85R890 NC-F     By: Buckingham S.B. No. 2070       A BILL TO BE ENTITLED   AN ACT   relating to limitations on the use of municipal electric utility   system revenues by certain municipalities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 552, Local Government Code, is amended   by adding Subchapter I to read as follows:   SUBCHAPTER I.  LIMITATIONS ON USE OF MUNICIPAL ELECTRIC UTILITY   SYSTEM REVENUES BY CERTAIN MUNICIPALITIES          Sec. 552.161.  DEFINITION.  In this subchapter, "revenues"   means the total amount of revenue received as rates for wholesale or   retail electric utility services by a municipal electric utility   system. The term does not include revenues from pass-through fuel   charges or power supply adjustment revenues.          Sec. 552.162.  APPLICABILITY.  This subchapter applies only   to a municipality with a population of less than 850,000 that owns   an electric utility system with 400,000 or more customers.          Sec. 552.163.  LIMITATIONS ON USE OF REVENUE.  (a)     Notwithstanding any other law, the governing body of a municipality   may use the revenues from the municipality's electric utility   system only for:                (1)  paying the direct costs of operating the system as   described by Subsection (b); and                (2)  transferring sums to the municipality as provided   by Section 552.164.          (b)  The direct costs of operating the electric utility   system include only:                (1)  the cost of operating and maintaining the system,   including the cost of salaries and wages, employee benefits,   vehicle purchases, vehicle maintenance, rents, legal services, and   facility maintenance;                (2)  payments on indebtedness incurred by or on behalf   of the system that is secured by revenues of the system;                (3)  the cost of replacing reserves required by   agreements entered into by the governing body of the municipality   in connection with the issuance of bonds or other indebtedness   incurred by or on behalf of the system;                (4)  the cost of funding reserves considered necessary   by the governing body of the municipality to maintain the financial   and operational integrity of the system;                (5)  the cost of funding a rate stabilization fund to   minimize the impact of rate increases on customers of the system;                (6)  the cost of capital improvements or equipment for   the system; and                (7)  required payments relating to the system to   governmental entities other than the municipality.          Sec. 552.164.  TRANSFER OF REVENUE.  The governing body of   the municipality may transfer annually to the general fund of the   municipality a sum not to exceed 12 percent of the amount of the   annual revenues of the municipality's electric utility system, as   reported in the municipality's audited financial statements for the   preceding fiscal year.          Sec. 552.165.  ACCOUNTING SYSTEM; REPORTS.  The governing   body of the municipality shall establish and maintain a discrete   system of accounts, books, financial statements, and reports for   the municipal electric utility system that is separate from the   accounts of the municipality and the municipality's other   utilities, departments, and agencies.          SECTION 2.  (a)  Subchapter I, Chapter 552, Local Government   Code, as added by this Act, applies only to revenues received by a   municipal electric utility system on or after September 1, 2019.   Revenues received by a municipal electric utility system before   September 1, 2019, are governed by the law applicable to the   revenues immediately before that date, and that law is continued in   effect for that purpose.          (b)  Not later than September 1, 2018, the governing body of   a municipality shall establish the accounting system required by   Section 552.165, Local Government Code, as added by this Act.          SECTION 3.  This Act takes effect September 1, 2017.