Proposed Rules Title 16

The Public Utility Commission of Texas (commission) proposes an amendment to 16 Texas Administrative Code (TAC) §24.167 (relating to Discontinuance of Service). Unedited §24.167 specifies "{p}ayment by check which has been rejected for insufficient funds …" which leaves other forms of payment unaddressed. Similarly, the tariff forms have a "returned check charge" line item, but do not specify what happens if a customer's credit card or debit card payment is declined. The proposal for publication removes the word "check" in reference to rejected payments to clarify that other forms of rejected payments are included.

The agency provides the following governmental growth impact statement for the proposed rule, as required by Texas Government Code §2001.0221. The agency has determined that for each year of the first five years that the proposed rule is in effect, the following statements will apply:

(1) the proposed rule will not create a government program and will not eliminate a government program;

(2) implementation of the proposed rule will not require the creation of new employee positions and will not require the elimination of existing employee positions;

(3) implementation of the proposed rule will not require an increase and will not require a decrease in future legislative appropriations to the agency;

(4) the proposed rule will not require an increase and will not require a decrease in fees paid to the agency;

(5) the proposed rule will not, in effect, create a new regulation, because it is replacing a similar regulation;

(7) the same number of individuals will be subject to the proposed rule's applicability as were subject to the applicability of the rule it is being proposed to replace; and

There is no adverse economic effect anticipated for small businesses, micro-businesses, or rural communities as a result of implementing the proposed rule. Accordingly, no economic impact statement or regulatory flexibility analysis is required under Texas Government Code §2006.002(c).

The commission has determined that the proposed rule will not be a taking of private property as defined in chapter 2007 of the Texas Government Code.

Celia Eaves, Utility Outreach Administrator, has determined that for the first five-year period the proposed rule is in effect, there will be no fiscal implications for the state or for units of local government under Texas Government Code §2001.024(a)(4) as a result of enforcing or administering the section.

Ms. Eaves has determined that for each year of the first five years the proposed section is in effect the public benefit anticipated as a result of enforcing the section is clarity on the types of permitted payment methods and rejected payments. There will be no adverse economic effect on small businesses or micro-businesses as a result of enforcing this section. Ms. Eaves has determined that the economic costs to persons required to comply with the proposed rule will vary on an individual basis.

For each year of the first five years the proposed section is in effect, there should be no effect on a local economy; therefore, no local employment impact statement is required under Texas Government Code §2001.022.

Texas Government Code §2001.0045(b) does not apply to this rulemaking because the commission is expressly excluded under subsection §2001.0045(c)(7).

The commission staff will conduct a public hearing on this rulemaking if requested in accordance with Texas Government Code §2001.029. The request for a public hearing must be received by August 22, 2025.

Interested persons may file comments electronically through the interchange on the commission's website. Comments must be filed by August 22, 2025. Comments should be organized in a manner consistent with the organization of the proposed rule. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed rule. The commission will consider the costs and benefits in deciding whether to modify the proposed rule on adoption. All comments should refer to Project Number 58270.

Each set of comments should include a standalone executive summary as the last page of the filing. This executive summary must be clearly labeled with the submitting entity's name and should include a bulleted list covering each substantive recommendation made in the comments.

The amendment is proposed under Texas Water Code (TWC) §13.001, which provides the commission jurisdiction over a water and sewer utility; §13.004, which provides the commission with jurisdiction over certain water supply or sewer service corporations; §13.041(b), which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction.

(2) Reasons for disconnection. Utility service may be disconnected after proper notice for any of the following reasons:

(A) failure to pay a delinquent account for utility service or failure to comply with the terms of a deferred payment agreement.

(i) Payment [~~by check~~] which has been rejected for insufficient funds, closed account, or for which a stop payment order has been issued is not deemed to be payment to the utility.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

DIVISION 1. RETAIL RATES

16 TAC §§25.235 - 25.237

The Public Utility Commission of Texas (commission) proposes amendments to 16 Texas Administrative Code (TAC) §25.235 (relating to Fuel Costs-General), §25.236 (relating to Recovery of Fuel Costs), and §25.237 (relating to Fuel Factors.

The proposed amendments will implement Public Utility Regulatory Act (PURA) §36.203 as revised by House Bill (HB) 2073 during the Texas 88th Regular Legislative Session. The amended rules will make procedural changes to fuel factor proceedings used by non-ERCOT utilities and create an interim fuel adjustment process for those utilities and reduce the maximum time period covered by fuel reconciliations from three years to two years. Additional changes include revisions to notice requirements for fuel proceedings and the addition of a protest procedure in which certain entities can challenge an interim fuel adjustment or fuel factor. The proposed amendments also update the commission-prescribed fuel reconciliation filing package to conform with current electronic filing practice, revise or remove outdated terms, and require utilities to provide copies of monthly fuel cost report the utility filed in the past 24-month period covered by the fuel reconciliation. The proposed amendments will also amend the title of 16 TAC §25.235 to 16 TAC §25.235, relating to Fuel Costs.

Growth Impact Statement

The agency provides the following governmental growth impact statement for the proposed rule, as required by Texas Government Code §2001.0221. The agency has determined that for each year of the first five years that the proposed rules are in effect, the following statements will apply:

(1) the proposed rules will not create a government program and will not eliminate a government program;

(2) implementation of the proposed rules will not require the creation of new employee positions and will not require the elimination of existing employee positions;

(3) implementation of the proposed rules will not require an increase and will not require a decrease in future legislative appropriations to the agency;

(4) the proposed rules will not require an increase and will not require a decrease in fees paid to the agency;

(5) the proposed rules will not create a new regulation;

(6) the proposed rules will expand, limit, or repeal an existing regulation;

(7) the proposed rules will not change the number of individuals subject to the rule's applicability; and

(8) the proposed rules will not affect this state's economy.

Fiscal Impact on Small and Micro-Businesses and Rural Communities

Takings Impact Analysis

The commission has determined that the proposed rules will not be a taking of private property as defined in chapter 2007 of the Texas Government Code.

Fiscal Impact on State and Local Government

Ana Givens, Director, Financial Review, has determined that for the first five-year period the proposed rules are in effect, there will be no fiscal implications for the state or for units of local government under Texas Government Code §2001.024(a)(4) as a result of enforcing or administering the sections.

