UTILITIES CODE
CHAPTER 33. JURISDICTION AND POWERS OF MUNICIPALITY
SUBCHAPTER A. GENERAL PROVISIONS
§ 33.001. MUNICIPAL JURISDICTION. To provide fair,
just, and reasonable rates and adequate and efficient services, the
governing body of a municipality has exclusive original
jurisdiction over the rates, operations, and services of an
electric utility in areas in the municipality, subject to the
limitations imposed by this title.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.002. SURRENDER OF MUNICIPAL JURISDICTION TO
COMMISSION. (a) A municipality shall regulate all local utility
service in the municipality until the commission assumes
jurisdiction over a local utility under this subtitle.
(b) A municipality may elect to have the commission exercise
exclusive original jurisdiction over electric utility rates,
operations, and services in the municipality by ordinance or by
submitting the question of the surrender of its jurisdiction to the
voters at a municipal election.
(c) The governing body of a municipality shall submit at a
municipal election the question of surrendering its jurisdiction to
the commission if the governing body receives a petition signed by a
number of qualified voters of the municipality equal to at least the
lesser of 20,000 or 10 percent of the number of voters voting in the
last preceding general election in the municipality.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.003. REINSTATEMENT OF MUNICIPAL
JURISDICTION. (a) A municipality that surrenders its
jurisdiction to the commission may at any time reinstate its
jurisdiction by a vote of the electorate.
(b) A municipality that reinstates its jurisdiction under
Subsection (a) may not surrender that jurisdiction before the fifth
anniversary of the date of the election in which the municipality
elected to reinstate its jurisdiction.
(c) A municipality may not, by a vote of the electorate,
reinstate the jurisdiction of the governing body during the time a
case involving the municipality is pending before the commission.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.004. AREA EXEMPT FROM COMMISSION
REGULATION. (a) If a municipality does not surrender its
jurisdiction, local utility service in the municipality is exempt
from regulation by the commission under this subtitle to the extent
that this subtitle applies to local service.
(b) The municipality may exercise in the exempt area the
same regulatory powers under the same standards and rules as the
commission or under other consistent standards and rules.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.005. EXEMPT AREA REPORTING. (a) An electric
utility serving an area exempt from commission regulation is
subject to the reporting requirements of this title.
(b) A report must be filed with:
(1) the governing body of the municipality; and
(2) the commission.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.006. COMMISSION POWERS IN NONEXEMPT AREAS. This
subchapter does not limit the duty and power of the commission to
regulate the service and rates of a municipally regulated electric
utility for service provided to another area in this state.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.007. ALLOWABLE CHARGES. A municipality that
performs a regulatory function under this title may make each
charge that is authorized by:
(1) this title; or
(2) the applicable franchise agreement.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.008. FRANCHISE CHARGES. (a) Following the end of
the freeze period for a municipality that has been served by an
electric utility, and following the date a municipally owned
utility or an electric cooperative has implemented customer choice
for a municipality that has been served by that municipally owned
utility or electric cooperative, a municipality may impose on an
electric utility, transmission and distribution utility,
municipally owned utility, or electric cooperative, as
appropriate, that provides distribution service within the
municipality a reasonable charge as specified in Subsection (b) for
the use of a municipal street, alley, or public way to deliver
electricity to a retail customer. A municipality may not impose a
charge on:
(1) an electric utility, or transmission and
distribution utility, municipally owned utility, or electric
cooperative for electric service provided outside the
municipality;
(2) a qualifying facility;
(3) an exempt wholesale generator;
(4) a power marketer;
(5) a retail electric provider;
(6) a power generation company;
(7) a person that generates electricity on and after
January 1, 2002; or
(8) an aggregator, as that term is defined by Section
39.353.
(b) If a municipality collected a charge or fee for a
franchise to use a municipal street, alley, or public way from an
electric utility, a municipally owned utility, or an electric
cooperative before the end of the freeze period, the municipality,
after the end of the freeze period or after implementation of
customer choice by the municipally owned utility or electric
cooperative, as appropriate, is entitled to collect from each
electric utility, transmission and distribution utility,
municipally owned utility, or electric cooperative that uses the
municipality's streets, alleys, or public ways to provide
distribution service a charge based on each kilowatt hour of
electricity delivered by the utility to each retail customer whose
consuming facility's point of delivery is located within the
municipality's boundaries. The charge imposed shall be equal to
the total electric franchise fee revenue due the municipality from
electric utilities, municipally owned utilities, or electric
cooperatives, as appropriate, for calendar year 1998 divided by the
total kilowatt hours delivered during 1998 by the applicable
electric utility, municipally owned utility, or electric
cooperative to retail customers whose consuming facilities' points
of delivery were located within the municipality's boundaries. The
compensation a municipality may collect from each electric utility,
transmission and distribution utility, municipally owned utility,
or electric cooperative providing distribution service shall be
equal to the charge per kilowatt hour determined for 1998
multiplied times the number of kilowatt hours delivered within the
municipality's boundaries.
