Adopted Sections 
 An agency may take final action on a section 30 days after a proposal has been 
published in the Texas Register. The section becomes effective 20 days after the 
agency files the correct document with the Texas Register, unless a later date 
is specified or unless a federal statute or regulation requires implementation 
of the action on shorter notice. 
 If an agency adopts the section without any changes to the proposed text, only 
the preamble of the notice and statement of legal authority will be published. 
If an agency adopts the section with changes to the proposed text, the proposal 
will be republished with the changes. 
 
   
  TITLE 13. CULTURAL RESOURCES 
 Part III. Texas Commission on the Arts 
  Chapter 31. Agency Procedures 
  
  13 TAC sec.sec.31.3, 31.4, 31.6 
 
  The Texas Commission on the Arts adopts amendments to sec. sec.31.3, 31.4, and 
31.6 concerning agency procedures, without changes to the proposed text as 
published in the October 30, 1992, issue of the Texas Register  (17 TexReg 
7631). 
 The amendments will allow the Commission to conduct its business in an 
efficient and orderly manner. 
 The amendments will promote more efficient and orderly business. 
 No comments were received regarding adoption of the amendments. 
 The amendments are adopted under Texas Civil Statutes, Government Code, Chapter 
444.009, which provide the Texas Commission on the Arts with the authority to 
make rules and regulations for its government and that of its officers and 
committees. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on December 8, 1992. 
 TRD-9216366 
  Connie Ree Green 
 Director of Finance and Administration 
 Texas Commission on the Arts 
    Effective date: December 29, 1992 
 Proposal publication date: October 30, 1992 
 For further information, please call: (512) 463-5535 
         
             
  TITLE 16. ECONOMIC REGULATION 
 Part II. Public Utility Commission of Texas 
  Chapter 23. Substantive Rules 
  
