By Black H.B. No. 1777
74R7130 CBH-F
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. Article VI, Public Utility Regulatory Act
1-6 (Article 1446c, Vernon's Texas Civil Statutes), is amended by
1-7 amending Section 43B and adding Section 43C to read as follows:
1-8 Sec. 43B. (a) Policy. The legislature finds that
1-9 regulatory policy should recognize differences between the small
1-10 and large local exchange companies, that there are a large number
1-11 of customer-owned telephone cooperatives and small, locally owned
1-12 investor companies, and that it is appropriate to provide
1-13 incentives and flexibility to allow local exchange companies that
1-14 serve the rural areas to provide existing services and to introduce
1-15 new technology and new services in a prompt, efficient, and
1-16 economical manner.
1-17 (b) Except as otherwise provided by this section, a local
1-18 exchange company that is a cooperative corporation, or that,
1-19 together with all affiliated local exchange companies, has fewer
1-20 than 31,000 access lines in service in this state, may offer
1-21 extended local calling services or new services on an optional
1-22 basis or make minor changes in its rates or tariffs if the company:
1-23 (1) files with the commission and the office a
1-24 statement of intent, as prescribed by Subsection (c) of this
2-1 section, not later than the 91st day before the date on which the
2-2 proposed change will take effect;
2-3 (2) provides notice as prescribed by Subsection (d) of
2-4 this section; and
2-5 (3) files with the commission affidavits verifying the
2-6 provision of notice as prescribed by Subsection (d) of this
2-7 section.
2-8 (c) The statement of intent required by Subsection (b)(1) of
2-9 this section must include:
2-10 (1) a copy of a resolution approving the proposed
2-11 change by the local exchange telephone company's board of
2-12 directors;
2-13 (2) a description of the services affected by the
2-14 proposed change;
2-15 (3) a copy of the proposed tariff for the affected
2-16 service;
2-17 (4) a copy of the customer notice required by
2-18 Subsection (b)(2) of this section;
2-19 (5) the number of access lines the company and each
2-20 affiliate has in service in this state; and
2-21 (6) the amount by which the company's total gross
2-22 annual revenues will increase or decrease as a result of the
2-23 proposed change.
2-24 (d) The local exchange company shall provide notice to
2-25 affected customers in the manner prescribed by the commission no
2-26 later than the 61st day before the date on which the proposed
2-27 change will take effect. Each notice prescribed by the commission
3-1 must include:
3-2 (1) a description of the services affected by the
3-3 proposed change;
3-4 (2) the effective date of the proposed change;
3-5 (3) an explanation of the customer's right to petition
3-6 the commission for a review under Subsection (e) of this section,
3-7 including the number of persons required to petition before a
3-8 commission review will occur;
3-9 (4) an explanation of the customer's right to obtain
3-10 information concerning how to obtain a copy of the proposed tariff
3-11 from the company;
3-12 (5) the amount by which the company's total gross
3-13 revenues will increase or decrease as a result of the proposed
3-14 change; and
3-15 (6) a list of rates that are affected by the proposed
3-16 rate change.
3-17 (e) The commission shall review a proposed change filed
3-18 under this section if:
3-19 (1) the commission receives complaints relating to the
3-20 proposed change signed by the lesser of five percent or 1,500 of
3-21 the affected local service customers;
3-22 (2) the commission receives a complaint relating to
3-23 the proposed change from an affected intrastate access customer, or
3-24 a group of affected intrastate access customers, that in the
3-25 preceding 12 months accounted for more than 10 percent of the
3-26 company's total intrastate access revenues;
3-27 (3) the proposed change is not a minor change;
4-1 (4) the company does not comply with the procedural
4-2 requirements of this section; or
4-3 (5) the proposed change is inconsistent with the
4-4 commission's substantive policies as expressed in its rules.
4-5 (f) On review, the commission may suspend the proposed
4-6 tariff during the pendency of review.
4-7 (g) This section does not prohibit a local exchange
4-8 telephone company from filing for a new service or rate change
4-9 under another applicable section of this Act or the commission from
4-10 conducting a review in accordance with Section 42 of this Act.
