As the independent consumer advocate within the State of Texas, OPUC engaged NewGen to assist with the PUC's development of the water and wastewater substantive rules amendment, regulatory rate filing packages, and templates for annual reporting. NewGen is providing technical guidance to OPUC staff through the PUC comment and adoption process for the new statewide water and wastewater rate filing requirements.
During the 83rd Session of the Texas Legislature, the passage of HB 1600 led to the transfer of economic regulation of water and wastewater utilities in the state of Texas from the Texas Commission on Environmental Quality to the Public Utility Commission of Texas (PUC). As a result of this transfer in regulatory powers, in 2015, the PUC opened five rule-making dockets to implement this transfer through amendments to Title 16, Chapter 22 of the Texas Administrative Code which contains the Procedural Rules of the PUC as well as Title 16, Chapter 24 of the TAC which contains the substantive rules applicable to water and wastewater providers.
To assist as their technical advisor in these rule-making proceedings, the Texas Office of Public Utility Counsel (OPUC), engaged the assistance of NewGen. OPUC, originally created in 1983, serves as the independent consumer advocate for utility customers within the State. As technical advisor, NewGen was responsible for reviewing the proposed changes to the rules within each Docket and providing technical guidance regarding water and wastewater ratemaking and regulation to OPUC staff through the comment and adoption process, with specific focus on the impacts these rules would have on utility customers.
Key issues addressed within Docket No. 43871, the proposed changes to the Texas Administrative Code, included the appropriate definition of key terminology; the overall process of cost allocation, customer class definition and cost distribution; as well as the proper methodology to be utilized in determining cost of service. Specific to cost of service, NewGen provided technical guidance on the development of a formulaic approach to determining the allowable return on equity as well as the inclusion or exclusion of certain rate base items including, but not limited to, construction work in progress, acquisition adjustments, intangible assets, and forms of non-investor supplied capital such as customer deposits.
One of the key impacts of the proposed changes was the segregation of water and wastewater utilities in the state into three classes based on the number of connections served, with rate applications and processes developed specific to each class reflective of their overall sophistication. Docket No. 43876 addressed the rate applications process for Class A utilities, the largest providers in the state. Docket No. 43967 addressed the process for Class B utilities which serve between 500 and 10,000 connections. Docket No. 44462 addressed the rate application process for Class C utilities, the smallest utilities in the state, and allowed for an annual price index adjustment for four consecutive years at which time the utility would be required to complete a Class B application. For each of these dockets, as well as Docket No. 44706 which addressed annual reports and rate tariff filing notices, NewGen assisted in the technical review of all application instructions and forms.
NewGen continues to assist OPUC in on-going rulemaking dockets, and was recently engaged by OPUC to assist as their technical advisor and Expert Witness in Docket 45570, the first ever Class A water rate application submitted to the PUC under the new rules.