S.B. No. 1977 amends the Utilities Code and Water Code to regulate the reimbursement of legal expenses incurred by electric and water utilities during rate proceedings. The bill introduces new provisions that prohibit electric utilities from reimbursing municipalities for legal expenses deemed frivolous or groundless, or incurred through actions intended to harass or delay proceedings. Specifically, it establishes a cap on legal expenses that can be reimbursed, limiting them to $500,000 and an additional 50% of expenses exceeding that amount. Similar restrictions are placed on water and sewer utilities regarding reimbursement for legal expenses incurred by municipalities.

Additionally, the bill outlines that legal expenses incurred by utilities may not be included in ratemaking if they are found to be unreasonable or not in the public interest. It also allows for the recovery of expenses incurred due to actions by non-utility intervenors in rate proceedings, provided those expenses are reasonable. The changes will apply to rate proceedings that begin on or after September 1, 2025, ensuring that any ongoing proceedings are governed by the previous law.

Statutes affected:
Introduced: Utilities Code 36.061, Water Code 13.185 (Utilities Code 36, Water Code 13)
Senate Committee Report: Utilities Code 33.023, Utilities Code 36.061, Water Code 13.084, Water Code 13.185 (Utilities Code 33, Utilities Code 36, Water Code 13)
Engrossed: Utilities Code 33.023, Utilities Code 36.061, Water Code 13.084, Water Code 13.185 (Utilities Code 33, Utilities Code 36, Water Code 13)