4-11 (h) In this section, "minor change" means a change,
4-12 including the restructuring of rates of existing services, that
4-13 decreases the rates or revenues of the local exchange telephone
4-14 company or that, together with any other rate or proposed or
4-15 approved tariff changes in the 12 months preceding the date on
4-16 which the proposed change will take effect, results in an increase
4-17 of the company's total annual gross revenues by not more than five
4-18 percent. Further, with regard to a change to a basic local access
4-19 line rate, a minor change may not, together with any other change
4-20 to that rate that went into effect during the 12 months preceding
4-21 the proposed effective date of the requested change, result in an
4-22 increase of more than 10 percent. <Except as otherwise provided by
4-23 this section, a local exchange company that is a cooperative
4-24 corporation or that has fewer than 5,000 access lines in service in
4-25 this state may change rates by publishing notice of the change at
4-26 least 60 days before the date of the change in the place and form
4-27 as prescribed by the commission. The notice must include:>
5-1 <(1) the reasons for the rate change;>
5-2 <(2) a description of the affected service;>
5-3 <(3) an explanation of the right of the subscriber to
5-4 petition the commission for a hearing on the rate change; and>
5-5 <(4) a list of rates that are affected by the proposed
5-6 rate change.>
5-7 <(b) At least 60 days before the date of the change, the
5-8 local exchange company shall file with the commission a statement
5-9 of intent to change rates containing:>
5-10 <(1) a copy of the notice required by Subsection (a)
5-11 of this section;>
5-12 <(2) the number of access lines the company has in
5-13 service in this state;>
5-14 <(3) the date of the most recent commission order
5-15 setting rates of the company;>
5-16 <(4) the increase in total gross annual local revenues
5-17 that will be produced by the proposed rates;>
5-18 <(5) the increase in total gross annual local revenues
5-19 that will be produced by the proposed rates together with any local
5-20 rate changes which went into effect during the 12 months preceding
5-21 the proposed effective date of the requested rate change and any
5-22 other proposed local rate changes then pending before the
5-23 commission;>
5-24 <(6) the increase in rates for each service category;
5-25 and>
5-26 <(7) other information the commission by rule
5-27 requires.>
6-1 <(c) The commission shall review a proposed change in the
6-2 rates set by a local exchange company under this section upon the
6-3 receipt of complaints signed by at least five percent of all
6-4 affected subscribers or upon its own motion. The commission may
6-5 require notice to ratepayers as it considers appropriate. If
6-6 sufficient complaints are presented to the commission within 60
6-7 days after the date notice of the rate change was sent to
6-8 subscribers, the commission shall review the proposed change.
6-9 After notice to the local exchange company, the commission may
6-10 suspend the rates during the pendency of the review and reinstate
6-11 the rates previously in effect. Review under this subsection shall
6-12 be as provided by Section 43 of this Act. The period for review by
6-13 the commission does not begin until the local exchange company
6-14 files a complete rate-filing package.>
6-15 <(d) If the commission has entered an order setting a rate,
6-16 the affected local exchange company may not change that rate under
6-17 this section before 365 days after the date of the commission's
6-18 order setting the rate.>
6-19 <(e) This section does not prohibit a local exchange company
6-20 from filing for a rate change under any other applicable section of
6-21 this Act.>
6-22 <(f) The commission shall review a proposed change in the
6-23 rates of a local exchange company under this section if the
6-24 proposed rates, together with any local rate changes which went
6-25 into effect during the 12 months preceding the proposed effective
6-26 date of the requested rate change as well as any other proposed
6-27 local rate changes then pending before the commission, will
7-1 increase its total gross annual local revenues by more than 2 1/2
7-2 percent or if the proposed change would increase the rate of any
7-3 service category by more than 25 percent, except for basic local
7-4 service, which shall be limited to a maximum of 2 1/2 percent of
7-5 the total gross annual local revenue. Review under this subsection
7-6 shall be as provided by Section 43 of this Act. Each local
7-7 exchange company may receive a change in its local rates or in any
7-8 service category pursuant to this section only one time in any
7-9 12-month period.>
7-10 (i) <(g)> Rates established under this section must be in
7-11 accordance with the rate-setting principles of Article VI of this
7-12 Act. However, such companies may provide to their board members,
7-13 officers, employees, and agents free or reduced rates for services.
