The Attorney General of Texas
MARK WHITE April 15, 1982
Attorney General
Mr. George M. Cowden Opinion No. M-462
Supreme Court Building
Chairman
P. 0. BOX 12546
Austin. TX. 76711. 2546
Public Utility Commission of Texas Re: Ratemaking standards to
512/475.2501 7800 Shoal Creek Boulevard be applied by Public Utility
Telex 9101674.1367 Suite 400N Commission in hearing appeals
Telecopier 512/475-0266 Austin, Texas 78757 and fixing rates pursuant to
section 26(e) of article
1446~. V.T.C.S.
16iI7 Main St., Suite 1400
DalIa?. TX. 75201-4764
21417428944 Dear Mr. Cowden:
You have requested an opinion concerning the standards to be
4624 Alberta Ave.. Suite 166
applied by the Public Utility Commission in hearing appeals from
El Paso. TX. 79905.2793
9151533.3464 ratepayers of municipally owned utilities who reside outside the
municipality's limits pursuant to section 26(e) of the Public Utility
Regulatory Act, article 1446~. V.T.C.S. [hereinafter "the act"].
,220 Dallas Ave., Suite 202 Specifically, your question is:
Houston. TX. 770026966
713l6530686
What standards or ratemaking provisions does the
commission apply in hearing appeals de nova and
605 Broadway. Suite 312 fixing rates pursuant to section 26(e) of the act?
CubWck. TX. 79401.3479
9061747.5236
In Attorney General Opinion ~~-406 (1981) we held that the
ratemaking standards of article VI of the act do not apply to appeals
4309 N. Tenth. Suite B pursuant to section 26(e), since all provisions of that article refer
McAtten. TX. 76501.1665 to "public utilities" or "utility," from which municipal utilities are
5121662-4547 expressly excluded pursuant to the definition of such in section 3(c)
of the act. However, subsequent to the issuance of Attorney General
200 Main Plaza. Suite 400 Opinion MW-406 (1981), the Austin Court of Appeals in Public Utility
San Antonio, TX. 78205.2797 Commission of Texas v. City of Sherman. Docket No. 13,453. Tex. Civ.
512/225-4191 APP. - Austin, December 23. 1981 (unreported), held that in certain
circumstances the terms "public utility" and "utility" as used in the
An Equal Opportunityl
act do include municipally owned utilities, notwithstanding their
Attivmtive Action EmplOyer definitional exclusion in section 3(c). Specifically, the court held
that the term "utility" in section 17(e) and the term "public utility"
in section 60 must be construed to include municipalities in order to
effectuate the intent of the act to establish a comprehensive
regulatory system. Similarly, the Supreme Court of Texas in City of
Coahoma v. Public Utility Commission. 626 S.W.2d 488 (Tex. 1981), held
that the term "public utility" in section 53 of the act must be
construed to include municipally owned utilities, despite section
P. 1608
Mr. George M. Cowden - Page 2 W-462)
3(c). In San Antonio Independent School District v. City of San
Antonio, 614 S.W.2d 917 (Tax. Civ. App. - Eastland 1981, writ ref'd
n.r.e.), the court held that the term "public utility" as used in
section 48 of the act is not dependent upon section 3(c) for its
definition and must include municipally owned utilities. It should be
noted that section 48 is within article VI of the act.
The above three cases make it clear that where exclusion of
municipally owned utilities from the terms "public utility" or
"utility" would result in a contradictlon in the act or in a
regulatory system of less than a comprehensive uature, then the terms
must include such municipalities. It is equally clear, as set forth
in Attorney General Opinion MW-406 (1981), that the legislature
intended the commission 'to have jurisdiction over appeals from
ratepayers of a municipally owned utility who reside outside the
municipality's boundaries, pursuant to section 26(e) of the act.
Accordingly, it must be inferred that the legislature also intended
that there be ratemaking standards for such appeals, in order that the
commission's jurisdiction in this regard be complete. Since the only
ratemaking standards of the act are set forth in article VI, we
believe it logically follows that these standards were intended to
apply to section 26(e) appeals, and that the terms "public utility"
and "utility",in article VI were intended to include municipally owned
utilities, where the commission properly has jurisdiction over such
utilities. The only qualification to this concerns section 43 of
article VI, which establishes the procedure for public utilities to
file rate applications with the regulatory authority and certain
procedures the regulatory authority must follow in hearing such
applications. Clearly this section does not apply to appeals from
municipally owned utilities, which are instead governed by section 26.
SUMMARY
In hearing appeals pursuant to section 26 of
article 1446~. V.T.C.S., from ratepayers who
reside outside the municipal limits, the Public
Utility Commission of Texas should apply the
ratemaking standards contained in article VI, with
the exception of section 43.
M A Rx W,H I T E
Attorney General of ~Texas
JORN W. FAINTER, JR.
First Assistant Attorney General
p. 1609
Mr. George M. Cowden - Page 3 (W-462)
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Phil Rickette
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Jon Bible
Phil Rickette
Rick Gllpin
Patricia Hinojosa
Jim Moellinger
p. 1610