Texas Water Code
§ 13.185 — COMPONENTS OF INVESTED CAPITAL AND NET INCOME
WA § 13.185Title 2. WATER ADMINISTRATION · Part B. WATER RIGHTS · Ch. 13. WATER RATES AND SERVICES · Art. F. PROCEEDINGS BEFORE REGULATORY AUTHORITY
Statute text
View on source(a)Unless alternate methodologies are adopted as provided in Sections 13.183(c) and 13.184(a), the components of invested capital and net income shall be determined according to the rules stated in this section.
(b)Utility rates shall be based on the original cost of property used by and useful to the utility during the test year in providing service, including, if necessary to the financial integrity of the utility, construction work in progress at cost as recorded on the books of the utility. The inclusion of construction work in progress is an exceptional form of rate relief to be granted only on the demonstration by the utility by clear and convincing evidence that the inclusion is in the ratepayers' best interest and is necessary to the financial integrity of the utility. Construction work in progress may not be included in the rate base for major projects under construction to the extent that those projects have been inefficiently or imprudently planned or managed. Original cost is the actual money cost or the actual money value of any consideration paid, other than money, of the property at the time it shall have been dedicated to public use, whether by the utility that is the present owner or by a predecessor, less depreciation. Utility property funded by explicit customer agreements or customer contributions in aid of construction such as surcharges may not be included in invested capital.
(c)Cost of facilities, revenues, expenses, taxes, and reserves shall be separated or allocated as prescribed by the regulatory authority.
(d)Net income is the total revenues of the utility less all reasonable and necessary expenses as determined by the regulatory authority. The regulatory authority shall:
(1)base a utility's expenses on test year information, as determined by utility commission rules; and
(2)determine expenses and revenues in a manner consistent with Subsections (e) through (h) of this section.
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Legislative history
Acts 2013, 83rd Leg., R.S., Ch. 170 (H.B. 1600), Sec. 2.38, eff. September 1, 2013. Acts 2013, 83rd Leg., R.S., Ch. 171 (S.B. 567), Sec. 38, eff. September 1, 2013. Acts 2023, 88th Leg., R.S., Ch. 581 (H.B. 2774), Sec. 1, eff. September 1, 2023. Acts 2025, 89th Leg., R.S., Ch. 521 (H.B. 2712), Sec. 4, eff. September 1, 2025.