The Railroad Commission of Texas simultaneously adopts the repeal of §7.44, relating to Filing of Tariffs without changes, and adopts new §7.315, relating to Filing of Tariffs, with changes to the version published in the November 23, 2001, issue of the Texas Register (26 TexReg 9481). The Commission adopts these actions to clarify the substantive requirements for tariff filings, to require that tariffs be filed electronically, and to position the rule in a new numbering and organizational scheme for Chapter 7. New §7.315 will be in new subchapter C to be entitled Records and Reports; Tariffs; Gas Utility Tax.

New §7.315(a) is the same as current §7.44(a), but adds the new requirement that all tariffs be filed electronically using a format prescribed by the Commission. New subsection (b) is substantially the same as current §7.44(b), but with some minor wording changes for clarification. New subsection (c) changes the existing language in §7.44(c) to describe in greater detail the information that a utility must include in all tariff filings; new subsection (d) sets out additional information that utilities must file for specific types of tariffs. New subsection (e) describes the process by which the Commission's Gas Services Division ensures compliance with the rule. New subsection (f) establishes a deadline for utilities to file current tariffs in electronic format, and offers a limited good cause extension.

As the Commission stated in the proposal preamble for these rules, in the long term, having utility tariffs in electronic format will be less costly for the Commission staff to handle, review, store, and retrieve. In the short term, however, the staff will likely devote extra time to answering questions and guiding utilities through the initial electronic filing process. These additional tasks will be temporary and the Commission will handle them within the current budget and staffing for the Gas Services Division.

The public will benefit from the new rule which clearly states the information a utility is required to include in a tariff filing. In addition, having tariffs in electronic format should make it easier to locate specific tariffs or tariff provisions and, ultimately, to provide access to the public through the Commission's web site.

The Commission believes that there are few, if any, utilities that are completely without any computerized operations. The initial filing is likely to be the most time-consuming; once that filing has been made, however, subsequent tariff filings should be made fairly quickly and perhaps at a savings (for postage, if for nothing else) for a gas utility.

The Commission received 19 comments on proposed new §7.315. The following six groups or associations filed comments: Consumers Union, Texas Ratepayers Organization to Save Energy, and Texas Legal Services Center, which filed jointly and are referred to as Consumers Union, et al ., generally favored adoption of proposed new §7.315; Texas Oil and Gas Association (TxOGA) generally opposed the proposed new rule; Association of Texas Intrastate Natural Gas Pipelines (ATIP) generally favored proposed new §7.315; and HealthShare/Texas Hospital Association (HealthShare) favored adoption of the proposal. The Commission also received comments from TXU Gas Distribution, TXU Lone Star Pipeline, and TXU Fuel Company jointly (TXU); Wagner & Brown, Ltd. (Wagner); Fowler Energy (Fowler); El Paso Field Services (EPFS); Texas Genco (Genco); Tractebel North America, Inc. (Tractebel); Clark, Thomas & Winters (Clark, Thomas); Vantex Gas Pipeline Company (Vantex); Paisano Transmission Company (Paisano); Huntsman Corporation (Huntsman); and the Texas General Land Office (GLO). In the following paragraphs, the Commission has grouped the comments according to subject matter for ease of discussion.

The first group of comments addressed concerns the general requirement to file electronically or in the specified format.

ATIP supported the proposal to provide for electronic filing of tariffs. TxOGA opposed the repeal of §7.44 and adoption of new §7.315. TxOGA's members account for approximately 92% of the oil and natural gas production and 95% of refining capacity in Texas, and represent the perspectives of producers, transporters, and consumers of natural gas. However, TxOGA's comment also generally supported the comments of ATIP, which generally favored the proposed new rule.

Paisano opposed the required electronic filing because the requirement would impose a hardship on the company. Vantex stated that the rule should allow a choice of filing electronically or by mail, and stated its preference for filing by mail. The Commission noted in the proposal preamble that very few utilities are completely without computerized operations, but Paisano apparently is and Vantex might be in that group. However, because the Commission must provide more services (for example, giving Texas citizens electronic access to information) with the same number of employees and the same budget each year, it must be as efficient as possible. Requiring gas utilities to file their tariffs electronically is one way for the Commission to achieve this. The Commission has determined that it is reasonable to expect those few utilities that may be completely without computer capabilities to hire a service to prepare the necessary filings. In addition, the Commission staff will be able to provide reasonable assistance to smaller utilities as it has traditionally done in the past with respect to paper tariff filings.

EPFS supported the Commission's efforts to develop electronic standards for filing tariffs, which should increase efficiency for both the Commission and gas utilities. While EPFS supported electronic filing, it stated there are additional changes in the proposed rule that would result in increased costs and less efficient operations for gas utilities in Texas. The Commission agrees with EPFS' comments on efficiency and addresses EPFS's suggested changes elsewhere in the preamble.

Clark, Thomas urged careful consideration by the Commission on the electronic filing requirement. The Commission points out that the proposal has been under consideration and planning for more than two years, and that the filing protocols have been crafted with the assistance of several of the utilities that file large numbers of tariffs each year.

The second group of comments concerns public access to and security of electronically-filed information generally. Consumers Union, et al. supported the proposal and suggested that, in addition to the language as proposed, the rule should clearly state that the information would be made available to the public through the Commission's web site, in the same manner that the Commission provides other information such as permits for oil and gas wells, certain reports, oil and gas fields, and production. The proposed rule would require electronic filing of information useful to consumers such as gas utility rates, charges related to deposits, line extension polices, meter testing, returned check, connection and reconnection, as well as customer service rules.

Consumers Union, et al. suggested the rule should clearly state that the information would be made available to the public on the Commission's web site. Through electronic filing, the Commission will provide a single point of access to consumers by providing rate and service information in an easily accessible, electronic form. Consumers Union, et al. also stated that the proposed rule would save taxpayers' money by streamlining procedures at the agency, making the handling of tariffs more efficient and improving service to the public who calls with questions or complaints about service. Consumers Union, et al. urged the Commission to make this information available to the public on the Commission's web site, and urged not only that the Commission should increase the amount of information relating to gas utility rates and service that is available to consumers over the Internet but also that the Commission should take a lead role in accepting public input and educating consumers about gas utility service. Consumers Union, et al. observed that there are no consistent standards relating to gas utility service across the state because while state law sets a floor on customer protection rules for gas utilities, a city may impose stronger rules. Consumers Union, et al. has also found that the public is confused about where to go, "the city or the Commission," when they have a complaint about price or service quality. Through electronic filing, the Commission will provide a single point of access to consumers by providing rate and service information in an easily accessible, electronic form.

The Commission concurs with Consumers Union in its call for the Commission to increase the amount of information relating to gas utility rates and services available to consumers over the internet. In fact, it has been the practice of the Commission to do just that. A list of the material currently available on its website includes: gas utility rules and regulations, Gas Services Division Annual Reports, Cost of Service and Cost of Gas rate comparisons, Typical Bill Comparisons, Natural Gas Rates - Frequently Asked Questions (FAQ), Natural Gas Rate Review Handbook, and Gas Utility Docket Information. Additional material is added as it is developed and as resources allow.

Consumers Union, et al. also stated that the proposed rule will save taxpayers' money by streamlining procedures at the agency; electronic filing will make handling of tariffs more efficient. Consumers Union, et al. believes electronic filing will also improve service to members of the public who call with questions or complaints about service. The staff will be able to easily retrieve rate schedules and customer service regulations for individual municipalities. The consumers who call the state will be more satisfied taxpayers if the Commission can give them immediate answers rather than requiring them to make another phone call by referring them to the municipality with original jurisdiction.

TXU expressed concern with the transition from the existing rule and paper tariff filings to the proposed rule and electronic tariffs. While the Commission has prepared electronic filing templates, TXU understood that the Commission's tariff system is not yet ready to provide public access to the electronic information. If this is correct, TXU stated, the Commission should carefully consider how the public will access tariff information filed electronically after the adoption of the rule and before public access can be provided. TXU urged the Commission to add some instructions to the rule preamble to address this situation.