  Rates 
 
  16 TAC sec.23.21 
 
  The Public Utility Commission of Texas adopts an amendment to sec.23.21, 
concerning rates, with changes to the proposed text as published in the June 16, 
1992, issue of the Texas Register, (17 TexReg 4306). The amendment being adopted 
makes three changes to the language of the Commission's Rule sec.23.21(c)(2)(B) 
as adopted in 1991 that prescribes the method by which cash working capital is 
determined in rate proceedings. Under the amendment, the first change requires a 
utility to recognize the availability of funds received by electronic transfer 
on the date of receipt. The second change under the amendment specifies a 
negative amount of cash working capital equal to a specified fraction of 
operations and maintenance expense as a reasonable level of cash working capital 
in the absence of persuasive evidence that suggests a different amount of cash 
working capital if the utility either does not file a lead-lag study or the 
utility's lead-lag study is determined to be so flawed as to be unreliable. That 
specified fraction will be a negative one eighth in the case of electric 
utilities and a negative one twelfth in the case of telephone utilities. The 
third change under the amendment fixes the amount of cash working capital to be 
allowed for cooperatives, river authorities, and investor-owned utilities that 
purchase 100% of their power requirements. 
 The Commission solicited comments and replies to comments on the proposed 
amendment. Parties filing comments were Texas Electric Cooperatives, Inc. (TEC) 
, Texas Utilities Electric Company (TU Electric), Gulf States Utilities Company 
(GSU), Southwestern Electric Service Company (SESCO), Texas-New Mexico Power 
Company (TNP), Southwestern Public Service Company (SPS), El Paso Electric 
Company (El Paso), Office of Public Utility Counsel (OPC), Central and South 
West Services, Inc. (CSW), Texas Industrial Energy Consumers (TIEC), Houston 
Lighting and Power Company (HL&P), Central Telephone Company of Texas (Centel), 
Lufkin-Conroe Telephone Exchange, Inc. (LCTX), and Sugar Land Telephone Company 
(Sugar Land). 
 Some parties opposed adoption of the amendment as a whole. Southwestern Public 
Service Company (SPS) expressed its belief that the amendment fails to include a 
reasoned justification of the rule and a statement of the rule's factual basis 
in accordance with the Administrative Procedure and Texas Register Act (APTRA), 
Texas Civil Statutes, Article 6252-13a sec.5(c-1)(1) (Vernon Supplement 1992). 
 The Commission disagrees with the suggestion that the rule lacks a reasoned 
justification and a statement of the rule's factual basis. In accordance with 
Administrative Procedure and Texas Register Act (APTRA), Texas Civil Statutes, 
Article 6252-13a sec.5(c-1)(1) (Vernon Supplement 1992), the preamble to the 
published proposal in the June 16, 1992 issue of the Texas Register (17 TexReg 
4306) included the justification for the proposed amendment, a statement of the 
amendment's factual basis, and the Commission's reasoning for proposing the 
amendment. 
 Some parties opposed the amendment in part and recommended changes in the 
proposed language. Texas-New Mexico Power Company (TNP) commented that the 
preamble of the amendment should be changed from "customer supplied capital" to 
"vendor supplied credit" to reflect the fact that customers do not provide 
capital but instead pay for services. TNP noted that when a lead-lag study is 
performed, the money for goods and services is already delivered by the vendor 
before the customers pay money to the vendor, and is thus "vendor-supplied" and 
not "customer-supplied." 
 The Commission agrees with TNP's comment but believes that a more appropriate 
change in wording would be from "customer supplied capital" to "cost free 
capital." 
 Numerous parties filed comments regarding the subparagraph (B)(iii)(VI) change 
establishing a negative default amount for cash working capital when a utility 
fails to perform an adequate lead-lag study. Houston Lighting and Power Company 
(HL&P) recommended against adoption of the amendment as proposed. HL&P commented 
that subparagraph (B)(iii)(VI) encourages intervenors to refrain from 
recommending any reasonable amount for the cash working capital allowance. HL&P 
further stated that the language would allow an intervenor merely to allege that 
a utility's lead-lag study was "so flawed as to be unreliable" and the 
Commission would be able to impose the negative one-eighth default amount (to 
electric utilities) without an explanation as to why the utility's lead-lag 
study may be flawed. 
 The Commission disagrees with HL&P. It is the utility's choice not to file a 
lead-lag study, not the choice of the intervenors or the General Counsel. 
Instead of the utility being the unfairly impacted party in the ratemaking 
process, it is the other parties to the case who are forced to develop an 
analysis without the benefit of solid data from the utility. Ultimately, it is 
the Commission who is forced to decide in this lead-lag study data vacuum the 
appropriate amount of cash working capital. The Commission has carefully chosen 
the phrase "so flawed as to be unreliable" to ensure that this Commission 
preserves its right to review the underlying data in a utility's lead-lag study. 
This Commission will not lightly pronounce a utility's lead-lag study to be 
unreliable. However, when the Commission is faced with evidence of a high number 
of errors in the underlying information of a utility's lead-lag study, 
determined by testing a sample of the informational inputs against the 
statistically-predicted number of errors, the Commission will be extremely 
cautious in further reliance on the untested data. The Commission remains 
mindful of a recent case before it where a statistically significant number of 
errors in the actual transcription of the underlying data into the lead-lag 
study itself caused the study to be declared unreliable. 
 Gulf State Utilities Company (GSU), El Paso Electric Company (EPE) and HL&P 
stated opposition to a negative default amount for cash working capital in the 
absence of a lead-lag study, or if a lead-lag study is found to be unreliable. 
EPE restated its dislike of a negative amount in rate base for cash working 
capital. HL&P stated that the negative one eighth of operations and management 
expenses may encourage some utilities to settle for the default amount if a 
