The bill amends the Utilities Code and the Water Code to regulate the recovery of legal expenses by electric and water utilities during rate proceedings. Specifically, it introduces a new provision in Section 36.061, which states that the regulatory authority cannot allow legal expenses exceeding the greater of $50,000 or 50 percent of the total legal expenses incurred by an electric utility in a rate proceeding. Additionally, Section 13.185(h) of the Water Code is revised to include similar restrictions on legal expenses for water and sewer utilities, specifying that any legal expenses exceeding the same thresholds will not be included for ratemaking purposes.

Furthermore, the bill removes certain legal expenses from consideration in rate proceedings, including those deemed unreasonable or unnecessary by the regulatory authority. The changes will only apply to rate proceedings that commence on or after the effective date of the Act, which is set for September 1, 2025. Rate proceedings that begin before this date will continue to be governed by the existing laws.

Statutes affected:
Introduced: Utilities Code 36.061, Water Code 13.185 (Utilities Code 36, Water Code 13)