(a) This section applies only to a municipally owned utility that is located in a municipality that is considered to be a defunding municipality under Chapter 109, Local Government Code.
(b) The governing body of a municipally owned utility may not charge a customer:
(1) at a rate higher than the rate the customer was charged or would have been charged on January 1 of the year that the municipality was determined to be a defunding municipality;
(2) any customer fees in amounts higher than the customer fees the customer was charged or would have been charged on January 1 of the year that the municipality was determined to be a defunding municipality; or
(3) any types of customer fees that the customer was not charged or would not have been charged on January 1 of the year that the municipality was determined to be a defunding municipality.

(c) If a municipally owned utility has not transferred funds to the defunding municipality described by Subsection (a) in the immediately preceding 12 months, the municipally owned utility may increase its rates to account for:
(1) pass-through charges imposed by a state regulatory body or the independent organization certified under § 39.151;
(2) fuel, hedging, or wholesale power cost increases; or
(3) fulfillment of debt obligations or compliance with Chapter 1502, Government Code.
(d) A municipally owned utility that increases rates under Subsection (c) may not transfer funds to the defunding municipality described by Subsection (a) until the date the criminal justice division of the governor’s office issues a written determination in accordance with § 109.005, Local Government Code, finding that the municipality described by Subsection (a) has reversed the reduction described by § 109.003(1), Local Government Code.