CHAPTER 33. JURISDICTION AND POWERS OF MUNICIPALITY - Texas Statutes

UTILITIES CODE

TITLE 2. PUBLIC UTILITY REGULATORY ACT

SUBTITLE B. ELECTRIC UTILITIES

CHAPTER 33. JURISDICTION AND POWERS OF MUNICIPALITY

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 33.001. MUNICIPAL JURISDICTION. (a) To provide fair,

just, and reasonable rates and adequate and efficient services,

the governing body of a municipality has exclusive original

jurisdiction over the rates, operations, and services of an

electric utility in areas in the municipality, subject to the

limitations imposed by this title.

(b) Notwithstanding Subsection (a), the governing body of a

municipality shall not have jurisdiction over the BPL system, BPL

services, telecommunications using BPL services, or the rates,

operations, or services of the electric utility or transmission

and distribution utility to the extent that such rates,

operations, or services are related, wholly or partly, to the

construction, maintenance, or operation of a BPL system used to

provide BPL services to affiliated or unaffiliated entities.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2005, 79th Leg., 2nd C.S., Ch.

2, Sec. 1, eff. September 7, 2005.

Sec. 33.002. SURRENDER OF MUNICIPAL JURISDICTION TO COMMISSION.

(a) A municipality shall regulate all local utility service in

the municipality until the commission assumes jurisdiction over a

local utility under this subtitle.

(b) A municipality may elect to have the commission exercise

exclusive original jurisdiction over electric utility rates,

operations, and services in the municipality by ordinance or by

submitting the question of the surrender of its jurisdiction to

the voters at a municipal election.

(c) The governing body of a municipality shall submit at a

municipal election the question of surrendering its jurisdiction

to the commission if the governing body receives a petition

signed by a number of qualified voters of the municipality equal

to at least the lesser of 20,000 or 10 percent of the number of

voters voting in the last preceding general election in the

municipality.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.003. REINSTATEMENT OF MUNICIPAL JURISDICTION. (a) A

municipality that surrenders its jurisdiction to the commission

may at any time reinstate its jurisdiction by a vote of the

electorate.

(b) A municipality that reinstates its jurisdiction under

Subsection (a) may not surrender that jurisdiction before the

fifth anniversary of the date of the election in which the

municipality elected to reinstate its jurisdiction.

(c) A municipality may not, by a vote of the electorate,

reinstate the jurisdiction of the governing body during the time

a case involving the municipality is pending before the

commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.004. AREA EXEMPT FROM COMMISSION REGULATION. (a) If a

municipality does not surrender its jurisdiction, local utility

service in the municipality is exempt from regulation by the

commission under this subtitle to the extent that this subtitle

applies to local service.

(b) The municipality may exercise in the exempt area the same

regulatory powers under the same standards and rules as the

commission or under other consistent standards and rules.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.005. EXEMPT AREA REPORTING. (a) An electric utility

serving an area exempt from commission regulation is subject to

the reporting requirements of this title.

(b) A report must be filed with:

(1) the governing body of the municipality; and

(2) the commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.006. COMMISSION POWERS IN NONEXEMPT AREAS. This

subchapter does not limit the duty and power of the commission to

regulate the service and rates of a municipally regulated

electric utility for service provided to another area in this

state.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.007. ALLOWABLE CHARGES. A municipality that performs a

regulatory function under this title may make each charge that is

authorized by:

(1) this title; or

(2) the applicable franchise agreement.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.008. FRANCHISE CHARGES. (a) Following the end of the

freeze period for a municipality that has been served by an

electric utility, and following the date a municipally owned

utility or an electric cooperative has implemented customer

choice for a municipality that has been served by that

municipally owned utility or electric cooperative, a municipality

may impose on an electric utility, transmission and distribution

utility, municipally owned utility, or electric cooperative, as

appropriate, that provides distribution service within the

municipality a reasonable charge as specified in Subsection (b)

for the use of a municipal street, alley, or public way to

deliver electricity to a retail customer. A municipality may not

impose a charge on:

(1) an electric utility, or transmission and distribution

utility, municipally owned utility, or electric cooperative for

electric service provided outside the municipality;

(2) a qualifying facility;

(3) an exempt wholesale generator;

(4) a power marketer;

(5) a retail electric provider;

(6) a power generation company;

(7) a person that generates electricity on and after January 1,

2002; or

(8) an aggregator, as that term is defined by Section 39.353.

