Bill Text: TX HB1968 | 2011-2012 | 82nd Legislature | Introduced

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Bill Title: Relating to regulation of gas pipelines; providing penalties.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2011-03-24 - Left pending in committee [HB1968 Detail]

Download: Texas-2011-HB1968-Introduced.html

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82R3269 JXC-F
By: Chisum H.B. No. 1968

A BILL TO BE ENTITLED
AN ACT
relating to regulation of gas pipelines; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 3, Utilities Code, is amended by adding
Subtitle C to read as follows:
SUBTITLE C. GAS PIPELINE REGULATORY ACT
CHAPTER 141. GENERAL PROVISIONS AND OFFICE OF PUBLIC UTILITY
COUNSEL
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 141.001. SHORT TITLE. This subtitle may be cited as
the Gas Pipeline Regulatory Act.
Sec. 141.002. PURPOSE AND FINDINGS. (a) This subtitle is
enacted to protect the public interest inherent in the rates and
services of gas pipelines. The purpose of this subtitle is to
establish a comprehensive and adequate regulatory system for gas
pipelines to assure rates, operations, and services that are just
and reasonable to the consumers and to the pipelines.
(b) Gas pipelines are by definition monopolies in the areas
they serve. As a result, the normal forces of competition that
regulate prices in a free enterprise society do not operate. Public
agencies regulate pipeline rates, operations, and services as a
substitute for competition.
Sec. 141.003. DEFINITIONS. In this subtitle:
(1) "Affected person" means:
(A) a gas pipeline affected by an action of the
railroad commission;
(B) a person whose gas pipeline service or rates
are affected by a proceeding before the railroad commission; or
(C) a person who:
(i) is a competitor of a gas pipeline with
respect to a service performed by the pipeline; or
(ii) wants to enter into competition with a
gas pipeline.
(2) "Affiliate" means:
(A) a person who directly or indirectly owns or
holds at least five percent of the voting securities of a gas
pipeline;
(B) a person in a chain of successive ownership
of at least five percent of the voting securities of a gas pipeline;
(C) a corporation that has at least five percent
of its voting securities owned or controlled, directly or
indirectly, by a gas pipeline;
(D) a corporation that has at least five percent
of its voting securities owned or controlled, directly or
indirectly, by:
(i) a person who directly or indirectly
owns or controls at least five percent of the voting securities of a
gas pipeline; or
(ii) a person in a chain of successive
ownership of at least five percent of the voting securities of a gas
pipeline;
(E) a person who is an officer or director of a
gas pipeline or of a corporation in a chain of successive ownership
of at least five percent of the voting securities of a gas pipeline;
or
(F) a person determined to be an affiliate under
Section 141.004.
(3) "Allocation" means the division among
municipalities or among municipalities and unincorporated areas of
the plant, revenues, expenses, taxes, and reserves of a gas
pipeline used to provide gas pipeline service for a municipality
and unincorporated areas.
(4) "Corporation" means a domestic or foreign
corporation, joint-stock company, or association, and each lessee,
assignee, trustee, receiver, or other successor in interest of the
corporation, company, or association, that has any of the powers or
privileges of a corporation not possessed by an individual or
partnership. The term does not include a municipal corporation,
except as expressly provided by this subtitle.
(5) "Counsellor" means the chief executive of the
Office of Public Utility Counsel.
(6) "Facilities" means all of the plant and equipment
of a gas pipeline and includes the tangible and intangible
property, without limitation, owned, operated, leased, licensed,
used, controlled, or supplied for, by, or in connection with the
business of the gas pipeline.
(7) "Gas pipeline" includes a person or river
authority that owns or operates for compensation in this state
equipment or facilities to transmit or distribute combustible
hydrocarbon natural gas or synthetic natural gas for sale or resale
in a manner not subject to the jurisdiction of the Federal Energy
Regulatory Commission under the Natural Gas Act (15 U.S.C. Section
717 et seq.). The term includes a lessee, trustee, or receiver of a
gas pipeline. The term does not include:
(A) a municipal corporation;
(B) a person or river authority to the extent the
person or river authority:
(i) produces, gathers, transports, or sells
natural gas or synthetic natural gas under Section 121.004 or
121.005;
(ii) distributes or sells liquefied
petroleum gas; or
(iii) transports, delivers, or sells
natural gas for fuel for irrigation wells or any other direct
agricultural use;
(C) a person to the extent the person:
(i) sells natural gas for use as vehicle
fuel;
(ii) sells natural gas to a person who later
sells the natural gas for use as vehicle fuel; or
(iii) owns or operates equipment or
facilities to sell or transport natural gas for ultimate use as
vehicle fuel;
(D) a person not otherwise a gas pipeline who
furnishes gas or gas service only to itself, its employees, or its
tenants as an incident of employment or tenancy, if the gas or gas
service is not resold to or used by others; or
(E) a person excluded from being considered a gas
utility under Section 121.007.
(8) "Order" means all or a part of a final disposition
by the railroad commission in a matter other than rulemaking,
without regard to whether the disposition is affirmative or
negative or injunctive or declaratory. The term includes the
setting of a rate.
(9) "Person" includes an individual, a partnership of
two or more persons having a joint or common interest, a mutual or
cooperative association, a limited liability company, and a
corporation.
(10) "Proceeding" means a hearing, investigation,
inquiry, or other procedure for finding facts or making a decision
under this subtitle. The term includes a denial of relief or
dismissal of a complaint.
(11) "Rate" means:
(A) any compensation, tariff, charge, fare,
toll, rental, or classification that is directly or indirectly
demanded, observed, charged, or collected by a gas pipeline for a
service, product, or commodity described in the definition of "gas
pipeline" in this section; and
(B) a rule, regulation, practice, or contract
affecting the compensation, tariff, charge, fare, toll, rental, or
classification.