(c) The municipal franchise charges authorized by this
section shall be considered a reasonable and necessary operating
expense of each electric utility, transmission and distribution
utility, municipally owned utility, or electric cooperative that is
subject to a charge under this section. The charge shall be
included in the nonbypassable delivery charges that a customer's
retail electric provider must pay under Section 39.107 to the
utility serving the customer.
(d) The municipal franchise charges authorized by this
section are in lieu of any franchise charges or fees payable under a
franchise agreement in effect before the expiration of the freeze
period or, as appropriate, before the implementation of customer
choice by a municipally owned utility or electric cooperative.
Except as otherwise provided by this section, this section does not
affect a provision of a franchise agreement in effect before the end
of the freeze period or, as appropriate, before the implementation
of customer choice by a municipally owned utility or electric
cooperative.
(e) A municipality may conduct an audit or other inquiry or
may pursue any cause of action in relation to an electric utility's,
transmission and distribution utility's, municipally owned
utility's, or electric cooperative's payment of charges authorized
by this section only if such audit, inquiry, or pursuit of a cause
of action concerns a payment made less than two years before
commencement of such audit, inquiry, or pursuit of a cause of
action; provided, however, that this subsection does not apply to
an audit, inquiry, or cause of action commenced before September 1,
1999. An electric utility, transmission and distribution utility,
municipally owned utility, or electric cooperative shall, on
request of the municipality in connection with a municipal audit,
identify the service provider and the type of service delivered for
any service in addition to electricity delivered directly to retail
customers through the utility's electricity-conducting facilities
that are located in the municipality's streets, alleys, or public
ways and for which the utility receives compensation.
(f) Notwithstanding any other provision of this section, on
the expiration of a franchise agreement existing on September 1,
1999, an electric utility, transmission and distribution utility,
municipally owned utility, or electric cooperative and a
municipality may mutually agree to a different level of
compensation or to a different method for determining the amount
the municipality may charge for the use of a municipal street,
alley, or public way in connection with the delivery of electricity
at retail within the municipality.
(g) After the end of the freeze period or after
implementation of customer choice by the municipally owned utility
or electric cooperative, as appropriate, a newly incorporated
municipality or a municipality that has not previously collected
compensation for the delivery of electricity at retail within the
municipality may adopt and collect compensation based on the same
rate per kilowatt hour that is collected by any other municipality
in the same county that is served by the same electric utility,
transmission and distribution utility, municipally owned utility,
or electric cooperative.
(h) In this section, "distribution service" means the
delivery of electricity to all retail customers.
Added by Acts 1999, 76th Leg., ch. 405, § 15, eff. Sept. 1, 1999.
SUBCHAPTER B. RATE DETERMINATION
§ 33.021. RATE DETERMINATION. (a) A municipality
regulating an electric utility under this subtitle shall require
the utility to submit information as necessary to make a reasonable
determination of rate base, expenses, investment, and rate of
return in the municipality.
(b) A municipality shall make a determination under
Subsection (a) using the procedures and requirements prescribed by
this title.
(c) A municipality shall retain personnel necessary to make
the determination of reasonable rates.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.022. CONSIDERATION OF REVENUES AND RETURN FROM
NONEXEMPT AREA. In establishing rates and charges in an area
exempt from commission regulation, the governing body may consider
an electric utility's revenues and return on investment in an area
that is not exempt from commission regulation.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.023. RATEMAKING PROCEEDINGS. (a) The governing
body of a municipality participating in or conducting a ratemaking
proceeding may engage rate consultants, accountants, auditors,
attorneys, and engineers to:
(1) conduct investigations, present evidence, and
advise and represent the governing body; and
(2) assist the governing body with litigation in an
electric utility ratemaking proceeding before the governing body, a
regulatory authority, or a court.
(b) The electric utility in the ratemaking proceeding shall
reimburse the governing body of the municipality for the reasonable
cost of the services of a person engaged under Subsection (a) to the
extent the applicable regulatory authority determines is
reasonable.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.024. STATEMENT OF INTENT. (a) Not later than the
31st day before the date an electric utility files a statement of
intent under Section 36.102, the electric utility shall provide
notice of intent to file the statement to each municipality having
original jurisdiction.
