The Honorable Ron Clower            Opinion No. H-872
Chairman
Consumer Affairs Sub-Committee      Re: Municipality's
Texas Senate                        authority to require regu-
State Capitol Building              lated utility to furnish
Austin, Texas 78711                 financial data concerning
                                    ;ps;;ions outside city
                                          .
Dear Senator Clower:
     You ask whether, under the Public Utility Regulatory
Act, article 1446c, V.T.C.S., a municipality setting rates
for a public utility operating within its regulatory juris-
diction may require information concerning the utility's
profits and losses in areas outside the city or town limits.
We believe that the Act clearly authorizes cities exercising
regulatory jurisdiction to require such information and to
consider it in setting rates.
       Under the regulatory scheme of the Act, the governing
 body of each municipality retains exclusive original juris-
 diction over the rates of any gas utility within its city
 or town limits [section 19(a)], and the Public Utility Com-
 mission (hereinafter referred to as "Commission") is granted
 exclusive original jurisdiction over telecommunications
 utility rates (section 18). Each municipality retains
 original jurisdiction to regulate electric, water, and sewer
orates within city or town limits, unless electing to surrender
 that jurisdiction to the Commission (section 17). Utility
 service subject to regulation by the governing body of a
 municipality is exempt from regulation by the Commission
  (or Railroad Commission for gas rates), and the area within
 the municipal boundaries is thus considered an "exempt area."
 Parts of the state which are subject to regulation by the
 Commission (or Railroad Commission) are thus "nonexempt areas."
 Section 22 of the Act provides that:




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The Honorable Ron Clower - page 2 (H-872)


         [I]n fixing rates and charges in the exempt
         area, the governing body [of the municipality]
         may consider a public utility's revenues and
         return on investment in nonexempt areas.
Section 22, then, authorizes any municipality's governing
body to take into account, in setting rates within city or
town limits, the utility's revenues and return on investment in
certain areas beyond city or town limits. In order to give
meaning to section 22's authorization, it is reasonable to
infer that the Act contemplates that the governing body should
have some means of obtaining such information, especially
since section 89 requires that the Act be construed "liberally
to promote the effectiveness and efficiency of regulation of
public utilities . . . ."
     The municipality's authority to require this information
under the Act will not arise until September 1, 1976. Section
87(b) of the Act provides that the regulatory authority --
again, for our purposes in this opinion, the governing body
of each municipality -- is to assume jurisdiction over rates
under the Act on September 1, 1976. Until that effective
date, municipalities must look to pre-Act law for authority
to require profit and loss information from public utilities.
                     SUMMARY
          Under the Public Utility Regulatory Act,
          the governing body of a municipality
          regulating rates of a public utility
          furnishing service within city or town
          limits may, after September 1, 1976,
          require that the utility furnish
          information concerning profits and losses
          in areas outside the city or town limits.
                               Very truly yours,




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The Honorable Ron Clower - page 3 (H-872)




Opinion Committee
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