(12) "Service" has its broadest and most inclusive
meaning. The term includes any act performed, anything supplied,
and any facilities used or supplied by a gas pipeline in the
performance of the pipeline's duties under this subtitle to its
patrons, employees, other gas pipelines, and the public. The term
also includes the interchange of facilities between two or more gas
pipelines.
(13) "State agency" has the meaning assigned by
Section 572.002, Government Code, to the extent the state agency
must obtain the approval described by Section 31.401(a), Natural
Resources Code.
Sec. 141.004. PERSON DETERMINED TO BE AFFILIATE. (a) The
railroad commission may determine that a person is an affiliate for
purposes of this subtitle if the railroad commission after notice
and hearing finds that the person:
(1) actually exercises substantial influence or
control over the policies and actions of a gas pipeline;
(2) is a person over which a gas pipeline exercises the
control described by Subdivision (1);
(3) is under common control with a gas pipeline; or
(4) actually exercises substantial influence over the
policies and actions of a gas pipeline in conjunction with one or
more persons with whom the person is related by ownership or blood
relationship, or by action in concert, so that together they are
affiliated with the gas pipeline within the meaning of this section
even though neither person may qualify as an affiliate
individually.
(b) For purposes of Subsection (a)(3), "common control with
a gas pipeline" means the direct or indirect possession of the power
to direct or cause the direction of the management and policies of
another, without regard to whether that power is established
through ownership or voting of securities or by any other direct or
indirect means.
Sec. 141.005. ADMINISTRATIVE PROCEDURE. Chapter 2001,
Government Code, applies to a proceeding under this subtitle except
to the extent inconsistent with this subtitle.
Sec. 141.006. CUMULATIVE EFFECT; APPLICATION TO GAS
PIPELINES. (a) This subtitle is cumulative of laws existing on
September 1, 2011, relating to the jurisdiction, power, or
authority of the railroad commission over a gas pipeline, as
defined by this subtitle. This subtitle does not limit the
jurisdiction, power, and authority of the railroad commission over
a gas pipeline.
(b) This subtitle applies to all gas pipelines, including a
gas pipeline that is under the jurisdiction, power, or authority of
the railroad commission under a law other than this subtitle.
(c) Subtitle A does not apply to a gas pipeline as defined by
this subtitle.
Sec. 141.007. LIBERAL CONSTRUCTION. This subtitle shall be
construed liberally to promote the effectiveness and efficiency of
regulation of gas pipelines to the extent that this construction
preserves the validity of this subtitle and its provisions.
Sec. 141.008. CONSTRUCTION WITH FEDERAL AUTHORITY. This
subtitle shall be construed to apply so as not to conflict with any
authority of the United States.
[Sections 141.009-141.050 reserved for expansion]
SUBCHAPTER B. OFFICE OF PUBLIC UTILITY COUNSEL
Sec. 141.051. OFFICE OF PUBLIC UTILITY COUNSEL. The
independent office of public utility counsel represents the
interests of residential consumers.
Sec. 141.052. OFFICE POWERS AND DUTIES. (a) The office:
(1) may appear or intervene as a party or otherwise
represent residential consumers, as a class, in proceedings before
the railroad commission under this subtitle only at the written
request of an affected municipality's governing body;
(2) may initiate or intervene as a matter of right or
otherwise appear in a judicial proceeding that involves an action
taken by the railroad commission under this subtitle in a
proceeding in which the office was a party;
(3) is entitled to the same access as a party, other
than railroad commission staff, to records gathered by the railroad
commission under Section 142.203;
(4) is entitled to discovery of any nonprivileged
matter that is relevant to the subject matter of a proceeding or
petition before the railroad commission;
(5) may represent an individual residential consumer
with respect to the consumer's disputed complaint concerning gas
pipeline services that is unresolved before the railroad
commission; and
(6) may recommend legislation to the legislature that
the office determines would positively affect the interests of
residential consumers.
(b) The office may represent only as a class the residential
consumers of a municipality that makes a request under Subsection
(a)(1).
(c) This section does not limit the authority of the
railroad commission to represent residential consumers.
(d) The appearance of the counsellor in a proceeding does
not preclude the appearance of other parties on behalf of
residential consumers. The counsellor may not be grouped with any
other party.
Sec. 141.053. PROHIBITED ACTS. (a) The counsellor may
not:
(1) have a direct or indirect interest in a gas
pipeline regulated under this subtitle; or
(2) provide legal services directly or indirectly to
or be employed in any capacity by a gas pipeline regulated under
this subtitle, its parent, or its subsidiary companies,
corporations, or cooperatives.
(b) The prohibition under Subsection (a) applies during the
period of the counsellor's service and until the first anniversary
of the date the counsellor ceases to serve as counsellor.
(c) This section does not prohibit a person from otherwise
engaging in the private practice of law after the person ceases to
serve as counsellor.
Sec. 141.054. PERSONNEL. (a) The counsellor may employ
lawyers, economists, engineers, consultants, statisticians,
accountants, clerical staff, and other employees as the counsellor
determines necessary to carry out this subchapter.
(b) An employee receives compensation as prescribed by the
legislature from the assessment imposed by Subchapter A, Chapter
16.
CHAPTER 142. JURISDICTION AND POWERS OF RAILROAD COMMISSION
SUBCHAPTER A. GENERAL POWERS OF RAILROAD COMMISSION
Sec. 142.001. RAILROAD COMMISSION JURISDICTION. The
railroad commission has exclusive original jurisdiction over the
rates and services of a gas pipeline that transmits, transports,
delivers, or sells natural gas or synthetic natural gas to a gas
utility that distributes the gas to the public.