(b) Not later than the 30th day after the date a
municipality receives notice under Subsection (a), the
municipality may request that the electric utility file with the
municipality a statement of intent in accordance with Section
36.102.
(c) If requested by a municipality under Subsection (b), the
electric utility shall file the statement of intent with the
municipality at the same time the statement is filed with the
commission.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.025. MUNICIPAL STANDING. (a) A municipality has
standing in each case before the commission that relates to an
electric utility providing service in the municipality.
(b) A municipality's standing is subject to the right of the
commission to:
(1) determine standing in a case involving a retail
service area dispute that involves two or more electric utilities;
and
(2) consolidate municipalities on an issue of common
interest.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.026. JUDICIAL REVIEW. A municipality is entitled
to judicial review of a commission order relating to an electric
utility providing services in the municipality as provided by
Section 15.001.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
SUBCHAPTER C. APPEAL OF MUNICIPAL ORDER
§ 33.051. APPEAL BY PARTY. A party to a rate proceeding
before a municipality's governing body may appeal the governing
body's decision to the commission.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.052. APPEAL BY RESIDENTS. The residents of a
municipality may appeal to the commission the decision of the
municipality's governing body in a rate proceeding by filing with
the commission a petition for review signed by a number of qualified
voters of the municipality equal to at least the lesser of 20,000 or
10 percent of the qualified voters of the municipality.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.053. FILING OF APPEAL. (a) An appeal under this
subchapter is initiated by filing a petition for review with the
commission and serving a copy of the petition on each party to the
original rate proceeding.
(b) The appeal must be initiated not later than the 30th day
after the date of the final decision by the governing body of the
municipality.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.054. HEARING AND ORDER. (a) An appeal under this
subchapter, Subchapter D, or Subchapter E is de novo and based on
the test year presented to the municipality.
(b) The commission shall enter a final order establishing
the rates the commission determines the municipality should have
set in the ordinance to which the appeal applies.
(c) In a proceeding involving the rates of a municipally
owned utility, the commission must enter a final order on or before
the 185th day after the date the appeal is perfected or the utility
files a rate application as prescribed by Section 33.104.
(d) In a proceeding in which a rate change is concurrently
sought from the commission under the commission's original
jurisdiction, the commission must enter a final order on or before
the later of the 120th day after the date the appeal is perfected or
the date final action must be taken in the proceeding filed with the
commission.
(e) In a proceeding not governed by Subsection (c) or (d),
the commission must enter a final order on or before the 185th day
after the date the appeal is perfected.
(f) If the commission fails to enter a final order before
the expiration of the applicable period prescribed by Subsections
(c)-(e), the rates proposed by the utility are considered to be
approved by the commission and take effect on the expiration of that
period.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.055. APPLICABILITY OF RATES. (a) Temporary or
permanent rates set by the commission are prospective and observed
from the date of the applicable commission order, except an interim
rate order necessary to effect uniform system-wide rates or to
provide an electric utility the opportunity to avoid confiscation
during the period beginning on the date a petition for review is
filed with the commission and ending on the date of a final order
establishing rates.
(b) The commission shall order interim rates on a prima
facie showing by the electric utility that it has experienced
confiscation during that period. The electric utility shall refund
or credit against future bills:
(1) money collected under the interim rates in excess
of the rate finally ordered; and
(2) interest on that money, at the current rate as
determined by the commission.
(c) In this section, "confiscation" includes negative cash
flow experienced by an electric utility at any time a rate case
proceeding is pending.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
SUBCHAPTER D. PROVISIONS APPLICABLE TO APPEAL BY RATEPAYERS OUTSIDE
MUNICIPALITY
§ 33.101. APPEAL BY RATEPAYERS OUTSIDE
MUNICIPALITY. (a) The ratepayers of a municipally owned utility
who are outside the municipality may appeal to the commission an
action of the governing body of the municipality affecting the
municipally owned utility's rates by filing with the commission a
petition for review signed by a number of ratepayers served by the
utility outside the municipality equal to at least the lesser of
10,000 or five percent of those ratepayers.
(b) A petition for review is properly signed if signed by a
person or the spouse of a person in whose name residential utility
service is carried.
(c) For purposes of this section, each person who receives a
separate bill is a ratepayer. A person who receives more than one
bill may not be counted as more than one ratepayer.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.102. IDENTIFICATION OF RATEPAYERS OUTSIDE
MUNICIPALITY. (a) A municipality that owns a utility shall:
(1) disclose to any person, on request, the number of
ratepayers who reside outside the municipality; and
(2) provide to any person, on request, a list of the
names and addresses of the ratepayers who reside outside the
municipality.
