74R9506 CBH-F
By Black, et al. H.B. No. 1777
Substitute the following for H.B. No. 1777:
By Black C.S.H.B. No. 1777
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of small telecommunications utilities
1-3 and telephone cooperative corporations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle E, Title III, Public Utility Regulatory
1-6 Act of 1995, as enacted by S.B. 319, Acts of the 74th Legislature,
1-7 Regular Session, 1995, is amended by amending Section 3.213 and
1-8 adding Section 3.2135 to read as follows:
1-9 Sec. 3.213. <COOPERATIVE OR> SMALL INCUMBENT LOCAL EXCHANGE
1-10 COMPANIES<; STATEMENT OF INTENT TO CHANGE RATES; NOTICE OF INTENT;
1-11 SUSPENSION OF RATE SCHEDULE; REVIEW>. (a) The
1-12 legislature finds that regulatory policy should recognize
1-13 differences between the small and large incumbent local exchange
1-14 companies, that there are a large number of customer-owned
1-15 telephone cooperatives and small, locally owned investor companies,
1-16 and that it is appropriate to provide incentives and flexibility to
1-17 allow incumbent local exchange companies that serve the rural areas
1-18 to provide existing services and to introduce new technology and
1-19 new services in a prompt, efficient, and economical manner.
1-20 (b) Except as otherwise provided by this section, an
1-21 incumbent local exchange company that is a cooperative corporation,
1-22 or that, together with all affiliated incumbent local exchange
1-23 companies, has fewer than 31,000 access lines in service in this
1-24 state, may offer extended local calling services or new services on
2-1 an optional basis or make minor changes in its rates or tariffs if
2-2 the company:
2-3 (1) files with the commission and the office a
2-4 statement of intent, as prescribed by Subsection (c) of this
2-5 section, not later than the 91st day before the date on which the
2-6 proposed change will take effect;
2-7 (2) provides notice as prescribed by Subsection (d) of
2-8 this section; and
2-9 (3) files with the commission affidavits verifying the
2-10 provision of notice as prescribed by Subsection (d) of this
2-11 section.
2-12 (c) The statement of intent required by Subsection (b)(1) of
2-13 this section must include:
2-14 (1) a copy of a resolution approving the proposed
2-15 change by the incumbent local exchange telephone company's board of
2-16 directors;
2-17 (2) a description of the services affected by the
2-18 proposed change;
2-19 (3) a copy of the proposed tariff for the affected
2-20 service;
2-21 (4) a copy of the customer notice required by
2-22 Subsection (b)(2) of this section;
2-23 (5) the number of access lines the company and each
2-24 affiliate has in service in this state; and
2-25 (6) the amount by which the company's total regulated
2-26 intrastate gross annual revenues will increase or decrease as a
2-27 result of the proposed change.
3-1 (d) The incumbent local exchange company shall provide
3-2 notice to affected customers in the manner prescribed by the
3-3 commission not later than the 61st day before the date on which the
3-4 proposed change will take effect. Each notice prescribed by the
3-5 commission must include:
3-6 (1) a description of the services affected by the
3-7 proposed change;
3-8 (2) the effective date of the proposed change;
3-9 (3) an explanation of the customer's right to petition
3-10 the commission for a review under Subsection (e) of this section,
3-11 including the number of persons required to petition before a
3-12 commission review will occur;
3-13 (4) an explanation of the customer's right to obtain
3-14 information concerning how to obtain a copy of the proposed tariff
3-15 from the company;
3-16 (5) the amount by which the company's total regulated
3-17 intrastate gross annual revenues will increase or decrease as a
3-18 result of the proposed change; and
3-19 (6) a list of rates that are affected by the proposed
3-20 rate change.
3-21 (e) The commission shall review a proposed change filed
3-22 under this section if:
3-23 (1) the commission receives complaints relating to the
3-24 proposed change signed by the lesser of five percent or 1,500 of
3-25 the affected local service customers;
3-26 (2) the commission receives a complaint relating to
3-27 the proposed change from an affected intrastate access customer, or
4-1 a group of affected intrastate access customers, that in the
4-2 preceding 12 months accounted for more than 10 percent of the
4-3 company's total intrastate gross access revenues;
4-4 (3) the proposed change is not a minor change;
4-5 (4) the company does not comply with the procedural
4-6 requirements of this section; or
4-7 (5) the proposed change is inconsistent with the
4-8 commission's substantive policies as expressed in its rules.