Sec. 142.002. RAILROAD COMMISSION POWERS RELATING TO
REPORTS. The railroad commission may:
(1) require a gas pipeline to report to the railroad
commission information relating to the gas pipeline and an
affiliate inside or outside this state as useful in administering
this subtitle;
(2) establish the form for a report;
(3) determine the time for a report and the frequency
with which the report is to be made;
(4) require that a report be made under oath;
(5) require the filing with the railroad commission of
a copy of:
(A) a contract or arrangement between a gas
pipeline and an affiliate;
(B) a report filed with a federal agency or a
governmental agency or body of another state; and
(C) an annual report that shows each payment of
compensation, other than salary or wages subject to federal income
tax withholding:
(i) to residents of this state;
(ii) with respect to legal, administrative,
or legislative matters in this state; or
(iii) for representation before the
legislature of this state or any governmental agency or body; and
(6) require that a contract or arrangement described
by Subdivision (5)(A) that is not in writing be reduced to writing
and filed with the railroad commission.
Sec. 142.003. REPORT OF SUBSTANTIAL INTEREST. The railroad
commission may require disclosure of the identity and respective
interests of each owner of at least one percent of the voting
securities of a gas pipeline or its affiliate.
Sec. 142.004. ADMINISTRATIVE HEARINGS IN CONTESTED CASES.
(a) The railroad commission by rule shall provide for
administrative hearings in contested cases to be conducted by one
or more members of the railroad commission, by railroad commission
hearings examiners, or by the utility division of the State Office
of Administrative Hearings. The rules must provide for a railroad
commission hearings examiner or the utility division of the State
Office of Administrative Hearings to conduct each hearing in a
contested case that is not conducted by one or more members of the
railroad commission. A hearing must be conducted in accordance
with the rules and procedures adopted by the railroad commission.
(b) The railroad commission may delegate to a railroad
commission hearings examiner or to the utility division of the
State Office of Administrative Hearings the authority to make a
final decision and to issue findings of fact, conclusions of law,
and other necessary orders in a proceeding in which there is not a
contested issue of fact or law.
(c) The railroad commission by rule shall define the
procedures by which it delegates final decision-making authority
under Subsection (b) to a railroad commission hearings examiner or
to the utility division of the State Office of Administrative
Hearings.
(d) For purposes of judicial review, the final decision of a
railroad commission hearings examiner or an administrative law
judge of the State Office of Administrative Hearings in a matter
delegated under Subsection (b) has the same effect as a final
decision of the railroad commission unless a member of the railroad
commission requests formal review of the decision.
(e) The State Office of Administrative Hearings shall
charge the railroad commission a fixed annual rate for hearings
conducted by the office under this section only if the legislature
appropriates money for that purpose. If the legislature does not
appropriate money for the payment of a fixed annual rate under this
section, the State Office of Administrative Hearings shall charge
the railroad commission an hourly rate of not more than $90 per hour
for hearings conducted by the office under this section.
[Sections 142.005-142.050 reserved for expansion]
SUBCHAPTER B. RESTRICTIONS ON CERTAIN TRANSACTIONS
Sec. 142.051. REPORT OF CERTAIN TRANSACTIONS; RAILROAD
COMMISSION CONSIDERATION. (a) Not later than the 60th day after
the date the transaction takes effect, a gas pipeline shall report
to the railroad commission:
(1) a sale, acquisition, or lease of a plant as an
operating unit or system in this state for a total consideration of
more than $1 million; or
(2) a merger or consolidation with another gas
pipeline operating in this state.
(b) On the filing of a report with the railroad commission,
the railroad commission shall investigate the transaction
described by Subsection (a), with or without a public hearing, to
determine whether the action is consistent with the public
interest. In reaching its determination, the railroad commission
shall consider the reasonable value of the property, facilities, or
securities to be acquired, disposed of, merged, or consolidated.
(c) If the railroad commission finds that a transaction is
not in the public interest, the railroad commission shall take the
effect of the transaction into consideration in ratemaking
proceedings and disallow the effect of the transaction if the
transaction will unreasonably affect rates or service.
(d) This section does not apply to:
(1) the purchase of a unit of property for
replacement; or
(2) an addition to the facilities of a gas pipeline by
construction.
Sec. 142.052. REPORT OF PURCHASE OF VOTING STOCK IN GAS
PIPELINE. A gas pipeline may not purchase voting stock in another
gas pipeline doing business in this state unless the pipeline
reports the purchase to the railroad commission.
Sec. 142.053. REPORT OF LOAN TO STOCKHOLDERS. A gas
pipeline may not loan money, stocks, bonds, notes, or other
evidence of indebtedness to a person who directly or indirectly
owns or holds any stock of the gas pipeline unless the gas pipeline
reports the transaction to the railroad commission within a
reasonable time.
[Sections 142.054-142.100 reserved for expansion]
SUBCHAPTER C. RECORDS
Sec. 142.101. RECORDS OF GAS PIPELINE. (a) Each gas
pipeline shall keep and provide to the railroad commission, in the
manner and form prescribed by the railroad commission, uniform
accounts of all business transacted by the gas pipeline.
(b) The railroad commission may prescribe the form of books,
accounts, records, and memoranda to be kept by a gas pipeline,
including:
(1) the books, accounts, records, and memoranda of:
(A) the provision of and capacity for service;
and
(B) the receipt and expenditure of money; and
(2) any other form, record, and memorandum that the
railroad commission considers necessary to carry out this subtitle.
(c) For a gas pipeline subject to regulation by a federal
regulatory agency, compliance with the system of accounts
prescribed for the particular class of pipelines by the federal
agency may be considered sufficient compliance with the system
prescribed by the railroad commission. The railroad commission may
prescribe the form of books, accounts, records, and memoranda
covering information in addition to that required by the federal
agency. The system of accounts and the form of books, accounts,
records, and memoranda prescribed by the railroad commission for a
gas pipeline or class of pipelines may not be inconsistent with the
systems and forms established by a federal agency for that gas
pipeline or class of pipelines.