utility anticipates that a lead-lag study would yield a lower amount. The issue 
of a negative amount of cash working capital in rate base is not an issue in the 
amendment, nor does the Commission propose any additional change to subparagraph 
(B)(iii)(IV)(-g-) of the original rule other than renumbering the subparagraph 
to (B)(iii)(V)(-g-). 
 In addition to GSU and El Paso, several utilities including Central Telephone 
Company of Texas (Centel), Lufkin-Conroe Telephone Exchange, Inc. (LCTX), and 
Sugar Land Telephone Company (Sugar Land) urged the Commission to adopt "zero" 
as the default amount. Centel, LCTX, and Sugar Land additionally expressed 
concern if the amendment is adopted regarding possible "significant" cost to 
conduct a lead-lag study for all telephone local exchange carriers with 50,0000 
access lines or more. The three telephone companies stated that the amendment 
would create a "negative expense presumption" that must be overcome by 
performing a lead-lag study because "under the current rule, smaller companies 
could forego the expense of a lead-lag study if they request no cash working 
capital in the revenue requirement." 
 On the other hand, some parties supported the default cash working capital 
level as a solution to problems raised when a utility does not file a viable 
lead-lag study. Texas Industrial Energy Consumers (TIEC) commented that the 
proposed amendment clarifies the appropriate accounting treatment of cash 
working capital if a utility fails to adequately perform a lead-lag study. Under 
the current rule, if a lead-lag study is not adequately performed, then a zero 
is assigned as cash working capital. TIEC commented that the proposed amendment 
encourages utilities to make good-faith efforts to perform accurate and reliable 
lead-lag studies, ultimately aiding the Commission to accurately set rates and 
eliminates the incentive for a utility with a negative cash working capital 
value failing to perform any lead-lag study since a zero value will be an amount 
greater than the negative value incurred by the utility if a lead-lag study had 
been performed. 
 OPC commented that the proposed amendment provides an adequate incentive for 
the completion of an adequate lead-lag study by a utility, or for adequate 
evidence to prove the utility's request for a zero amount of cash working 
capital. OPC commented that a request for zero cash working capital is still a 
request, and therefore still triggers an obligation to file an adequate lead-lag 
study. 
 The Commission supports the comments of TIEC and OPC and opposes the request of 
GSU, El Paso, Centel, LCTX, and Sugar Land for a zero default amount. These 
utilities fail to acknowledge the fact that a zero request is nonetheless a 
request for a reasonable allowance of cash working capital. Centel, LCTX, and 
Sugar Land fail to acknowledge the probability of a negative result if a Section 
42 proceeding is filed on a telephone local exchange carrier with 50,0000 or 
more access lines regardless of whether or not a lead-lag study is performed. 
Further, it is questionable that additional costs will be incurred if a lead-lag 
study is performed since it does not automatically follow that an outside firm 
must be employed to conduct a lead-lag study. Therefore, it is the Commission's 
view that the current rule requires the filing of a lead-lag study to 
substantiate the utility's request for cash working capital. The cost issue is 
not a new issue; the Commission carefully considered the cost of preparing these 
studies when adopting the rule's current language. It is the misinterpretation 
of this requirement by utilities that necessitates the adoption of the amendment 
language to clarify the lead-lag study requirement. 
 Several parties commented that the rule does not specify a standard for 
determining the reliability of a lead-lag study. Texas Utilities Electric 
Company (TU Electric) recommended that the default cash working capital level 
should only be effective if the utility fails to file a lead-lag study, or files 
a lead-lag study that "was not performed in good faith and" is so flawed as to 
be unreliable "as a whole, then" the default level for cash working capital 
would be imposed. TNP noted that the amendment fails to state who makes the 
determination that a utility's lead-lag study is "so flawed as to be 
unreliable." Centel, LCTX, and Sugar Land commented that although this phrase 
indicates a fairly strict standard, the amendment should also recognize that 
different methodologies exist for performing lead-lag studies and thus the rule 
should not deem unreliable a lead-lag if performed "with any generally 
recognized methodology." 
 The Commission disagrees with these comments and the suggested language 
changes. The Commission rejects the implication that unless the intervenors or 
General Counsel provide evidence to prove the absence of good faith by the 
utility, the utility's request would be accepted. "Good faith" is not at issue 
in the case where a lead-lag study is unreliable. The utility is under an 
obligation, and has sufficient opportunity, to verify the accuracy of the lead-
lag study prior to its inclusion in the rate change request. Subparagraph 
(B)(iii)(IV)(-a-) delineates the methodology that a utility's lead-lag study 
should use. It is the Commission that must ultimately make the determination of 
the accuracy of a utility's lead-lag study. The Commission will make this 
decision as necessary on a case-by-case basis. 
 Centel, LCTX, and Sugar Land further suggested that the proposed amendment 
should be clarified to state whether or not the negative presumption is intended 
to apply in Earnings Monitoring reviews. If so, all three companies urged the 
Commission to recognize and identify the "significant costs" of performing lead-
lag studies every six months. It should be clear that this proposed revision 
does not affect the Earnings Monitoring Report requirements any more than the 
original rule does. For Earnings Monitoring Report purposes, utilities are 
required to include in rate base the amount that the utility was granted in its 
last rate case within the last five years, or the "cap" amount of one eighth for 
electric utilities and one twelfth for telephone utilities. It has not been this 
Commission's practice to require utilities to prepare lead-lag studies for 
earnings monitoring purposes. 