(b) The municipality may not charge a fee for disclosing the
information under Subsection (a)(1). The municipality may charge a
reasonable fee for providing information under Subsection (a)(2).
(c) The municipality shall provide information requested
under Subsection (a)(1) by telephone or in writing, as preferred by
the person making the request.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.103. FILING OF APPEAL. (a) Not later than the
14th day after the date a governing body of a municipality makes a
final decision, the municipality shall issue a written report
stating the effect of the decision on each class of ratepayer.
(b) An appeal under this subchapter is initiated by filing a
petition for review with the commission and serving a copy of the
petition on each party to the original rate proceeding.
(c) The appeal must be initiated not later than the 45th day
after the date the municipality issues the written report required
by Subsection (a).
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.104. RATE APPLICATION. Not later than the 90th day
after the date a petition for review is filed that complies with
Section 33.103, the municipality shall file with the commission a
rate application that complies in all material respects with the
rules and forms prescribed by the commission. The commission may,
for good cause shown, extend the period for filing a rate
application.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
SUBCHAPTER E. RATE DETERMINATION AND APPEAL OF ORDERS OF CERTAIN
MUNICIPAL UTILITIES
§ 33.121. APPLICATION OF COMMISSION REVIEW. A
municipally owned utility is subject to this subchapter if the
utility is a utility:
(1) whose rates are appealed under Subchapter D;
(2) for which the commission orders a decrease in
annual nonfuel base revenues that exceeds the greater of
$25,000,000 or 10 percent of the utility's nonfuel base revenues,
as computed on a total system basis without regard to the utility's
municipal boundaries and established in the appealed rate
ordinance; and
(3) for which the commission finds that the rates paid
by the combined residential or other major customer class, other
than a class in which the municipality is the customer of the
municipally owned utility, are removed from cost-of-service levels
to the extent that, under the nonfuel base revenue requirement
adopted by the commission as computed on a total system basis
without regard to the municipality's boundaries, a change in
nonfuel base rate revenues in excess of 50 percent from adjusted
test year levels would be required to move that class to a relative
rate of return of unity (1.00 or 100 percent) under the
cost-of-service methodology adopted by the commission in an appeal
under Subchapter D.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.122. REVIEW OF CERTAIN RATE
DECISIONS. (a) Except as provided by Subsections (b)-(f), for a
period of 10 years beginning on the later of August 28, 1989, or the
effective date of the rate ordinance that is the subject of the
commission's final order invoking the application of this section,
the commission has appellate jurisdiction over the rates charged by
the municipally owned utility, both inside and outside the
municipality, in the same manner and subject to the same commission
powers and authority provided by this subtitle for an electric
utility.
(b) The commission has jurisdiction to review the cost
allocation and rate design methodologies adopted by the governing
body of a municipally owned utility subject to this section. If the
commission finds that the cost-of-service methodologies result in
rates that are unjust, unreasonable, or unreasonably
discriminatory, or unduly preferential to a customer class, the
commission may order the implementation of ratesetting
methodologies the commission finds reasonable.
(c) The commission shall ensure that a customer class, other
than a class in which the municipality is the customer of the
municipally owned utility, does not pay rates that result in a
relative rate of return of more than 115 percent under the
cost-of-service methodology found reasonable by the commission. A
customer class may not experience a percentage base rate increase
that is greater than 1-1/2 times the system average base increase.
In moving an above-cost class toward cost-of-service levels, each
class farthest above cost shall be moved sequentially toward cost
so that no above-cost class moves toward cost until no other class
is further removed from cost.
(d) A municipality subject to this section may design
residential rates, as a matter of intra-class rate design, to
accomplish reasonable energy conservation goals, notwithstanding
any other provision of this title.
(e) The commission's jurisdiction under this section may be
invoked by any party to a local rate proceeding required by this
section in the same manner as an appeal of the rates of an electric
utility under Section 33.051.
(f) The commission's jurisdiction under this section does
not extend to a municipally owned utility's:
(1) revenue requirements, whether base rate or fuel
revenues;
(2) invested capital;
(3) return on invested capital;
(4) debt service coverage ratio; or
(5) level of transfer of revenues from the utility to
the municipality's general fund.
(g) The governing body of a municipally owned utility
subject to this section shall establish procedures similar to the
procedures of a municipality that retains original jurisdiction
under Section 33.001 to regulate an electric utility operating in
the municipality. The procedures must include a public hearing
process in which an affected ratepayer is granted party status on
request and is grouped for purposes of participation in accordance
with common or divergent interests, including the particular
interests of all-electric residential ratepayers and residential
ratepayers outside the municipality.