(d) Each gas pipeline shall:
(1) keep and provide its books, accounts, records, and
memoranda accurately and faithfully in the manner and form
prescribed by the railroad commission; and
(2) comply with the directions of the railroad
commission relating to the books, accounts, records, and memoranda.
Sec. 142.102. MAINTENANCE OF OFFICE AND RECORDS IN THIS
STATE. (a) Each gas pipeline shall maintain an office in this
state in a county in which some part of the pipeline's property is
located. The gas pipeline shall keep in this office all books,
accounts, records, and memoranda required by the railroad
commission to be kept in this state.
(b) A book, account, record, or memorandum required by the
railroad commission to be kept in this state may not be removed from
this state except as prescribed by the railroad commission.
Sec. 142.103. COMMUNICATIONS WITH RAILROAD COMMISSION.
(a) The railroad commission shall adopt rules governing
communications with the railroad commission or a member or employee
of the railroad commission by:
(1) a gas pipeline;
(2) an affiliate; or
(3) a representative of a gas pipeline or affiliate.
(b) A record of a communication must contain:
(1) the name of the person contacting the railroad
commission or member or employee of the railroad commission;
(2) the name of the business entity represented;
(3) a brief description of the subject matter of the
communication; and
(4) the action, if any, requested by the gas pipeline,
affiliate, or representative.
(c) Records compiled under Subsection (b) shall be
available to the public monthly.
Sec. 142.104. JURISDICTION OVER AFFILIATE. The railroad
commission has jurisdiction over an affiliate that has a
transaction with a gas pipeline under the railroad commission's
jurisdiction to the extent of access to an account or a record of
the affiliate relating to the transaction, including an account or
a record of joint or general expenses, any portion of which may be
applicable to the transaction.
[Sections 142.105-142.150 reserved for expansion]
SUBCHAPTER D. REQUIRED REPORTS AND FILINGS
Sec. 142.151. SCHEDULE FILINGS. (a) A gas pipeline shall
file with the railroad commission schedules showing all rates that
are:
(1) subject to the railroad commission's original
jurisdiction; and
(2) in effect for a gas pipeline service, product, or
commodity offered by the gas pipeline.
(b) The gas pipeline shall file as a part of the schedules
required under Subsection (a) each rule or regulation that relates
to or affects:
(1) a rate of the gas pipeline; or
(2) a gas pipeline service, product, or commodity
furnished by the gas pipeline.
Sec. 142.152. DEPRECIATION ACCOUNT. The railroad
commission shall require each gas pipeline to carry a proper and
adequate depreciation account in accordance with:
(1) the rates and methods prescribed by the railroad
commission under Section 144.054; and
(2) any other rule the railroad commission adopts.
Sec. 142.153. ACCOUNTS OF PROFITS AND LOSSES. A gas
pipeline shall keep separate accounts showing profits or losses
from the sale or lease of merchandise, including an appliance, a
fixture, or equipment.
Sec. 142.154. REPORT OF CERTAIN EXPENSES. The railroad
commission may require a gas pipeline to annually report the
pipeline's expenditures for:
(1) business gifts and entertainment; and
(2) advertising or public relations, including
expenditures for institutional and consumption-inducing purposes.
[Sections 142.155-142.200 reserved for expansion]
SUBCHAPTER E. AUDITS AND INSPECTIONS
Sec. 142.201. INQUIRY INTO MANAGEMENT AND AFFAIRS. The
railroad commission may inquire into the management and affairs of
each gas pipeline and shall keep itself informed as to the manner
and method in which each gas pipeline is managed and its affairs are
conducted.
Sec. 142.202. AUDIT OF ACCOUNTS. The railroad commission
may require the examination and audit of the accounts of a gas
pipeline.
Sec. 142.203. INSPECTION. At a reasonable time for a
reasonable purpose, the railroad commission and, to the extent
authorized by the railroad commission, its counsel, agent, or
employee may:
(1) inspect and obtain copies of the papers, books,
accounts, documents, and other business records of a gas pipeline
within its jurisdiction; and
(2) inspect the plant, equipment, and other property
of a gas pipeline within its jurisdiction.
Sec. 142.204. EXAMINATIONS UNDER OATH. In connection with
an inspection taken under Section 142.203, the railroad commission
may:
(1) examine under oath an officer, agent, or employee
of a gas pipeline; or
(2) authorize the person conducting the action to make
the examination under oath.
Sec. 142.205. ENTERING PREMISES OF GAS PIPELINE. (a) A
member, agent, or employee of the railroad commission may enter the
premises occupied by a gas pipeline to conduct an inspection,
examination, or test or to exercise any other authority provided by
this subtitle.
(b) A member, agent, or employee of the railroad commission
may act under this section only during reasonable hours and after
reasonable notice to the gas pipeline.
(c) A gas pipeline is entitled to be represented when an
inspection, examination, or test is conducted on its premises. The
gas pipeline is entitled to a reasonable time to secure a
representative before the inspection, examination, or test begins.
Sec. 142.206. PRODUCTION OF OUT-OF-STATE RECORDS. (a) The
railroad commission may require, by order or subpoena served on a
gas pipeline, the production, at the time and place in this state
that the railroad commission designates, of any books, accounts,
papers, or records kept by that gas pipeline outside this state or,
if ordered by the railroad commission, verified copies of the
books, accounts, papers, or records.
(b) A gas pipeline that fails or refuses to comply with an
order or subpoena under this section violates this subtitle.
