing under this subchapter and to

deciding questions arising under this subchapter over any other

question pending before it; and

(2) decide the questions as quickly as possible.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.107. RATE SUSPENSION; DEADLINE. (a) Pending the

hearing and a decision:

(1) the local regulatory authority, after delivering to the gas

utility a written statement of the regulatory authority's

reasons, may suspend the operation of the schedule for not longer

than 90 days after the date the schedule would otherwise be

effective; and

(2) the railroad commission may suspend the operation of the

schedule for not longer than 150 days after the date the schedule

would otherwise be effective.

(b) The 150-day period prescribed by Subsection (a)(2) shall be

extended for two days for each day the actual hearing on the

merits of the case exceeds 15 days.

(c) If the regulatory authority does not make a final

determination concerning a schedule of rates before expiration of

the applicable suspension period, the regulatory authority is

considered to have approved the schedule. This approval is

subject to the authority of the regulatory authority thereafter

to continue a hearing in progress.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2001, 77th Leg., ch. 1233, Sec. 67, eff. Sept. 1,

2001.

Sec. 104.108. TEMPORARY RATES. (a) The regulatory authority

may establish temporary rates to be in effect during the

applicable suspension period under Section 104.107.

(b) If the regulatory authority does not establish temporary

rates, the rates in effect when the suspended schedule was filed

continue in effect during the suspension period.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.109. BONDED RATES. (a) A gas utility may put a

changed rate into effect by filing a bond with the regulatory

authority if the regulatory authority fails to make a final

determination within 90 days from the date the proposed increase

would otherwise be effective.

(b) The bonded rate may not exceed the proposed rate.

(c) The bond must be:

(1) payable to the regulatory authority in an amount, in a form,

and with a surety approved by the regulatory authority; and

(2) conditioned on refund.

(d) The gas utility shall refund or credit against future bills:

(1) money collected under the bonded rates in excess of the rate

finally ordered; and

(2) interest on that money, at the current interest rate as

determined by the regulatory authority.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.110. ESTABLISHMENT OF FINAL RATES. (a) If, after

hearing, the regulatory authority finds the rates are

unreasonable or in violation of law, the regulatory authority

shall:

(1) enter an order establishing the rates the gas utility shall

charge or apply for the service in question; and

(2) serve a copy of the order on the gas utility.

(b) The rates established in the order shall be observed

thereafter until changed as provided by this subtitle.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.111. APPROVAL OF DECREASE IN RATES. Notwithstanding

any other provision in this subtitle, the regulatory authority

may, without reference to the cost of service standard prescribed

by Section 104.051, administratively approve a decrease in rates

proposed by the applicant and agreed on by each party directly

affected unless the regulatory authority determines that the

proposed decrease is not in the public interest.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.112. SURCHARGE TO RECOVER RELOCATION COSTS. (a) This

section applies to a gas utility's costs of relocating a facility

to accommodate construction or improvement of a highway, road,

street, public way, or other public work by or on behalf of the

United States, this state, a political subdivision of this state,

or another entity having the power of eminent domain that are not

reimbursed by a source other than as provided by this section.

(b) A gas utility may recover its relocation costs to which this

section applies through a surcharge on gas volumes sold and

transported to customers in the service area where the relocation

occurred by applying to each appropriate regulatory authority for

a new rate schedule or tariff. The gas utility is not required to

file a statement of intent to increase rates to institute the

surcharge, and the other provisions of this subchapter, other

than appeal rights, do not apply to institution of the surcharge.

(c) An application under Subsection (b) must include sufficient

documentation to demonstrate:

(1) the requirement for each relocation;

(2) the entity requiring the relocation;

(3) costs incurred for relocation of comparable facilities;

(4) surcharge computations; and

(5) that reasonable efforts have been made to receive

reimbursement from the entity requiring the relocation, if

applicable.

(d) Not later than the 35th day after the date an application

under Subsection (b) is received, the regulatory authority shall

administratively grant or deny the application. Denial of the

application must be based on a finding that:

(1) the relocation was not necessary or required;

(2) the costs of the relocation were excessive or not supported;

(3) the utility did not pursue reimbursement from the entity

requiring the relocation, if applicable;

(4) the surcharge is unduly discriminatory among customers or

classes of customers located in the service area; or

(5) the period over which the relocation costs are designed to

be recovered is less than one or more than three years.

(e) If the regulating authority does not make a decision before

the deadline prescribed by Subsection (d), the application is

approved.

Added by Acts 1999, 76th Leg., ch. 219, Sec. 1, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 662, Sec. 1, eff.