(h) This section does not require the governing body of a
municipality or the governing board of a municipally owned utility
subject to this section to adopt procedures that require the use of
the Texas Rules of Evidence, the Texas Rules of Civil Procedure, or
the presentation of sworn testimony or any other form of sworn
evidence.
(i) The governing body of a municipally owned utility
subject to this section shall appoint a consumer advocate to
represent the interests of residential and small commercial
ratepayers in the municipality's local rate proceedings. The
consumer advocate's reasonable costs of participating in a
proceeding, including the reasonable costs of ratemaking
consultants and expert witnesses, shall be funded by and recovered
from residential and small commercial ratepayers.
(j) The commission shall adopt rules applicable to a party
to an appeal under Subchapter D that provide for the public
disclosure of financial and in-kind contributions and expenditures
related to preparing and filing an appeal petition and preparing
expert testimony or legal representation for an appeal. A party or
customer who is a member of a party who makes a financial
contribution or in-kind contribution to assist in an appeal by
another party or customer class under Subchapter D shall be
required, on a finding of the commission to that effect, to pay the
municipally owned utility a penalty equivalent in amount to two
times the amount of the contribution.
(k) This section does not limit the right of a party or
customer to spend money to represent its own interests following
the filing of a petition with the commission under Subchapter D.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
§ 33.123. REVIEW OF CERTAIN DECISIONS FOR RATES CHARGED
OUTSIDE MUNICIPALITY. (a) For a period of 10 years beginning on
the later of August 28, 1989, or the effective date of the rate
ordinance that is the subject of the commission's final order
invoking the application of this section, the commission has
appellate jurisdiction over the rates charged by the municipally
owned utility, outside the municipality, as provided by this
section.
(b) Except as otherwise provided by this section, a
ratepayer of a municipally owned utility subject to this section
who resides outside the municipality may appeal any action of the
governing body of a municipality affecting the rates charged by the
municipally owned utility outside the municipality by filing a
petition for review with the commission in the manner provided for
an appeal under Subchapter D. The petition must plainly disclose
that the cost of the appeal will be funded by a surcharge on the
monthly electric bills of ratepayers outside the municipality as
prescribed by the commission.
(c) After the commission approves the sufficiency of a
petition, the appellants shall submit to the office for approval a
budget itemizing the scope and expected cost of consultant services
to be purchased by the appellants in the appeal.
(d) Not later than the 120th day after the date the
commission enters its final order, the municipality shall assess a
onetime surcharge on a per capita basis among residential
ratepayers who reside outside the municipality to pay the
reasonable consultant and legal costs approved by the counsellor.
The municipality shall reimburse the appellants for incurred costs
not later than the 90th day after the date the commission enters its
final order.
(e) A municipality may not:
(1) include the costs associated with its defense of
an appeal under this section in the rates charged a ratepayer
outside the municipality; or
(2) if the municipality appeals an order entered by
the commission under this section, include the costs associated
with its appeal in the rates charged a ratepayer outside the
municipality.
(f) A ratepayer who brings an appeal under this section may
not receive funding for rate case expenses except from a
residential ratepayer who resides outside the municipality or from
another municipality inside whose boundaries the municipally owned
utility provides service. The commission shall adopt rules for
reporting financial and in-kind contributions in support of an
appeal under this section. If the commission finds that an
appellant has received contributions from a source other than from
a ratepayer who resides outside the municipality or from another
municipality, the appeal and each commission order entered in the
appeal are void.
(g) The commission has jurisdiction in an appeal under this
section to review and ensure that the revenue requirements of a
municipally owned utility subject to this section are reasonable.
The jurisdiction under this subsection does not extend to
regulating the use and level of a transfer of the utility's revenues
to the municipality's general fund.
(h) The commission has jurisdiction to review the cost
allocation and rate design methodologies adopted by the governing
body of a municipally owned utility subject to this section. If the
commission finds that the cost-of-service methodologies result in
rates that are unjust, unreasonable, or unreasonably
discriminatory or unduly preferential to a customer class, the
commission may order the implementation of ratesetting
methodologies the commission finds reasonable. The commission's
jurisdiction under this subsection does not include intra-class
residential rate design.
(i) An intervenor in an appeal under this section is limited
to presenting evidence on cost allocation and rate design
methodologies, except that an intervenor may present evidence in
support of the municipality on an issue related to utility
revenues.
(j) A ratepayer of a municipally owned utility subject to
this section who resides outside the municipality may elect to
petition for review under either this section or Subchapter D when
appealing a rate ordinance or other ratesetting action of the
governing body of a municipality.
Acts 1997, 75th Leg., ch. 166, § 1, eff. Sept. 1, 1997.