[Sections 142.207-142.250 reserved for expansion]
SUBCHAPTER F. GENERAL PROVISIONS RELATING TO PROCEEDINGS BEFORE
RAILROAD COMMISSION
Sec. 142.251. RECORD OF PROCEEDING. The railroad
commission shall keep a record of each proceeding before the
railroad commission under this subtitle.
Sec. 142.252. RIGHT TO BE HEARD. Each party to a proceeding
before the railroad commission is entitled to be heard by attorney
or in person.
CHAPTER 143. JURISDICTION AND POWERS OF MUNICIPALITY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 143.001. FRANCHISES. (a) This subtitle does not
restrict the rights and powers of a municipality to grant or refuse
a franchise to use the streets and alleys in the municipality or to
make a statutory charge for that use.
(b) A municipality that performs a regulatory function
under this subtitle may make each charge that is authorized by:
(1) this subtitle; or
(2) the applicable franchise agreement.
(c) A franchise agreement may not limit or interfere with a
power conferred on the railroad commission by this subtitle.
[Sections 143.002-143.020 reserved for expansion]
SUBCHAPTER B. RATE DETERMINATION
Sec. 143.021. RATE ASSISTANCE AND COST REIMBURSEMENT.
(a) The governing body of a municipality participating in 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 or a gas
pipeline ratemaking proceeding before the railroad commission or
court.
(b) The gas pipeline 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 railroad commission determines reasonable.
Sec. 143.022. MUNICIPAL STANDING. (a) A municipality has
standing in each case before the railroad commission that relates
to a gas pipeline's rates and services in the municipality.
(b) A municipality's standing is subject to the right of the
railroad commission to consolidate that municipality with another
party on an issue of common interest.
Sec. 143.023. JUDICIAL REVIEW. A municipality is entitled
to judicial review of a railroad commission order relating to a gas
pipeline's rates and services in a municipality as provided by
Section 145.001.
CHAPTER 144. RATES AND SERVICES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 144.001. 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 pipelines in this subtitle.
(b) The railroad commission may establish and regulate
rates of a gas pipeline 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 railroad commission may not
conflict with a ruling of a federal regulatory body.
Sec. 144.002. COMPLIANCE WITH SUBTITLE. A gas pipeline may
not:
(1) charge, collect, or receive a rate for pipeline
service except as provided by this subtitle; or
(2) impose a rule or regulation except as provided by
this subtitle.
Sec. 144.003. JUST AND REASONABLE RATES. (a) The railroad
commission shall ensure that each rate a gas pipeline or two or more
gas pipelines 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 pipeline's rates, the railroad commission may
treat as a single class two or more municipalities that a gas
pipeline serves if the railroad commission considers that treatment
to be appropriate.
(b) A rate for a pipeline-to-pipeline transaction or for 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 railroad
commission if:
(1) neither the gas pipeline nor the customer had an
unfair advantage during the negotiations;
(2) the rate is substantially the same as the rate
between the gas pipeline 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
pipeline, 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 utility.
Sec. 144.004. UNREASONABLE PREFERENCE OR PREJUDICE
PROHIBITED. A gas pipeline 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.
Sec. 144.005. EQUALITY OF RATES AND SERVICES. (a) A gas
pipeline 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 pipeline than the compensation
prescribed by the applicable schedule of rates filed under Section
142.151.
(b) A person may not knowingly receive or accept a service
from a gas pipeline for a compensation greater or less than the
compensation prescribed by the schedule of rates filed under
Section 142.151. A rate charged and collected by a gas pipeline on
September 1, 2011, may be continued until schedules are filed.
(c) After notice and hearing, the railroad commission may,
in the public interest, order a gas pipeline 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.
Sec. 144.006. DISCRIMINATION AND RESTRICTION ON
COMPETITION. A gas pipeline may not:
(1) discriminate against a person who sells or leases
equipment or performs services in competition with the gas
pipeline; or
(2) engage in a practice that tends to restrict or
impair that competition.
Sec. 144.007. BURDEN OF PROOF. In a proceeding involving a
proposed rate change, the gas pipeline has the burden of proving
that:
(1) the rate change is just and reasonable, if the
pipeline proposes the change; or
(2) an existing rate is just and reasonable, if the
proposal is to reduce the rate.
[Sections 144.008-144.050 reserved for expansion]
SUBCHAPTER B. COMPUTATION OF RATES
Sec. 144.051. ESTABLISHING OVERALL REVENUES. In
establishing a gas pipeline's rates, the railroad commission shall
establish the gas pipeline's overall revenues at an amount that
will permit the gas pipeline a reasonable opportunity to earn a
reasonable return on the gas pipeline's invested capital used and
useful in providing service to the public in excess of its
reasonable and necessary operating expenses.
Sec. 144.052. ESTABLISHING FAIR RATE OF RETURN. The
railroad commission 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.
Sec. 144.053. COMPONENTS OF ADJUSTED VALUE OF INVESTED
CAPITAL. (a) In this section, "original cost" means the actual
money cost or the actual money value of consideration paid other
than money.
(b) Gas pipeline rates shall be based on the adjusted value
of invested capital used and useful to the pipeline 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.
(c) The railroad commission 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 pipeline 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.
(d) In determining a reasonable balance, the railroad
commission may consider inflation, deflation, quality of service
being provided, growth rate of the service area, and need for the
gas pipeline to attract new capital.
(e) Construction work in progress, at cost as recorded on
the gas pipeline's books, may be included as part of the adjusted
value of invested capital used by and useful to the pipeline in
providing service, as necessary to the financial integrity of the
pipeline.
(f) Costs of facilities, revenues, expenses, taxes, and
reserves shall be separated or allocated as prescribed by the
railroad commission.
Sec. 144.054. 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 pipeline.
(b) The rates and methods established under this section and
the depreciation account required under Section 142.152 shall be
used uniformly and consistently throughout rate-setting and appeal
proceedings under this subtitle.
