Maximum disposal rates adopted by the commission shall consider
the following factors and be sufficient to:
(1) allow the licensee to recover allowable expenses.
Allowable expenses shall never include: legislative advocacy expenses;
political expenditures or contributions; expenses in support of or
promoting political movements, or political or religious causes; funds
expended for membership in or support of social, fraternal, or religious
clubs or organizations; costs, including interest expense, of processing
a refund or credit ordered by the commission; or any expenditure found
by the commission to be unreasonable, unnecessary or against public
interest, including but not limited to, executive salaries, legal
expenses, penalties, fines, or costs not used or useful for the provision
of compact waste disposal services;
(2) provide an amount to fund local public projects
under Texas Health and Safety Code, §401.244;
(3) provide a reasonable opportunity to earn a reasonable
rate of return on invested capital in the facilities used for management,
disposal, processing, or treatment of compact waste at the compact
waste disposal facility, which rate of return is expressed as a percentage
of invested capital. In addition to the factors set forth in §336.1303(13)
of this title (relating to Definitions), the rate of return should
be reasonably sufficient to assure confidence in the financial soundness
of the licensee and should be adequate, under efficient and economical
management, to maintain and support its credit and enable it to raise
the money necessary for the proper discharge of its public duties.
A rate of return may be reasonable at one time and become too high
or too low because of changes affecting opportunities for investment,
the money market, and business conditions generally. The commission
may, in addition, consider inflation, deflation, and the need for
the licensee to attract new capital. The rate of return must be high
enough to attract new capital but need not go beyond that. In each
case, the commission shall consider the licensee's cost of capital,
which is the weighted average of the costs of the various classes
of capital used by the licensee:
(A) Debt capital. The cost of debt capital is the actual
cost of the debt at the time of issuance, plus adjustments for premiums,
discounts, and refunding and issuance costs.
(B) Equity capital. For companies with ownership expressed
in terms of shares of stock, equity capital commonly consists of the
following classes of stock:
(i) Common stock capital. The cost of common stock
capital shall be based upon a fair return on its market value; or
(ii) Preferred stock capital. The cost of preferred
stock capital is the actual cost of preferred stock at the time of
issuance, plus an adjustment for premiums, discounts and refunding
and issuance costs; and
(4) provide an amount necessary to pay compact waste
disposal facility licensing fees, to pay compact waste disposal facility
fees set by rule or statute, to provide financial assurance for the
compact waste disposal facility as required by the commission under
law and commission rules, and to reimburse the commission for the
salary and other expenses of two or more resident inspectors employed
by the commission pursuant to Texas Health and Safety Code, §401.206.
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