Public Benefits

Ms. Givens has determined that for each year of the first five years the proposed sections are in effect the public benefit anticipated as a result of enforcing the sections will be expedited processes to ensure more timely cost recovery for non-ERCOT utilities. There will not be any probable economic costs to persons required to comply with the rules under Texas Government Code §2001.024(a)(5).

Local Employment Impact Statement

For each year of the first five years the proposed sections are in effect, there should be no effect on a local economy; therefore, no local employment impact statement is required under Texas Government Code §2001.022.

Costs to Regulated Persons

Texas Government Code §2001.0045(b) does not apply to this rulemaking because the commission is expressly excluded under subsection §2001.0045(c)(7).

Public Hearing

The commission will conduct a public hearing on this rulemaking if requested in accordance with Texas Government Code §2001.029. The request for a public hearing must be received by August 26, 2025. If a request for public hearing is received, commission staff will file in this project a notice of hearing.

Public Comments

Interested persons may file comments electronically through the interchange on the commission's website. Comments must be filed by August 26, 2025. Comments should be organized in a manner consistent with the organization of the proposed rules and questions for comment. The commission invites specific comments regarding the effects of the proposed rule, including the costs associated with, and benefits that will be gained by, implementation of the proposed rule. The commission also requests any data, research, or analysis from any person required to comply with the proposed rules or any other interested person. The commission will consider the information submitted by commenters and the costs and benefits of implementation in deciding whether to modify the proposed rules on adoption. All comments should refer to Project Number 58210.

In addition to comments on the proposed rule text, the commission requests comments on the following questions concerning the proposed rules and the new procedures established by HB 2073 (88R):

Existing §25.236(a)(9) authorizes a utility to retain 10% of the margins from an off-system energy sales transaction if certain criteria are met.

1. Should this percentage be adjusted? Why or why not?

2. Should the provision be revised to distinguish separate margins (expressed as a percentage) that an electric utility may retain from off-system sales that are respectively applicable to electric utilities that are dispatched in a power market operated by an independent system operator (ISO) outside of ERCOT and those that are not? (i.e., An electric utility being dispatched by an outside-ERCOT ISO may retain X% of margins from off-system sales, an electric utility that is not dispatched by an outside-ERCOT ISO may retain Y% of margins from off-system sales.)

PURA §36.203(b)(3)(A) requires commission rules to ensure any material balance of amounts under-collected or over-collected for eligible electric fuel and purchased power costs is refunded or surcharged to customers through an interim fuel adjustment not later than the 90th day after the date the balance is accrued unless an exception applies.

3. What is the proper threshold for determining a "material balance" for purposes of an interim fuel adjustment? (The proposed rule contains a 4.0% materiality threshold identical to the threshold used in §25.237 for fuel factors.)

4. Given the 90-day deadline for recovery under §36.203(b)(3)(A), what time period is appropriate to reasonably expect an electric utility to be capable of filing an interim fuel adjustment application? (i.e., Taking into account the time necessary for a utility to close their books and make a true-up determination regarding whether deferred fuel balances places the utility in a state of material over- or under-recovery.)

5. At what point does a utility determine that it incurs ("accrues") a fuel balance for purposes of an interim fuel adjustment? (i.e., Given the lag time in providing monthly fuel reports to the commission and based on a utility's accounting practices, what is the method for determining when a material under-recovery or over-recovery has accrued?)

6. Given the introduction of the interim fuel adjustment by HB 2073 (88R), should §25.237(f), which concerns emergency revisions to a fuel factor, be deleted or revised? (i.e., Does an interim fuel adjustment eliminate the need for emergency revisions to the fuel factor?)

PURA §36.203(e) authorizes a customer of the electric utility, a municipality with original jurisdiction over the utility, or Office of Public Utility Counsel (OPUC) to "protest" a fuel factor or interim fuel adjustment. The statute establishes several limitations on such protests, such as the prohibition on prudence of costs being raised as an issue, not requiring a hearing per PURA §36.203(d) unless one of the criteria of PURA §36.203(g) are met, and the additional restrictions on fuel factor protests under PURA §36.203(f).

7. Procedurally, how should a "protest" of a fuel factor or interim fuel adjustment be treated at the commission given the foregoing statutory limitations? Under HB 2073, a person that files a "protest" in the context of a fuel factor or interim fuel adjustment could be classified as a more constrained form of "intervenor" in the proceeding under commission rules. Specifically, an "intervenor" as defined in 16 TAC §22.2(25), relating to Definitions is a party to the proceeding and may accordingly, per 16 TAC §22.102(b), relating to Classification of Parties, "have the right to present a direct case, cross-examine all witnesses, conduct discovery, make oral or written legal arguments, and otherwise fully participate in any proceeding." This contrasts with the far more limited "protestor" defined in 16 TAC §22.2(37) that is not a party to the case and may only submit oral or written comments if allowed by the presiding officer per 16 TAC §22.102(c)). However, given the foregoing statutory boundaries on protests of fuel factors and interim fuel adjustments and the requirement that, for interim fuel adjustments, a material balance be collected from or refunded to customers no later than the 90th day after the date the balance accrues. In the context of these proceedings, consider the following questions.

a. Is a protest in fuel factor proceeding or of an interim fuel adjustment meant to equate to a motion to intervene? Or should filing a protest mean that the person is automatically a party to the (assuming that person is a customer of the electric utility, a municipality with original jurisdiction over the utility, or OPUC)?

b. What rights should a person that files a "protest" in a fuel factor proceeding or an in interim fuel adjustment have? (i.e., right to present a direct case, cross-examine witnesses, conduct discovery, etc.)

c. Given the time constraints surrounding refunds or collections, should the rights afforded to a person that files a "protest" in an interim fuel adjustment be different than those afforded to a person that files a "protest" in a fuel factor proceeding?

d. Should an interim fuel adjustment be eligible for administrative approval under 16 TAC §22.32, relating to Administrative Review, regardless of whether a protest is filed? (Assuming no hearing is required under PURA §36.203(g) and the commission does not otherwise deem a hearing to be necessary).

8. Please provide any additional feedback regarding the statutory deadlines and commission procedures surrounding fuel factor proceedings and interim fuel adjustments.