Sec. 144.055. 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
pipeline from gas pipeline service less all reasonable and
necessary expenses related to that gas pipeline service. The
railroad commission shall determine those revenues and expenses in
a manner consistent with this subchapter.
(b) In establishing a gas pipeline's rates, the railroad
commission may not allow a gas pipeline'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 pipeline service except to the extent that the
railroad commission finds the payment is reasonable and necessary
for each item or class of items as determined by the railroad
commission. 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 pipeline 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 gas pipeline
rates, or an investment is included in the gas pipeline 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 gas pipeline rates, or an
investment is not included in the gas pipeline 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 railroad commission may adopt reasonable rules
complying with this section to include and exclude certain expenses
in computing the rates to be established.
(e) This section is not intended to increase gas pipeline
rates to the customer not caused by gas pipeline service. Gas
pipeline rates may include only expenses caused by gas pipeline
service.
Sec. 144.056. TREATMENT OF CERTAIN TAX BENEFITS. (a) In
determining the allocation of tax savings derived from liberalized
depreciation and amortization, the investment tax credit, or the
application of similar methods, the railroad commission shall:
(1) balance equitably the interests of present and
future customers; and
(2) apportion accordingly the benefits between
consumers and the gas pipeline.
(b) If a gas pipeline 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.
Sec. 144.057. CONSIDERATION OF CERTAIN EXPENSES. (a) In
establishing a gas pipeline's rates, the railroad commission may
not allow as a cost or expense an expenditure:
(1) described by Section 142.154 that the railroad
commission determines to be not in the public interest; or
(2) for legislative advocacy.
(b) The railroad commission may allow as a cost or expense
reasonable charitable or civic contributions not to exceed the
amount approved by the railroad commission.
Sec. 144.058. CONSIDERATION OF PROFIT OR LOSS FROM SALE OR
LEASE OF MERCHANDISE. In establishing a gas pipeline's rates, the
railroad commission 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 pipeline service.
[Sections 144.059-144.100 reserved for expansion]
SUBCHAPTER C. RATE CHANGES PROPOSED BY PIPELINE
Sec. 144.101. DEFINITION. In this subchapter, "major
change" means an increase in rates that would increase the
aggregate revenues of the gas pipeline more than the greater of
$100,000 or 2-1/2 percent. The term does not include an increase in
rates that the railroad commission allows to go into effect or the
gas pipeline makes under an order of the railroad commission after
hearings held with public notice.
Sec. 144.102. STATEMENT OF INTENT TO INCREASE RATES.
(a) A gas pipeline may not increase its rates unless the gas
pipeline files a statement of its intent with the railroad
commission at least 35 days before the effective date of the
proposed increase.
(b) The gas pipeline 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 gas pipeline;
(C) each class and number of utility consumers
affected; and
(D) any other information required by the
railroad commission's rules and regulations.
Sec. 144.103. NOTICE OF INTENT TO INCREASE RATES. (a) The
gas pipeline shall:
(1) publish, in conspicuous form, notice to the public
of the proposed rate 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 rate increase to
any other affected person as required by the railroad commission's
rules.
(b) Instead of publishing newspaper notice, a gas pipeline
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.
Sec. 144.104. EARLY EFFECTIVE DATE OF RATE INCREASE.
(a) For good cause shown, the railroad commission 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 144.102; and
(2) under conditions the railroad commission
prescribes, subject to suspension as provided by this subchapter.
(b) The gas pipeline shall immediately revise its schedules
to include the early increase.
Sec. 144.105. DETERMINATION OF PROPRIETY OF RATE CHANGE;
HEARING. (a) If a schedule modifying or increasing rates is filed
with the railroad commission, the railroad commission 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 railroad commission shall hold a hearing in every
case in which the increase constitutes a major change. The railroad
commission may, however, use an informal proceeding if the railroad
commission does not receive a complaint before the expiration of 45
days after the date notice of the increase is filed.
(c) The railroad commission shall give reasonable notice of
the hearing, including notice to the governing body of each
affected municipality and county. The gas pipeline 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.
Sec. 144.106. PREFERENCE TO HEARING. The railroad
commission 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.
Sec. 144.107. RATE SUSPENSION; DEADLINE. (a) Pending the
hearing and a decision, 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) shall be
extended for two days for each day the actual hearing on the merits
of the case exceeds 15 days.
(c) If the railroad commission does not make a final
determination concerning a schedule of rates before expiration of
the applicable suspension period, the railroad commission is
considered to have approved the schedule. This approval is subject
to the authority of the railroad commission to continue a hearing in
progress.
Sec. 144.108. TEMPORARY RATES. (a) The railroad
commission may establish temporary rates to be in effect during the
applicable suspension period under Section 144.107.
(b) If the railroad commission does not establish temporary
rates, the rates in effect when the suspended schedule was filed
continue in effect during the suspension period.
Sec. 144.109. BONDED RATES. (a) A gas pipeline may put a
changed rate into effect by filing a bond with the railroad
commission if the railroad commission 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 railroad commission in an amount,
in a form, and with a surety approved by the railroad commission;
and
(2) conditioned on refund.
(d) The gas pipeline 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 railroad commission.
Sec. 144.110. ESTABLISHMENT OF FINAL RATES. (a) If, after
hearing, the railroad commission finds the rates are unreasonable
or in violation of law, the railroad commission shall:
(1) enter an order establishing the rates the gas
pipeline shall charge or apply for the service in question; and
(2) serve a copy of the order on the gas pipeline.
(b) The rates established in the order shall be observed
thereafter until changed as provided by this subtitle.
Sec. 144.111. APPROVAL OF DECREASE IN RATES.