The Commission intends to provide as much information on the web site as possible, and to provide access to the tariff data from the Gas Services link from the Commission's home page of its web site. Any reference in the rule to access via the web site will necessarily be conditional, since electronic access can be hindered by many kinds of interference and unanticipated problems.

TxOGA stated that any electronic database storing the tariffs should include appropriate security measures and procedures to assure that confidential information is not inadvertently released. ATIP was also concerned with security of any electronic database and asked the Commission to consider receiving the confidential information on a separate disk and maintaining it separately from the accessible database.

Clark, Thomas suggested the Commission allow utilities to file tariffs in a read-only file format, which would ensure that the provisions of a particular tariff are not changed after being submitted to the Commission, except by the gas utility making a new tariff filing. Unless the electronic filing protocol adopted by the Commission is subject to both internal and external security tests, the Commission and gas utilities risk corruption or alteration of tariff information.

In response, the Commission notes its preference that all requirements be specified within the text of the rule itself, rather than in a preamble which is not part of the rule and therefore not easily located by those who must abide by its requirements or anyone who may be interested in knowing those requirements. To address the comments from TxOGA, ATIP, and Clark, Thomas, regarding the security of filed information, the Commission notes that all data, including customer identification information, will go into a database to which the public will not have access through the Internet. Using the database, the Commission staff will develop reports that include utilities' tariff information and make them available to the public through the Commission's web site. The Commission staff needs the tariff information filed in the specified, pipe-delimited format in order to use that information in the database and thus to manipulate it to develop the information that will be available on the web site. This procedure will protect the filed information from being altered or corrupted. The Commission's electronic filing templates are currently available.

The third group of comments expressed concern about the continued confidentiality of certain filed information because of the unreliability of security in an electronic filing process. Security of confidential information is not threatened because of electronic filing, because immediately upon receipt, the filed information is moved to a separate, secure server and database behind the Commission's firewall. Web users cannot access these files. Confidential information filed by the utilities will be filed prior to the filing of an actual rate schedule, and thereafter referenced by Commission-assigned numbers. This information is further secured through the use of a username and password selected by the person filing. In addition, the Commission has an intrusion detection system in place that would alert Commission Information Technology Services Division (ITS) staff in the event someone tried to access these data.

Genco commented that public disclosure of its identity and delivery point information would cause a disadvantage for Genco and urged the Commission to retain the existing standards of confidentiality. Huntsman also stated that the disclosure of customer and delivery point data currently kept confidential by the Commission would cause Huntsman harm and requested that this information remain confidential.

Other comments, however, were directed to, and critical of, the Commission's practice of keeping certain information confidential. For example, Fowler stated that disclosure of customer information, or at least detailed SIC code and zip code or county location, should be required for tariff customers and transportation customers, and that it should apply to existing contracts. Fowler stated that without this information, the Commission's informal complaint process is flawed. HealthShare also stated that customer information should be required and also cited the informal complaint process as a reason to require it. Most emphatic, however, were the comments filed by GLO opposing the continued confidentiality of customer identification information.

GLO stated that having the ability to negotiate just and reasonable transportation rates in a price-transparent, vigorous and open gas transportation services market is critical to the economic future of this state and particularly to the success of electric deregulation, and the Commission's adoption of this rule would greatly impact the Land Office's efforts to provide both gas and electricity to Texas schools and public retail customers at a reasonable rate. GLO generally supported the proposed rule, but offered some comments on the issue of whether eliminating the confidentiality of certain information would improve the marketplace for natural gas transactions and whether disclosing the information would cause business harm to the parties in the transportation agreements.

GLO believes the Commission should examine how the Federal Energy Regulatory Commission (FERC) dealt with these exact questions. The FERC's solutions to these questions are applicable to intra-state markets because the positive economic effects of price transparency and the benefits to the market of motivating all transporters to be the low-cost provider in their local market do not depend on whether the gas transported is for ultimate sale across state lines. The FERC required pipelines to timely disclose contract prices and delivery points for transportation and sales service in FERC Order No. 636 (Final Rule, April 8, 1992), and recognized that gas prices must be fully known and that transporters should inform interested persons about the available capacity. In February 2000, the FERC improved the reporting requirements to provide more pricing information and permit more effective monitoring of the market, and added certain new types of information to its reporting requirements, including the names of the parties to the contract; an identification number for each shipper, such as a DUNS number; the contract number for the shipper receiving service and for the releasing shipper; the rate charged under each contract and the maximum rate, if applicable; the duration of the contract; the receipt and delivery points and zones or segments covered by the contract, as well as the common transaction point codes; the contract quantity, or volumetric quantity under a volumetric release; special terms and conditions applicable to a capacity release and special details pertaining to a pipeline transportation contract; and any affiliate relationship between the pipeline and the shipper or between the releasing and replacement shipper. Many comments submitted by pipelines opposed the FERC's new and expanded transaction disclosure requirements, and many of the same arguments have been raised in the Commission's proposed new §7.315, including confidentiality. Some commenters on the FERC rule stated it would cause shippers competitive harm. GLO suspects that the term "competitive harm" as used by the commenters means "competition" and that what the commenters were really concerned about is that a low-cost provider of transportation services would be able to take business away from the higher-cost providers. In responding to these concerns, the FERC found that the disclosure of the identity of the shipper in each transaction, together with the price and capacity path information on each shipper's transaction, is necessary to enable shippers and the Commission to effectively monitor for potential undue discrimination or undue preference. The FERC also determined that the transactional information must be reported at the time of the transaction for it to have any value.

GLO noted that pipelines often assert that the Commission has a "complaint-driven" oversight system for gas utilities that has served the Commission well for many decades. It cites the paucity of complaints claiming discrimination and undue preference as proof that competition for gas transportation services is strong. As most gas utility practitioners know, nothing could be further from the truth. GLO stated it is virtually impossible to find a transporter in the state who will transport gas without a commitment to keep the terms of the agreement, such as the shipper's identity and the delivery and receipt points, confidential. GLO also stated that, according to some intra-state pipelines, the Texas Public Information Act prohibits the Commission from disclosing or requiring transporters to disclose customer names and the locations of delivery points. However, the Legislature has given the Commission clear authority to require the reporting of the identity of shippers and delivery points, in Texas Utilities Code, §102.101(b); to require a gas utility to publish, in electronic format, any data related to the furnishing of transportation services, in Texas Utilities Code, §104.252(1); and to treat shipper and delivery point information as confidential, even though transporters have no vested right in the continuation of that practice, in Texas Utilities Code, §104.253.

GLO also noted that the Commission's new charge from the Legislature, in Senate Bill 7 (regarding electric deregulation; 76th Legislature [1999]), includes keeping the costs of fuel, such as natural gas, used for generating electricity low. Texas Utilities Code, §39.9048 (Vernon 1999). GLO stated that assuring that the gas transportation market is truly competitive is to promote price transparency.

To facilitate as much as possible a competitive market for natural gas, the proposal preamble solicited comments from interested parties regarding the desirability of public disclosure of the customer and delivery point information that is currently kept confidential. Specifically, the Commission requested comments on whether eliminating the confidentiality of certain information would improve the marketplace for natural gas transactions and whether disclosing the information would cause business harm to the parties in the transportation agreements. The rule as proposed, however, would not have resulted in the Commission making public any information that previously it had kept confidential. As proposed, the rule would have discontinued the filing of customer identity information and substituted the filing of just a description of the type of customer for which the utility is providing transportation service; that description of the type of customer would not have been confidential. Because of the number of comments the Commission received on the issue of confidentiality of certain information, its impact on the competitiveness of the gas market, and the widely divergent positions of the comments, the Commission declines to adopt the wording proposed for subsection (d)(2)(B) and will retain the current practice with respect to the filing of delivery point information and maintaining the confidentiality of that information; however, information about customer type will no longer be required.

The fourth area of comments addressed the amount of detail requested by the Commission or the specific requirements of particular subdivisions of proposed new §7.315.

