AI-assisted research summary: Utility regulators generally may not set rates that produce more than a fair return, and the utility must prove rate changes are just and reasonable.
Sec. 13.184. FAIR RETURN; BURDEN OF PROOF. (a) Unless the utility commission establishes alternate rate methodologies in accordance with Section 13.183(c), the utility commission may not prescribe any rate that will yield more than a fair return on the invested capital used and useful in rendering service to the public based on test year information. The governing body of a municipality exercising its original jurisdiction over rates and services may use alternate ratemaking methodologies established by ordinance or by utility commission rule in accordance with Section 13.183(c). Unless the municipal regulatory authority uses alternate ratemaking methodologies established by ordinance or by utility commission rule in accordance with Section 13.183(c), it may not prescribe any rate that will yield more than a fair return on the invested capital used and useful in rendering service to the public based on test year information. (b) In fixing a reasonable return on invested capital, the regulatory authority shall consider, in addition to other applicable factors, the efforts and achievements of the utility in the conservation of resources, the quality of the utility's services, the efficiency of the utility's operations, and the quality of the utility's management. (c) In any proceeding involving any proposed change of rates, the burden of proof shall be on the utility to show that the proposed change, if proposed by the utility, or that the existing rate, if it is proposed to reduce the rate, is just and reasonable. (d) For a utility that uses a future or combined historic and future test year in a rate proceeding, if the regulatory authority determines in the next rate proceeding for that utility that the test year information used for the utility resulted in the utility's rates yielding more than a fair return on the utility's invested capital used and useful in rendering service to the public, the regulatory authority shall require the utility to refund to customers money collected in excess of a rate that would have yielded a fair return during the period in which the excessive rate was collected. Added by Acts 1985, 69th Leg., ch. 795, Sec. 3.005, eff. Sept. 1, 1985. Amended by Acts 1997, 75th Leg., ch. 1010, Sec. 6.05, eff. Sept. 1, 1997. Amended by: Acts 2013, 83rd Leg., R.S., Ch. 170 (H.B. 1600), Sec. 2.37, eff. September 1, 2013. Acts 2013, 83rd Leg., R.S., Ch. 171 (S.B. 567), Sec. 37, eff. September 1, 2013. Acts 2025, 89th Leg., R.S., Ch. 521 (H.B. 2712), Sec. 3, eff. September 1, 2025.