4-9 (f) On review, the commission may suspend the proposed
4-10 tariff during the pendency of review.
4-11 (g) This section does not prohibit an incumbent local
4-12 exchange company from filing for a new service or rate change under
4-13 another applicable section of this Act or the commission from
4-14 conducting a review in accordance with Section 3.210 of this Act.
4-15 (h) In this section, "minor change" means a change,
4-16 including the restructuring of rates of existing services, that
4-17 decreases the rates or revenues of the incumbent local exchange
4-18 company or that, together with any other rate or proposed or
4-19 approved tariff changes in the 12 months preceding the date on
4-20 which the proposed change will take effect, results in an increase
4-21 of the company's total regulated intrastate gross annual revenues
4-22 by not more than five percent. Further, with regard to a change to
4-23 a basic local access line rate, a minor change may not, together
4-24 with any other change to that rate that went into effect during the
4-25 12 months preceding the proposed effective date of the requested
4-26 change, result in an increase of more than 10 percent. <Except as
4-27 otherwise provided by this section, a local exchange company that
5-1 is a cooperative corporation or that has fewer than 5,000 access
5-2 lines in service in this state may change rates by publishing
5-3 notice of the change at least 60 days before the date of the change
5-4 in the place and form as prescribed by the commission. The notice
5-5 must include:>
5-6 <(1) the reasons for the rate change;>
5-7 <(2) a description of the affected service;>
5-8 <(3) an explanation of the right of the subscriber to
5-9 petition the commission for a hearing on the rate change; and>
5-10 <(4) a list of rates that are affected by the proposed
5-11 rate change.>
5-12 <(b) At least 60 days before the date of the change, the
5-13 local exchange company shall file with the commission a statement
5-14 of intent to change rates containing:>
5-15 <(1) a copy of the notice required by Subsection (a)
5-16 of this section;>
5-17 <(2) the number of access lines the company has in
5-18 service in this state;>
5-19 <(3) the date of the most recent commission order
5-20 setting rates of the company;>
5-21 <(4) the increase in total gross annual local revenues
5-22 that will be produced by the proposed rates;>
5-23 <(5) the increase in total gross annual local revenues
5-24 that will be produced by the proposed rates together with any local
5-25 rate changes which went into effect during the 12 months preceding
5-26 the proposed effective date of the requested rate change and any
5-27 other proposed local rate changes then pending before the
6-1 commission;>
6-2 <(6) the increase in rates for each service category;
6-3 and>
6-4 <(7) other information the commission by rule
6-5 requires.>
6-6 <(c) The commission shall review a proposed change in the
6-7 rates set by a local exchange company under this section upon the
6-8 receipt of complaints signed by at least five percent of all
6-9 affected subscribers or upon its own motion. The commission may
6-10 require notice to ratepayers as it considers appropriate. If
6-11 sufficient complaints are presented to the commission within 60
6-12 days after the date notice of the rate change was sent to
6-13 subscribers, the commission shall review the proposed change.
6-14 After notice to the local exchange company, the commission may
6-15 suspend the rates during the pendency of the review and reinstate
6-16 the rates previously in effect. Review under this subsection shall
6-17 be as provided by Section 3.211 of this Act. The period for review
6-18 by the commission does not begin until the local exchange company
6-19 files a complete rate-filing package.>
6-20 <(d) If the commission has entered an order setting a rate,
6-21 the affected local exchange company may not change that rate under
6-22 this section before 365 days after the date of the commission's
6-23 order setting the rate.>
6-24 <(e) This section does not prohibit a local exchange company
6-25 from filing for a rate change under any other applicable section of
6-26 this Act.>
6-27 <(f) The commission shall review a proposed change in the
7-1 rates of a local exchange company under this section if the
7-2 proposed rates, together with any local rate changes which went
7-3 into effect during the 12 months preceding the proposed effective
7-4 date of the requested rate change as well as any other proposed
7-5 local rate changes then pending before the commission, will
7-6 increase its total gross annual local revenues by more than 2-1/2
7-7 percent or if the proposed change would increase the rate of any
7-8 service category by more than 25 percent, except for basic local
7-9 service, which shall be limited to a maximum of 2-1/2 percent of
7-10 the total gross annual local revenue. Review under this subsection
7-11 shall be as provided by Section 3.211 of this Act. Each local
7-12 exchange company may receive a change in its local rates or in any
7-13 service category pursuant to this section only one time in any
7-14 12-month period.>
7-15 (i) <(g)> Rates established under this section must be in
7-16 accordance with the rate-setting principles of this subtitle.