(b) If a municipality collected a charge or fee for a franchise

to use a municipal street, alley, or public way from an electric

utility, a municipally owned utility, or an electric cooperative

before the end of the freeze period, the municipality, after the

end of the freeze period or after implementation of customer

choice by the municipally owned utility or electric cooperative,

as appropriate, is entitled to collect from each electric

utility, transmission and distribution utility, municipally owned

utility, or electric cooperative that uses the municipality's

streets, alleys, or public ways to provide distribution service a

charge based on each kilowatt hour of electricity delivered by

the utility to each retail customer whose consuming facility's

point of delivery is located within the municipality's

boundaries. The charge imposed shall be equal to the total

electric franchise fee revenue due the municipality from electric

utilities, municipally owned utilities, or electric cooperatives,

as appropriate, for calendar year 1998 divided by the total

kilowatt hours delivered during 1998 by the applicable electric

utility, municipally owned utility, or electric cooperative to

retail customers whose consuming facilities' points of delivery

were located within the municipality's boundaries. The

compensation a municipality may collect from each electric

utility, transmission and distribution utility, municipally owned

utility, or electric cooperative providing distribution service

shall be equal to the charge per kilowatt hour determined for

1998 multiplied times the number of kilowatt hours delivered

within the municipality's boundaries.

(c) The municipal franchise charges authorized by this section

shall be considered a reasonable and necessary operating expense

of each electric utility, transmission and distribution utility,

municipally owned utility, or electric cooperative that is

subject to a charge under this section. The charge shall be

included in the nonbypassable delivery charges that a customer's

retail electric provider must pay under Section 39.107 to the

utility serving the customer.

(d) The municipal franchise charges authorized by this section

are in lieu of any franchise charges or fees payable under a

franchise agreement in effect before the expiration of the freeze

period or, as appropriate, before the implementation of customer

choice by a municipally owned utility or electric cooperative.

Except as otherwise provided by this section, this section does

not affect a provision of a franchise agreement in effect before

the end of the freeze period or, as appropriate, before the

implementation of customer choice by a municipally owned utility

or electric cooperative.

(e) A municipality may conduct an audit or other inquiry or may

pursue any cause of action in relation to an electric utility's,

transmission and distribution utility's, municipally owned

utility's, or electric cooperative's payment of charges

authorized by this section only if such audit, inquiry, or

pursuit of a cause of action concerns a payment made less than

two years before commencement of such audit, inquiry, or pursuit

of a cause of action; provided, however, that this subsection

does not apply to an audit, inquiry, or cause of action commenced

before September 1, 1999. An electric utility, transmission and

distribution utility, municipally owned utility, or electric

cooperative shall, on request of the municipality in connection

with a municipal audit, identify the service provider and the

type of service delivered for any service in addition to

electricity delivered directly to retail customers through the

utility's electricity-conducting facilities that are located in

the municipality's streets, alleys, or public ways and for which

the utility receives compensation.

(f) Notwithstanding any other provision of this section, on the

expiration of a franchise agreement existing on September 1,

1999, an electric utility, transmission and distribution utility,

municipally owned utility, or electric cooperative and a

municipality may mutually agree to a different level of

compensation or to a different method for determining the amount

the municipality may charge for the use of a municipal street,

alley, or public way in connection with the delivery of

electricity at retail within the municipality.

