| (h) Before the expiration of the 120-day period described
in subsection (a) of this section, the commission will determine whether
to require a public hearing to determine if the transaction will serve
the public interest. The commission will notify the transferee, the
transferor, all intervenors, and the Office of Public Utility Counsel
whether a hearing will be held. The commission may require a hearing
if:
(1) the application filed with the commission or the
public notice was improper;
(2) the transferee has not demonstrated adequate financial,
managerial, and technical capability for providing continuous and
adequate service to the requested area and any area already being
served under the transferee's existing CCN;
(3) the transferee has a history of:
(A) noncompliance with the requirements of the TCEQ,
the commission, or the Texas Department of State Health Services;
or
(B) continuing mismanagement or misuse of revenues
as a utility service provider;
(4) the transferee cannot demonstrate the financial
ability to provide the necessary capital investment to ensure the
provision of continuous and adequate service to the requested area;
or
(5) there are concerns that the transaction does not
serve the public interest based on consideration of the following
factors:
(A) the adequacy of service currently provided to the
requested area;
(B) the need for additional service in the requested
area;
(C) the effect of approving the transaction on the
transferee, the transferor, and any retail public utility of the same
kind already serving the area within two miles of the boundary of
the requested area;
(D) the ability of the transferee to provide adequate
service;
(E) the feasibility of obtaining service from an adjacent
retail public utility;
(F) the financial stability of the transferee, including,
if applicable, the adequacy of the debt-equity ratio of the transferee
if the transaction is approved;
(G) environmental integrity;
(H) the probable improvement of service or lowering
of cost to consumers in the requested area resulting from approving
the transaction; and
(I) whether the transferor or the transferee has failed
to comply with any commission or TCEQ order. The commission may refuse
to approve a sale, transfer, merger, consolidation, acquisition, lease,
or rental if conditions of a judicial decree, compliance agreement,
or other enforcement order have not been substantially met.
(i) If the commission does not require a public hearing,
the sale, transfer, merger, consolidation, acquisition, lease, or
rental may be completed as proposed:
(1) at the end of the 120-day period described in subsection
(a) of this section; or
(2) at any time after the transferee receives notice
from the commission that a hearing will not be required.
(j) Within 30 days of the commission order that approves
the sale, transfer, merger, consolidation, acquisition, lease, or
rental to proceed as proposed, the transferee must provide a written
update on the status of the transaction, and every 30 days thereafter,
until the transaction is complete. The transferee must inform the
commission of any material changes in its financial, managerial, and
technical capability to provide continuous and adequate service to
the requested area and the transferee's service area.
(k) If there are outstanding customer deposits, within
30 days of the actual effective date of the transaction, the transferor
and the transferee must file with the commission, the following information
supported by a notarized affidavit:
(1) the names and addresses of all customers who have
a deposit on record with the transferor;
(2) the date such deposit was made;
(3) the amount of the deposit; and
(4) the unpaid interest on the deposit. All such deposits
must be refunded to the customer or transferred to the transferee,
along with all accrued interest.
(l) Within 30 days after the actual effective date
of the transaction, the transferee and the transferor must file a
signed contract, bill of sale, or other appropriate documents as evidence
that the transaction has closed as proposed. The signed contract,
bill of sale, or other documents, must be signed by both the transferor
and the transferee. If there were outstanding customer deposits, the
transferor and the transferee must also file documentation that customer
deposits have been transferred or refunded to the customers with interest
as required by this section.
(m) The commission's approval of a sale, transfer,
merger, consolidation, acquisition, lease, or rental of any water
or sewer system or retail public utility expires 180 days following
the date of the commission order allowing the transaction to proceed.
If the sale has not been completed within that 180-day time period,
the approval is void, unless the commission in writing extends the
time period.
(n) If the commission does not require a hearing, and
the transaction is completed as proposed, the commission may issue
an order approving the transaction.
(o) A sale, transfer, merger, consolidation, acquisition,
lease, or rental of any water or sewer system or retail public utility
required by law to possess a CCN, or transfer of customers or service
area, owned by an entity required by law to possess a CCN that is
not completed in accordance with the provisions of TWC §13.301
is void.
(p) The requirements of TWC §13.301 do not apply
to:
(1) the purchase of replacement property;
(2) a transaction under TWC §13.255; or
(3) foreclosure on the physical assets of a utility.
(q) If a utility's facility or system is sold and the
utility's facility or system was partially or wholly constructed with
customer contributions in aid of construction derived from specific
surcharges approved by the regulatory authority over and above revenues
required for normal operating expenses and return, the utility may
not sell or transfer any of its assets, its CCN, or a controlling
interest in an incorporated utility, unless the utility provides a
written disclosure relating to the contributions to both the transferee
and the commission before the date of the sale or transfer. The disclosure
must contain, at a minimum, the total dollar amount of the contributions
and a statement that the contributed property or capital may not be
included in invested capital or allowed depreciation expense by the
regulatory authority in rate-making proceedings. This subsection does
not apply to a utility facility or system sold as part of a transaction
where the transferor and transferee elected to use the fair market
valuation process set forth in §24.238 of this title (relating
to Fair Market Valuation).
(r) For any transaction subject to this section, the
retail public utility that proposes to sell, transfer, merge, acquire,
lease, rent, or consolidate its facilities, customers, service area,
or controlling interest must provide the other party to the transaction
a copy of this section before signing an agreement to sell, transfer,
merge, acquire, lease, rent, or consolidate its facilities, customers,
service area, or controlling interest.
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