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Summary: This legislation authorizes the commissioners court of a county to intervene in a rate proceeding if a utility seeks to increase rates by more than 25% or serves more than 3,000 ratepayers in the county.
Analysis: On its face, this legislation adds more regulation to private industry. Ordinarily we would oppose such regulation. In a free market system, competition would prevent rates from climbing too high because consumers would leave the higher priced utility in favor of a lower priced competitor. The market price would be self-regulating. However, water utilities in Texas, including those that are privately owned, do not operate in a free market. Most water utilities have a state granted monopoly. When the government grants a monopoly, the government has a responsibility to ensure that the monopoly is not abused by charging rates that would never be acceptable in a competitive situation.
As written, this legislation would allow county intervention for a rate hike of greater than 25% or for any rate hike if the utility serves 3,000 or more ratepayers in the county. This broad language would allow the county to intervene in even a miniscule rate hike so long as more than 3,000 ratepayers would be affected. This allows the county too much regulatory power, even in a monopoly situation.
Recommendation: We recommend opposing the bill unless amended to strike the word "or" from the end of line 12 on page 2 and strike lines 13-14 on page 2. The text we recommend striking is "or (2) serves more than 3,000 ratepayers who reside in the county." Should such an amendment be adopted, we would support final passage.