ATIP noted that the additional explanations required by the proposed rule would result in a tariff that resembles a contract. Many of the provisions of the contract would be repeated in the tariff, resulting in a tariff far lengthier and more complicated than anything previously filed. ATIP also argued that some information that may be required would have little to do with rate issues, such as liquidated damage provisions. ATIP was not aware of any public demand for additional reporting data or any public need that would be met by amassing additional reporting data, and questioned whether this was necessary. The Commission points out that the rule requires only a list of the services provided under the contract, not a reproduction of the contract itself, regardless of whether each service provided has a separate rate component. The Commission requires the information not because of public demand--indeed, it is not likely that members of the public even know that the Commission has this type of information on file--but because the Commission's auditors and rate analysts need it to perform full and fair audits and rate analyses.

The fifth area of comments concerned the need to clarify rule requirements and/or to reconcile rule requirements with the electronic templates.

TXU urged the Commission to consider a fuller revision of the rule that would better match the electronic filing formats and eliminate unnecessary information requirements. Section 7.44 has remained unchanged since 1987, a time prior to the significant changes in the industry created by deregulation of interstate pipelines and the development of a robust transportation business. TXU stated the rule is difficult to follow in determining what information is needed for a particular type of tariff or rate schedule and is unclear concerning what services fall under the different content requirements. TXU suggested that the Commission's two templates for electronic rate schedules (GSD-1 and GSD-2), as well as 10 other templates for service charges, etc., be more clearly discussed in the rule, and provided some draft revisions toward this end. The Commission agrees that the proposed new rule, particularly the electronic filing requirement, is a significant change to the current practice, and recognizes that the rule will almost certainly require future amendments as the program matures. The Commission also agrees that the templates need further explanation and has clarified the wording in subsection (a), subsection (c)(5) and (6), and subsection (d)(1) and (2) to specify the uses of each template.

EPFS stated that the rule should recognize the many differing characteristics of gas utilities and encouraged the Commission to retain standards that facilitate the automation of tariff filings and to not impose additional unnecessary requirements. EPFS recognized that automated tariff filings reduce administrative costs and allow gas utilities to ensure greater compliance with regulations. The Commission agrees that the rule increases the efficient operation of the agency by reducing administrative costs and standardizing the way tariffs are filed.

The remaining comments addressed specific portions of the rule, the terminology used, etc.

TXU suggested using the terms "tariff" and "rate schedule" consistently in the rule. In some sections of the rule, the term "tariff" is used to refer to the entire set of rates filed by a gas utility, while in other sections, the term "tariff" refers to a single rate. The term "rate schedule" is used both ways also. TXU suggested that "tariff" be used to refer to the complete set of all rates filed by a gas utility and that "rate schedule" be used to refer to a single rate description. If adopted, each utility would be required to file a tariff consisting of all rate schedules of the gas utility. The Commission recognizes the logic of the suggested distinction, but because the proposed language is virtually identical to that of current §7.44, which is understood by those who must comply with the rule, the Commission declines to make this change now. The consistency in use of terms is, however, a matter worthy of further evaluation and discussion, and the Commission will likely revisit it in a future rulemaking proceeding.

EPFS supported the requirement to automate all tariff filings, but stated that conforming to the electronic format prescribed by the Commission may be difficult for some gas utilities. The Commission has currently proposed a "pipe-delimited" format, which, according to EPFS, is not supported by many computer software programs, including Microsoft Excel. Accordingly, customized programming may be required to conform to the Commission's standard, which can be costly and time consuming. EPFS urged that the Commission adopt formats that are widely available and compatible with popular software programs, such as a tab-delimited format or space-delimited format, particularly as the computer industry continues to progress. Otherwise, unnecessary costs and resources will be utilized to comply with outdated format requirements. The Commission disagrees with EPFS that the pipe-delimited format is incompatible with Microsoft Excel; it is compatible with that program, although users may find it easier to use in Notepad or Wordpad. The tab-delimited and space-delimited formats are not options for this type of filing.

Clark, Thomas suggested that gas utilities be allowed to file tariffs using a read-only file format, preferably .pdf. This type of electronic filing would eliminate a number of objections and concerns that the industry has relative to the proposed rule but would still allow the Commission to make its handling of tariffs more efficient. A read-only file format would also ensure that the provisions of a particular tariff are not changed after being submitted to the Commission, except by the gas utility making a new tariff filing. A read-only file format would also allow those gas utilities that file tariffs at both the Commission and at cities to avoid maintaining more than one set of tariffs in the likely event that a city or cities do not adopt the same electronic tariff filing protocol prescribed by the Commission. In many instances, a city approves a specific non-electronic tariff that relates to natural gas service subject to its original jurisdiction. Pursuant to the Commission's current tariff filing rule, a copy of the city-approved tariff is then filed with the Commission. Under the proposed rule, that city-approved tariff would be required to be filed in the electronic format prescribed by the Commission without regard to whether such format adequately allows for the inclusion of all of the tariff provisions approved by the city.

In response, the Commission reiterates its earlier statement that all data will go into a database to which the public will not have access through the Internet. Using the database, the Commission staff will develop reports that include utilities' tariff information and make the reports available to the public through the Commission's web site. The Commission staff needs the tariff information filed in the specified, pipe-delimited format in order to use that information in the database and thus to manipulate it to develop the information that will be available on the web site in .pdf or HTML format.

Both ATIP and EPFS questioned the requirement in subsection (c)(3) for the company's contract number and noted the Commission should permit the gas utility to request confidentiality of such number. The Commission responds that contract numbers are not currently confidential. In addition, if there are provisions that apply to many rate schedules, that information may be filed once and cross-referenced. In the alternative, utilities can assign dummy numbers with their own cross-references. Having the contract number, a unique identifier, is important for the Commission's auditors and rate analysts.

With respect to subsection (c)(4), ATIP questioned how to describe a particular service, such as a movement of gas from Point A to Point B, which may include movement over a gathering line requiring compression, through a plant requiring processing and treating, and through a transmission line which may or may not include additional stages of compression. Describing all of those activities would make the tariff as involved as the contract, if not more so. ATIP recommended that the Commission clearly describe what information is necessary and that further discussion of the Commission's requirements should occur prior to the adoption of the rule. The Commission requires only a list of all the services provided, whether these are broken out separately for rate purposes or not. The Commission does not want a reproduction or even a summary of the contract itself.

EPFS noted that proposed subsection (c)(4) includes some services that are not required under current §7.44. EPFS requested that the Commission continue to permit flexibility in denoting the type of service provided, rather than narrowing the service to specific categories in the rule. EPFS stated that a gas utility is often unaware of buyer's purpose for purchasing the gas, and the type of service may change as the gas industry continues to evolve, so the Commission and gas utility should retain the maximum amount of flexibility under the rule. EPFS also requested that the Commission clarify that a single tariff is only necessary when such rates are charged and that a single type of service, such as gathering, will sufficiently cover all charges incurred under a gathering agreement. To increase the level of detail would result in increased costs to gas utilities, particularly those that negotiate transactions under Texas Utilities Code, §104.003(b) and have automated tariff-filing systems. TxOGA also recommended that the Commission clarify the level of detail and the extent of description necessary for the type of service the utility provides under the tariff. The Commission suggests that for services that are bundled into a single rate, the utility should list the services separately; there is no requirement that each service list a separate rate. The Commission has clarified the wording in subsection (c)(4) but has retained the word "other" to capture everything not listed and to provide maximum flexibility.

TXU stated the Commission should delete the requirement for the original contract date found in subsection (c)(5) and the date of current amendment found in subsection (c)(6) because there is no apparent need for this information in informing the public of a particular rate or in enforcing any regulatory requirement. TXU noted there would be no contract or agreement for residential rates, and, in the case of a rate schedule of general applicability, the original contract date would be different for every customer served under the rate schedule. Filing such information under a generally applicable rate would be confusing and would require multiple revisions of the rate schedule. Likewise, TXU questioned requiring the date of the current amendment and asked if filing a new rate schedule for all amendments, regardless of their impact on the amount paid or the service rendered, would be required. If the requirement is not deleted, then TXU recommended adding the term "if applicable." The Commission notes that although the language in proposed subsection (c)(5) and (6) was not changed from the current rule, the information required by these paragraphs is necessary for the Commission's audit and rate analysis activities. In the adopted version, the Commission has amended the wording to clarify which form to use.