(g) After the end of the freeze period or after implementation

of customer choice by the municipally owned utility or electric

cooperative, as appropriate, a newly incorporated municipality or

a municipality that has not previously collected compensation for

the delivery of electricity at retail within the municipality may

adopt and collect compensation based on the same rate per

kilowatt hour that is collected by any other municipality in the

same county that is served by the same electric utility,

transmission and distribution utility, municipally owned utility,

or electric cooperative.

(h) In this section, "distribution service" means the delivery

of electricity to all retail customers.

Added by Acts 1999, 76th Leg., ch. 405, Sec. 15, eff. Sept. 1,

1999.

SUBCHAPTER B. RATE DETERMINATION

Sec. 33.021. RATE DETERMINATION. (a) A municipality regulating

an electric utility under this subtitle shall require the utility

to submit information as necessary to make a reasonable

determination of rate base, expenses, investment, and rate of

return in the municipality.

(b) A municipality shall make a determination under Subsection

(a) using the procedures and requirements prescribed by this

title.

(c) A municipality shall retain personnel necessary to make the

determination of reasonable rates.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.022. CONSIDERATION OF REVENUES AND RETURN FROM NONEXEMPT

AREA. In establishing rates and charges in an area exempt from

commission regulation, the governing body may consider an

electric utility's revenues and return on investment in an area

that is not exempt from commission regulation.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.023. RATEMAKING PROCEEDINGS. (a) The governing body of

a municipality participating in or conducting a ratemaking

proceeding may engage rate consultants, accountants, auditors,

attorneys, and engineers to:

(1) conduct investigations, present evidence, and advise and

represent the governing body; and

(2) assist the governing body with litigation in an electric

utility ratemaking proceeding before the governing body, a

regulatory authority, or a court.

(b) The electric utility in the ratemaking proceeding shall

reimburse the governing body of the municipality for the

reasonable cost of the services of a person engaged under

Subsection (a) to the extent the applicable regulatory authority

determines is reasonable.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.024. STATEMENT OF INTENT. (a) Not later than the 31st

day before the date an electric utility files a statement of

intent under Section 36.102, the electric utility shall provide

notice of intent to file the statement to each municipality

having original jurisdiction.

(b) Not later than the 30th day after the date a municipality

receives notice under Subsection (a), the municipality may

request that the electric utility file with the municipality a

statement of intent in accordance with Section 36.102.

(c) If requested by a municipality under Subsection (b), the

electric utility shall file the statement of intent with the

municipality at the same time the statement is filed with the

commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.025. MUNICIPAL STANDING. (a) A municipality has

standing in each case before the commission that relates to an

electric utility providing service in the municipality.

(b) A municipality's standing is subject to the right of the

commission to:

(1) determine standing in a case involving a retail service area

dispute that involves two or more electric utilities; and

(2) consolidate municipalities on an issue of common interest.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.026. JUDICIAL REVIEW. A municipality is entitled to

judicial review of a commission order relating to an electric

utility providing services in the municipality as provided by

Section 15.001.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER C. APPEAL OF MUNICIPAL ORDER

Sec. 33.051. APPEAL BY PARTY. A party to a rate proceeding

before a municipality's governing body may appeal the governing

body's decision to the commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.052. APPEAL BY RESIDENTS. The residents of a

municipality may appeal to the commission the decision of the

municipality's governing body in a rate proceeding by filing with

the commission a petition for review signed by a number of

qualified voters of the municipality equal to at least the lesser

of 20,000 or 10 percent of the qualified voters of the

municipality.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.053. FILING OF APPEAL. (a) An appeal under this

subchapter is initiated by filing a petition for review with the

commission and serving a copy of the petition on each party to

the original rate proceeding.

(b) The appeal must be initiated not later than the 30th day

after the date of the final decision by the governing body of the

municipality.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.054. HEARING AND ORDER. (a) An appeal under this

subchapter, Subchapter D, or Subchapter E is de novo and based on

the test year presented to the municipality.

(b) The commission shall enter a final order establishing the

rates the commission determines the municipality should have set

in the ordinance to which the appeal applies.

