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The Railroad Commission of Texas v. Texas Coast Utilities Coalition

The Railroad Commission approved a new rate schedule for appellant CenterPoint Energy Resources Corp. d/b/a CenterPoint Energy Entex and CenterPoint Energy Texas Gas, that contained an adjustment mechanism for annually adjusting customer charges based on the utility's actual operating expenses, return on investment, and franchise tax payments-adjustments that would be made without the need or requirement to initiate a subsequent rate proceeding before either the Railroad Commission or any municipalities having original jurisdiction over the rates. The Railroad Commission's delegated authority under the Gas Utility Regulatory Act encompasses the power to adopt or impose the cost-of-service-adjustment clause in both the Texas Coastal Division environs and the Texas Coast Utilities Coalition municipalities. Disagreeing with the Railroad Commission's view of its authority, the district court reversed the commission's order approving CenterPoint's rate schedule. CenterPoint and the Railroad Commission appeal. The district court's judgment that the Railroad Commission exceeded its authority in adopting or imposing the COSA clause is reversed and the cause is remanded. Austin Court of Appeals, No. 03-10-00242-CV, 10-27-2011.

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OPINION

The pivotal issue in this administrative appeal is whether the Legislature’s statutory delegation of authority to the Railroad Commission to regulate the “rates” of gas utilities empowers the agency to approve or impose a rate schedule that includes a mechanism for annually adjusting customer charges based on the utility’s actual operating expenses, return on investment, and franchise tax payments-adjustments that would be made without the need or requirement to initiate a subsequent rate proceeding before either the Commission or any municipalities having original jurisdiction over the rates. In the view that it possesses such power, the Railroad Commission approved a new rate schedule for appellant CenterPoint Energy Resources Corp. d/b/a CenterPoint Energy Entex and CenterPoint Energy Texas Gas (CenterPoint), that contained the adjustment mechanism. Disagreeing with the Commission’s view of its authority, the district court reversed the Commission’s order approving CenterPoint’s rate schedule. CenterPoint and the Railroad Commission appeal. We will reverse the district court’s judgment.

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