7-17 However, companies may provide to their board members, officers,
7-18 employees, and agents free or reduced rates for services.
7-19 (j)(1) The commission shall, within 120 days of the
7-20 effective date of this section, examine its policies, its reporting
7-21 requirements, and its procedural and substantive rules as they
7-22 relate to rural and small incumbent local exchange companies and
7-23 cooperatives to eliminate or revise those that place unnecessary
7-24 burdens and expenses on those companies. Notwithstanding any other
7-25 provisions of this Act, the commission shall consider and may adopt
7-26 policies that include the following:
7-27 (A) policies to allow those companies to provide
8-1 required information by report or otherwise as necessary, including
8-2 a rate filing package when required, in substantially less
8-3 burdensome and complex form than required of larger incumbent local
8-4 exchange companies;
8-5 (B) policies that permit consideration of the
8-6 company's future construction plans and operational changes in
8-7 evaluating the reasonableness of current rates;
8-8 (C) policies that provide for evaluation of the
8-9 overall reasonableness of current rates no more frequently than
8-10 once every three years;
8-11 (D) policies that permit companies to change
8-12 depreciation and amortization rates when customer rates are not
8-13 affected by notice to the commission, subject to review by the
8-14 commission in a proceeding under Section 3.210 or 3.211 of this
8-15 Act;
8-16 (E) policies to allow the incumbent local
8-17 exchange companies to adopt for new services the rates for the same
8-18 or substantially similar services offered by a larger incumbent
8-19 local exchange company, without commission requirement of
8-20 additional cost justification; and
8-21 (F) policies that allow an incumbent local
8-22 exchange company, instead of any management audit that would
8-23 otherwise be required by law, policy, or rule, to submit to the
8-24 commission financial audits of the company regularly performed by
8-25 independent auditors or required and performed as a result of the
8-26 company's participation in federal or state financing or
8-27 revenue-sharing programs.
9-1 (2) Notwithstanding any other relevant provision of
9-2 this Act, the commission may adopt policies under this subsection
9-3 that the commission considers appropriate.
9-4 (k) <(h)> The commission is granted all necessary power and
9-5 authority to prescribe and collect fees and assessments from
9-6 incumbent local exchange companies necessary to recover the
9-7 commission's and the office's costs of activities carried out and
9-8 services provided under this section, Subsection (h) of Section
9-9 3.211, and Sections <Section> 3.212 and 3.2135 of this Act.
9-10 (l) Except as provided in Subsection (j), this section may
9-11 not apply to any incumbent local exchange company that is a
9-12 cooperative corporation partially deregulated under the provisions
9-13 of Section 3.2135 of this Act.
9-14 Sec. 3.2135. COOPERATIVE CORPORATIONS. (a) An incumbent
9-15 local exchange company that is a cooperative corporation may vote
9-16 to partially deregulate the cooperative by sending a ballot to each
9-17 cooperative member. The ballot may be included in a bill or sent
9-18 separately. The ballot shall provide for voting for or against the
9-19 proposition: "Authorizing the partial deregulation of the (name of
9-20 the cooperative)."
9-21 (b) The cooperative is deemed to be partially deregulated if
9-22 a majority of the ballots returned to the cooperative not later
9-23 than the 45th day after the date on which the ballots are mailed
9-24 favor deregulation.
9-25 (c) After the initial balloting, the cooperative may offer
9-26 extended local calling services, new services on an optional basis,
9-27 or make changes in its rates or tariffs if the cooperative:
10-1 (1) provides notice of the proposed action under this
10-2 section to all customers and municipalities as prescribed by
10-3 Subsection (e) of this section;
10-4 (2) files with the commission affidavits verifying the
10-5 provision of notice as prescribed by Subsection (f) of this
10-6 section; and
10-7 (3) files a statement of intent under Subsection (d)
10-8 of this section.