With regard to TXU's statement concerning the need to file a new rate schedule for all amendments regardless of their impact on the amount paid or the service rendered, the Commission points out that this rule language is unchanged from current §7.44. Utilities should keep filing the new schedules for all required amendments or elements of the tariff. The data help the Commission's auditors and rate analysts by saving time and ensuring accuracy.

There were many comments criticizing the level of detail required by the provisions of subsection (c)(7). ATIP commented the provisions of this subsection appear to require a listing of all possible monetary events under a contract, whether those actually occur or not. Describing all the contingencies a contract might provide will result in a tariff not much briefer than the contract itself. Tractebel commented that subsection (c)(7) adds more requirements to disclose all components of the current rate than current §7.44 language requires. In some cases, requiring the utility to provide more detail about the prevailing rate would not provide more useful information to the marketplace, and could impair a utility's generation affiliate's ability to compete. Tractebel recommended the Commission leave intact the current text requiring a utility to list all components used to calculate the rate.

EPFS also noted that proposed subsection (c)(7) has been expanded to include major components of a contract that would be difficult to duplicate on a tariff form without essentially reiterating the major provisions of the contract. Taxes, imbalance provisions, and penalties, for example, may be charged if certain triggering events occur. TXU stated these provisions should not be required on a tariff filing because they are not standard components of the rates charged for services. Gas utilities that negotiate transactions under Texas Utilities Code, §104.003(b), as EPFS does, would be required to devote additional staffing resources to review each tariff and contract to ensure compliance with the new regulation.

TXU recommended the Commission clarify subsection (c)(7) to eliminate any interpretation that complete contract language needs to be included in the tariff. Balancing provisions can easily take two or three pages of a contract and treating or tax provisions could be almost a page in length. Because the electronic filing format contemplates all of this information being entered into one area of the electronic template, it will not be possible to provide currently available rate information without divulging the confidential information. Additionally, the inclusion of so much detail will significantly increase the amount of Commission resources required to maintain electronic tariffs. TXU suggested that an acknowledgment on the rate schedule that a particular rate includes certain provisions without providing the full particulars of the contract language might be an appropriate compromise. Certainly the information is available to the customer through their contract and to the Commission through the files of the gas utility, but there is no significant public purpose to be achieved through the disclosure of all of the contract detail on or through the Commission's web site. TxOGA stated the tariff filing should be limited in scope and content to rate information and should not include contractual information, such as balancing provisions or payment provisions.

In response to the comments regarding the requirements of subsection (c)(7), the Commission points out that only a list of the services provided or the penalty provisions that might be invoked are required to be listed; these are as much a part of a "rate" as the cost per unit for transportation services. For example, there is no requirement to explain all of the contingencies that might trigger the application of a penalty provision, only an entry such as "penalty for imbalances." That a term or condition might not be "standard" is no reason to omit it; to the contrary, such information is useful to the Commission and the public. The Commission specifically disagrees that subsection (c)(7) requires inclusion of the full contract language. In fact, TXU's suggested compromise is what the Commission intends to be required, and the Commission has amended the wording of subsection (c)(7) to clarify the requirement.

ATIP commented that proposed subsection (c)(8) might be viewed as including such things as an obligation to pay for the remaining costs of facilities built to provide service to a particular customer if that customer fails to transport sufficient volumes. Long-term arrangements are common in which a transporter would build or enlarge facilities for a customer and, in turn, the customer may be obligated to transport some minimum volume of gas so that the transporter's additional investment is worthwhile. If the customer fails to meet that obligation, additional cash payments or requirements may occur. ATIP did not believe it would be necessary or useful to repeat those provisions in a tariff. ATIP also questioned whether the new electronic tariff form will accommodate a large amount of information, stating that the form accepts only 10 lines of data in both the current rate components and rate adjustment provisions. A detailed explanation of all the contingency charges in a contract as well as a description of imbalance provision would require more than 10 lines of data.

The Commission agrees that proposed subsection (c)(8) does, in fact, require that the utility include listing an obligation to pay for the remaining costs of facilities built to provide service to a particular customer if that customer fails to transport sufficient volumes; this minimum take information is clearly part of the rate. The Commission notes that while a utility may set a rate, rate information in and of itself is not inherently confidential. Regarding ATIP's comment that this information would not be necessary or useful to include in a tariff, the Commission disagrees and points out that this is the type of information that will inform both customers and members of the public of the events that influence the rates they ultimately pay for gas utility service. With respect to ATIP's criticism of a detailed explanation of all contingency charges, the Commission notes that the rule does not say "detailed," but in any event, the electronic filing forms will hold much more than 10 lines of data. Any hard copy or paper version of the form that might have been made available to utilities to comment on was printed using a 10-line field, but the "form" will expand to hold much more than 10 lines of data.

TXU stated that the requirement of subsection (c)(9)(D) should be revised to require only a statement that the tariff filing amends an existing tariff. Requiring an explanation of the amendment would duplicate information already provided in the tariff under subsection (c)(7) or (8). The Commission agrees and has clarified the wording in subsection (c)(9)(D) by deleting the phrase "in which case the filing shall include an explanation of the amendment."

TXU stated that the information for a contact person required by subsection (c)(10) is not needed on every rate schedule and suggested that this requirement be moved to subsection (a) and should clearly state that the Gas Services Division's assigned company contact number be required on all tariffs or rate schedules. TXU believes this would be consistent with the electronic filing format. The Commission disagrees. The company contact information is filed only once on the electronic filing forms and then is cross-referenced. However, because rate schedules are developed and filed by different people within a utility organization, it is necessary to identify the person or persons who can discuss the schedule knowledgeably. This information is crucial for the Commission's auditors and rate analysts. The information can still be filed once and cross- referenced to every rate schedule to which it applies.

The comments on proposed §7.315(d) were many and detailed; however, they also revealed that the commenters did not understand the way in which the proposal was different from the current requirements and was intended to require filing less, rather than more, information that has traditionally been kept confidential.

TXU recommended the Commission revise the descriptions of services in subsections (d)(1), (2), and (3) to match the electronic filing templates. These three sections previously coincided with the original three forms of the Commission, which are being replaced with two forms (GSD-1 and GSD-2). TXU stated it is difficult to determine what services are covered by the requirements of each section. Because there are now only two electronic filing templates, TXU recommended the rule be revised to include only two sections and to clarify which electronic template covers each section or service. The Commission agrees in part and has added language to subsection (d)(1), (2), and (3) to indicate which of the two forms should be filed in each of the three situations. This should help clarify that there are three types of service and two templates.

TXU recommended the Commission clarify subsection (d)(1)(B) and (C) which require descriptions of service charges, but use different words to describe the information required to be filed. TXU stated the Commission should ensure that it uses language consistently throughout the rule and suggested that the Commission require the rate schedule to include, in one section, all jurisdictional service charges and a description of each service charge in sufficient detail to enable customers to determine the applicability of each service charge. This would eliminate the need for both sections. TXU also recommended the Commission eliminate subsection (d)(1)(D) because the information on rules and regulations is already required to be included by all distribution utilities in their tariffs under subsection (a) of the rule, and that the customer name requirement in subsection (d)(2)(A) is not needed because it is already required in subsection (c)(2) in all rate schedules. The Commission agrees that subsection (d)(1)(D) is duplicative and should be deleted; in addition, subsection (d)(1)(B) and (C) have been combined and the wording clarified. However, with regard to TXU's comment on subsection (d)(2)(A), the Commission disagrees and finds that this information is needed because the Commission will organize the information by type of service. Under the proposal, the Commission intended to collect less confidential information, expected that the description of the type of service would be more helpful to shippers, and would have done away with the practice of collecting information that could be more customer- specific. However, because the Commission received comments both in favor of and opposed to the proposal, the Commission declines to adopt this procedure and has reinstated the existing requirements for this type of tariff filing.

