| (a) The commission shall determine the protested rate
adversely affects the public interest if after the evidentiary hearing
on public interest the commission concludes at least one of the following
public interest criteria have been violated:
(1) the protested rate impairs the seller's ability
to continue to provide service, based on the seller's financial integrity
and operational capability;
(2) the protested rate impairs the purchaser's ability
to continue to provide service to its retail customers, based on the
purchaser’s financial integrity and operational capability;
(3) the protested rate evidences the seller's abuse
of monopoly power in its provision of water or sewer service to the
purchaser. In making this inquiry, the commission shall weigh all
relevant factors. The factors may include:
(A) the disparate bargaining power of the parties,
including the purchaser's alternative means, alternative costs, environmental
impact, regulatory issues, and problems of obtaining alternative water
or sewer service;
(B) the seller's failure to reasonably demonstrate
the changed conditions that are the basis for a change in rates;
(C) the seller changed the computation of the revenue
requirement or rate from one methodology to another;
(D) where the seller demands the protested rate pursuant
to a contract, other valuable consideration received by a party incident
to the contract;
(E) incentives necessary to encourage regional projects
or water conservation measures;
(F) the seller's obligation to meet federal and state
wastewater discharge and drinking water standards;
(G) the rates charged in Texas by other sellers of
water or sewer service for resale; or
(H) the seller's rates for water or sewer service charged
to its retail customers, compared to the retail rates the purchaser
charges its retail customers as a result of the wholesale rate the
seller demands from the purchaser; or
(4) the protested rate is unreasonably preferential,
prejudicial, or discriminatory, compared to the wholesale rates the
seller charges other wholesale customers.
(b) The commission shall not determine whether the
protested rate adversely affects the public interest based on an analysis
of the seller's cost of service.
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