| (a) General. In fixing the rates of a utility, the
commission shall fix its overall revenues at a level which will permit
such utility a reasonable opportunity to earn a reasonable return
on its invested capital used and useful in rendering service to the
public, over and above its reasonable and necessary operating expenses
(unless an alternative rate method is used as set forth in §24.75
of this title (relating to Alternative Rate Methods), and preserve
the financial integrity of the utility.
(b) Conservation.
(1) In order to encourage the prudent use of water
or promote conservation, water and sewer utilities shall not apply
rate structures which offer discounts or encourage increased usage
within any customer class.
(2) After receiving final authorization from the regulatory
authority through a rate change proceeding, a utility may implement
a water conservation surcharge using an inclining block rate or other
conservation rate structure. A utility may not implement such a rate
structure to avoid providing facilities necessary to meet the TCEQ's
minimum standards for public drinking water systems. A water conservation
rate structure may generate revenues over and above the utility's
usual cost of service:
(A) to reduce water usage or promote conservation either
on a continuing basis or in specified restricted use periods identified
in the utility's approved drought contingency plan required by 30
TAC §288.20 (TCEQ rules relating to Drought Contingency Plans
for Municipal Uses by Public Water Suppliers) included in its tariff
in order to:
(i) comply with mandatory reductions directed by a
wholesale supplier or underground water district; or
(ii) conserve water supplies, maintain acceptable pressure
or storage, or other reasons identified in its approved drought contingency
plan;
(B) to generate additional revenues necessary to provide
facilities for maintaining or increasing water supply, treatment,
production, or distribution capacity.
(3) All additional revenues over and above the utility's
usual cost of service collected under paragraph (2) of this subsection:
(A) must be accounted for separately and reported to
the commission, as requested; and
(B) are considered customer contributed capital unless
otherwise specified in a commission order.
(c) Volume charges. Charges for additional usage above
the base rate shall be based on metered usage over and above any volume
included in the base rate rounded up or down as appropriate to the
nearest 1,000 gallons or 100 cubic feet, or the fractional portion
of the usage.
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