Statutory Authority

The amendments are proposed under Public Utility Regulatory Act (PURA) §14.001, which grants the commission the general power to regulate and supervise the business of each public utility within its jurisdiction and to do anything specifically designated or implied by this title that is necessary and convenient to the exercise of that power and jurisdiction; §14.002, which authorizes the commission to adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction; PURA §14.052, which requires the commission to adopt and enforce rules governing practice and procedure before the commission and, as applicable, practice and procedure before the State Office of Administrative Hearings; PURA §36.201 which, outside of certain circumstances, prohibits the commission from establishing a rate or tariff that authorizes an electric utility to automatically adjust and pass through to the utility's customers a change in the utility's fuel or other costs; PURA §36.203 which authorizes the commission to establish a utility's fuel factor and adjust that fuel factor through an interim fuel adjustment.

Cross Reference to Statute: Public Utility Regulatory Act §14.001, 14.002, 14.052, 36.201, and 36.203.

§25.235. Fuel Costs[~~--General~~].

(a) Purpose. The commission will set an electric utility's rates at a level that will permit the electric utility a reasonable opportunity to earn a reasonable return on its invested capital and to recover its reasonable and necessary expenses, including the cost of fuel and purchased power. The commission recognizes in this connection that it is in the interests of both electric utilities and their ratepayers to adjust charges in a timely manner to account for changes in certain fuel and purchased-power costs. In accordance with [~~Pursuant to the~~] Public Utility Regulatory Act (PURA) §36.203 this section establishes a procedure for setting and revising fuel factors and a procedure for regularly reviewing the reasonableness of the fuel expenses recovered through fuel factors.

(b) Notice of fuel proceedings. In addition to the notice required by the Administrative Procedure Act (APA) to be given by the commission, the electric utility is required to give notice of a fuel proceeding at the time the petition is filed. The term "rate class" as used in this subsection means all customers taking service under the same tariffed rate or schedule, or a group of seasonal agricultural customers as identified by the electric utility.

(1) Method of notice. Notice of fuel proceedings must be posted to the utility's website and provided to the OPUC by electronic mail. Notice must also be provided [~~will be given~~] by the electric utility as follows, as applicable:

(A) Notice in all proceedings involving refunds or [ ,] surcharges (interim fuel adjustments), or a proposal to change the fuel factor under §25.237 of this title (relating to Fuel Factor), must [~~shall~~] be by either:

(i) one-time publication in a newspaper having general circulation in each county of the service area of the electric utility; or

(ii) by individual notice to each customer, and by individual notice to all parties [~~that participated~~ ] in the electric utility's prior fuel reconciliation proceeding .[;]

(B) Notice in all fuel reconciliation proceedings must [~~shall~~] be by:

(i) publication once each week for two consecutive weeks in a newspaper having general circulation in each county of the service area of the electric utility; and

(ii) by individual notice to each customer and to all parties [~~that participated~~] in the electric utility's prior fuel reconciliation proceeding.

(2) Contents of notice.

(A) All notices required by this section must [ ~~shall~~] provide the following information:

(i) the date the petition or application was filed;

(ii) a general description of the customers, customer classes (for fuel factors) or rate classes (for interim fuel adjustments), and territories affected by the petition or application;

(iii) the relief requested;

(iv) a statement substantially similar to the following: [ ~~the statement,~~] "Persons with questions or who want more information on this petition or application may contact (utility name) at (utility address) or call (utility toll-free telephone number) during normal business hours. A complete copy of this petition or application is available for inspection at the address listed above or at the following website [direct link to notice on the utility's website]"; and

(v) a statement substantially similar to the following: [~~the statement,~~] "Persons who wish to formally participate in this proceeding, or who wish to express their comments concerning this petition or application should contact the Public Utility Commission of Texas, Consumer Protection Division [ ~~Office of Customer Protection~~], P.O. Box 13326, Austin, Texas 78711-3326, or call (512) 936-7120 or toll-free at (888) 782-8477. Hearing and speech-impaired individuals may contact the commission through [~~with text telephones (TTY) may call (512) 936-7136 or use~~] Relay Texas (toll-free) at 1-800-735-2989."

(B) (No change.)

(C) Notices to revise fuel factors or an interim fuel adjustment for a refund or surcharge [~~, to refund, or to surcharge~~] must contain a statement substantially similar to the following: [~~the statement that,~~] "these changes will be subject to final review by the commission in the electric utility's next reconciliation," unless, in the case of refunds or surcharges, the change is a result of a reconciliation proceeding.

(D) Notices to reconcile fuel expenses must also state the period for which final reconciliation is sought.

(E) Notices for an interim fuel adjustment must indicate, for each rate class:

(i) whether the adjustment is for a refund or surcharge;

(ii) the amount of the refund or surcharge;

(iii) the period for which the refund or surcharge is applicable (i.e., January to March);

(iv) if the adjustment is for a surcharge, whether the surcharge would or is anticipated to result in a total bill increase of 10 percent or more for an average customer in any rate class compared to the total bill in the month before implementation; and

(v) the time period and manner in which the surcharge or refund will be implemented.

[(3) Proof of notice may be demonstrated by appropriate affidavit. In fuel proceedings initiated by a person other than an electric utility, the notice required in this subsection must be provided in accordance with a schedule ordered by the presiding officer.]

(c) Reports; confidentiality of information. Matters related to submitting reports and confidential information will be handled as follows:

(1) The commission will monitor each electric utility's actual and projected fuel-related costs and revenues on a monthly basis. Each electric utility must [~~shall~~] maintain and provide to the commission, in a format specified by the commission, monthly reports containing all information required to monitor monthly fuel-related costs and revenues, including generation mix, fuel consumption, fuel costs, purchased power quantities and costs, and system and off-system sales revenues.

(2) (No change.)

(3) The electric utility must [~~shall~~] prepare a confidentiality disclosure agreement to be included as part of the fuel reconciliation petition. The format for the agreement must [~~shall~~] be the same as that contained in the commission approved rate filing package. In addition to the agreement itself, Attachment 1 of the agreement must [~~shall~~] present a complete listing of the information required to be filed which the electric utility alleges is confidential. Upon request and execution of the confidentiality agreement, the electric utility must [ ~~shall~~] provide any information which it alleges is confidential. If the electric utility fails to file a confidentiality agreement, the deadline for a commission final order in the case is tolled until a protective order is entered or a confidentiality agreement is filed. Use of the confidentiality disclosure agreement does not constitute a finding that any information is proprietary and/or confidential under law, or alter the burden of proof on that issue. The form of agreement contained in the commission approved rate filing package does not bind the examiner or the commission to accept the language of the agreement in the consideration of any subsequent protective order that may be entered.