7-14 (j)(1) Small Company Policy Review. The commission shall,
7-15 within 120 days of the effective date of this section, examine its
7-16 policies, its reporting requirements, and its procedural and
7-17 substantive rules as they relate to rural and small local exchange
7-18 companies and cooperatives to eliminate or revise those that place
7-19 unnecessary burdens and expenses on such companies.
7-20 Notwithstanding any other provisions of this Act, the commission
7-21 shall consider and may adopt policies that include the following:
7-22 (A) policies to allow such companies to provide
7-23 required information by report or otherwise as necessary, including
7-24 a rate filing package when required, in substantially less
7-25 burdensome and complex form than required of larger local exchange
7-26 companies;
7-27 (B) policies that permit consideration of the
8-1 company's future construction plans and operational changes in
8-2 evaluating the reasonableness of current rates;
8-3 (C) policies that provide for evaluation of the
8-4 overall reasonableness of current rates no more frequently than
8-5 once every three years;
8-6 (D) policies that permit companies to change
8-7 depreciation and amortization rates when customer rates are not
8-8 affected by notice to the commission, subject to review by the
8-9 commission in a proceeding under Sections 42 and 43 of this Act;
8-10 (E) policies to allow the local exchange
8-11 companies to adopt for new services the rates for the same or
8-12 substantially similar services offered by a larger local exchange
8-13 company, without commission requirement of additional cost
8-14 justification; and
8-15 (F) policies that allow a local exchange
8-16 company, in lieu of any management audit that would otherwise be
8-17 required by law, policy, or rule, to instead submit to the
8-18 commission financial audits of the company regularly performed by
8-19 independent auditors or required and performed as a result of the
8-20 company's participation in federal or state financing or
8-21 revenue-sharing programs.
8-22 (2) Notwithstanding any other relevant provision of
8-23 this Act, the commission may adopt policies under this subsection
8-24 that the commission considers appropriate.
8-25 (k) <(h)> The commission is granted all necessary power and
8-26 authority to prescribe and collect fees and assessments from local
8-27 exchange companies necessary to recover the commission's and the
9-1 Office of Public Utility Counsel's costs of activities carried out
9-2 and services provided under Subsection (i) of Section 43 and
9-3 Sections 43A, <and> 43B, and 43C of this Act.
9-4 (l) Except as provided in Subsection (j), this section may
9-5 not apply to any local exchange company that is a cooperative
9-6 corporation partially deregulated under the provisions of Section
9-7 43C of this Act.
9-8 Sec. 43C. (a) A local exchange company that is a
9-9 cooperative corporation may vote to partially deregulate the
9-10 cooperative by sending a ballot to each cooperative member. The
9-11 ballot may be included in a bill or sent separately. The ballot
9-12 shall provide for voting for or against the proposition:
9-13 "Authorizing the partial deregulation of the (name of the
9-14 cooperative)."
9-15 (b) The cooperative is deemed to be partially deregulated if
9-16 a majority of the ballots returned to the cooperative not later
9-17 than the 45th day after the date on which the ballots are mailed
9-18 favor deregulation.
9-19 (c) After the initial balloting, the cooperative may offer
9-20 extended local calling services, new services on an optional basis,
9-21 or make changes in its rates or tariffs if the cooperative:
9-22 (1) provides notice of the proposed action under this
9-23 section to all customers and municipalities as prescribed by
9-24 Subsection (e) of this section;
9-25 (2) files with the commission affidavits verifying the
9-26 provision of notice as prescribed by Subsection (f) of this
9-27 section; and
10-1 (3) files a statement of intent pursuant to Subsection
10-2 (d) of this section.
10-3 (d) A statement of intent to use this section must be filed
10-4 with the commission and the office not later than the 61st day
10-5 before the date on which a proposed change will take effect and
10-6 must include:
10-7 (1) a copy of a resolution approving the proposed
10-8 action and authorizing the filing of the statement of intent signed
10-9 by a majority of the members of the cooperative's board of
10-10 directors;
10-11 (2) a description of the services affected by the
10-12 proposed action;
10-13 (3) a copy of the proposed tariff for the affected
10-14 service; and
10-15 (4) a copy of the customer notice required by this
10-16 section.