Sept. 1, 2001.

SUBCHAPTER D. RATE CHANGES PROPOSED BY COMMISSION

Sec. 104.151. UNREASONABLE OR VIOLATIVE EXISTING RATES. (a) If

the regulatory authority, on its own motion or on complaint by an

affected person, after reasonable notice and hearing, finds that

the existing rates of a gas utility for a service are

unreasonable or in violation of law, the regulatory authority

shall:

(1) enter an order establishing the just and reasonable rates to

be observed thereafter, including maximum or minimum rates; and

(2) serve a copy of the order on the gas utility.

(b) The rates set under Subsection (a) constitute the legal

rates of the gas utility until changed as provided by this

subtitle.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.152. INVESTIGATING COSTS OF OBTAINING SERVICE FROM

ANOTHER SOURCE. If a gas utility does not produce the service

that it distributes, transmits, or furnishes to the public for

compensation but obtains the service from another source, the

regulatory authority may investigate the cost of that production

in an investigation of the reasonableness of the gas utility's

rates.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER E. RATES FOR GOVERNMENTAL ENTITIES

Sec. 104.201. TRANSPORTATION RATES BETWEEN GAS UTILITY OR

MUNICIPALLY OWNED UTILITY AND STATE AGENCY. (a) Notwithstanding

Section 104.003(b), absent a contract for transportation service

between a state agency and a gas utility or municipally owned

utility, the railroad commission, not later than the 210th day

after the date either party files a request to set a

transportation rate, shall establish the transportation rate for

the state agency. The commission has exclusive original

jurisdiction to establish a transportation rate for a state

agency under this section.

(b) The railroad commission shall base its determination of the

transportation rate under Subsection (a) on the cost of providing

the transportation service for both the distribution system and

the transmission system, as applicable, of the gas utility or

municipally owned utility.

(c) The railroad commission may order temporary rates under

Subsection (a) as provided for under the commission's appellate

jurisdiction.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.202. EXCLUDED EXPENSES. (a) The rates that a gas

utility or municipally owned utility charges a state agency may

not include an amount representing a gross receipts assessment,

regulatory assessment, or similar expense of the utility.

(b) An expense under Subsection (a) that is reasonable and is

not recovered from a state agency under this section may be

recovered from other customers of the gas utility or municipally

owned utility.

(c) A gross receipts assessment, regulatory assessment, or

similar expense of the utility does not include a payment to a

municipality under a contract, franchise, or other agreement.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 1326, Sec. 1, eff. June 18,

1999.

Sec. 104.203. PAYMENT IN LIEU OF TAX. (a) A payment made in

lieu of a tax by a municipally owned utility to the municipality

by which the utility is owned may not be considered an expense of

operation in establishing the utility's rate for providing

utility service to a school district or hospital district.

(b) A rate a municipally owned utility receives from a school

district or hospital district may not be used to make or to cover

the cost of making payments in lieu of taxes to the municipality

that owns the utility.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER F. SERVICES

Sec. 104.251. GENERAL STANDARD. A gas utility shall furnish

service, instrumentalities, and facilities that are safe,

adequate, efficient, and reasonable.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.252. AUTHORITY OF REGULATORY AUTHORITY CONCERNING

STANDARDS. A regulatory authority, on its own motion or on

complaint and after reasonable notice and hearing, may:

(1) adopt just and reasonable standards, classifications,

regulations, or practices a gas utility must follow in furnishing

a service;

(2) adopt adequate and reasonable standards for measuring a

condition, including quantity, quality, and pressure relating to

the furnishing of a service;

(3) adopt reasonable regulations for examining, testing, and

measuring a service; and

(4) adopt or approve reasonable rules, regulations,

specifications, and standards to ensure the accuracy of

equipment, including meters and instruments, used to measure a

service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.253. RULE OR STANDARD. (a) A gas utility may file

with the regulatory authority a standard, classification,

regulation, or practice the utility follows.

(b) The standard, classification, regulation, or practice

continues in force until:

(1) amended by the utility; or

(2) changed by the regulatory authority as provided by this

subtitle.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.254. SERVICE. A gas utility or municipally owned

utility may not refuse to provide service to a state agency if

pipeline capacity is available on an existing facility of the

utility.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.2545. REQUIRED SERVICE TO PUBLIC RETAIL CUSTOMER. (a)

In this section, "service site" means facilities or buildings

operated by a public retail customer or a group of adjacent

facilities or buildings operated by a public retail customer

within one contiguous geographical area.