(4) (No change.)

§25.236. Recovery of Fuel Costs.

(a) Eligible fuel expenses. Eligible fuel expenses include expenses properly recorded in the Federal Energy Regulatory Commission Uniform System of Accounts, numbers 501, 502, 503, 509, 518, 536, 547, and 555, as modified in this subsection, as of April 1, 2025 [~~2013~~], and the items specified in paragraph (8) of this subsection. Any later amendments to the System of Accounts are not incorporated into this subsection. Subject to the commission finding special circumstances under paragraph (7) of this subsection, eligible fuel expenses are limited to:

(1) - (6) (No change.)

(7) Upon demonstration that such treatment is justified by special circumstances, an electric utility may recover as eligible fuel expenses fuel or fuel related expenses otherwise excluded in paragraphs (1) - (6) of this subsection. In determining whether special circumstances exist, the commission will [~~shall~~] consider, in addition to other factors developed in the record of the reconciliation proceeding, whether the fuel expense or transaction giving rise to the ineligible fuel expense resulted in, or is reasonably expected to result in, increased reliability of supply or lower fuel expenses than would otherwise be the case, and that such benefits received or expected to be received by ratepayers exceed the costs that ratepayers otherwise would have paid or otherwise would reasonably expect to pay.

(8) Eligible fuel expenses are prohibited from being [~~shall not be~~] offset by revenues by affiliated companies for the purpose of equalizing or balancing the financial responsibility of differing levels of investment and operation costs associated with transmission assets. In addition to the expenses designated in paragraphs (1) - (7) of this subsection, unless otherwise specified by the commission, eligible fuel expenses may [~~shall~~] be offset by:

(A) revenues from steam sales included in Accounts 504 and 456 to the extent expenses incurred to produce that steam are included in Account 503;

(B) revenues from off-system sales in their entirety, except as permitted in paragraph (9) of this subsection; and

(9) (No change.)

(b) Definitions. The following terms, when used in this section, have the following meanings unless the context indicates otherwise.

(1) Materially or material--the cumulative amount of over- or under-recovery, including interest, is greater than or equal to 4.0% of the annual actual fuel cost figures on a rolling 12-month basis, as reflected in the utility's monthly fuel cost reports as filed by the utility with the commission.

(2) Rate class--all customers taking service under the same tariffed rate or schedule, or a group of seasonal agricultural customers as identified by the electric utility.

(1) Each electric utility must file petitions for reconciliations on a periodic basis such that a petition:

(A) contains at least one year and no more than two years of reconcilable data; and

(B) is filed no later than 180 days after the end of the period to be reconciled.

(2) To the extent a reconciliation results in a material change to the electric utility's under-collected or over-collected fuel balance, that change may be incorporated into an interim fuel adjustment under subsection (f) of this section as directed by the commission through the issuance of a written order.

[(b) Reconciliation of fuel expenses. Electric utilities shall file petitions for reconciliation on a periodic basis so that any petition for reconciliation shall contain a maximum of three years and a minimum of one year of reconcilable data and will be filed no later than six months after the end of the period to be reconciled.]

(d) [~~(c)~~] Petitions to reconcile fuel expenses. In addition to the commission prescribed reconciliation application, a fuel reconciliation petition filed by an electric utility must be accompanied by a summary and supporting testimony that includes the following information:

(1) a summary of significant, atypical events that occurred during the reconciliation period that affected the economic dispatch of the electric utility's generating units, including but not limited to transmission line constraints, fuel use or deliverability constraints, unit operational constraints, and system reliability constraints;

(2) a general description of typical constraints that limit the economic dispatch of the electric utility's generating units, including but not limited to transmission line constraints, fuel use or deliverability constraints, unit operational constraints, and system reliability constraints;

(3) the reasonableness and necessity of the electric utility's eligible fuel expenses and its mix of fuel used during the reconciliation period;

(4) a summary table that lists all the fuel cost elements which are covered in the electric utility's fuel cost recovery request, the dollars associated with each item, and where to find the item in the prefiled testimony;

(5) tables and graphs which show generation (MWh), capacity factor, fuel cost (cents per kWh and cents per MMBtu), variable cost and heat rate by plant and fuel type, on a monthly basis; and

(6) a summary and narrative of the next-day and intra-day surveys of the electricity markets and a comparison of those surveys to the electric utility's marginal generating costs.

(e) [~~(d)~~] Fuel reconciliation proceedings. The burden [~~Burden~~] of proof and scope of a fuel reconciliation proceeding are as follows:

(1) In a proceeding to reconcile fuel factor revenues and expenses, an electric utility has the burden of proving [ ~~showing~~] that:

(A) its eligible fuel expenses during the reconciliation period were reasonable and necessary expenses incurred to provide reliable electric service to retail customers;

(B) if its eligible fuel expenses for the reconciliation period included an item or class of items supplied by an affiliate of the electric utility, the prices charged by the supplying affiliate to the electric utility were reasonable and necessary and no higher than the prices charged by the supplying affiliate to its other affiliates or divisions or to unaffiliated persons or corporations for the same item or class of items; and

(C) it has properly accounted for the amount of fuel-related revenues collected in accordance with [~~pursuant to~~] the fuel factor during the reconciliation period.

(2) The scope of a fuel reconciliation proceeding includes any issue related to determining the reasonableness of the electric utility's fuel expenses during the reconciliation period and reviewing whether the electric utility has materially over- or under-recovered its reasonable fuel expenses through interim fuel adjustments under subsection (f) of this section. An electric utility has the burden of proof in a fuel reconciliation proceeding to establish the reasonableness of its fuel expenses and the materiality of any over- or under-recovery.

(f) Interim fuel adjustments. An electric utility must apply for an interim fuel adjustment in the time frame specified by subsection (i)(2)(A) of this section if the utility is in a state of material under-collection or over-collection of the utility's reasonably stated eligible fuel and purchased power costs.

(1) Adjustment factor. If it is determined in the interim fuel adjustment proceeding that the utility is in a state of material under-collection or over-collection, except as provided for under subsection (g)(7) of this section, each rate class must be credited or assessed a refund or surcharge, as applicable, using an adjustment factor. The adjustment factor will be applied to the kilowatt-hour usage of each rate class over the refund or surcharge period.

