Current through Reg. 50, No. 13; March 28, 2025
(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.
