| (a) Recovery of rate-case expenses. A utility may recover
rate-case expenses, including attorney fees, incurred as a result
of filing a rate-change application pursuant to TWC §13.187 or
TWC §13.1871, only if the expenses are reasonable and necessary.
(b) Requirements for claiming recovery of or reimbursement
for rate-case expenses. A utility requesting recovery of its rate-case
expenses has the burden to prove the reasonableness of such rate-case
expenses by a preponderance of the evidence. A utility seeking recovery
of rate-case expenses must submit information that sufficiently details
and itemizes all rate-case expenses, including, but not limited to,
evidence verified by testimony or affidavit, showing:
(1) the nature, extent, and difficulty of the work
done by the attorney or other professional in the rate case;
(2) the time and labor expended by the attorney or
other professional;
(3) the fees or other consideration paid to the attorney
or other professional for the services rendered;
(4) the expenses incurred for lodging, meals and beverages,
transportation, or other services or materials;
(5) the nature and scope of the rate case, including:
(A) the size of the utility and number and type of
consumers served;
(B) the amount of money or value of property or interest
at stake;
(C) the novelty or complexity of the issues addressed;
(D) the amount and complexity of discovery;
(E) the occurrence and length of a hearing; and
(6) the specific issue or issues in the rate case and
the amount of rate-case expenses reasonably associated with each issue.
(c) Criteria for review and determination of reasonableness.
In determining the reasonableness of the rate-case expenses, the commission
must consider the relevant factors listed in subsection (b) of this
section and any other factor shown to be relevant to the specific
case. The commission must decide whether and the extent to which the
evidence shows that:
(1) the fees paid, tasks performed, or time spent on
a task were extreme or excessive;
(2) the expenses incurred for lodging, meals and beverages,
transportation, or other services or materials were extreme or excessive;
(3) there was duplication of services or testimony;
(4) the utility's proposal on an issue in the rate
case had no reasonable basis in law, policy, or fact and was not warranted
by any reasonable argument for the extension, modification, or reversal
of commission precedent;
(5) rate-case expenses as a whole were disproportionate,
excessive, or unwarranted in relation to the nature and scope of the
rate case addressed by the evidence pursuant to subsection (b)(5)
of this section; or
(6) the utility failed to comply with the requirements
for providing sufficient information pursuant to subsection (b) of
this section.
(d) Unamortized rate-case expenses. Unamortized rate-case
expenses may not be a component of invested capital for calculation
of rate-of-return purposes.
(e) Calculation of allowed or disallowed rate-case
expenses.
(1) Based on the factors and criteria in subsections
(b) and (c) of this section, the commission must allow recovery of
rate-case expenses equal to the amount shown in the evidentiary record
to have been actually and reasonably incurred by the requesting utility.
The commission must disallow recovery of rate-case expenses equal
to the amount shown to have been not reasonably incurred under the
criteria in subsection (c) of this section. A disallowance may be
based on cost estimates in lieu of actual costs if reasonably accurate
and supported by the evidence.
(2) A disallowance pursuant to subsection (c)(5) of
this section may be calculated as a proportion of a utility's requested
rate-case expenses using the following ratio or an appropriate methodology:
(A) the amount of the increase in revenue requirement
requested by the utility that was denied, to
(B) the total amount of the increase in revenue requirement
requested in a proceeding by the utility.
(3) If the evidence presented pursuant to subsection
(b)(6) of this section does not enable the commission to determine
the appropriate disallowance of rate-case expenses reasonably associated
with an issue with certainty and specificity, then the commission
may disallow or deny recovery of a proportion of a utility's requested
rate-case expenses using the following ratio or an appropriate methodology:
(A) the amount of the increase in revenue requirement
requested by the utility in the rate case related to the issues not
reasonably supported by evidence of certainty and specificity, to
(B) the total amount of the increase in revenue requirement
requested in a proceeding by the utility.
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