(A) The adjustment factor will, for the applicable period be determined by dividing the amount of refund or surcharge properly allocated to each rate class by projected kilowatt-hour usage for the applicable rate class during the period in which the refund or surcharge will be made.

(B) Notwithstanding subparagraph (A) of this paragraph, each retail customer who receives service at transmission voltage levels, each wholesale customer, and any groups of seasonal agricultural customers as identified by the electric utility must be given a one-time credit or assessed a surcharge made on a monthly basis over a period not to exceed 12 months through a bill charge, based on the actual refund or surcharge balance for the individual customers.

(2) Refunds and surcharges. Refunds and surcharges must be issued and recovered by the electric utility, as applicable, in the following manner for each rate class:

(A) All refunds must be made through a bill credit and be issued no later than 90 days the refund balance is accrued. A refund may be made by check to a municipally-owned utility if requested by that utility.

(B) All surcharges must be assessed on a monthly basis and paid by customers no later than 90 days from the date the surcharge balance is accrued except in the following circumstances:

(i) If an interim fuel adjustment would or is anticipated to result in a total bill increase of 10 percent or more for an average customer in any rate class compared to the total bill in the month before implementation, the surcharge must be collected over a time period ending not later than a date ordered by the commission. Such a time period must be at least 90 days after the date the balance is accrued.

(ii) If the commission determines that a utility has an under-collected balance that is the result of extraordinary electric fuel and purchased power costs that are unlikely to continue, the commission may approve a surcharge in an interim fuel adjustment proceeding that would defer recovery to occur over a period exceeding 90 days from the date the surcharge balance is accrued.

(3) The prudence of costs will not be considered in an interim fuel adjustment. The prudence of costs may only be reviewed in a fuel reconciliation proceeding under subsection (e) of this section or another appropriate proceeding.

[(e) Refunds. All fuel refunds and surcharges shall be made using the following methods.]

[(1) Interest shall be calculated on the cumulative monthly ending under- or over-recovery balance at the rate established annually by the commission for overbilling and underbilling in §25.28 (c) and (d) of this title (relating to Bill Payment and Adjustments). Interest shall be calculated based on principles set out in subparagraphs (A)-(E) of this paragraph.]

[(A) Interest shall be compounded annually by using an effective monthly interest factor.]

[(B) The effective monthly interest factor shall be determined by using the algebraic calculation x = (1 + i)^(1/12) - 1; where i = commission-approved annual interest rate, and x = effective monthly interest factor. ]

[(C) Interest shall accrue monthly. The monthly interest amount shall be calculated by applying the effective monthly interest factor to the previous month's ending cumulative under/over recovery fuel and interest balance.]

[(D) The monthly interest amount shall be added to the cumulative principal and interest under/over recovery balance.]

[(E) Interest shall be calculated through the end of the month of the refund or surcharge.]

[(2) Rate class as used in this subparagraph shall mean all customers taking service under the same tariffed rate schedule, or a group of seasonal agricultural customers as identified by the electric utility.]

(g) Interest calculations for fuel proceedings.

(1) For a fuel proceeding under subsection (e) or (f) of this section, interest must be calculated for each rate class on the cumulative monthly ending under- or over-recovery balance for that rate class at the rate established annually by the commission for overbilling and underbilling in §25.28(c) and (d) of this title (relating to Bill Payment and Adjustments). Interest must be calculated for each rate class based on principles set out in subparagraphs (A) - (E) of this paragraph:

(A) Interest must be compounded by using an effective monthly interest factor.

(B) The effective monthly interest factor must be determined by using the algebraic calculation x = (1 + i)^(1/12) - 1; where i = commission-approved annual interest rate, and x = effective monthly interest factor.

(C) Interest accrues on a monthly basis. The monthly interest amount is calculated by applying the effective monthly interest factor to the previous month's ending cumulative under- or over-recovery balance.

(D) The monthly interest amount must be added to the cumulative principal and interest under- or over-recovery balance.

(E) In calculating the amounts to be refunded or surcharged, interest must be calculated through the end of the month of the refund or surcharge.

(2) [~~(3)~~] Unless otherwise ordered by the commission in an electric utility's fuel reconciliation proceeding, in calculating rate class fuel balances, the total of the utility's eligible electric fuel and purchased power costs for a calendar month must be allocated among jurisdictions based on the actual historical calendar month kilowatt-hour usage, adjusted for line losses using the same commission-approved loss factors that were used in the electric utility's applicable fixed or interim fuel factor. The resulting monthly Texas retail jurisdiction costs must be allocated among rate classes based on the actual historical calendar month kilowatt-hour usage, [Interclass allocations of refunds and surcharges, including associated interest, shall be developed on a month-by-month basis and shall be based on the historical kilowatt-hour usage of each rate class for each month during the period in which the cumulative under- or over-recovery occurred,] adjusted for line losses using the same commission-approved loss factors that were used in the electric utility's applicable fixed or interim fuel factor.

(3) [~~(4)~~] Intraclass allocations of refunds and surcharges [~~shall~~] depend on the voltage level at which the customer receives service from the electric utility. Retail customers who receive service at transmission voltage levels, all wholesale customers, and any groups of seasonal agricultural customers as identified by the electric utility must [~~shall~~] be given refunds or assessed surcharges based on their individual actual historical kilowatt-hour usage recorded during each month of the period in which the cumulative under- or over-recovery occurred, adjusted for line losses where [if] necessary. All other customers must [~~shall~~] be given refunds or assessed surcharges based on the historical kilowatt-hour usage of their rate class.

[(5) Unless otherwise ordered by the commission, all refunds shall be made through a one-time bill credit and all surcharges shall be made on a monthly basis over a period not to exceed 12 months through a bill charge. However, refunds may be made by check to municipally-owned electric utility systems if so requested. Retail customers who receive service at transmission voltage levels, all wholesale customers, and any groups of seasonal agricultural customers as identified by the electric utility shall be given a one-time credit or assessed a surcharge made on a monthly basis over a period not to exceed 12 months through a bill charge. All other customers shall be given a credit or assessed a surcharge based on a factor which will be applied to their kilowatt-hour usage over the refund or surcharge period. This factor will be determined by dividing the amount of refund or surcharge allocated to each rate class by forecasted kilowatt-hour usage for the class during the period in which the refund or surcharge will be made.]

