1. (a) Notwithstanding other provisions of this chapter, upon sending written notice to the commission, a retail public utility other than a municipally owned utility or a water and sewer utility subject to the original rate jurisdiction of a municipality that takes over the provision of services for a nonfunctioning retail public water or sewer utility service provider may immediately begin charging the customers of the nonfunctioning system a temporary rate to recover the reasonable costs incurred for interconnection or other costs incurred in making services available and any other reasonable costs incurred to bring the nonfunctioning system into compliance with commission rules.
2. (b) Notice of the temporary rate must be provided to the customers of the nonfunctioning system no later than the first bill which includes the temporary rates.
3. (c) Within 90 days of receiving notice of the temporary rate increase, the commission will issue an order regarding the reasonableness of the temporary rates. In making the determination, the commission will consider information submitted by the retail public utility taking over the provision of service, the customers of the nonfunctioning system, or any other affected person.

4. (d) At the time the commission approves an acquisition of a nonfunctioning retail water or sewer utility service provider under Texas Water Code (TWC) §13.301, the commission must:

   1. (1) determine the duration of the temporary rates to the retail public utility, which must be for a reasonable period; and
   2. (2) rule on the reasonableness of the temporary rates under subsection (a) of this section if the commission did not make a ruling before the application was filed under TWC §13.301.

5. (e) Regulatory asset. This section applies only to an expedited sale, transfer, or merger application under §24.239 of this title (relating to Sale, Transfer, Merger, Consolidation, Acquisition, Lease, or Rental) or §24.243 of this title (relating to Purchase of Voting Stock or Acquisition of a Controlling Interest in a Utility).

   1. (1) If a temporary rate is adopted during the term of a person's temporary management, receivership, or supervision of a utility, then the person's used and useful invested capital and just and reasonable operations and maintenance costs that are incurred by the person during the person's appointment as temporary manager, receiver, or supervisor that are in excess of the costs covered by the temporary rate are considered to be a regulatory asset.
   2. (2) This regulatory asset is eligible for recovery in the person's next comprehensive rate proceeding or system improvement charge application and will be reviewed for prudence in the utility's next comprehensive base rate proceeding.

Source Note:The provisions of this §24.363 adopted to be effective October 17, 2018, 43 TexReg 6826; amended to be effective May 7, 2020, 45 TexReg 2845; amended to be effective January 1, 2026, 50 TexReg 8561.