EPFS noted that subsection (d)(2)(B) changed the filing requirements to include a description of the delivery point, which is not currently required under the Commission's rules. Currently, the Commission assigns a confidential delivery point number to each delivery point, and the gas utility files tariffs using the contracted delivery point numbers. Under the proposed wording, gas utilities would be required to include a delivery point description, rather than the actual delivery point numbers. Filing a type of the delivery point would not be an accurate reflection of the contractual agreement. In addition, modifying the tariff filing requirements would require additional hours of programming for gas utilities that utilize a customized automated system to generate tariff filings. Moreover, EPFS stated delivery point information should remain confidential as is permitted today by the Commission because such information is commercially sensitive to gas utilities that negotiate transactions under Texas Utilities Code, §104.003(b). EPFS suggests the Commission retain the current standards, which require a Commission-assigned delivery point number, rather than a publicly available description of the type of delivery point. The current and proposed rules require gas utilities to file tariffs with delivery point information. Since some services, such as gathering, have rates that are based on the receipt point, the Commission should permit the filing of receipt or delivery point information, depending upon whether the rate is charged on receipts or deliveries.

The Commission notes that currently the delivery point information is coded and confidential with regard to the physical location. Under the proposed rule, the delivery point information would not have identified the physical location and therefore would not have been kept confidential. However, because of the number of comments the Commission received on the issue of confidentiality of certain information, its impact on the competitiveness of the gas market, and the widely divergent positions of the comments, the Commission declines to adopt its proposed wording of subsection (d)(2) and will retain the current practice with respect to the filing of delivery point information and maintaining the confidentiality of that information. Customer type information will no longer be reported. The Commission also notes that the electronic filing format will permit the utility to file information for either receipt point or delivery point. The Commission agrees that subsection (d)(2) should be clarified, and as previously stated, has added a reference to the form GSD-2.

Wagner opposed the adoption of §7.315 as proposed, and commented that §7.315(d)(2)(B) and (d)(3)(B) would implement significant changes in the Commission's public disclosure policy by eliminating the opportunity for utilities to file a confidential customer identification number in place of information concerning "contractual point(s) of redelivery" as allowed under existing §7.44. Wagner stated this change in policy could harm both shippers and transporters whose existing transportation agreements are governed by binding non-disclosure provisions. Further, because many existing transportation agreements have been executed with the understanding that certain information will be handled confidentially, Wagner believed parties whose contracts do not include non-disclosure provisions could also be significantly harmed. In addition, Wagner stated the explanation for proposed §7.315 constituted insufficient notice by failing to adequately describe the significance of the change proposed in §7.315(d). If it is the Commission's desire to change its public disclosure policy, Wagner stated the Commission must repropose the rule and clearly state its intention in the notice.

The Commission responds by pointing out that currently, delivery point information, i.e. , the physical location, is coded and kept confidential. Under the proposed rule, delivery point information would not have included the physical location and would not have been kept confidential; instead, delivery point information would be limited to the type of service provided by the utility, and was intended to more helpful to shippers without collecting information that could be more customer-specific. The Commission observes that reducing the amount of confidential information it gathers, keeps, and manages would appear to be less significant than asking for more. Other commenters ( e.g. , Fowler, HealthShare, and GLO) were opposed to continuing the practice of keeping any kind of information about utility service confidential. Therefore the Commission has decided to retain its current practice with respect to delivery point information; however, information about customer type will no longer be reported.

TXU commented that the requirement in subsection (d)(3)(A) should be eliminated. The language requires the expiration date to be stated in the rate schedule, but the electronic formats do not have a provision for the expiration date. TXU stated the usefulness of this information in a public forum is not clear, and the rule should not require information that the electronic template will not permit to be filed. The Commission agrees and has changed the wording of subsection (d)(3)(A) to use the wording on the electronic forms, which is "term of contract." The Commission notes that the usefulness of this information does not apply only to the public, but also to the Commission's auditors and rate analysts who need this information to carry out their regulatory responsibilities.

Although not part of a comment, the Commission has corrected the citations in (d)(4) and (d)(4)(A) from Texas Utilities Code §104.002(b) to §104.003(b). Also, the Commission has added in subsection (d)(4)(C) the requirement that the affirmation state that the transaction is not a direct sale for resale to a gas distribution utility at a city gate. This requirement is part of current §7.44(d)(4)(B).

ATIP stated that both utilities and customers need to know that a tariff has been accepted and is effective and recommended that the current wording in §7.44(e) be retained and the following language from the current rule inserted: "A filing is deemed accepted within 30 days from the date of the filing if no action is taken by the division." Tractebel also noted that subsection (e) deletes the previous provision that a tariff will be deemed approved 30 days after filing if no action is taken by the Division.

TXU also suggested that the Commission retain the requirement from existing §7.44 that deems a rate schedule accepted if the Gas Services Division takes no action on a rate schedule within 30 days following the filing of a rate schedule. TXU also suggested that the last two sentences of subsection (e) be eliminated. The rule sets forth the requirements for information to be made available to the Commission and the public; it does not involve a review of the justness or reasonableness of any particular rate. Therefore, the rejection of a tariff or rate schedule under §7.315 should be based on a utility's compliance with §7.315, not the justness or reasonableness of the rate itself. TXU stated it would be inappropriate to consider a rate schedule filing as a statement of intent under Texas Utilities Code, §104.102, because such a filing would not contain all of the information required for a statement of intent. Likewise, the Commission should not be able to file a complaint against a gas utility simply because the rate schedule failed to comply with this rule. The Commission is free to initiate an investigation or complaint under Texas Utilities Code, §104.151, at any time, but the proposed language implies that the Commission could establish rates in a docketed proceeding and then challenge those same rates through a complaint proceeding based on the rejection of a tariff. The rule should not be worded in a manner that would allow such an approach to be taken.

The Commission agrees with the comments of ATIP, Tractebel, and TXU regarding the reinstatement of the provision that a tariff is deemed approved if the Commission staff takes no action within 30 days of filing, and has added wording to subsection (e) to refer to the 30-day time period. The Commission notes that on its Web site, an accepted tariff is identified as "active." Tariffs that are filed but not accepted will not be shown on the Web site.

The Commission disagrees with TXU's comments that the proposed language implies that the Commission could establish rates in a docketed proceeding and then challenge those same rates through a complaint proceeding based on the rejection of a tariff; the Commission has not ever done that and, this proposal did not contemplate a change in the procedure for review and approval or rejection of compliance tariffs. The Commission's practice has been that subsequent to the entry of a final order in a rate case, the Commission staff reviews all tariffs filed to implement that order; those that do not comply with that Commission order are rejected as noncompliant. Nevertheless, the Commission has revised the rule to clarify that a tariff or rate schedule filing may be docketed when a utility files a tariff for an initial rate which on its face is not just and reasonable; files a tariff for higher environs rates based on city rates without filing a statement of intent to increase rates for the environs; files a tariff to increase a city gate rate without filing a statement of intent; or files tariffs containing provisions other than rates that have substantive service rule changes that have not been reviewed.

EPFS stated that proposed §7.315 includes many expanded provisions that would change the nature of approved tariffs on file with the Commission. Accordingly, a gas utility may be unable to comply with the requirement to refile currently approved tariffs without any substantive changes. EPFS encouraged the Commission to limit any additional requirements in the proposed rule aside from the electronic filing requirements. EPFS also stated that requiring the electronic filing of tariffs in a format required by the Commission may have a material impact on the feasibility of electronic filing and recommended the Commission continue to engage the industry in discussions regarding all future formats so the Commission can adopt formats that permit an efficient implementation of electronic filing processes. The Commission points out that submitting tariff information through the Web site makes the information secure; submittal with a diskette or through electronic mail does not. The Commission staff has had ongoing discussions with the industry for two years regarding the format and method for filing tariff information electronically, and this rule provides the most flexibility in converting a wide range of data formats to the Commission's Oracle database. Continuing the current practice of accepting any style or format for these filings does not achieve this goal. There will be a one-time cost to convert, but after that, there should be few problems and the new procedures will be better for the public as well. The Commission disagrees that a tariff that commemorates the contract would be a "substantive" change, as EPFS commented.