(c) In a proceeding involving the rates of a municipally owned

utility, the commission must enter a final order on or before the

185th day after the date the appeal is perfected or the utility

files a rate application as prescribed by Section 33.104.

(d) In a proceeding in which a rate change is concurrently

sought from the commission under the commission's original

jurisdiction, the commission must enter a final order on or

before the later of the 120th day after the date the appeal is

perfected or the date final action must be taken in the

proceeding filed with the commission.

(e) In a proceeding not governed by Subsection (c) or (d), the

commission must enter a final order on or before the 185th day

after the date the appeal is perfected.

(f) If the commission fails to enter a final order before the

expiration of the applicable period prescribed by Subsections

(c)-(e), the rates proposed by the utility are considered to be

approved by the commission and take effect on the expiration of

that period.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.055. APPLICABILITY OF RATES. (a) Temporary or

permanent rates set by the commission are prospective and

observed from the date of the applicable commission order, except

an interim rate order necessary to effect uniform system-wide

rates or to provide an electric utility the opportunity to avoid

confiscation during the period beginning on the date a petition

for review is filed with the commission and ending on the date of

a final order establishing rates.

(b) The commission shall order interim rates on a prima facie

showing by the electric utility that it has experienced

confiscation during that period. The electric utility shall

refund or credit against future bills:

(1) money collected under the interim rates in excess of the

rate finally ordered; and

(2) interest on that money, at the current rate as determined by

the commission.

(c) In this section, "confiscation" includes negative cash flow

experienced by an electric utility at any time a rate case

proceeding is pending.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER D. PROVISIONS APPLICABLE TO APPEAL BY RATEPAYERS

OUTSIDE MUNICIPALITY

Sec. 33.101. APPEAL BY RATEPAYERS OUTSIDE MUNICIPALITY. (a)

The ratepayers of a municipally owned utility who are outside the

municipality may appeal to the commission an action of the

governing body of the municipality affecting the municipally

owned utility's rates by filing with the commission a petition

for review signed by a number of ratepayers served by the utility

outside the municipality equal to at least the lesser of 10,000

or five percent of those ratepayers.

(b) A petition for review is properly signed if signed by a

person or the spouse of a person in whose name residential

utility service is carried.

(c) For purposes of this section, each person who receives a

separate bill is a ratepayer. A person who receives more than one

bill may not be counted as more than one ratepayer.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.102. IDENTIFICATION OF RATEPAYERS OUTSIDE MUNICIPALITY.

(a) A municipality that owns a utility shall:

(1) disclose to any person, on request, the number of ratepayers

who reside outside the municipality; and

(2) provide to any person, on request, a list of the names and

addresses of the ratepayers who reside outside the municipality.

(b) The municipality may not charge a fee for disclosing the

information under Subsection (a)(1). The municipality may charge

a reasonable fee for providing information under Subsection

(a)(2).

(c) The municipality shall provide information requested under

Subsection (a)(1) by telephone or in writing, as preferred by the

person making the request.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.103. FILING OF APPEAL. (a) Not later than the 14th day

after the date a governing body of a municipality makes a final

decision, the municipality shall issue a written report stating

the effect of the decision on each class of ratepayer.

(b) An appeal under this subchapter is initiated by filing a

petition for review with the commission and serving a copy of the

petition on each party to the original rate proceeding.

(c) The appeal must be initiated not later than the 45th day

after the date the municipality issues the written report

required by Subsection (a).

