HBA-JLV, AMW H.B. 724 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 724 By: Turner, Sylvester Environmental Regulation 3/18/2001 Introduced BACKGROUND AND PURPOSE The regulation of water utilities, historically managed by the Public Utility Commission (PUC), was transferred in the early 1980's to the Texas Natural Resource Conservation Commission (TNRCC). More recently, municipal water systems have come under review because of the need to make infrastructure investments to bring these systems in to compliance with state and federal standards. As a result of this need, an increasing number of energy companies have initiated movements towards buying or taking over the operations of aging municipal water systems. As Texas approaches a deregulated electric market, the purchase of water utilities presents new opportunities for growth. The PUC's regulatory authority over electric utilities and the movement towards these utilities in acquiring municipal water systems provides PUC with the incentive and authority to then provide oversight over water utilities. House Bill 724 transfers TNRCC's powers and duties regarding water rates and services to the PUC. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Public Utility Commission of Texas in SECTION 6 (Section 13.017, Water Code) and the secretary of state in SECTION 13 of this bill. ANALYSIS House Bill 724 amends the Water, Utilities, and Local Government codes to transfer the Texas Natural Resource Conservation Commission's (TNRCC) powers and duties regarding water rates and services to the Public Utility Commission of Texas (PUC). The bill amends the Water Code to transfer TNRCC's general jurisdiction over administration of the state's water rate program. H.B. 724 also sets forth provisions regarding the transfer from TNRCC to PUC of all: _rights, powers, duties, functions, programs, and activities related to water rates and services; _funds, obligations, contracts, property, and records relating to water rates and services; _employees who perform duties relating to water rates and services; and _appropriations for activities related to water rates and services. The bill removes the Texas Water Development Board from serving as a source of evidence and information gathered by the executive director and staff of PUC for the purposes of regulating water rates and services. H.B. 724 amends the Utilities Code to authorize the Office of the Public Utility Counsel to initiate or intervene as a matter of right or otherwise appear in a judicial proceeding in which the public utility counselor determines that residential or small commercial consumers of water or sewer utility service are in need of representation. The bill transfers any money collected by TNRCC for fees related to applications pending before September 1, 2001, rules or forms adopted by TNRCC relating to water rates and services, and references in law to TNRCC relating to water rates and services to PUC. The bill also authorizes the secretary of state to adopt rules as necessary to expedite the implementation of this transfer. EFFECTIVE DATE September 1, 2001.