TXU recommended that existing subsection (f), which covers transition matters from paper filings to electronic filings, be removed from the rule and placed in the preamble. These transition provisions will have no import within one year of the adoption of the rule. Rather than embed this language permanently in the rule in a manner that would require another rule amendment in order to remove it, the Commission should simply place these transition requirements in the preamble. If it is believed that placement in the preamble is not legally binding on gas utilities, the Commission should condition the effectiveness of the section so that it becomes ineffective pursuant to its own terms after some date certain. While this latter approach would not remove the need for a future amendment, it would provide clarity on the applicability of the dates in the future.

The Commission disagrees with TXU's comments. The Commission again notes that requirements that are not in the rule language itself are difficult to find and may be unenforceable. In addition, information in preambles is not as readily available to the public after a rule is adopted, although it is available through the Texas Register online. Because this provision will become ineffective by its own terms, the Commission finds it preferable to retain the provision as part of the rule rather than simply including it in the adoption preamble. A rulemaking proceeding to delete obsolete language would be neither difficult nor time-consuming.

TXU also recommended adding a new subsection (f) to state when a rate schedule is deemed filed. Because the rule requires tariffs and rate schedules to be filed within 30 days of their effective date, it is important to know when a rate schedule will be considered filed. TXU understood that the Commission's system is designed to automatically send an electronic confirmation of receipt of a gas utility's tariff filing; if this is correct, this procedure should be covered in the rule. If this is incorrect, TXU suggested that electronic filings be considered filed upon their transmittal by the sender. The rule does not indicate how electronic filings will be made, i.e ., by disk or by electronic transmittal, and the Commission's existing rules on the filing of documents do not contemplate electronic filings. Some clarification of this point is needed. The Commission agrees that this should be clarified, and has reworded subsection (f) to state that the method of filing is through the Commission's web site using the instructions contained in the Electronic Data Interchange (EDI) manual found on the Commission's web site, and that the filing date is confirmed through the date of the electronic mail confirming receipt. In addition, the Commission has extended the deadline for filing electronic versions of currently approved tariffs by a month or more, depending on the type of utility.

Clark, Thomas noted that tariffs for certain types of natural gas service, such as residential and commercial customers, may be more readily adaptable to electronic filing than tariffs relating to a single industrial customer. Typically, contracts for industrial sales contain detailed clauses concerning such provisions as billing and payment, measurement and heating values, and rate adjustments, which vary greatly in detail and in length from contract to contract. Clark, Thomas questioned whether the type of electronic filing format utilized by the Commission contains sufficient data fields to allow a gas utility to accurately and completely include all of the provisions from its currently approved tariffs, as well as all of the data required by the proposed rule. Clark, Thomas again expressed preference for filing in a read-only format. The Commission notes that the electronic filing forms will accept a large amount of data and should not cause any limitations. The Commission disagrees with allowing a read-only format because the Commission will use the information in an interactive database, as well as to produce different kinds of reports. The information made available to the public will be in read-only format and will not be susceptible to changes.

The Commission has amended the provisions of subsection (f)(3)(D) to reduce the time by which a request for an exception must be filed from 60 days to 30 days before the deadline to which the utility is subject. This should make it easier for a utility to file an exception, because it won't have to be filed so far in advance.

EPFS noted that subsection (f)(5) does not permit any exemptions from the electronic filing requirement, and opined that the Commission should not develop provisions that place unnecessary restrictions on its ability to react to reasonable circumstances and grant waivers. There may be unforeseen circumstances in the future that will prevent a gas utility from filing tariffs electronically that may be reasonable to the Commission, and a waiver would be rationally granted. Moreover, the Commission may find it beneficial to require hard copy tariffs, rather than electronic tariffs in certain instances, particularly if computer viruses cannot be contained or security is compromised. EPFS encouraged the Commission to remove subsection (f)(5).

The Commission disagrees with this comment. Having utility tariffs in a mix of formats, both paper and electronic, makes the information in those tariffs as inaccessible as having them all on paper and kept in a filing cabinet. However, the Commission has clarified (f)(5) by including a provision that recognizes there may be temporary or technical obstacles to electronic filing, and these do not constitute a failure to file in the required format.

The Commission concurrently adopts the review of §7.44, required under Texas Government Code, §2001.039. The separate rule review documents will be filed with the Texas Register concurrently with this rulemaking.

Subchapter B. SUBSTANTIVE RULES

The Railroad Commission of Texas adopts the repeal of §7.60, relating to Suspension of Gas Utility Service Disconnection During Winter Months, and adopts new §7.460, relating to Suspension of Gas Utility Service Disconnection During Extreme Weather Emergency, without changes to the version published in the November 23, 2001, issue of the Texas Register (26 TexReg 9484). The Commission adopts the repeal and new rule to incorporate the requirements of Texas Utilities Code, §104.258, enacted by House Bill 2806, 77th Legislative Session (2001) (HB 2806), and to position the rule in a new numbering and organizational scheme for Chapter 7. New §7.460 will be in new subchapter D, to be entitled Customer Service and Protection.

The new rule incorporates the provisions of Texas Utilities Code, §104.258, which prohibit disconnection of natural gas service to residential customers during an extreme weather emergency, not just during the "winter months" as the current rule states; require providers to defer collection of the full payment of bills that are due during an extreme weather emergency until after the emergency is over; and direct providers to work with customers to establish a pay schedule for deferred bills. An extreme weather emergency is defined in Texas Utilities Code, §104.258(a)(1), as a period during which the previous day's highest temperature did not exceed 32 degrees Fahrenheit and the temperature is predicted to remain at or below that level for the next 24 hours according to the nearest National Weather Service reports.

The Commission adopts new §7.460(b)(1) to incorporate the requirements of Texas Utilities Code, §104.258, by including the legislative definition of "extreme weather emergency." New §7.460(b)(3) also reflects the statutory wording that prohibits disconnection of residential natural gas service on a weekend day unless provider personnel or agents are available to make collections and reconnect service. New §7.460(c) directs providers to defer collection of full payment of bills that are due during an extreme weather emergency until after the emergency is over, and to work with customers to establish a pay schedule for deferred bills. New §7.460(d) consists of language pertaining to level or average payment plans that was previously part of §7.60(c), except that paragraph (4), relating to a gas utility's ability to require a deposit, has been omitted, because customer deposits are governed by the provisions of §7.45, relating to Quality of Service. New §7.460(e) and (f) contain the provisions that were previously found in §7.60(d) and (e), respectively; the wording in those sections has not been changed.

During the drafting of the changes to existing rule §7.60 necessary to render the rule compliant with new Texas Utilities Code, §104.258, the Gas Services Division solicited comment from interested persons. Consumers Union, Texas Ratepayers' Organization to Save Energy, and Texas Legal Services Center (Consumers Union, et al. ) jointly offered suggestions. The first one concerned changing "winter months" in the title of the rule to "extreme weather emergency," to be consistent with the language of new Texas Utilities Code, §104.258(c). The Commission agreed with this suggestion and reworded the title of proposed rule §7.460 accordingly.

The next suggestion of Consumers Union, et al. , concerned the rule's statement of jurisdiction in subsection (a). The comment stated that HB 2806 is clearly applicable to all gas utilities and providers of master metered service, and does not limit the applicability of the new Texas Utilities Code, §104.258, to those utilities over which the Railroad Commission has jurisdiction. Therefore, Consumers Union, et al. , recommended the phrase "within the jurisdiction of the Railroad Commission pursuant to Texas Utilities Code, §102.001" should be stricken from the proposed rule. Texas Utilities Code, §102.001, limits the original jurisdiction of the Railroad Commission to the rates and services of a gas utility distributing natural gas or synthetic natural gas in areas outside a municipality; Consumers Union, et al. stated the proposal inappropriately applied jurisdictional limitations to the protections of HB 2806. The law prohibiting disconnection of gas utility service when it is dangerously cold is intended to protect public health and safety, and is intended to provide the safeguard to all Texans, not just those in areas outside a municipality.