(b) Unless the utility is prohibited by other law from providing

the service and if sufficient pipeline capacity is available on

an existing facility of the utility to provide the service, a gas

utility or municipally owned utility may not refuse to provide

service to a public retail customer at a service site, at rates

established as provided by Subsection (c), the following

services:

(1) the sale of gas;

(2) the transportation of an annual average of 25 million

British thermal units or more each day of gas that is:

(A) taken as a royalty in kind; and

(B) owned by the state or managed by a marketing program

operated by the state or by a state agency; or

(3) a combination of the services described by Subdivisions (1)

and (2).

(c) A utility shall provide a service described by Subsection

(b) at rates provided by a written contract negotiated between

the utility and the state or a state agency. If the utility and

the state or state agency are not able to agree to a contract

rate, a fair and reasonable rate may be determined for the public

retail customer, as a rate for a separate class of service, by

the railroad commission or, for municipally owned gas utilities,

by the relevant regulatory body under this chapter.

(d) In this section, "public retail customer" has the meaning

assigned by Section 35.101.

Added by Acts 1999, 76th Leg., ch. 300, Sec. 1, eff. Sept. 1,

1999. Amended by Acts 2003, 78th Leg., ch. 563, Sec. 1, eff. June

20, 2003.

Sec. 104.255. BILLING. (a) A gas utility or municipally owned

utility may not bill or otherwise require the state or a state

agency or institution to pay for service before the service is

provided.

(b) The railroad commission shall adopt rules concerning payment

of bills by the state or a state agency to a gas utility or

municipally owned utility. The rules must be consistent with

Chapter 2251, Government Code.

(c) This subtitle does not prohibit a gas utility or municipally

owned utility from entering into an agreement with the state or a

state agency to establish a level or average monthly service

billing plan. An agreement under this subsection must require

reconciliation of the leveled or equalized bills quarterly.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.2551. ELECTRONIC BILLING. A gas utility or municipally

owned utility may transmit the utility's bill for services

through the Internet or by other electronic means instead of

through the United States mail on the request of a customer of

the gas utility or municipally owned utility.

Added by Acts 2001, 77th Leg., ch. 1233, Sec. 68, eff. Sept. 1,

2001.

Sec. 104.256. EXAMINATION AND TEST OF INSTRUMENT OR EQUIPMENT;

INSPECTION. (a) A regulatory authority may:

(1) examine and test equipment, including meters and

instruments, used to measure service of a gas utility; and

(2) set up and use on the premises occupied by a gas utility an

apparatus or appliance necessary for the examination or test.

(b) The gas utility is entitled to be represented at an

examination, test, or inspection made under this section.

(c) The gas utility and its officers and employees shall

facilitate the examination, test, or inspection by giving

reasonable aid to the regulatory authority and to any person

designated by the regulatory authority for the performance of

those duties.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.257. INSPECTION FOR CONSUMER. (a) A consumer may have

a meter or other measuring device tested by a gas utility:

(1) once without charge, after a reasonable period of presumed

accuracy that the regulatory authority establishes by rule; and

(2) at a shorter interval on payment of a reasonable fee

established by the regulatory authority.

(b) The regulatory authority shall establish reasonable fees to

be paid for other examining or testing of a measuring device on

the request of a consumer.

(c) If the consumer requests the test under Subsection (a)(2)

and the measuring device is found unreasonably defective or

incorrect to the substantial disadvantage of the consumer, the

fee the consumer paid at the time of the request shall be

refunded.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 104.258. DISCONNECTION OF GAS SERVICE. (a) In this

section:

(1) "Extreme weather emergency" means a period during which the

previous day's highest temperature did not exceed 32 degrees

Fahrenheit and the temperature is predicted to remain at or below

that level for the next 24 hours according to the nearest

National Weather Service reports.

(2) "Provider" means:

(A) a gas utility, as defined by Sections 101.003 and 121.001;

and

(B) an owner, operator, or manager of a mobile home park or

apartment who purchases natural gas through a master meter for

delivery to a dwelling unit in a mobile home park or apartment

house under Chapter 124.

(b) A provider may not disconnect natural gas service to a

residential customer on a weekend day unless personnel of the

provider are available on that day to take payments and reconnect

service.

(c) A provider may not disconnect natural gas service to a

residential customer during an extreme weather emergency. The

provider shall defer collection of the full payment of bills that

are due during an extreme weather emergency until after the

emergency is over and shall work with customers to establish a

pay schedule for deferred bills.

Added by Acts 2001, 77th Leg., ch. 1149, Sec. 1, eff. Sept. 1,

2001.

