About the PUCT  

Since the passage of SB 700 (86R), smaller water utilities have been able to apply for a system improvement charge to fund certain needed improvements to their systems more quickly than through a traditional rate case. The current statute requires the PUCT to issue a final order within 120 days after the application is determined to be sufficient. The PUCT recommends shortening the timeline from 120 days to 60 days to create more certainty for utilities and their consumers.

Distressed water or sewer utilities present a significant hazard to the health and wellbeing of Texans. The Legislature has provided the PUCT with clear authority to appoint a temporary manager over a distressed utility or to work with the Office of the Attorney General to seek appointment of a receiver over the utility through a district court proceeding. The Legislature could broaden the pool of available, qualified water and sewer operators who may be willing to take on the challenge of rescuing distressed utilities.

Expand Types of Entities That Can Serve as Temporary Manager or Receiver
Chapter 13 of the Texas Water Code (TWC) states that the PUCT can appoint a person as a temporary manager. Chapter 64 of the Civil Practices and Remedies Code describes a receiver as a person, though the TWC is silent on this point. Under the TWC, a person does not include a municipally owned utility, district, or county. The Legislature could amend Section 13.4132 to make clear that the PUCT can appoint as a temporary manager a person, municipally owned utility, district, or county. Additionally, the Legislature could amend Section 13.412 to make clear that a person, as that term is currently defined, is not the only type of entity that may be appointed as a receiver of a distressed utility. By expanding the pool of available entities to serve in these critical roles, the Legislature would broaden the PUCT's ability to seek out and find 83 qualified, willing entities and individuals who are capable of restoring essential water or sewer utility service.

Expansion of the Expedited Sales Transfer or Merger Process
Following the passage of SB 1965 (88R), Class A and B water utilities can acquire a utility in temporary management or receivership through an expedited sale, transfer, or merger (STM) application process. This ensures that struggling utilities are transitioned to capable operators more quickly. Currently, the expedited process only applies to temporary managers or receivers that are Class A or B utilities. As the second part of this recommendation to enhance the PUCT's ability to address distressed utilities, the PUCT recommends making the expedited STM process available to temporary managers that are municipalities, water supply or sewer service corporations, utility districts, river authorities or water control and improvement districts.

The PUCT does not have clear authority to equally impose administrative penalties against all regulated entities. This authorization would clarify the PUCT's enforcement authority over wholesale market participants, including electric cooperatives, municipally owned utilities, and river authorities.

The PUCT has clear authority to initiate enforcement action against a water utility if there is reason to believe there is an imminent threat to human health or safety. Amending this statute to include sewer utilities would provide clarity for the PUCT, consumers, and utilities. The PUCT recommends holding sewer utilities to the same enforcement standard as water utilities.

Informal settlement negotiations are a common practice at the PUCT and an important part of the PUCT's strategy to ensure full compliance with the law. Often, an entity involved in an enforcement case is willing to reveal sensitive or proprietary information or take accountability for certain behaviors when assured of confidentiality in a settlement negotiation. However, once the PUCT finally decides the outcome on the case, the confidentiality of those materials is no longer protected. The uncertainty around confidentiality can create a chilling effect on negotiations and make an entity less willing to provide information. Ensuring confidentiality to parties involved in enforcement cases would significantly increase the effectiveness of informal settlement negotiations. The PUCT recommends making investigation files explicitly confidential even after the case is resolved, as they are for some other regulatory agencies.

All customers experiencing an outage should have reasonable access to information about their outage status and estimated restoration time. The Commission has launched an administrative rulemaking requiring IOUs to maintain functional and accurate public-facing outage trackers. However, the Commission lacks the authority to require the same of MOUs and co-ops. Additionally, customers should have the ability to contact their electric service provider to report outages and other electrical emergencies 24 hours a day.

The Legislature should consider adding these protections to the Public Utility Regulatory Act (PURA) Chapter 17, which outlines customer protections.

Further, critical loads, such as assisted living facilities and water utilities, must be able to contact their electric service provider directly during an emergency. The Legislature should consider codifying a critical customer's right to timely contact with utility representatives during significant power outages. Some of these customers reported waiting on hold for hours to speak to a customer service representative following Hurricane Beryl.

The Commission oversees and enforces IOU compliance with service quality standards. However, since 1998, the Commission has excluded major events—extreme weather that disrupts power to at least 10% of customers—from these service quality calculations. The exclusion reflects concerns that including such events would misrepresent a utility's typical reliability. While it's reasonable to exclude hurricane damage from average service quality metrics, utilities should not avoid accountability for insufficient storm preparation or response.

The Commission recommends establishing a new standard to assess IOU system reliability and response during major events. The standard would be applied to a utility's service quality performance during major events over the course of a year, similar to how the Commission's current service quality rules are designed. For violations of this standard, the Commission should have the authority to pursue enhanced administrative penalties.

Vegetation-related outages generally represent 15% to 20% of system-wide forced-outages reported by IOUs in each reporting year (excluding major events like hurricanes). System-wide 85 violations of electric service quality metrics are considered one violation for the entire reporting year and are capped at $25,000. To incentivize proactive measures to improve electric service quality, the Legislature could either increase the penalty cap or expand what may constitute a violation by placing a maximum threshold for forced-outages caused by vegetation-related issues. Enhanced penalties could apply if the utility crosses the threshold due to failure to trim circuits based on its trim cycle plan.