The Commission agreed with Consumers Union, et al. , that the law applies to all providers of natural gas service, utilities and master meter operators alike, operating within or outside of municipal boundaries. HB 2806 clearly does not limit the safeguards of the disconnection prohibition to those customers residing outside municipalities. However, HB 2806 enacted only the new provision Texas Utilities Code, §104.258; the bill did not amend the scope of the jurisdiction delegated to the Commission in Texas Utilities Code, §§102.001 and 102.002. Therefore, with respect to the scope of rulemaking and enforcement authority, the Commission's jurisdiction remains limited to those areas outside municipal boundaries. Providers of natural gas service must comply with Texas Utilities Code, §104.258, and municipalities may adopt the provisions of §7.460 as their own rule, should they so desire. However, the Commission lacks jurisdiction to compel them to do so.

With respect to level and averaged payment plans, Consumers Union, et al. , noted that the proposal made in this docket, GUD No. 9226, does not alter the language found in the current version of §7.60(d) regarding the requirements for level and average payment plans. Consumers Union, et al. , also noted that provisions concerning level and average payment plans are included in the draft wording of a new rule §7.425 (which results from revisions to §7.45, relating to Quality of Service), found in GUD No. 9221. Consumers Union, et al. , pointed out that the current rule refers to §7.45, which will be repealed as part of GUD No. 9221, and this proposal did not make a conforming change. Consumers Union, et al. , wanted the rules on level and average payment plans to be consistent and consolidated; therefore, they recommended striking subsection (d) of this rule and covering level and average plans in GUD No. 9221, because those alternative payment plans (as contrasted with deferred billing) are not directly related to disconnection of service. They intended to file comments in support of required level and average plans in GUD No. 9221. The Commission reviewed these suggestions by Consumers Union, et al. , and agreed that the rules regarding level and average payment plans should be consistent. The Commission planned to address these concerns in GUD No. 9221, Review of the Commission's Quality of Service rules, to ensure that the rules are consistent.

Section 7.460 includes a requirement that providers give notice of the adoption of this rule to certain entities, and that utilities notify agencies which distribute low-income energy assistance and other social service agencies within their service area. Consumers Union, et al. , asked the Commission to set standards for this notice, including a written announcement of the rule revisions and a complete copy of the revised rules; a follow-up phone call from the utility to the agencies to assure that the written notice was received; and a written invitation to the applicable assistance agencies to a meeting sponsored by the utility where utility representatives would explain the revised rules to energy assistance agencies' staff and answer questions about the company's policies.

The Commission found that these provisions are most likely unnecessary, for two reasons. First, the prohibition on disconnection under certain conditions has been in place for almost a year; it is likely that most residential customers are aware of it because of the widespread publicity that accompanied its emergency adoption in November 2000. Second, many natural gas service providers serve so few customers that requiring them to conduct a meeting for energy assistance agencies is unnecessarily burdensome. The Commission expected that the larger gas utilities will have the resources and the incentive (driven, perhaps, by the assistance agencies' requests) to distribute updated information about their disconnection and deferred billing policies to the assistance agencies in their service areas without the Commission requiring them to do so.

Finally, Consumers Union, et al. , suggested that the Commission require gas utilities to report the number and location of accounts disconnected, and those under deferred payment plans on a monthly basis, because, in their view, such reporting will enable the Commission to track problem areas and monitor the effectiveness of the rule. The reporting of this information by utilities is consistent with reporting now required by the Public Utility Commission as part of Project No. 24375, Investigation into Disconnect and Payment Policies for Summer 2001. In addition the Commission should monitor weather information and issue news releases announcing when disconnection bans are in effect due to weather.

The Commission declined, at the time, to require reporting of disconnections as a part of this rule. Because most customers reside within municipalities, the Commission expected that most of the disconnections will occur within municipalities, which are not within the Commission's jurisdiction. Having information about such disconnections may be interesting, but any problems would not necessarily be within the Commission's authority to address. Further, the Commission declined to undertake the monitoring of weather information and issuance of news releases announcing when disconnection bans are in effect due to weather-- the very responsibilities that have been assigned to natural gas service providers under the rule. In addition, because the rules contemplate weather emergencies measured at the county level, it would be burdensome for the Commission to monitor and report on each of the 254 counties in Texas.

A comment by an individual suggested that, in addition to prohibiting disconnections during extreme winter weather, all disconnections should be preceded by placement of a tag (announcing the disconnection) on the residential customer's door 24 hours before the actual disconnection. The Commission declined to require natural gas service providers to incur the additional, and perhaps unrecoverable, expense of making a second trip to the residential customer's location; utility customers must already be notified of disconnection under current §7.45(4)(C). (Revisions to disconnection policies will be considered as part of GUD No. 9221.)

After the Commission considered all the informal comments, the rule was revised and published in the November 23, 2001, issue of the Texas Register for a 30-day comment period. The Commission received six comments on the published proposal. The Commission received comments from the following groups or associations: Consumers Union, Texas Ratepayers' Organization to Save Energy, Texas Association of Community Action Agencies, Public Citizen Texas, and AARP Texas. The comments were generally in favor of the rule, but offered suggestions for changes in specific provisions.

The Office of the Attorney General of Texas, Consumer Protection Division, Public Agency Representation Section (OAG) filed comments supporting the adoption of the new rule and stating that the adoption of the rule properly implements the responsibilities of the Railroad Commission with respect to the enforcement of this provision. However, OAG suggested that §102.003 of the Texas Utilities Code provides the Commission with sufficient authority to require gas utilities to report all monthly disconnection numbers and asked that the rule be changed to provide that all gas utilities be required to report the number and location of all disconnected residential accounts on a monthly basis.

The Commission disagrees with this suggestion. A similar comment was received during the informal comment period discussed earlier in this preamble. As with the earlier comment, the Commission declines to require reporting of disconnections as a part of this rule. Because most customers reside within municipalities, the Commission expects that most of the disconnections will occur within municipalities, which are not within the Commission's jurisdiction. Having information about such disconnections may be interesting, but any problems would not necessarily be within the Commission's authority to address.

Next, TXU commented on subsection (d)(3) concerning the requirement for utilities to provide a copy of the rule to customers in each September or October billing. TXU recommended this provision be deleted because of the widespread publicity that accompanied the initial adoption of this rule in November 2000. TXU already provided a copy of the rule to its residential customers and owners, operators, and managers of master metered systems in 2000 and 2001. TXU stated the notice is costly and its value unclear, and suggested that a copy of the rule only be required to be mailed to social services agencies that distribute funds as described in subsection (d)(1) and (2).

The Commission disagrees with these comments. The cost for a copy of the rule is negligible and, while a utility's overall list of customer locations may not change, the occupants of those customer locations may change if a house is sold, rented to new tenants, etc., and the Commission believes the public's right to be informed of this rule greatly outweighs the slight cost to the utilities.

Representative Ann Kitchen, Texas House of Representatives, District 48, commented on the proposed rule and authored HB 2806, which added §104.258, Disconnection of Gas Service, to the Texas Utilities Code. Representative Kitchen was concerned that the rule did not apply to municipalities, even though her intent in HB 2806 was that it would cover both municipalities and unincorporated areas and she intended that the Commission enforce this rule within municipalities. She also questioned the requirement to require written pledges by energy assistance providers as being unduly burdensome. Representative Kitchen also requested that the Commission establish a minimum period for deferred payment plans and prohibit inclusion of a five percent penalty on the deferred payment balance. Finally, she suggested that the definition of an extreme weather emergency be changed from a temperature of 32 degrees Fahrenheit for 24 hours to the temperature reaching 32 degrees Fahrenheit any time during a 24- hour period, not during the entire 24-hour period.