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.104. RATE APPLICATION. Not later than the 90th day

after the date a petition for review is filed that complies with

Section 33.103, the municipality shall file with the commission a

rate application that complies in all material respects with the

rules and forms prescribed by the commission. The commission may,

for good cause shown, extend the period for filing a rate

application.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER E. RATE DETERMINATION AND APPEAL OF ORDERS OF CERTAIN

MUNICIPAL UTILITIES

Sec. 33.121. APPLICATION OF COMMISSION REVIEW. A municipally

owned utility is subject to this subchapter if the utility is a

utility:

(1) whose rates are appealed under Subchapter D;

(2) for which the commission orders a decrease in annual nonfuel

base revenues that exceeds the greater of $25,000,000 or 10

percent of the utility's nonfuel base revenues, as computed on a

total system basis without regard to the utility's municipal

boundaries and established in the appealed rate ordinance; and

(3) for which the commission finds that the rates paid by the

combined residential or other major customer class, other than a

class in which the municipality is the customer of the

municipally owned utility, are removed from cost-of-service

levels to the extent that, under the nonfuel base revenue

requirement adopted by the commission as computed on a total

system basis without regard to the municipality's boundaries, a

change in nonfuel base rate revenues in excess of 50 percent from

adjusted test year levels would be required to move that class to

a relative rate of return of unity (1.00 or 100 percent) under

the cost-of-service methodology adopted by the commission in an

appeal under Subchapter D.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.122. REVIEW OF CERTAIN RATE DECISIONS. (a) Except as

provided by Subsections (b)-(f), for a period of 10 years

beginning on the later of August 28, 1989, or the effective date

of the rate ordinance that is the subject of the commission's

final order invoking the application of this section, the

commission has appellate jurisdiction over the rates charged by

the municipally owned utility, both inside and outside the

municipality, in the same manner and subject to the same

commission powers and authority provided by this subtitle for an

electric utility.

(b) The commission has jurisdiction to review the cost

allocation and rate design methodologies adopted by the governing

body of a municipally owned utility subject to this section. If

the commission finds that the cost-of-service methodologies

result in rates that are unjust, unreasonable, or unreasonably

discriminatory, or unduly preferential to a customer class, the

commission may order the implementation of ratesetting

methodologies the commission finds reasonable.

(c) The commission shall ensure that a customer class, other

than a class in which the municipality is the customer of the

municipally owned utility, does not pay rates that result in a

relative rate of return of more than 115 percent under the

cost-of-service methodology found reasonable by the commission. A

customer class may not experience a percentage base rate increase

that is greater than 1-1/2 times the system average base

increase. In moving an above-cost class toward cost-of-service

levels, each class farthest above cost shall be moved

sequentially toward cost so that no above-cost class moves toward

cost until no other class is further removed from cost.

(d) A municipality subject to this section may design

residential rates, as a matter of intra-class rate design, to

accomplish reasonable energy conservation goals, notwithstanding

any other provision of this title.

(e) The commission's jurisdiction under this section may be

invoked by any party to a local rate proceeding required by this

section in the same manner as an appeal of the rates of an

electric utility under Section 33.051.

(f) The commission's jurisdiction under this section does not

extend to a municipally owned utility's:

(1) revenue requirements, whether base rate or fuel revenues;

(2) invested capital;

(3) return on invested capital;

(4) debt service coverage ratio; or

(5) level of transfer of revenues from the utility to the

municipality's general fund.

(g) The governing body of a municipally owned utility subject to

this section shall establish procedures similar to the procedures

of a municipality that retains original jurisdiction under

Section 33.001 to regulate an electric utility operating in the

municipality. The procedures must include a public hearing

process in which an affected ratepayer is granted party status on

request and is grouped for purposes of participation in

accordance with common or divergent interests, including the

particular interests of all-electric residential ratepayers and

residential ratepayers outside the municipality.

(h) This section does not require the governing body of a

municipality or the governing board of a municipally owned

utility subject to this section to adopt procedures that require

the use of the Texas Rules of Evidence, the Texas Rules of Civil

Procedure, or the presentation of sworn testimony or any other

form of sworn evidence.

(i) The governing body of a municipally owned utility subject to

this section shall appoint a consumer advocate to represent the

interests of residential and small commercial ratepayers in the

municipality's local rate proceedings. The consumer advocate's

reasonable costs of participating in a proceeding, including the

reasonable costs of ratemaking consultants and expert witnesses,

shall be funded by and recovered from residential and small

commercial ratepayers.