[(6) A petition to surcharge or refund a fuel under- or over-recovery balance not associated with a proceeding under subsection (d) of this section shall be processed in accordance with the filing schedules in §25.237(d) of this title (relating to Fuel factors) and the deadlines in §25.237(e) of this title.]

(i) [~~(f)~~] Procedural schedule.

(1) Procedural schedule for fuel reconciliation proceedings. Upon the filing of a petition to reconcile fuel expenses [~~in a separate proceeding~~], the presiding officer will [~~officers shall~~] set a procedural schedule that will enable the commission to issue a final order in the proceeding within one year after a materially complete petition was filed. However, if two or more [~~the deadlines result in a number of~~] electric utilities file petitions to reconcile fuel expenses [ ~~filing cases~~] within 45 days of each other, the presiding officers will [~~shall~~] schedule the cases in a manner to allow the commission to accommodate the workload of the cases irrespective of whether the [~~such~~] procedural schedule enables the commission to issue a final order in each of the cases within one year after a materially complete petition is filed.

(2) Procedural schedule for interim fuel adjustments.

(A) A utility seeking an interim fuel adjustment to surcharge or refund a fuel under- or over-recovery balance must file its interim fuel adjustment application within five working days from the date the material fuel under- or over-recovery balance accrues.

(B) Upon the filing of a petition for an interim fuel adjustment to surcharge or refund a material fuel under- or over-recovery balance, the presiding officer will set a procedural schedule that will enable the commission to issue a final order in the proceeding no later than 75 days from the date the surcharge or refund balance is accrued.

(C) Notwithstanding subparagraph (B) of this paragraph, a final order for an interim fuel adjustment may be issued later than 75 days from the date a surcharge balance is accrued if:

(i) the presiding officer determines that the interim fuel adjustment sought would result in a total bill increase of 10 percent or more for an average customer in any rate class as described under subsection (f)(2)(B)(i) of this section or if the utility has a material under-collected balance that is the result of extraordinary electric fuel and purchased power costs as described under subsection (f)(2)(B)(ii) of this section; or

(ii) a hearing is required for a protest of an interim fuel adjustment under subsection (h) of this section.

(3) Procedural schedule for protest of interim fuel adjustment. A protest of an interim fuel adjustment may be processed and reviewed in a manner deemed administratively efficient by the presiding officer to ensure that any refunds or surcharges are refunded or collected in accordance with the deadline established under subsection (f) of this section, as applicable.

§25.237. Fuel Factors.

(a) Use and calculation of fuel factors. An electric utility's fuel costs will be recovered from the electric utility's customers by the use of a fuel factor that will be charged for each kilowatt-hour (kWh) consumed by the customer.

(1) An electric utility may determine its fuel factor in dollars per kilowatt-hour in accordance with [~~pursuant to~~] either subparagraph (A) or (B) of this paragraph. Fuel factors must account for system losses and for the difference in line losses corresponding to the voltage at which the electric service is provided. An electric utility may have different fuel factors for different times of the year to account for seasonal variations. A different method of calculation may be allowed upon a showing of good cause by the electric utility.

(A) - (B) (No change.)

(2) An electric utility may initiate a change to its fuel factor as follows:

(A) In accordance with [~~Pursuant to~~] subsection (a)(1)(A) of this section, an electric utility may petition to adjust its fuel factor as often as once every four months according to the schedule set out in subsection (d) of this section.

(B) In accordance with [~~Pursuant to~~] subsection (a)(1)(B) of this section, an electric utility may petition to adjust its fuel factor in accordance with its approved fuel factor formula no sooner than four months after the filing of its most recent fuel factor adjustment petition.

(3) Fuel factors are temporary rates, and the electric utility's collection of revenues by fuel factors is subject to the following adjustments:

(A) The reasonableness of the fuel costs that an electric utility has incurred will be periodically reviewed in a reconciliation proceeding, as described in §25.236 of this title, and any disallowed costs resulting from a reconciliation proceeding will be reflected in the calculation of the utility's recoverable fuel and over- or under- [~~over/(under)~~] collections.

(B) To the extent that there are variations between the fuel costs incurred and the revenues collected, it may be necessary [~~or convenient~~ ] to refund material over-collections [ ~~overcollections~~] or surcharge material under-collections through an interim fuel adjustment under §25.236 of this title in the time and manner required by that section [~~surcharge undercollections~~]. Refunds or surcharges may be made without changing an electric utility's fuel factor. [Nothwithstanding §25.236(e)(6) of this title, an electric utility may petition for a surcharge any time it has materially undercollected its fuel costs and projects that it will continue to be in a state of material undercollection. Notwithstanding §25.236(e)(6) of this title, an electric utility shall petition to make a refund any time it has materially overcollected its fuel costs and projects that it will continue to be in a state of material overcollection.]

(C) The terms "materially" [~~"Materially"~~ ] or "material," as used in this section, mean [~~shall mean~~] that the cumulative amount of over- or under-recovery, including interest, is greater than or equal to 4.0% of the annual actual fuel cost figures on a rolling 12-month basis, as reflected in the utility's monthly fuel cost reports as filed by the utility with the commission.

(b) Petitions to revise fuel factors.

(1) An electric utility using the fuel factor methodology established in accordance with [~~set forth under~~] subsection (a)(1)(A) of this section may file a petition requesting revised fuel factors in accordance with [~~pursuant to~~] subsection (a)(2)(A) of this section during the first five working [~~business~~] days of the months specified in subsection (d) of this section. A copy of the complete petition package must [~~shall~~] be served on each party in the utility's most recent fuel reconciliation and on OPUC [~~the Office of Public Utility Counsel~~]. Service must [~~shall~~] be accomplished in accordance with §22.74 of this title (relating to Service of Pleadings and Documents) [~~by email if possible~~]. Each complete fuel factor filing package must [~~shall~~] include the [~~commission-prescribed fuel factor~~ ]application, a tariff sheet reflecting the proposed fuel factors, and supporting testimony that includes the following information:

(A) For each month of the period in which the fuel-factor has been in effect and has not been reconciled up to the most recent month for which information is available,

(i) the revenues collected in accordance with [ ~~pursuant to~~] fuel factors by customer class;

(ii) any other items that to the knowledge of the electric utility have affected fuel factor revenues and eligible fuel expenses; and

(iii) the difference, by customer class, between the revenues collected in accordance with [~~pursuant to~~] fuel factors and the eligible fuel expenses incurred.

