Relating to the recovery and reimbursement of certain expenses by an electric utility or a water and sewer utility in a rate proceeding.

89(R) SB 1977 - Engrossed version - Bill Text

By: Kolkhorst

S.B. No. 1977

A BILL TO BE ENTITLED

AN ACT

relating to the recovery and reimbursement of certain expenses by

an electric utility or a water and sewer utility in a rate

proceeding.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 33.023, Utilities Code, is amended by

adding Subsection (c) to read as follows:

(c)

For purposes of Subsection (b), the electric utility may

not reimburse the governing body of a municipality for any legal

expenses that the regulatory authority determines were incurred due

to the municipality:

(1)

filing a frivolous or groundless discovery motion;

or

(2) engaging in:

(A)

an act intended to harass, delay, or

needlessly increase the expense incurred for participating in the

proceeding; or

(B) conduct not in the public interest.

SECTION 2. Section 36.061, Utilities Code, is amended by

adding Subsections (b-1), (b-2), and (b-3) to read as follows:

(b-1)

For purposes of Subsection (b)(2), the regulatory

authority may not allow as a cost or expense legal expenses incurred

by an electric utility for participating in a rate proceeding under

this title that exceed a total of:

(1) $500,000; and

(2)

50 percent of the legal expenses incurred by the

electric utility to participate in the proceeding that exceed

$500,000.

(b-2)

For purposes of Subsection (b)(2), the regulatory

authority may not allow as a cost or expense legal expenses incurred

by an electric utility for participating in a rate proceeding under

this title that the regulatory authority determines are

attributable to the following conduct by the utility:

(1)

filing a frivolous or groundless discovery motion;

or

(2) engaging in:

(A)

an act intended to harass, delay, or

needlessly increase the expense incurred for participating in the

proceeding; or

(B) conduct not in the public interest.

(b-3)

Notwithstanding Subsection (b-1), the regulatory

authority shall allow as a cost or expense legal expenses incurred

by an electric utility in a rate proceeding under this title in any

amount if the expenses were:

(1)

attributable to conduct described by Subsection

(b-2) by a party to the rate proceeding who was a non-utility

intervenor; and

(2) reasonable.

SECTION 3. Section 13.084, Water Code, is amended to read as

follows:

Sec. 13.084. AUTHORITY OF GOVERNING BODY; COST

REIMBURSEMENT.
(a)
The governing body of any municipality or the

commissioners court of an affected county shall have the right to

select and engage rate consultants, accountants, auditors,

attorneys, engineers, or any combination of these experts to

conduct investigations, present evidence, advise and represent the

governing body, and assist with litigation on water and sewer

utility ratemaking proceedings. The water and sewer utility

engaged in those proceedings shall be required to reimburse the

governing body or the commissioners court for the reasonable costs

of those services and shall be allowed to recover those expenses

through its rates with interest during the period of recovery.

(b)

For purposes of Subsection (a), the water and sewer

utility may not reimburse the governing body of a municipality for

any legal expenses that the regulatory authority determines were

incurred due to the municipality:

(1)

filing a frivolous or groundless discovery motion;

or

(2) engaging in:

(A)

an act intended to harass, delay, or

needlessly increase the expense incurred for participating in the

proceeding; or

(B) conduct not in the public interest.

SECTION 4. Section 13.185, Water Code, is amended by

amending Subsection (h) and adding Subsections (h-1) and (h-2) to

read as follows:

(h) The regulatory authority may not include for ratemaking

purposes:

(1) legislative advocacy expenses, whether made

directly or indirectly, including legislative advocacy expenses

included in trade association dues;

(2) costs of processing a refund or credit under this

subchapter; [
or
]

(3) any expenditure found by the regulatory authority

to be unreasonable, unnecessary, or not in the public interest,

including executive salaries, advertising expenses, [
legal

expenses,
] and civil penalties or fines
; or

(4)

legal expenses for a rate proceeding found by the

regulatory authority to be unreasonable, unnecessary, or not in the

public interest or that exceed a total of:

(A) $500,000; and

(B)

50 percent of the legal expenses incurred by

the utility for the proceeding that exceed $500,000
.

(h-1)

An expense is not considered to be in the public

interest under Subsection (h)(4) if the expense is attributable to

the following conduct by the utility:

(1)

filing a frivolous or groundless discovery motion;

or

(2)

engaging in an act intended to harass, delay, or

needlessly increase the expense incurred for participating in the

ratemaking proceeding.

(h-2)

Notwithstanding Subsection (h)(4), the regulatory

authority shall allow for ratemaking purposes expenses incurred by

a utility in a ratemaking proceeding in any amount if the expenses

were:

(1)

attributable to conduct described by Subsection

(h-1) by a party to the ratemaking proceeding who was a non-utility

intervenor; and

(2) reasonable.

SECTION 5. The changes in law made by this Act apply only to

a rate proceeding under Title 2, Utilities Code, or Chapter 13,

Water Code, as applicable, that begins on or after the effective

date of this Act. A rate proceeding that begins before the

effective date of this Act is governed by the law in effect on the

date the rate proceeding began, and the former law is continued in

effect for that purpose.

SECTION 6. This Act takes effect September 1, 2025.