 Other parties objected to the numerical amounts chosen as the default floor 
amount. SPS commented that the negative default one-eighth figure for an 
electric utility's cash working capital under the proposed amendment deprives 
SPS of the due process of law and lacks a legitimate reason to support a 
negative one eighth. SPS further stated its concern that the proposed rule is 
"arbitrary and capricious" and could cost SPS and other utilities "millions of 
dollars." 
 The Commission disagrees. SPS failed to acknowledge that under the amendment, 
the negative floor will only be instituted if the utility fails to perform a 
lead-lag study or provides an unreliable lead-lag study. If a utility performs a 
legitimate lead-lag study, then the negative floor amount is not an issue. A 
utility will have a right to a full hearing and an opportunity to support the 
amount of cash working capital it requests. SPS' claim that it will have been 
deprived of due process is groundless. As to the claim that the floor is 
arbitrary, the reasonableness of the floor is addressed as follows. 
 SPS, El Paso, HL&P, TNP, SESCO and The Central and South West (CSW) Operating 
Companies all challenged the symmetry of the negative default floor amount with 
the positive cap amount of cash working capital. El Paso, HL&P, TNP, SESCO and 
CSW offered comments on the inclusion of fuel and purchased power in the 
negative default amount while these amounts are excluded in the positive cap 
amount. TNP proposed changing the language "including fuel and purchased power" 
instead to "excluding amounts charged to operations and maintenance expense for 
materials, supplies, fuel, and prepayments." Additionally, TU supported deletion 
of the one-eighth level of operations and maintenance expenses for electric 
utilities and instead proposed that an amount of cash working capital equal to 
the negative of the maximum amount allowable under subclauses (I)-(IV) should be 
used. OPC commented that the symmetry of the negative one-eighth floor with the 
positive one-eighth cap of allowable cash working capital is not the primary 
basis for the rule. Instead, the rule should primarily encourage companies to 
file adequate lead-lag studies at the time the utility files its case. 
 The Commission disagrees with the comments of SPS, El Paso, HL&P, TNP, SESCO, 
CSW, and instead agrees with OPC. The utilities' discussions of the lack of 
symmetry between the cap and floor amounts do not consider several important 
points. The goal in determining an allowance in rate base for cash working 
capital is to accurately recognize the extent to which the utility has needs for 
cash in its normal operations. Many utilities have been able to manage their 
cash flows so that they have cost free capital for their use. This situation 
results in a negative cash working capital balance. It is based on the 
Commission experience in a number of electric utility rate cases that the 
Commission proposed and now chooses the floor for electric utilities. This floor 
is achievable for some utilities and has been achieved with good cash 
management, but it is low enough that it provides an incentive for utilities to 
properly manage their cash and provide a sufficient lead-lag study in rate 
proceedings. The Commission believes that to set the floor, which will only 
apply if the utility fails to carry its burden of proof, at a level above that 
chosen could give a windfall to the utility at the expense of the ratepayer. 
Implicit in the utilities' comments is that the cap is not high enough. This 
position is solely of academic interest because no electric investor-owned 
utility cash working capital amount meets the cap amount, nor is even close to 
the cap. On the contrary, most electric investor-owned utilities do not have a 
positive amount of cash working capital, but instead have a negative amount of 
cash working capital. The Commission's proposal for a negative default amount 
represents a base floor level that is achievable by some and will act as an 
incentive to utilities to perform a reliable lead-lag study. 
 CSW recommended that if the Commission approved the amendment, additional 
language should be inserted in subparagraph (B)(iii)(VI) to specify that only 
"after the utility has been given the opportunity to correct the situation" 
would the negative limit be imposed upon the utility. The Office of Public 
Utility Council (OPC) disagreed with CSW's suggestion that utilities have 
another opportunity to correct or modify the proposal because such revisions 
would result in an unreasonable delay in the ratemaking process. Because 
utilities have complete control over the timing and breath when filing their 
case and later have an opportunity to file rebuttal testimony, OPC stated that 
intervenor parties and ratepayers should not be forced to pay the price if a 
utility fails to file an adequate lead-lag study. 
 The Commission agrees with OPC. Because each utility has the opportunity to 
ensure accurate performance of lead-lag studies prior to the time of filing, the 
CSW's argument for additional time to modify inaccurate lead-lag data is without 
merit. The Commission wants to encourage accuracy in the data presented at the 
time of filing rather than support a policy that encourages regulatory delay. 
The Commission is additionally mindful of the limited resources available for 
review for Commission staff and intervenors, and therefore favors accuracy of 
lead-lag data at the time of filing. 
 OPC suggested that the negative one-eighth floor for an electric utility in 
subsection (c)(2)(B)(iii)(VI) should likewise apply to telephone utilities. The 
amendment as drafted applies a negative one-eighth floor for electric utilities 
and a negative one-twelfth floor for telephone utilities. OPC commented that the 
negative one-twelfth amount results in giving an advantage to telephone 
utilities with a smaller negative amount (or a higher floor) than the larger 
negative amount (or lower floor) applied to electric utilities. OPC maintained 
that a single one-eighth floor amount applied to both electric and telephone 
utilities will ensure consistent application of the rule. 
 The Commission disagrees with OPC's suggestion that the cash working capital 
floor for telephone utilities should be lowered from one twelfth to one eighth. 
OPC uses one eighth of operations and maintenance expenses as the appropriate 