10-17 (e) The cooperative shall provide to all affected customers
10-18 and parties, including municipalities, at least two notices of the
10-19 proposed action by bill insert or by individual notice. The
10-20 cooperative shall provide the first notice not later than the 61st
10-21 day before the date on which the proposed action will take effect.
10-22 The cooperative shall provide the last notice not later than the
10-23 31st day before the date on which the proposed action will take
10-24 effect. Each notice prescribed by this subsection must include:
10-25 (1) a description of the services affected by the
10-26 proposed action;
10-27 (2) the effective date of the proposed action;
11-1 (3) an explanation of the customer's right to petition
11-2 the commission for a review under Subsection (g) of this section;
11-3 (4) an explanation of the customer's right to obtain a
11-4 copy of the proposed tariff from the cooperative;
11-5 (5) the amount by which the cooperative's total gross
11-6 annual revenues will increase or decrease and a statement
11-7 explaining the effect on the cooperative revenues as a result of
11-8 the proposed action; and
11-9 (6) a list of rates that are affected by the proposed
11-10 rate action, showing the effect of the proposed action on each such
11-11 rate.
11-12 (f) Not later than the 15th day before the date on which the
11-13 proposed action will take effect, the cooperative shall file with
11-14 the commission affidavits that verify that the cooperative provided
11-15 each notice prescribed under Subsection (e) of this section.
11-16 (g)(1) The commission shall review a proposed action filed
11-17 under this section if:
11-18 (A) the commission receives, not later than the
11-19 45th day after the first notice is provided under Subsection (e) of
11-20 this section, complaints relating to the proposed action:
11-21 (i) signed by at least five percent of the
11-22 affected local service customers; or
11-23 (ii) from an affected intrastate access
11-24 customer, or group of affected intrastate access customers, that in
11-25 the preceding 12 months accounted for more than 10 percent of the
11-26 cooperative's total intrastate access revenues;
11-27 (B) the cooperative does not comply with the
12-1 procedural requirements of this section; or
12-2 (C) the proposed action is inconsistent with the
12-3 commission's substantive policies as expressed in its rules.
12-4 (2) If the commission conducts a review of the
12-5 proposed action under this subsection or under Section 42 of this
12-6 Act before the effective date, the commission may suspend the
12-7 proposed actions of the cooperative during the pendency of the
12-8 review.
12-9 (h) A cooperative that is partially deregulated under this
12-10 section may vote to reverse the deregulation by sending a ballot
12-11 to each cooperative member. Upon its own motion or within 60 days
12-12 upon receipt of a written request of 10 percent of its members, the
12-13 cooperative's board of directors shall reballot. The ballot may be
12-14 included in a bill or sent separately. The ballot shall provide
12-15 for voting for or against the proposition: "Reversing the partial
12-16 deregulation of the (name of the cooperative)." The partial
12-17 deregulation is reversed if a majority of the ballots returned to
12-18 the cooperative not later than the 45th day after the date on which
12-19 the ballots are mailed favor reversal.
12-20 (i) The commission by rule shall prescribe the voting
12-21 procedures a cooperative is required to use under this section.
12-22 (j) This section does not:
12-23 (1) prohibit a cooperative from filing for a new
12-24 service or rate change under another applicable section of this
12-25 Act; or
12-26 (2) affect the application of other provisions of this
12-27 Act not directly related to rate-making or the authority of the
13-1 commission to require the cooperative to file reports as required
13-2 under this Act, Section 43B(j) of this Act, or under the rules
13-3 adopted by the commission.
13-4 (k) Notwithstanding any other provision of this section, the
13-5 commission may conduct a review in accordance with Section 42 of
13-6 this Act.
13-7 SECTION 2. This Act takes effect September 1, 1995.
13-8 SECTION 3. The importance of this legislation and the
13-9 crowded condition of the calendars in both houses create an
13-10 emergency and an imperative public necessity that the
13-11 constitutional rule requiring bills to be read on three several
13-12 days in each house be suspended, and this rule is hereby suspended.