Notwithstanding any other provision in this subtitle, the railroad
commission may, without reference to the rate standard prescribed
by Section 144.051, administratively approve a decrease in rates
proposed by the gas pipeline and agreed on by each party directly
affected unless the railroad commission determines that the
proposed decrease is not in the public interest.
Sec. 144.112. SURCHARGE TO RECOVER RELOCATION COSTS.
(a) This section applies to a gas pipeline'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 is
not reimbursed by a source other than as provided by this section.
(b) A gas pipeline 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 the railroad commission for a new rate
schedule or tariff. The gas pipeline 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 railroad
commission 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 gas pipeline 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 railroad commission does not make a decision
before the deadline prescribed by Subsection (d), the application
is approved.
[Sections 144.113-144.150 reserved for expansion]
SUBCHAPTER D. RATE CHANGES PROPOSED BY COMMISSION
Sec. 144.151. UNREASONABLE OR VIOLATIVE EXISTING RATES.
(a) If the railroad commission, on its own motion or on complaint
by an affected person, after reasonable notice and hearing, finds
that the existing rates of a gas pipeline for a service are
unreasonable or in violation of law, the railroad commission shall:
(1) enter an order establishing just and reasonable
rates for that gas pipeline, including maximum or minimum rates;
and
(2) serve a copy of the order on the gas pipeline.
(b) The rates set under Subsection (a) constitute the legal
rates of the gas pipeline until changed as provided by this
subtitle.
Sec. 144.152. INVESTIGATING COSTS OF OBTAINING SERVICE FROM
ANOTHER SOURCE. If a gas pipeline does not produce the service that
it distributes, transmits, or furnishes to the public for
compensation but obtains the service from another source, the
railroad commission may investigate the cost of that production in
an investigation of the reasonableness of the gas pipeline's rates.
[Sections 144.153-144.200 reserved for expansion]
SUBCHAPTER E. RATES FOR GOVERNMENTAL ENTITIES
Sec. 144.201. TRANSPORTATION RATES BETWEEN GAS PIPELINE AND
STATE AGENCY. (a) Notwithstanding Section 144.003(b), absent a
contract for transportation service between a state agency and a
gas pipeline, 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 railroad 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
pipeline.
(c) The railroad commission may order temporary rates under
Subsection (a) as provided by Section 144.108.
Sec. 144.202. EXCLUDED EXPENSES. (a) The rates that a gas
pipeline charges a state agency may not include an amount
representing a gross receipts assessment, regulatory assessment,
or similar expense of the gas pipeline.
(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 pipeline.
(c) A gross receipts assessment, regulatory assessment, or
similar expense of the gas pipeline does not include a payment to a
municipality under a contract, franchise, or other agreement.
[Sections 144.203-144.250 reserved for expansion]
SUBCHAPTER F. SERVICES
Sec. 144.251. GENERAL STANDARD. A gas pipeline shall
furnish service, instrumentalities, and facilities that are safe,
adequate, efficient, and reasonable.
Sec. 144.252. AUTHORITY OF RAILROAD COMMISSION CONCERNING
STANDARDS. The railroad commission, 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 pipeline 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.
Sec. 144.253. RULE OR STANDARD. (a) A gas pipeline may
file with the railroad commission a standard, classification,
regulation, or practice the gas pipeline follows.
(b) A standard, classification, regulation, or practice
filed by the gas pipeline continues in force until:
(1) amended by the gas pipeline; or
(2) changed by the railroad commission as provided by
this subtitle.
Sec. 144.254. SERVICE TO STATE AGENCIES. A gas pipeline may
not refuse to provide service to a state agency if the gas
pipeline's existing facilities have capacity available.
Sec. 144.255. 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 gas pipeline is prohibited by other law from
providing the service and if sufficient pipeline capacity is
available on an existing facility of the pipeline to provide the
service, a gas pipeline may not refuse to provide 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 gas pipeline shall provide a service described by
Subsection (b) at rates provided by a written contract negotiated
between the pipeline and the state or a state agency. If the
pipeline 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.
(d) In this section, "public retail customer" has the
meaning assigned by Section 35.101.
Sec. 144.256. BILLING. (a) A gas pipeline 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 pipeline.
The rules must be consistent with Chapter 2251, Government Code.
(c) This subtitle does not prohibit a gas pipeline 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 quarterly
reconciliation of the leveled or equalized bills.
Sec. 144.257. ELECTRONIC BILLING. On request of a customer
of a gas pipeline, the gas pipeline may transmit the pipeline's bill
for services through the Internet or by other electronic means
instead of through the United States mail.
Sec. 144.258. EXAMINATION AND TEST OF INSTRUMENT OR
EQUIPMENT; INSPECTION. (a) The railroad commission may:
(1) examine and test equipment, including meters and
instruments, used to measure service of a gas pipeline; and
(2) set up and use on the premises occupied by a gas
pipeline an apparatus or appliance necessary for the examination or
test.
(b) The gas pipeline is entitled to be represented at an
examination, test, or inspection made under this section.
(c) The gas pipeline and its officers and employees shall
facilitate the examination, test, or inspection by giving
reasonable aid to the railroad commission and to any person
designated by the railroad commission for the performance of those
duties.
[Sections 144.259-144.300 reserved for expansion]
SUBCHAPTER G. INTERIM COST RECOVERY AND RATE ADJUSTMENT
Sec. 144.301. INTERIM ADJUSTMENT FOR CHANGES IN INVESTMENT.