floor for telephone companies. If a telephone company chose to perform a lead-
lag study, the results might prove that a much larger negative cash working 
capital amount than one eighth of operations and maintenance expense is 
appropriate. If no lead-lag study is available, the Commission staff has no 
information to determine what the exact level of cash working capital should be 
in rate base. With this in mind, the Commission staff was required to set a 
floor which would be used in the absence of a study. Thus, a floor amount was 
chosen for both electric and telephone utilities to approximate the maximum cash 
working capital "cap" of operations and maintenance expenses. In setting this 
"cap," the Commission could have considered other percentage amounts for the 
negative floor amount, such as one fourth or one twenty-fourth. However, these 
amounts would not be based on the historical maximum percentage allowed by both 
telephone and electric utilities. And, as previously mentioned, the Commission 
has experience in a number of rate cases as to what electric utilities can 
achieve. Instead, the Commission chose percentages that mirror the historical 
maximum percentages of one eighth for electric utilities and one twelfth for 
telephone utilities. The Commission believes that the one-eighth floor for 
electric utilities and the one-twelfth floor for telephone utilities is 
appropriate and should be maintained for the above reasons. The Commission 
believes it is unreasonable to set the negative floor for telephone utilities 
with an amount that is greater than the possible maximum amount a telephone 
utility may receive in rates. 
 SESCO commented that the negative one-eighth default amount of cash working 
capital for electric utilities is unfair, burdensome and will not benefit 
SESCO's customers. SESCO noted that in its last two rate cases, the rate case 
expense of a lead lag study overshadowed the benefits of such a study. SESCO 
requested that the Commission expand the exemption in subparagraph (B)(iii) 
(VII) concerning telephone carriers with less than 50,000 access lines to 
include electric utilities with fewer than 50,000 customers. Alternatively, 
SESCO suggested that the Commission include electric utilities that purchase 
100% of their power under the proposed exemption in subparagraph (B)(iii)(III) 
regarding electric cooperatives and river authorities. 
 The Commission agrees with SESCO's comment concerning the inclusion of electric 
utilities that purchase 100% of their power in the proposed exemption in 
subparagraph (B)(iii)(III). Several parties including TIEC and Texas Electric 
Cooperatives, Inc. (TEC) filed comments generally supporting the proposed 
amendments concerning cash working capital allowances for cooperatives and river 
authorities. TEC commented that it strongly supports the portion of the proposed 
amendment that sets out a method for determining cash working capital under 
subsection (c)(B)(iii)(III). TIEC stated that the one-eighth cap amount removes 
ambiguity regarding the appropriate method for determining a reasonable amount 
of cash working allowance and tracks the method historically used by the 
Commission staff and intervenors in evaluation of an electric cooperative's 
request for rate relief. Accordingly, the Commission has revised subparagraph 
(B)(iii)(III) to include "investor-owned utilities that purchase 100% of their 
power requirements" in the first sentence. 
 OPC supported the proposed amendment subparagraph (B)(iii)(V)(-d-) regarding 
the availability of utility funds received by electronic transfer. OPC commented 
that this proposed change reflects the reality that funds so transferred are 
available the day of receipt, and thus enhances the accuracy of lead-lag 
studies. The Commission agrees with OPC's comments. 
 OPC, Centel, LCTX, and Sugar Land commented that the proposed amendment as 
drafted does not address differences in the applicability of a sec.42 case 
versus a sec.43 case. OPC suggested that additional language should be included 
in the proposed amendment to make clear that any company which is required to 
file a rate case under sec.42 is likewise under the same obligation to perform a 
lead-lag study as a company which chooses to file a rate case under sec.43. OPC 
maintained that this additional language would clarify this possible situation 
and would avoid unnecessary delay in a sec.42 case. 
 The Commission disagrees with OPC's suggested language and believes that the 
amendment to subparagraph (B)(iii)(V) clarifies that a lead-lag study should be 
performed in all situations where cash working capital allowances are an issue. 
 Centel, LCTX, and Sugar Land commented that the Commission should make it clear 
that it intends utilities to have sufficient time to perform lead-lag studies 
after a sec.42 proceeding is filed. 
 The Commission disagrees with this suggestion. Sufficient safeguards currently 
exist to ensure sufficient time is available for a utility to perform any needed 
studies. Typically, a utility is given a minimum of 120 days to prepare a rate 
filing package in a sec.42 proceeding. If additional time is needed, the utility 
can raise this concern at the first prehearing conference when the timeline is 
set in a Section 42 proceeding. In the extreme, the utility may always appeal an 
unfavorable ruling to the Commission. 
 Centel, LCTX, and Sugar Land further proposed that a requirement be imposed 
upon Commission staff to advise utilities of any reliability questions regarding 
a lead-lag study within a short time following the filing of the study. 
 The Commission strongly disagrees. Centel, LCTX, and Sugar Land apparently want 
the Commission staff to bless a utility's lead-lag study prior to the time of 
filing staff testimony. As with any issue in a case, the utility bears the 
burden of proving its request, not the Commission staff. The Commission's staff 
reviews the utility's filing and then makes recommendations based on that filing 
supplemented by discovery requests. The Commission will not shift the utility's 
burden of providing a reliable lead-lag study to the staff. 
 The amendment is adopted under Texas Civil Statutes, Article 1446c, sec.16 and 
sec.43(g), which provide the Public Utility Commission of Texas with the 
authority to make and enforce rules reasonably required in the exercise of its 
powers and jurisdiction. 
 
