(a) Levels of environs rates.      
        (1) The environs rates may be the same rates as those in effect in the nearest incorporated area in Texas served by the same utility where gas is obtained from at least one common pipeline supplier or transmission system. The Commission, on application by a utility, on complaint by any affected person, or on its own motion may review the rate in or boundaries of a given environs area and may consent to or order an adjustment where appropriate.       
        (2) In addition to the definition of environs rates in §7.115 of this title (relating to Definitions), environs rates shall include any quality of service rules adopted by the Commission in subchapter D of this chapter (relating to Customer Service and Protection). Such quality of service rules shall apply to environs areas and become part of environs rates regardless of whether the same quality of service rules are in effect in the related incorporated areas.       
      (b) Rate increases for environs rates. Rate increases in environs shall be made in accordance with the following procedures.      
        (1) The gas utility shall file a statement of intent and shall give notice as required under Texas Utilities Code, §104.103, §7.210 of this title (relating to Increasing Residential and Commercial Rates--Statement of Intent), and §7.230 of this title (relating to Contents of Notice). In addition, when environs rates are to be increased at the same time and to the same extent as the related incorporated area (city) rate and the proposed change does not constitute a "major change," the statement of intent to increase such environs rates shall include (in completed form) the following statement: "This is a Statement of Intent to increase environs rates for the unincorporated areas in the vicinity of __________________, and contains rates identical with and to become effective upon the same date as rates contained in a similar Statement of Intent filed on or about this date by this utility with said city. This Statement of Intent is intended to produce the same residential and commercial rates as finally approved for the City of __________________ and applies to the rates set out herein or any lower rates finally approved for the City of __________________. Any rate changes pursuant to this Statement of Intent will not become effective until identical changes have become effective within the City of __________________." All rate schedules filed with the environs Statement of Intent shall bear the following statement: "Effective on the latter of _______________________ or such other date as new rates become effective in the City of __________________."       
        (2) The utility shall give notice of the filing of a statement of intent to increase environs rates as required by §7.235 of this title (relating to Publication and Service of Notice).       
        (3) Upon request and a showing of good cause by the utility, the environs rates may become effective upon the same date as the rates became effective in the municipality pursuant to Texas Utilities Code, §104.104. Environs rates shall not become effective any earlier than the filing date of the statement of intent to increase rates with the Director. If a utility appeals the rate to the Commission, and the Commission establishes rates the same as or less than those in the environs statement of intent, the rates established by the Commission in the city may become simultaneously effective in the environs area. If the Commission dismisses that appeal, any rates which have been established in the city may become effective in the environs area at the time of dismissal, provided that the rates established in the city are the same as or less than those in the environs statement of intent.       
        (4) No later than 60 days from the date of filing an environs statement of intent, the utility shall furnish a copy to the Commission of any action taken by the city with respect to the related statement of intent, the form of written notice mailed to affected environs area customers, and an affidavit of publication from the newspaper in which notice by publication was made, or an affidavit stating the manner in which notice was otherwise given pursuant to Texas Utilities Code, §104.103.       
      (c) Rate changes proposed pursuant to cost of service adjustment clause. The Commission shall review, on a cost of service basis, an increase in an environs rate that the utility proposes pursuant to a cost of service adjustment clause, as defined in §7.115 of this title (relating to Definitions). The cost of service adjustment clause in effect in the adjacent municipality shall not be applicable or put into effect for the affected environs area, although the utility may request the same rates that are in effect in the adjacent municipality for the environs area. The Commission may review the proposed rate increases pursuant to these clauses on an informal basis and will not schedule a formal hearing unless a complaint is received pursuant to subsection (b)(4) of this section or the Commission elects to conduct a formal hearing.     
      (d) Other rate changes. This section shall not apply to major rate changes or to changes in special rates.     
     Source Note:        The provisions of this §7.220 adopted to be effective July 29, 2002, 27 TexReg 6687; amended to be effective May 14, 2018, 43 TexReg 2997