(a) A gas pipeline that has filed a rate case under Subchapter C
within the preceding two years may file with the railroad
commission a tariff or rate schedule that provides for an interim
adjustment in the gas pipeline's monthly customer charge or initial
block rate to recover the cost of changes in the investment in
service for gas pipeline services. The adjustment shall be
allocated among the gas pipeline's classes of customers in the same
manner as the cost of service was allocated among classes of
customers in the gas pipeline's latest effective rates for the area
in which the tariff or rate schedule is implemented. The gas
pipeline shall file the tariff or rate schedule, or the annual
adjustment under Subsection (c), with the railroad commission at
least 60 days before the proposed implementation date of the
tariff, rate schedule, or annual adjustment. The gas pipeline
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 gas pipeline files the
tariff, rate schedule, or annual adjustment with the railroad
commission. During the 60-day period, the railroad commission 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 the railroad commission 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 the railroad commission 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 pipeline shall adjust the gas
pipeline'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 pipeline may file a request with the railroad commission 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 railroad commission may grant the
suspension on a showing by the gas pipeline of reasonable
justification.
(d) A gas pipeline may only adjust the gas pipeline'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 railroad commission establishing the gas
pipeline's latest effective rates for the area in which the tariff
or rate schedule is implemented.
(e) A gas pipeline that implements a tariff or rate schedule
under this section shall file with the railroad commission 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 pipeline shall file with the railroad commission an annual
earnings monitoring report demonstrating the gas pipeline's
earnings during the preceding calendar year.
(g) If the gas pipeline 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 the railroad commission for the
area in which the tariff or rate schedule is implemented under this
section, the gas pipeline 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 pipeline 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 pipeline 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 the railroad
commission under Section 144.151.
(j) A gas pipeline implementing a tariff or rate schedule
under this section shall reimburse the railroad commission for the
gas pipeline's proportionate share of the railroad commission's
costs related to the administration of the interim rate adjustment
mechanism provided by this section.
CHAPTER 145. JUDICIAL REVIEW; ENFORCEMENT AND PENALTIES
SUBCHAPTER A. JUDICIAL REVIEW
Sec. 145.001. RIGHT TO JUDICIAL REVIEW. (a) Any party to a
proceeding before the railroad commission under this subtitle is
entitled to judicial review under the substantial evidence rule.
(b) In a proceeding under this subtitle, the issue of
confiscation is determined by a preponderance of the evidence.
Sec. 145.002. JUDICIAL STAY OR SUSPENSION. While an appeal
of an order, ruling, or decision of the railroad commission under
this subtitle is pending, the district court, court of appeals, or
supreme court, as appropriate, may stay or suspend all or part of
the operation of the order, ruling, or decision. In granting or
refusing a stay or suspension, the court shall act in accordance
with the practice of a court exercising equity jurisdiction.
[Sections 145.003-145.020 reserved for expansion]
SUBCHAPTER B. ENFORCEMENT AND PENALTIES
Sec. 145.021. ACTION TO ENJOIN OR REQUIRE COMPLIANCE.
(a) The attorney general, on the request of the railroad
commission, shall apply in the name of the railroad commission for
an order under Subsection (b) if the railroad commission determines
that a gas pipeline or other person is:
(1) engaging in or about to engage in an act that
violates this subtitle or an order or rule of the railroad
commission entered or adopted under this subtitle; or
(2) failing to comply with the requirements of this
subtitle or a rule or order of the railroad commission.
(b) A court, in an action under this section, may:
(1) prohibit the commencement or continuation of an
act that violates this subtitle or an order or rule of the railroad
commission entered or adopted under this subtitle; or
(2) require compliance with a provision of this
subtitle or an order or rule of the railroad commission.
(c) The remedy under this section is in addition to any
other remedy provided under this subtitle.
Sec. 145.022. CONTEMPT. The railroad commission may file
an action for contempt against a person who:
(1) fails to comply with a lawful order of the railroad
commission;
(2) fails to comply with a subpoena or subpoena duces
tecum; or
(3) refuses to testify about a matter on which the
person may be lawfully interrogated.
Sec. 145.023. CIVIL PENALTY AGAINST GAS PIPELINE OR
AFFILIATE. (a) A gas pipeline or affiliate is subject to a civil
penalty if the gas pipeline or affiliate knowingly violates this
subtitle, fails to perform a duty imposed on it, or fails, neglects,
or refuses to obey an order, rule, direction, or requirement of the
railroad commission or a decree or judgment of a court.
(b) A civil penalty under this section shall be in an amount
of not less than $1,000 and not more than $5,000 for each violation.
(c) A gas pipeline or affiliate commits a separate violation
each day it continues to violate Subsection (a).
(d) The attorney general shall file in the name of the
railroad commission a suit on the attorney general's own initiative
or at the request of the railroad commission to recover the civil
penalty under this section.
Sec. 145.024. OFFENSE. (a) A person commits an offense if
the person knowingly violates this subtitle.
(b) An offense under this section is a felony of the third
degree.
Sec. 145.025. PLACE FOR SUIT. A suit for an injunction or a
penalty under this subtitle may be brought in:
(1) Travis County;
(2) a county in which the violation is alleged to have
occurred; or
(3) a county in which a defendant resides.
Sec. 145.026. PENALTIES CUMULATIVE. (a) A penalty that
accrues under this subtitle is cumulative of any other penalty.
(b) A suit for the recovery of a penalty does not bar or
affect the recovery of any other penalty or bar a criminal
prosecution against any person, including a gas pipeline or
officer, director, agent, or employee of a gas pipeline.
Sec. 145.027. DISPOSITION OF FINES AND PENALTIES. A fine or
penalty collected under this subtitle, other than a fine or penalty
collected in a criminal proceeding, shall be paid to the railroad
commission.
[Sections 145.028-145.050 reserved for expansion]
SUBCHAPTER C. COMPLAINTS
Sec. 145.051. COMPLAINT BY AFFECTED PERSON. An affected
person may complain to the railroad commission in writing setting
forth an act or omission by a gas pipeline that the person claims
violates a law that the railroad commission has jurisdiction to
administer or an order, ordinance, or rule of the railroad
commission.
SECTION 2. This Act takes effect September 1, 2011.