 
  sec.23.21. Cost of service. 
 
  (a)-(b) (No change.) 
   
  (c) Return on invested capital. The return on invested capital is the rate of 
return times invested capital. 
 
  (1) (No change.) 
   
  (2) Invested capital; rate base. The rate of return is applied to the rate 
base. The rate base, sometimes referred to as invested capital, includes as a 
major component the original cost of plant, property, and equipment, less 
accumulated depreciation, used and useful in rendering service to the public. 
Components to be included in determining the overall rate base are as follows: 
 
  (A) (No change.) 
   
  (B) working capital allowance to be composed of, but not limited to the 
following: 
 
  (i)-(ii) (No change.) 
   
  (iii) a reasonable allowance for cash working capital. The following shall 
apply in determining the amount to be included in invested capital for cash 
working capital: 
 
  (I)-(II) (No change.) 
   
  (III) For electric cooperatives, river authorities, and investor-owned 
utilities that purchase 100% of their power requirements, one eighth of 
operations and maintenance expense excluding amounts charged to operations and 
maintenance expense for materials, supplies, fuel, and prepayments will be 
considered a reasonable allowance for cash working capital. For telephone 
cooperatives, one twelfth of operations and maintenance expense excluding 
amounts charged to operations and maintenance expense for materials, supplies, 
and prepayments will be considered a reasonable allowance for cash working 
capital. 
   
  (IV) Operations and maintenance expense does not include depreciation, other 
taxes, or federal income taxes, for purposes of subclauses (I), (II), (III), and 
(VI) of this clause. 
   
  (V) For all investor owned electric utilities, all telephone interexchange 
utilities, and all telephone local exchange carriers with 50,000 or more access 
lines, a reasonable allowance for cash working capital, including a request of 
zero, will be determined by the use of a lead-lag study. A lead-lag study will 
be performed in accordance with the following criteria. 
 