The Commission disagrees with these suggestions. Regarding municipalities, the Texas Utilities Code, §§102.001, 102.002, and 103.001, clearly limit the Commission's jurisdiction to the rates and services of a gas utility outside of a municipality, while giving the governing body of a municipality jurisdiction within the municipality. The Commission agrees that §104.258, as added by HB 2806, applies to both the Commission, with regard to unincorporated areas, and to municipalities. However, the Commission's authority in §§102.001, 102.002, and 103.001 was not expanded to include Commission jurisdiction over municipalities. Therefore, while a municipality is free to adopt the Commission's rule as its own for use within its municipal boundaries, the Commission cannot enforce this rule within a municipality.

Regarding the written payment pledges by energy assistance providers, the Commission's intent was that the pledge be documented in writing, with "in writing" meaning any communication that leaves a record, such as a letter, fax, or email. The rule allows an oral pledge to be made when time is of the essence, but the oral pledge must be followed with a written confirmation as soon as practical. The Commission believes that it is in the best interest of all parties for the utility to keep a record of all communications when an energy assistance provider makes a payment pledge.

Concerning the suggestion for minimum periods for deferred payment plans and a prohibition on a five percent penalty, the Commission's proposed rule requires utilities to work with customers to establish a deferred payment plan under the terms of the Commission's quality of service rule, §7.45. Although this rule as it exists now does not include a minimum payment period, the rule is in the process of being revised to include a minimum of three installments in a deferred payment plan, as suggested by Representative Kitchen. This three-month period would apply to all deferred payment plans, not just those created in response to a disconnection notice. That forthcoming rule proposal does not include a change regarding the five percent penalty, however. This penalty is not a finance charge, but is a reimbursement to the utility for additional costs it incurs related to the delinquent account. The penalty is calculated as a one-time charge on the original amount of the outstanding bill and can be added to the deferred balance in order to determine a reasonable payment period.

Regarding the last comment on the extreme weather emergency, the rule language ( i.e. , a period when the day's temperature did not exceed 32 degrees Fahrenheit and is predicted to remain at or below that level for the next 24 hours) is consistent with the language of the new legislation. Generally, the Commission cannot adopt a rule that has a greater impact on a party than the legislation it is intended to implement. Defining the temperature threshold as suggested by Representative Kitchen would allow more opportunities for disconnection to be prohibited. Although this may benefit consumers, it would have a negative impact on natural gas service providers that experience a larger proportion of delinquent customers, such as master meter operators. Such small natural gas service providers are likely to be particularly sensitive to customer delinquencies, when nonpayment by one customer might impair the cash flow of the provider and thus threaten service to all other customers.

Clark, Thomas & Winters (Clark, Thomas) indicated concern that the statute and proposed rule could be interpreted to prohibit the collection of any amount from customers during a weather emergency. Clark, Thomas suggested some language be added to the preamble stating that the "statute and rule prohibit the termination of service because of the inability to pay a delinquent account during a weather emergency. The utility may collect that portion of a delinquent bill that the customer can pay. The utility will also work with that customer to establish a deferred payment plan. The rule does not address the collection of bills in the ordinary course of business but only applies to those customers who are at risk of having service terminated during a weather emergency because of a delinquent bill. The rule is intended to apply only to active customers."

The Commission notes that language in a rule preamble does not remain with the rule after it is adopted and published in the Texas Administrative Code. Any requirements should be stated in the rule itself, not the preamble. However, even if these suggestions were made to apply to the rule itself, the Commission disagrees with the language. The wording of the rule is clear that it applies only in a specific situation.

Consumers Union, Texas Ratepayers' Organization to Save Energy, and Texas Legal Services Center (Consumers Union, et al. ) jointly filed comments. The comments stated that the Texas Association of Community Action Agencies and Public Citizen Texas also joined in the comments to express concern because the rule provides unduly narrow construction of the legislation and was significantly watered down from the original (emergency) version. Specifically, Consumers Union, et al. stated, as did Representative Kitchen, that new §104.258, as added to the Texas Utilities Code by HB 2806, applies to all gas utilities and gives the Commission authority over municipalities in this instance, even though Texas Utilities Code, §§102.001 and 102.002, limit the Commission's authority to utilities outside municipalities. Consumers Union, et al. believed that the jurisdictional limitations of §§102.001 and 102.002 do not prohibit the Commission adopting a rule that applies to all gas utilities and stated that the legislature clearly intended for the disconnection provisions in §104.258 to apply to all gas utilities statewide.

The Commission disagrees with this characterization of 104.258. As explained previously, the Texas Utilities Code, §§102.001, 102.002, and 103.001, clearly limit the Commission's jurisdiction to the rates and services of a gas utility outside of a municipality, while giving the governing body of a municipality jurisdiction within the municipality. The Commission agrees that Texas Utilities Code, §104.258, as added by HB 2806, applies to both the Commission, with regard to unincorporated areas, and to municipalities. However, HB 2806 did not expand the Commission's authority under §§102.001, 102.002, and 103.001 to give the Commission jurisdiction over municipalities. Therefore, while a municipality is free to adopt the Commission's rule as its own for use within the municipality, the Commission cannot enforce this rule within municipalities.

Consumers Union, et al. also had a similar comment to that of the OAG regarding the reporting of the number and location of disconnections and the monitoring of weather; the comment also was made during the informal comment period. Consumers Union, et al. stated that the reporting of this information by utilities is consistent with such reporting now required by the Public Utility Commission as part of Project No. 24375, Investigation into Disconnect and Payment Policies for Summer 2001.

The Commission disagrees with these suggestions. As explained previously, the Commission declines to require reporting of disconnections as a part of this rule. Because most customers reside within municipalities, the Commission expects that most of the disconnections will occur within municipalities, which are not within the Commission's jurisdiction. Having information about such disconnections and weather trends may be interesting, but any problems would not necessarily be within the Commission's authority to address.

Consumers Union, et al. viewed the definition of extreme weather emergency, as defined both in HB 2806 and in the proposed rule, as the minimum standard that a gas provider is obligated to meet. Consumers Union, et al. suggested that if the Commission adopts the rule as proposed, there will be a need for emergency rulemaking in the future because the "below 32 degree F standard for 24 hours" is insufficient to protect consumers from life-threatening conditions.

The Commission disagrees that the provisions of HB 2806 are only minimum standards. In fact, the Commission may not propose a rule for which it has no authority. The Commission has proposed the rule to comply with the legislature's approval of Texas Utilities Code, §104.258, as enacted by HB 2806.

Consumers Union, et al. commented, as did Representative Kitchen, that the requirement for a written pledge from an energy assistance provider would be too burdensome. The Commission disagrees with this comment as explained previously in its response to Representative Kitchen's comment.

Finally, Consumers Union, et al. suggested that the Commission's deferred payment plan rule, 16 TAC §7.45, relating to Quality of Service, applies to any situation where a consumer cannot pay the full amount owed, and suggested that §7.460 should include its own deferred payment plan language that would apply only to extreme weather emergency disconnections. Consumers Union, et al. states that the rule as proposed would make it impossible for many consumers who wish to pay their bill in full to do so. Consumers Union, et al. suggests that, at a minimum, the rule should include provisions to guarantee that every customer with an account in arrearage because of a weather emergency is offered a deferred payment plan; that the plan include payment terms that the customer is financially able to meet; that a period of six months to 36 months be allowed for the repayment; that the customer will be charged only for the cost of gas, with no late fee, interest, penalty, or service charges; that the terms and conditions of the deferred payment plan be in writing; and that the customer is entitled to renegotiate the terms of the agreement if circumstances change.

The Commission disagrees with these suggestions. The Commission sees no need to repeat deferred payment plan language in this rule when that language already exists in §7.45. However, because the Commission is reviewing §7.45 in preparation for proposing amendments to it, the Commission will consider the suggestions regarding the payment period, the cost of gas, and the terms and conditions of the plan.

AARP Texas filed late comments which supported the comments made by Consumers Union, et al. The Commission has already addressed all of the comments from that group.

Also, the Commission concurrently adopts the review of §7.60, under Texas Government Code, §2001.039. The separate rule review documents will be filed with the Texas Register concurrently with this rule adoption.

Subchapter B. SUBSTANTIVE RULES