Tex. Codes » Utilities Code · TITLE 3. GAS REGULATION · SUBTITLE A. GAS UTILITY REGULATORY ACT · CHAPTER 104. RATES AND SERVICES
Texas Codes

Tex. Util. Code § 104.003 (2026)

Just And Reasonable Rates

✓ current as of May 2026
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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.

Notes of Decisions
Cited in 14 cases (1 in the last 5 years), 2006–2022 · leading case: Atmos Energy Corp. v. Cities of Allen, 353 S.W.3d 156 (Tex. 2011).
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Atmos Energy Corp. v. Cities of Allen, 353 S.W.3d 156 (Tex. 2011). “” Tex. Util. Code § 104.003(a). . The fifty-one Texas cities are Allen, Argyle, Arlington, Bedford, Brownwood, Burkbur-nett, Burleson, Caddo Mills, Canyon, Carroll-ton, Cedar Hill, Clyde, College Station, Corral City, Crandall, Dimmitt, Eastland, Everman, Farmers Branch, Fate,…”
Centerpoint Energy Entex v. R.R. Comm'n, 208 S.W.3d 608 (Tex. App. 2006). “” Tex. Util. Code Ann. § 104.003 (West 1998).”
Texas Coast Utils. Coalition v. R.R. Comm'n, 423 S.W.3d 355 (Tex. 2014). “The Commission may not, for example, establish a practice that does not ensure that the rate is “just and reasonable,” see Tex. Util. Code § 104.003(a), or that is not calculated to “establish the utility’s overall revenues at an amount that will permit the utility a reasonable…”
in Re BHP Billiton Petroleum Props. (N.A.), LP & BHP Billiton Petroleum (TXLA Operating) Co. (Tex. App. 2017). · cites it 2× “” Tex. Util. Code Ann. § 104.003 (a) (Vernon 2007).”
Centerpoint Energy Resources Corp. v. Fernando Ramirez & Minerva Ramirez (Tex. 2022). “, TEX. UTIL CODE §§ 104.003 (“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.”
Atmos Energy Corp., Centerpoint Energy Resources Corp., & Texas Gas Serv. Co. v. the Cities of Allen & R.R. Comm'n of Texas (Tex. 2011). “” TEX. UTIL. CODE § 104.003(a). 4 Fifty-one Texas cities3 then pursued a declaratory judgment action in district court against the Commission, challenging the validity of Commission Rule 7.”
Texas Coast Utils. Coalition v. R.R. Comm'n of Texas & Centerpoint Energy Resources Corp. D/B/A Centerpoint Energy Entex & Centerpoint Energy Texas Gas (Tex. 2014). “The Commission may not, for example, establish a practice that does not ensure that the rate is “just and reasonable,” see TEX. UTIL. CODE § 104.003(a), or that is not calculated to “establish the utility’s overall revenues at an amount that will permit the utility a reasonable…”
CenterPoint Energy Entex v. R.R. Comm'n of Texas, Victor Carrillo, Elizabeth A. Jones, Michael Williams, City of Tyler & State of Texas (Tex. App. 2006). “" Tex. Util. Code Ann. § 104.003 (West 1998).”
CenterPoint Energy Entex v. R.R. Comm'n of Texas, Victor Carrillo, Elizabeth A. Jones, Michael Williams, City of Tyler & State of Texas (Tex. App. 2006). “” Tex. Util. Code Ann. § 104.003 (West 1998).”
CenterPoint Energy Entex v. R.R. Comm'n of Texas, Victor Carrillo, Elizabeth A. Jones, Michael Williams, City of Tyler & State of Texas (Tex. App. 2006). “” Tex. Util. Code Ann. § 104.003 (West 1998).”
CenterPoint Energy Entex v. R.R. Comm'n of Texas, Victor Carrillo, Elizabeth A. Jones, Michael Williams, City of Tyler & State of Texas (Tex. App. 2006). “" Tex. Util. Code Ann. § 104.003 (West 1998).”
CenterPoint Energy Entex v. R.R. Comm'n of Texas, Victor Carrillo, Elizabeth A. Jones, Michael Williams, City of Tyler & State of Texas (Tex. App. 2006). “” Tex. Util. Code Ann. § 104.003 (West 1998).”
Show all 14 citing cases →
— Tex. Util. Code § 104.003(a) — 4 cases
Atmos Energy Corp. v. Cities of Allen, 353 S.W.3d 156 (Tex. 2011). “” Tex. Util. Code § 104.003(a). . The fifty-one Texas cities are Allen, Argyle, Arlington, Bedford, Brownwood, Burkbur-nett, Burleson, Caddo Mills, Canyon, Carroll-ton, Cedar Hill, Clyde, College Station, Corral City, Crandall, Dimmitt, Eastland, Everman, Farmers Branch, Fate,…”
Texas Coast Utils. Coalition v. R.R. Comm'n, 423 S.W.3d 355 (Tex. 2014). “The Commission may not, for example, establish a practice that does not ensure that the rate is “just and reasonable,” see Tex. Util. Code § 104.003(a), or that is not calculated to “establish the utility’s overall revenues at an amount that will permit the utility a reasonable…”
Atmos Energy Corp., Centerpoint Energy Resources Corp., & Texas Gas Serv. Co. v. the Cities of Allen & R.R. Comm'n of Texas (Tex. 2011). “” TEX. UTIL. CODE § 104.003(a). 4 Fifty-one Texas cities3 then pursued a declaratory judgment action in district court against the Commission, challenging the validity of Commission Rule 7.”
Texas Coast Utils. Coalition v. R.R. Comm'n of Texas & Centerpoint Energy Resources Corp. D/B/A Centerpoint Energy Entex & Centerpoint Energy Texas Gas (Tex. 2014). “The Commission may not, for example, establish a practice that does not ensure that the rate is “just and reasonable,” see TEX. UTIL. CODE § 104.003(a), or that is not calculated to “establish the utility’s overall revenues at an amount that will permit the utility a reasonable…”
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