  (-a-)-(-c-) (No change.) 
   
  (-d-) All funds received by the utility except electronic transfers shall be 
considered available for use no later than the business day following the 
receipt of the funds in any repository of the utility (e.g., lockbox, post 
office box, branch office). All funds received by electronic transfer will be 
considered available the day of receipt. 
   
  (-e-)-(-g-) (No change.) 
     
  (VI) If cash working capital is required to be determined by the use of a lead 
lag study under the previous subclause and either the utility does not file a 
lead lag study or the utility's lead-lag study is determined to be so flawed as 
to be unreliable, in the absence of persuasive evidence that suggests a 
different amount of cash working capital, an amount of cash working capital 
equal to negative one eighth of operations and maintenance expenses including 
fuel and purchased power in the case of an electric utility, or negative one 
twelfth of operations and maintenance expense in the case of a telephone 
utility, will be presumed to be the reasonable level of cash working capital. 
   
  (VII) For all investor owned telephone local exchange carriers with fewer than 
50,000 access lines, cash working capital shall be calculated by any method that 
the Commission determines to be reasonable, subject to subclause (IV) of this 
clause. 
       
  (C)-(F) (No change.) 
       
  (d) (No change.) 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on December 4, 1992. 
 TRD-9216303 
  John M. Renfrow 
 Secretary of the Commission 
 Public Utility Commission of Texas 
    Effective date: December 28, 1992 
 Proposal publication date: June 16, 1992 
 For further information, please call: (512) 458-0100 
         
             
  Customer Service and Protection 
 
  16 TAC sec.23.44 
 
  The Public Utility Commission of Texas adopts an amendment to sec.23.44 
concerning new construction, with changes to the proposed text as published in 
the June 16, 1992, issue of the Texas Register (17 TexReg 4308). The proposed 
amendments begin to address the Commission's concern regarding the possible 
effects of electric magnetic fields (EMF). While at present there are no proven 
adverse health effects associated with EMF, the proposed amendment is consistent 
with the Commission's policy of prudent avoidance and will provide the 
Commission with a vehicle to address the EMF issue should additional information 
become available which proves that EMF causes adverse health effects. 
 The amendments would require a provision in easements for new rights-of-way 
that prohibits new construction of habitable structures within the rights-of-
way. Additionally, the amendments apply the standards of construction, as set 
forth in sec.23.44, to the construction of any new electric transmission 
facilities. Finally, the amendments define the term habitable structure. 
 The following parties filed comments to the proposed rule: Houston Lighting and 
Power (HL&P); Gulf States Utilities (GSU); Texas Electric Cooperative, Inc. 
(TEC); Central Power and Light (CP&L), Southwestern Electric Power Company 
(SWEPCO), and West Texas Utilities (WTU), collectively referred to as the CSW 
companies; El Paso Electric Company (EPE); the Lower Colorado River Authority 
(LCRA), and Texas-New Mexico Power Company (TNP). TNP, TEC, LCRA, and EPE filed 
comments generally supporting the proposed rule change. No one filed comments in 
opposition to the proposed rule change. 
 Several of the commentors expressed some concern over the preamble to the 
proposed rule where it indicated that the proposed rule would begin to address 
the Commission's concern regarding the possible effects of electric and magnetic 
fields (EMF). Some of the commentors also indicated that they believed that the 
Commission's task force on EMF had resolved this issue. The CSW companies even 
urged that the Commission formally adopt the task force report. The CSW 
companies and TNP also expressed their concern that the preamble might cause 
unwarranted concern on the part of the public. The CSW companies suggested that 
the preamble include a statement that there is no basis to conclude that 
transmission line fields cause adverse health effects. In addition, GSU 
expressed their belief that the Commission should base changes to the rule on 
safety concerns rather than inconclusive EMF concerns. In an effort to avoid 
unnecessarily alarming the public, the preamble was modified to indicate that at 
present there are no known adverse health effects associated with EMF. 
 HL&P noted in its comments that in some situations it may be necessary for an 
industrial customer to build a structure within the right-of-way because of 
constraints associated with the particular industrial site. HL&P requests that 
the rule be modified such that utilities may grant an exception for industrial 
customers on a case-by-case basis as long as the requirements of the National 
Electric Safety Code are met. This comment was adopted and the rule has been 
modified accordingly. 
 HL&P also requests that utilities be allowed to negotiate exceptions in 
easement agreements with governmental agencies as long as the standards of the 
National Electric Safety Code are satisfied. This comment was adopted and the 
rule has been modified accordingly. 
 GSU requests that the rule include an exception for those cases where the 
utility and landowner agree that a habitable structure may be built within the 
right-of-way. This comment has been rejected because the proposed exception 
would swallow the rule, making the Commission's policy of prohibiting the 
construction of habitable structures within the right-of-way meaningless. 
 TEC and the CSW companies request that the rule be modified to indicate that 
the proposed standards are minimum requirements and that more restrictive 
easements are still permissible. This comment was adopted and the rule has been 
modified accordingly. 
 The CSW companies request that sec.23.44(a)(1) be clarified to substitute the 
phrase "provisions of this rule" for the phrase "standards of construction. " 
The proposed language does not appear to clarify the proposed rule. 
Consequently, this change was rejected. 
 The LCRA requests that the phrase "Major modifications to pre-existing 
habitable structures" contained in sec.23.44(a)(2) be clarified to indicate that 
necessary repairs are not a major modification under the rule. This change was 
adopted and the rule has been modified. 
 The LCRA also requests that RV-type vehicles be eliminated from the definition 
of "habitable structures." This change was rejected because RV-type vehicles 
that serve as residences in a mobile home park should receive the same 
consideration as other habitable structures. 
 The CSW companies request clarification on the meaning of the term "major 
additions" contained in sec.23.44(a)(3). This change was rejected because the 
term "major additions" is intended to be relative. 
 The CSW companies note that the reference to structure additions contained in 
both sec.23.44(a)(2)(3) appears to be duplicative. The CSW companies suggest 
that the last sentence in sec.23.44(a)(2) be stricken. This change was adopted 
and the rule has been modified accordingly. 
 The CSW companies request that sec.23.44(a)(3) be clarified to indicate that 
the reference to major additions to preexisting structures refers to the 
aforementioned list of habitable structures. This change was adopted and the 
rule has been modified accordingly. 
 The amendment is adopted under Texas Civil Statutes, Article 1446c, sec.16(a) , 
which provide the Public Utility Commission of Texas with the authority to make 
and enforce rules reasonably required in the exercise of its powers and 
jurisdiction. 
 
