Sec. 104.003.  JUST AND REASONABLE RATES.  (a)  The regulatory authority shall ensure that each rate a gas utility or two or more gas utilities jointly make, demand, or receive is just and reasonable.  A rate may not be unreasonably preferential, prejudicial, or discriminatory but must be sufficient, equitable, and consistent in application to each class of consumer.  In establishing a gas utility's rates, the railroad commission may treat as a single class two or more municipalities that a gas utility serves if the commission considers that treatment to be appropriate.
(b)  A rate for a pipeline-to-pipeline transaction or to a transportation, industrial, or similar large volume contract customer is considered to be just and reasonable and otherwise to comply with this section and shall be approved by the regulatory authority if:
(1)  neither the gas utility nor the customer had an unfair advantage during the negotiations;
(2)  the rate is substantially the same as the rate between the gas utility and at least two of those customers under the same or similar conditions of service;  or
(3)  competition does or did exist with another gas utility, another supplier of natural gas, or a supplier of an alternative form of energy.
(c)  Subsection (b) does not apply:
(1)  if a complaint is filed with the railroad commission by a transmission pipeline purchaser of gas sold or transported under the pipeline-to-pipeline or transportation rate;  or
(2)  to a direct sale for resale to a gas distribution utility at a city gate.
(d)  The reasonableness of gas purchase costs included in a city gate rate proposed to be charged for a sale for resale to a gas distribution utility at a city gate may be reviewed at a city gate rate proceeding even though the costs have been previously approved as a rate for other parties under Subsection (b).
(e)  Subsection (b)(1) does not apply to a rate charged or offered to be charged to an affiliated pipeline utility.
Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.