(B) (No change.)

(2) An electric utility using the fuel factor formula methodology established in accordance with [~~set forth under~~] subsection (a)(1)(B) of this section may file a petition requesting revised fuel factors in accordance with [~~pursuant to~~] subsection (a)(2)(B) of this section at least 15 days prior to the first billing cycle in the billing month in which the proposed fuel factors are requested to become effective. A copy of the complete petition package must [~~shall~~] be served on each party in the utility's most recent fuel reconciliation and on OPUC [ ~~the Office of Public Utility Counsel~~]. Service must [ ~~shall~~] be accomplished in accordance with §22.74 of this title (relating to Service of Pleadings and Documents) [~~by email if possible~~]. Each complete fuel factor filing package must [~~shall~~] include:

(A) a tariff sheet reflecting the proposed fuel factors;

(B) workpapers (in native Excel format with formulas intact; and proof and verification of natural gas prices, including copies of data used to calculate the natural gas prices) supporting the calculation of the revised fuel factors;

(1) In a proceeding to revise fuel factors in accordance with [~~pursuant to~~] subsection (a)(1)(A) of this section, an electric utility has the burden of proving that:

(A) - (C) (No change.)

(2) The scope of a fuel factor revision proceeding under subsection (a)(1)(B) of this section is limited to the issue of whether the petitioning electric utility has appropriately calculated its proposed fuel factors. In a proceeding to revise fuel factors in accordance with [~~pursuant to~~] subsection (a)(1)(B) of this section, an electric utility has the burden of proving that:

(A) - (B) (No change.)

(3) The prudence of costs will not be considered in a fuel factor proceeding. The prudence of costs may only be reviewed in a fuel reconciliation proceeding under §25.236 of this title or another appropriate proceeding.

(d) Schedule for filing petitions to revise fuel factors. A petition to revise fuel factors or to initiate or revise a fuel factor formula may be filed with any general rate proceeding.

(1) Otherwise, except as provided by subsection (f) of this section which addresses emergencies, petitions by an electric utility to revise fuel factors in accordance with [~~pursuant to~~] subsection (a)(1)(A) of this section may only be filed in accordance with the following schedule:

(A) February, June, and October: El Paso Electric Company;

(B) March, July, and November: Entergy Texas, Inc.;

(D) May, September, and January: Southwestern Electric Power Company; and

(E) March, July, and November: any other electric utility not named in this subsection that uses one or more fuel factors.

(2) Petitions by an electric utility to revise fuel factors in accordance with [~~pursuant to~~] subsection (a)(1)(B) of this section may be filed in any month except December.

(e) Procedural schedules.

(1) Upon the filing of a petition to revise fuel factors in accordance with [~~pursuant to~~] subsection (a)(1)(A) of this section, the presiding officer will [~~shall~~] set a procedural schedule that will enable the commission to issue a final order in the proceeding as follows:

(A) (No change.)

(B) within 90 days after the petition was filed, if a hearing is requested within 30 days of the petition. If a hearing is requested, the hearing will be held no earlier than the first working [~~business~~] day after the 45th day after the application was filed.

(2) Upon the filing of a petition to revise fuel factors in accordance with [~~pursuant to~~] subsection (a)(1)(B) of this section, the presiding officer will [~~shall~~] set a procedural schedule as follows:

(A) the presiding officer will [~~shall~~] issue an order approving the proposed fuel factors on an interim basis no later than 12 days after the date the petition was filed, if no objection to interim approval is filed within 10 days after the date the petition was filed;

(B) if no hearing is requested within 30 days after the petition was filed, the presiding officer will [~~shall~~ ], after submission of proof of notice by the electric utility, issue an order approving the fuel factors without hearing or action by the commission; and

(C) if a hearing is requested within 30 days after the petition was filed, the hearing will be held no earlier than the first working [~~business~~] day after the 45th day after the petition was filed and a final order will be issued within 90 days after the petition was filed, subject to submission of proof of notice by the electric utility.

(f) Emergency revisions to the fuel factor. If fuel curtailments, equipment failure, strikes, embargoes, sanctions, or other reasonably unforeseeable circumstances have caused a material under-recovery of eligible fuel costs, the electric utility may file a petition with the commission requesting an emergency interim fuel factor. Such emergency requests must [~~shall~~] state the nature of the emergency, the magnitude of change in fuel costs resulting from the emergency circumstances, and other information required to support the emergency interim fuel factor. The commission will [~~shall~~] issue an interim order within 30 days after such petition is filed to establish an interim emergency fuel factor. If within 120 days after implementation, the emergency interim factor is found by the commission to have been excessive, the electric utility must [~~shall~~] refund all excessive collections with interest calculated on the cumulative monthly ending material under- or over-recovery [~~overrecovery~~] balance in the manner and at the rate established by the commission for overbilling and underbilling in §25.28(c) and (d) of this title (relating to Bill Payment and Adjustments Billing). If, after full investigation, the commission determines that no emergency condition existed, a penalty of up to 10% of such over-collections may also be imposed on investor-owned electric utilities.

(g) Protest of fuel factor.

(1) Only a customer of the utility, a municipality with original jurisdiction over the utility, or OPUC are eligible to protest a fuel factor under this section.

(2) A protest of a fuel factor is prohibited from raising the prudence of costs as an issue and is limited to the sole issue identified under paragraph (3) of this subsection.

(3) The presiding officer will review a protest of a fuel factor solely to determine whether the utility's fuel factor reasonably reflects costs the utility will incur such that that the utility will not substantially under-collect or over-collect the utility's reasonably stated fuel and purchased power costs on an ongoing basis.

(4) If the presiding officer determines that a fuel factor is anticipated to result in a substantial under- or over-collection of costs by the utility, the presiding officer will adjust the utility's fuel factor to address the under-collection or over-collection in a manner consistent with this section.

(5) The presiding officer may hold a hearing on a protest of a fuel factor at his or her discretion and may consider any evidence that is appropriate and in the public interest.

(6) A protest of a fuel factor may be processed and reviewed in a manner deemed administratively efficient by the presiding officer.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 10, 2025.