 
  sec.23.44. New Construction. 
 
  (a) Standards of construction. In determining standard practice, the 
commission will be guided by the provisions of the American National Standards 
Institute, Incorporated, the National Electrical Safety Code and such other 
codes and standards that are generally accepted by the industry, except as 
modified by this commission or by municipal regulations within their 
jurisdiction. Each utility shall construct, install, operate, and maintain its 
plant, structures, equipment and lines in accordance with these standards, and 
in such manner to best accommodate the public, and to prevent interferences with 
service furnished by other public utilities insofar as practical. 
 
  (1) The standards of construction shall apply to, but are not limited to, the 
construction of any new electric transmission facilities, rebuilding, upgrading, 
or relocation of existing electric transmission facilities. 
   
  (2) For electric transmission line construction requiring the acquisition of 
new rights-of-way, utilities must include, at a minimum, in the easement 
agreement a provision for prohibiting the new construction of habitable 
structures within the right-of-way. However, utilities may negotiate appropriate 
exceptions in instances where the utility is subject to a restrictive agreement 
being granted by a governmental agency or within the constraints of an 
industrial site. Any exception to this subsection must meet all the applicable 
requirements of the National Electric Safety Code. 
   
  (3) For the purposes of this subsection, "habitable structures" shall include 
those structures normally inhabited by humans on a daily, or regular basis. The 
term "habitable structures" shall include, but is not limited to, single-family 
dwellings and related structures, apartment building, business structures, major 
additions to the aforementioned types of pre-existing structures, and mobile 
home parks. However, the term "habitable structures" shall not include necessary 
repairs to existing structures, farm or livestock facilities, storage barns, 
hunting structures, small personal storage sheds, or similar structures. 
     
  (b)-(c) (No change.) 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on December 4, 1992. 
 TRD-9216302 
  John M. Renfrow 
 Secretary of the Commission 
 Public Utility Commission of Texas 
    Effective date: December 28, 1992 
 Proposal publication date: June 16, 1992 
 For further information, please call: (512) 458-0100