Keep It Legal

Keep It Legal

Answers to Members' Questions by TRWA Assistant General Counsel Trent Hightower

Q: I heard the legislature changed the law regarding the confidentiality of customer information this session. What can you tell us about the new law?

A: Until now, Utilities Code Section 182.052 created an opt-in approach to the confidentiality of certain personal information. Under the old law, utilities were required to keep confidential their customers’ address, telephone number, social security number, and billing and usage information, but only if the customer expressly requested that the utility do so. This created a headache for utility administrators when they received requests for this information, because in many cases only some of their customers had opted into keeping the information confidential. The opt-in approach meant verifying on a customer-by-customer basis which customers’ information they should disclose and which they should withhold. That headache was resolved with the passage of H.B. 872 this session, which makes this information automatically confidential for all customers. That said, there are some other minor changes that utilities should be aware of. First, the law gives customers the right to opt out of this automatic confidentiality. While I don’t expect such requests to be common, utilities must still give customers the option and honor their wishes if they get a request for customers’ personal information. Systems can give customers this option either by posting a request form on their website, along with a way for customers to electronically return the form, or by giving them a paper copy of the request form, either with a bill or with their application packet in the case of new customers. Posting it online seems like the easiest, most cost-effective method of complying with this requirement. Systems should also be aware that they cannot charge an administrative fee for processing requests to allow disclosure of customers’ information. This was allowed under the old, opt-in scheme, but in that case the volume of requests was generally higher since most people want more confidentiality of their personal information, not less. So, in the off chance that you get a request to disclose a customer’s information, you will have to process it for free. The TRWA Legal Department has made changes to the Sample Tariff and District Service Policy, as well as updated the form to reflect the new, opt-out focus of the law. If you purchased either of these documents recently, you can contact us to obtain these changes. If it has been a while since you last updated your tariff or district service policy, it might be time to purchase our latest version, which includes these and other changes that have accumulated in recent years.

Q: Is there anything our system needs to be doing now to comply with the bill passed by the legislature in response to the winter storm earlier this year?

A: Yes. S.B. 3, the Texas Legislature’s response to February’s unprecedented power and water outages brought on by Winter Storm Uri, imposes several new requirements on water utilities, including new reporting and emergency planning requirements. All retail water utilities in Texas are subject to these requirements and therefore must comply with three important upcoming deadlines. The Texas Commission on Environmental Quality (TCEQ) and the Public Utility Commission of Texas (PUCT) have released guidance and template documents to assist utilities in complying with these deadlines: November 1, 2021: Utilities must submit critical infrastructure information to certain agencies and electricity distributors and providers. The PUCT has prepared guidance to assist utilities in providing this information. You can download this information sheet on our site at trwa.org/SB3Guidance. March 1, 2022: Utilities must submit an Emergency Preparedness Plan (EPP) to TCEQ. The commission has prepared a template EPP that systems can use to meet this requirement. Utilities that require assistance in preparing their EPP can utilize the commission’s EPP Help Form. For more information about EPPs, see the TCEQ’s frequently asked questions page. You can find these links on our site at trwa.org/SB3Guidance July 1, 2022: Utilities must implement their EPP. As it relates to the November 1, 2021, reporting deadline, water utilities should note the following: The PUCT requires all information to be submitted online by filing a letter in Project 52299. Due to the COVID-19 pandemic, the PUCT will not accept submissions by mail. For assistance with filing, utilities may contact the PUCT’s Central Records Division by email at centralrecords@puc.texas.gov, or by phone at 512-936-7180. In addition to reporting critical infrastructure information to your electric service provider, you must also report that information to your transmission and distribution service provider (TDU), which is the company that distributes electricity from power generation to homes and businesses. You can find more information on how to identify and contact your TDU in the previously referenced PUCT guidance. Going forward, water utilities must annually re-submit their critical infrastructure information to their retail electric providers and TDUs and immediately notify all the required entities about changes to your critical load infrastructure as they occur. Therefore, utilities should make it a policy to regularly review their critical infrastructure and notify the appropriate entities when necessary.