(j) The commission shall adopt rules applicable to a party to an

appeal under Subchapter D that provide for the public disclosure

of financial and in-kind contributions and expenditures related

to preparing and filing an appeal petition and preparing expert

testimony or legal representation for an appeal. A party or

customer who is a member of a party who makes a financial

contribution or in-kind contribution to assist in an appeal by

another party or customer class under Subchapter D shall be

required, on a finding of the commission to that effect, to pay

the municipally owned utility a penalty equivalent in amount to

two times the amount of the contribution.

(k) This section does not limit the right of a party or customer

to spend money to represent its own interests following the

filing of a petition with the commission under Subchapter D.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 33.123. REVIEW OF CERTAIN DECISIONS FOR RATES CHARGED

OUTSIDE MUNICIPALITY. (a) For a period of 10 years beginning on

the later of August 28, 1989, or the effective date of the rate

ordinance that is the subject of the commission's final order

invoking the application of this section, the commission has

appellate jurisdiction over the rates charged by the municipally

owned utility, outside the municipality, as provided by this

section.

(b) Except as otherwise provided by this section, a ratepayer of

a municipally owned utility subject to this section who resides

outside the municipality may appeal any action of the governing

body of a municipality affecting the rates charged by the

municipally owned utility outside the municipality by filing a

petition for review with the commission in the manner provided

for an appeal under Subchapter D. The petition must plainly

disclose that the cost of the appeal will be funded by a

surcharge on the monthly electric bills of ratepayers outside the

municipality as prescribed by the commission.

(c) After the commission approves the sufficiency of a petition,

the appellants shall submit to the office for approval a budget

itemizing the scope and expected cost of consultant services to

be purchased by the appellants in the appeal.

(d) Not later than the 120th day after the date the commission

enters its final order, the municipality shall assess a onetime

surcharge on a per capita basis among residential ratepayers who

reside outside the municipality to pay the reasonable consultant

and legal costs approved by the counsellor. The municipality

shall reimburse the appellants for incurred costs not later than

the 90th day after the date the commission enters its final

order.

(e) A municipality may not:

(1) include the costs associated with its defense of an appeal

under this section in the rates charged a ratepayer outside the

municipality; or

(2) if the municipality appeals an order entered by the

commission under this section, include the costs associated with

its appeal in the rates charged a ratepayer outside the

municipality.

(f) A ratepayer who brings an appeal under this section may not

receive funding for rate case expenses except from a residential

ratepayer who resides outside the municipality or from another

municipality inside whose boundaries the municipally owned

utility provides service. The commission shall adopt rules for

reporting financial and in-kind contributions in support of an

appeal under this section. If the commission finds that an

appellant has received contributions from a source other than

from a ratepayer who resides outside the municipality or from

another municipality, the appeal and each commission order

entered in the appeal are void.

(g) The commission has jurisdiction in an appeal under this

section to review and ensure that the revenue requirements of a

municipally owned utility subject to this section are reasonable.

The jurisdiction under this subsection does not extend to

regulating the use and level of a transfer of the utility's

revenues to the municipality's general fund.

(h) The commission has jurisdiction to review the cost

allocation and rate design methodologies adopted by the governing

body of a municipally owned utility subject to this section. If

the commission finds that the cost-of-service methodologies

result in rates that are unjust, unreasonable, or unreasonably

discriminatory or unduly preferential to a customer class, the

commission may order the implementation of ratesetting

methodologies the commission finds reasonable. The commission's

jurisdiction under this subsection does not include intra-class

residential rate design.

(i) An intervenor in an appeal under this section is limited to

presenting evidence on cost allocation and rate design

methodologies, except that an intervenor may present evidence in

support of the municipality on an issue related to utility

revenues.

(j) A ratepayer of a municipally owned utility subject to this

section who resides outside the municipality may elect to

petition for review under either this section or Subchapter D

when appealing a rate ordinance or other ratesetting action of

the governing body of a municipality.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.