House Committee Considers Municipal Rate Case Participation

On March 5, the House Committee on State Affairs considered H.B. 1148 and H.B. 1149, which are two bills that could limit municipal participation in gas and electric rate cases.

Proponents of the bill spoke of “streamlining” the process by taking cities out of the process.  They would prefer that rate cases go directly to the Railroad Commission or the Public Utility Commission.  Their position is that, by removing cities from the equation, consumers would save money by not having to bear the costs of the cities’ participation.  (A city’s lawyers and consultants are reimbursed through a utility’s rates.)

Of course, nothing could be further from the truth.  City participation in rate cases has saved consumers hundreds of millions of dollars, with relatively miniscule costs incurred by the cities.  It is unlikely that the staff of any state agency has the resources or the wherewithal to accomplish those same results.  In fact, municipal original jurisdiction over gas cases often results in settlement at the city level.  Without it, a state agency would likely be overwhelmed.

Over a dozen city officials showed up to testify against the bills.  Collectively, they argued that a city’s original jurisdiction provides many benefits to consumers:  (1) a city can take action to reduce rates or force concessions that benefit city residents when a monopoly utility company is overearning and the state agency refuses to take action; (2) a city can, particularly in gas rate cases, resolve a rate increase request at the local level, which helps to avoid costly litigation at the state level; (3) discovery that is begun at the local level reduces the amount of discovery necessary once a case gets to the state agency; and (4) local media is more likely to follow rate regulatory matters when the city is involved, which leads to greater transparency and greater citizen confidence that someone is looking out for their interests.

The two bills were left pending in the House Committee on State Affairs for now.  To view the lengthy hearing, click here and fast forward to 2 hours and 49 minutes into the hearing.

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