10-9 (d) A statement of intent to use this section must be filed
10-10 with the commission and the office not later than the 61st day
10-11 before the date on which a proposed change will take effect and
10-12 must include:
10-13 (1) a copy of a resolution approving the proposed
10-14 action and authorizing the filing of the statement of intent signed
10-15 by a majority of the members of the cooperative's board of
10-16 directors;
10-17 (2) a description of the services affected by the
10-18 proposed action;
10-19 (3) a copy of the proposed tariff for the affected
10-20 service; and
10-21 (4) a copy of the customer notice required by this
10-22 section.
10-23 (e) The cooperative shall provide to all affected customers
10-24 and parties, including municipalities, at least two notices of the
10-25 proposed action by bill insert or by individual notice. The
10-26 cooperative shall provide the first notice not later than the 61st
10-27 day before the date on which the proposed action will take effect.
11-1 The cooperative shall provide the last notice not later than the
11-2 31st day before the date on which the proposed action will take
11-3 effect. Each notice prescribed by this subsection must include:
11-4 (1) a description of the services affected by the
11-5 proposed action;
11-6 (2) the effective date of the proposed action;
11-7 (3) an explanation of the customer's right to petition
11-8 the commission for a review under Subsection (g) of this section;
11-9 (4) an explanation of the customer's right to obtain a
11-10 copy of the proposed tariff from the cooperative;
11-11 (5) the amount by which the cooperative's total gross
11-12 annual revenues will increase or decrease and a statement
11-13 explaining the effect on the cooperative revenues as a result of
11-14 the proposed action; and
11-15 (6) a list of rates that are affected by the proposed
11-16 rate action, showing the effect of the proposed action on each such
11-17 rate.
11-18 (f) Not later than the 15th day before the date on which the
11-19 proposed action will take effect, the cooperative shall file with
11-20 the commission affidavits that verify that the cooperative provided
11-21 each notice prescribed under Subsection (e) of this section.
11-22 (g)(1) The commission shall review a proposed action filed
11-23 under this section if:
11-24 (A) the commission receives, not later than the
11-25 45th day after the first notice is provided under Subsection (e) of
11-26 this section, complaints relating to the proposed action:
11-27 (i) signed by at least five percent of the
12-1 affected local service customers; or
12-2 (ii) from an affected intrastate access
12-3 customer, or group of affected intrastate access customers, that in
12-4 the preceding 12 months accounted for more than 10 percent of the
12-5 cooperative's total intrastate access revenues;
12-6 (B) the cooperative does not comply with the
12-7 procedural requirements of this section; or
12-8 (C) the proposed action is inconsistent with the
12-9 commission's substantive policies as expressed in its rules.
12-10 (2) If the commission conducts a review of the
12-11 proposed action under this subsection before the effective date,
12-12 the commission may suspend the proposed actions of the cooperative
12-13 during the pendency of the review.
12-14 (h) A cooperative that is partially deregulated under this
12-15 section may vote to reverse the deregulation by sending a ballot
12-16 to each cooperative member. Upon its own motion or within 60 days
12-17 upon receipt of a written request of 10 percent of its members, the
12-18 cooperative's board of directors shall reballot. The ballot may be
12-19 included in a bill or sent separately. The ballot shall provide
12-20 for voting for or against the proposition: "Reversing the partial
12-21 deregulation of the (name of the cooperative)." The partial
12-22 deregulation is reversed if a majority of the ballots returned to
12-23 the cooperative not later than the 45th day after the date on which
12-24 the ballots are mailed favor reversal.
12-25 (i) The commission by rule shall prescribe the voting
12-26 procedures a cooperative is required to use under this section.
12-27 (j) This section does not:
13-1 (1) prohibit a cooperative from filing for a new
13-2 service or rate change under another applicable section of this
13-3 Act; or
13-4 (2) affect the application of other provisions of this
13-5 Act not directly related to rate-making or the authority of the
13-6 commission to require the cooperative to file reports as required
13-7 under this Act, Section 3.213(j) of this Act, or under the rules
13-8 adopted by the commission.
13-9 (k) Notwithstanding any other provision of this section, the
13-10 commission may conduct a review in accordance with Section 3.210 of
13-11 this Act.
13-12 SECTION 2. This Act takes effect September 1, 1995.
13-13 SECTION 3. The importance of this legislation and the
13-14 crowded condition of the calendars in both houses create an
13-15 emergency and an imperative public necessity that the
13-16 constitutional rule requiring bills to be read on three several
13-17 days in each house be suspended, and this rule is hereby suspended.