SUBCHAPTER G. INTERIM COST RECOVERY AND RATE ADJUSTMENT

Sec. 104.301. INTERIM ADJUSTMENT FOR CHANGES IN INVESTMENT. (a)

A gas utility that has filed a rate case under Subchapter C

within the preceding two years may file with the regulatory

authority a tariff or rate schedule that provides for an interim

adjustment in the utility's monthly customer charge or initial

block rate to recover the cost of changes in the investment in

service for gas utility services. The adjustment shall be

allocated among the gas utility's classes of customers in the

same manner as the cost of service was allocated among classes of

customers in the utility's latest effective rates for the area in

which the tariff or rate schedule is implemented. The gas

utility shall file the tariff or rate schedule, or the annual

adjustment under Subsection (c), with the regulatory authority at

least 60 days before the proposed implementation date of the

tariff, rate schedule, or annual adjustment. The gas utility

shall provide notice of the tariff, rate schedule, or annual

adjustment to affected customers by bill insert or direct mail

not later than the 45th day after the date the utility files the

tariff, rate schedule, or annual adjustment with the regulatory

authority. During the 60-day period, the regulatory authority

may act to suspend the implementation of the tariff, rate

schedule, or annual adjustment for up to 45 days. After the

issuance of a final order or decision by a regulatory authority

in a rate case that is filed after the implementation of a tariff

or rate schedule under this section, any change in investment

that has been included in an interim adjustment in accordance

with the tariff or rate schedule under this section shall no

longer be subject to subsequent review for reasonableness or

prudence. Until the issuance of a final order or decision by a

regulatory authority in a rate case that is filed after the

implementation of a tariff or rate schedule under this section,

all amounts collected under the tariff or rate schedule before

the filing of the rate case are subject to refund.

(b) The amount the gas utility shall adjust the utility's rates

upward or downward under the tariff or rate schedule each

calendar year is based on the difference between the value of the

invested capital for the preceding calendar year and the value of

the invested capital for the calendar year preceding that

calendar year. The value of the invested capital is equal to the

original cost of the investment at the time the investment was

first dedicated to public use minus the accumulated depreciation

related to that investment.

(c) The interim adjustment shall be recalculated on an annual

basis in accordance with the requirements of Subsection (b). The

gas utility may file a request with the regulatory authority to

suspend the operation of the tariff or rate schedule for any

year. The request must be in writing and state the reasons why

the suspension is justified. The regulatory authority may grant

the suspension on a showing by the utility of reasonable

justification.

(d) A gas utility may only adjust the utility's rates under the

tariff or rate schedule for the return on investment,

depreciation expense, ad valorem taxes, revenue related taxes,

and incremental federal income taxes related to the difference in

the value of the invested capital as determined under Subsection

(b). The return on investment, depreciation, and incremental

federal income tax factors used in the computation must be the

same as the factors reflected in the final order issued by or

settlement agreement approved by the regulatory authority

establishing the gas utility's latest effective rates for the

area in which the tariff or rate schedule is implemented.

(e) A gas utility that implements a tariff or rate schedule

under this section shall file with the regulatory authority an

annual report describing the investment projects completed and

placed in service during the preceding calendar year and the

investments retired or abandoned during the preceding calendar

year. The annual report shall also state the cost, need, and

customers benefited by the change in investment.

(f) In addition to the report required under Subsection (e), the

gas utility shall file with the regulatory authority an annual

earnings monitoring report demonstrating the utility's earnings

during the preceding calendar year.

(g) If the gas utility is earning a return on invested capital,

as demonstrated by the report filed under Subsection (f), of more

than 75 basis points above the return established in the latest

effective rates approved by a regulatory authority for the area

in which the tariff or rate schedule is implemented under this

section, the gas utility shall file a statement with that report

stating the reasons why the rates are not unreasonable or in

violation of law.

(h) If a gas utility that implements a tariff or rate schedule

under this section does not file a rate case under Subchapter C

before the fifth anniversary of the date on which the tariff or

rate schedule takes effect, the gas utility shall file a rate

case under that subchapter not later than the 180th day after

that anniversary in relation to any rates subject to the tariff

or rate schedule.

(i) This section does not limit the power of a regulatory

authority under Section 104.151.

(j) A gas utility implementing a tariff or rate schedule under

this section shall reimburse the railroad commission the

utility's proportionate share of the railroad commission's costs

related to the administration of the interim rate adjustment

mechanism provided by this section.

Added by Acts 2003, 78th Leg., ch. 938, Sec. 1, eff. Sept. 1,

2003.

Amended by:

Acts 2005, 79th Leg., Ch.

948, Sec. 1, eff. September 1, 2005.