Q: We have a policy of letting applicants pay half of their tap fees up front, then paying the balance over the next few months. Our auditor thinks we should be charging interest on these payments since we’re essentially financing the cost of their meter. Can we do this?

A: If you were to assess the new owner the remainder of the equity buy-in fee and they challenged it to the Public Utility Commission of Texas (PUCT), I’m not sure how the agency would rule and I am not aware of any cases where they have looked at this in the past. However, given their general consumer-focused stance on rate and fee issues and the way they look at other fees, I would urge you to err on the side of caution and absorb this as a loss and lesson learned. For most debts that water system customers leave behind, like a few months’ worth of unpaid water bills, the answer is clear: that debt belongs to the person who incurred it and the system is forbidden from charging it to a subsequent purchaser. Equity buy-in fees are somewhat unique in that they are assessed against a property, rather than a person. When a property is first served, the owner must pay this fee to bring it into “parity” with the rest of the system. In other words, the property will be receiving the benefit of many years of payments made by other members over the decades, and the owner must pay a calculated amount to bring the new property up to speed. That said, I have concerns that the PUCT would say that the utility had the obligation to collect the fee at the time service was extended to the property, and it is not the new owner’s fault that wasn’t done. Further, if you finance any up front fees as the TRWA Sample Tariff contemplates that a system may choose to do, you should have executed a deferred payment contract with the previous owner at the time you installed service. Such an agreement would likely make the remaining fee a personal debt of the previous owner, because they executed a contract agreeing to pay that amount. Thus, I think you will need to pursue this unpaid amount from the previous owner through the courts or collections as you would with any other bad debt. This is a risk that a system takes when it agrees to a deferred payment plan for up-front service fees. However, there is no requirement that systems agree to these terms. As with other things like obtaining easements, the utility is in its position of greatest strength when the applicant applies for service. They can predicate service on conditions that the PUCT would not allow a disconnection for after service has begun. I recommend using deferred payment plans for up-front fees sparingly, being mindful of cost of service appeals and an applicant’s likelihood of paying the full amount before they sell the property.

Q: What are “facilities only” and “facilities + 200 feet” certificates of convenience and necessity (CCN)? How do they compare to area CCNs in terms of the system’s obligation to serve new customers?

A: These types of CCNs are less common than those held by most TRWA members. Whereas an area CCN involves a geographic area within a set of boundaries, like a municipality’s city limits, these types of CCNs are based strictly upon the location of the utility’s lines in the ground. The Public Utility Commission of Texas (PUCT) defines these types of CCNs as follows: Facilities Only: A certificated service area represented by lines on a map. They are granted for a "point of use" that covers only the customer connections at the time the CCN is granted. Facility only service lines normally follow along roads and may correspond to distribution lines or facilities in the ground. Facilities +200 Feet: A certificated service area represented by lines on a map. These CCNs include a buffer of a specified number of feet (usually 200 feet). The lines on a map normally follow along roads and may correspond to distribution lines or facilities in the ground. TRWA members are probably used to hearing me write and talk about how a utility’s CCN imposes upon them an absolute obligation to serve all qualified applicants. While that is true for all traditional, bounded CCNs, it would be impossible to apply that same standard to a facilities-only CCN since it is limited only to the connections that existed at the time it was granted. Therefore, for that type of CCN, even if a new customer is located very close to the system’s current lines, the system would be under no obligation to serve that customer. The utility could, however, choose to amend its CCN to include an extension to that customer if it so chooses. Facilities + 200 Feet CCNs land in between a traditional and Facilities Only CCN. Like a Facilities Only CCN, this type is also defined by its lines in the ground. However, that 200-foot buffer on both sides of the line acts more like an area CCN — it maintains the utility’s exclusive right and responsibility to serve applicants within that area. Two-hundred feet isn’t very much land, but if an applicant for service happens to fall within that narrow strip, the system in this case would be obligated to serve that new customer because no other utility could do so without violating the CCN holder’s right to serve there. TRWA Members can email legal@trwa.org for their legal inquiries, or search the archive at trwa.org/keepitlegal.