TRD-202502324

Adriana Gonzales

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: August 24, 2025

For further information, please call: (512) 936-7322

The Texas Racing Commission (TXRC) proposes rule amendments in Texas Administrative Code, Title 16, Part 8, Chapter 307, Subchapter C, Proceedings by Stewards, and Racing Judges, §307.67. Appeal to the Commission. The purpose of this rule amendment is to change the procedures, timeline and fine required by a licensee when appealing a ruling to the Commission.

There are no anticipated economic costs to persons required to comply with the proposed rule amendments. There is no effect on local economy for the first five years that the proposed rule amendments will be in effect; therefore, no local employment impact statement is required under Texas Government Code §§2001.022 and 2001.024(a)(6).

Amy F. Cook, Executive Director, has determined that the proposed rule amendment will have no direct adverse economic impact on small businesses, micro-businesses, or rural communities. Accordingly, the preparation of an economic impact statement and a regulatory flexibility analysis, as specified in Texas Government Code § 2006.002, is not required.

C. GOVERNMENT GROWTH IMPACT STATEMENT REQUIRED BY TEXAS GOVERNMENT CODE §2001.0221.

Pursuant to Texas Government Code §2001.0221, Texas Racing Commission provides the following government growth impact statement for the proposed rule amendments. For each year of the first five years that the proposed rule amendments will be in effect, the Texas Racing Commission has determined the following:

(1) The proposed rule amendments will not create or eliminate a government program;

(2) Implementation of the proposed rule amendments will not require the creation of new employee positions or the elimination of existing employee positions;

(3) implementation of the proposed rule amendments will not require an increase or decrease in future legislative appropriations to the agency;

(4) the proposed rule amendments will not require an increase or decrease in fees paid to the agency;

(5) the proposed rule amendments are new rules and therefore create new regulations;

(6) the proposed rule amendments will not expand, limit, or repeal an existing regulation;

(7) the proposed rule amendments will not increase or decrease the number of individuals subject to the rules' applicability; and

(8) the proposed rule amendments will not positively or adversely affect the state's economy.

Amy F. Cook, Executive Director, has determined that no private real property interests are affected by the proposed rule amendments, and the proposed rule amendments do not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the proposed rule amendments do not constitute a taking or require a takings impact assessment under Texas Government Code §2007.043.

E. LOCAL EMPLOYMENT IMPACT STATEMENT REQUIRED BY TEXAS GOVERNMENT CODE §2001.024(A)(6).

Amy F. Cook, Executive Director, has determined that the proposed rule amendments are not expected to have any fiscal implications for state or local government as outlined in Texas Government Code §2001.024(A)(6).

Amy F. Cook, Executive Director has determined that the proposed rule amendments are expected to improve the positive economic impact, health, and safety of licensed horse racing in Texas by reducing the impact of unlicensed racing.

Amy F. Cook, Executive Director has determined that no significant fiscal impact is associated with the proposed rule amendment.

Amy F. Cook, Executive Director certifies that a legal review has been completed and the proposal is within agency's legal authority to adopt under §2025.001 of the Texas Occupations Code.

Comments on the proposal may be submitted to the Texas Racing Commission Executive Director, Amy F. Cook, via webpage comment form at https://www.txrc.texas.gov/texas-rules-of-racing or through the agency customer service desk at customer.service@txrc.texas.gov, or by calling the customer service phone number at (512) 833-6699. Comments will be accepted for 30 days following publication of the proposal in the Texas Register.

STATUTORY AUTHORITY. The amendments are proposed under Texas Occupations Code §2025.001.

(a) Right to Appeal. A person aggrieved by a ruling of the stewards [~~or racing judges~~] may appeal to the Commission. A person who fails to file an appeal by the deadline and in the form required by this section waives the right to appeal the ruling.

(1) An appeal must be in writing in a form prescribed by the executive director. [~~secretary.~~] An appeal from a ruling of the stewards [~~or racing judges~~] must be filed not later than 5:00 p.m. of the third calendar day after the day the person is informed by the stewards of the ruling. [ ~~or racing judges~~]. An appeal from the modification of a penalty by the executive director [~~secretary~~] must be filed not later than 5:00 p.m. of the fifth calendar day after the person is informed of the penalty modification. The appeal must be post marked by the fifth day after the person is informed of the penalty modification and mailed to: Texas Racing Commission, 1801 N. Congress, Suite 7.600, Austin, Texas 78701. [filed at the main Commission offices in Austin or with the stewards or racing judges at a Texas pari-mutuel racetrack where a live race meet is being conducted. The appeal must be accompanied by a cash bond in the amount of $150, to defray the costs of the court reporter and transcripts required for the appeal. The bond must be in the form of a cashier's check or money order.]

(2) Record of Stewards'[~~/Judges'~~] hearing. On notification by the executive director [~~secretary~~] that an appeal has been filed, the stewards [~~or racing judges~~] shall forward to the Commission the record of the proceeding being appealed. A person appealing a stewards' [~~or judges'~~] ruling may request a copy of the record of the hearing. [~~and the executive secretary may assess the cost of making to the copy to the requestor.~~]

(c) Hearing Procedure. A hearing on an appeal from a ruling by the stewards [~~or racing judges~~] is a contested case and shall be conducted by SOAH in accordance with the Rules regarding contested cases. In an appeal, the appellant has the burden to prove that the stewards' [~~or racing judges'~~] decision was clearly in error.

(d) Effect of Appeal on Fine Payment. If a person against whom a fine has been assessed appeals the ruling that assesses the fine, the person shall pay the fine in accordance with the Rules. The executive director shall place the fine amount into the agency suspense account until such time that the appeal is final. If the appeal is disposed of in favor of the appellant, the executive director [ ~~Commission~~] shall refund the amount of the fine.

(e) Effect of Appeal on Purse Payment. If a ruling that affects the outcome of a race is appealed, the portion of the purse that is involved in the appeal shall be withheld and not distributed. The stewards [~~or racing judges~~] may distribute the portion of the purse that is not involved in or affected by the outcome of the appeal.

(f) Effect of Appeal on Horse Eligibility. If an appeal involves the official order of finish in a horse race, all horses finishing first or declared to be the winner by the stewards carry all penalties of eligibility until the winner is determined through the final resolution of the appeal.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.