S.B. No. 319
                                        AN ACT
    1-1  relating to a nonsubstantive recodification of the Public Utility
    1-2  Regulatory Act.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  The Public Utility Regulatory Act of 1995 is
    1-5  enacted to read as follows:
    1-6           TITLE I.  PROVISIONS APPLICABLE TO ALL UTILITIES
    1-7                    SUBTITLE A.  GENERAL PROVISIONS
    1-8        Sec. 1.001.  SHORT TITLE.  This Act may be referred to as the
    1-9  "Public Utility Regulatory Act of 1995."  (Sec. 1)
   1-10        Sec. 1.002.  LEGISLATIVE POLICY AND PURPOSE.  This Act is
   1-11  enacted to protect the public interest inherent in the rates and
   1-12  services of public utilities.  The legislature finds that public
   1-13  utilities are by definition monopolies in the areas they serve;
   1-14  that therefore the normal forces of competition which operate to
   1-15  regulate prices in a free enterprise society do not operate; and
   1-16  that therefore utility rates, operations, and services are
   1-17  regulated by public agencies with the objective that this
   1-18  regulation shall operate as a substitute for competition.  The
   1-19  purpose of this Act is to establish a comprehensive regulatory
   1-20  system which is adequate to the task of regulating public utilities
   1-21  as defined by this Act, to assure rates, operations, and services
   1-22  which are just and reasonable to the consumers and to the
   1-23  utilities.  (Sec. 2)
   1-24        Sec. 1.003.  DEFINITIONS.  In this Act:
    2-1              (1)  "Affected person" means any public utility
    2-2  affected by any action of the regulatory authority, any person or
    2-3  corporation whose utility service or rates are affected by any
    2-4  proceeding before the regulatory authority, or any person or
    2-5  corporation that is a competitor of a public utility with respect
    2-6  to any service performed by the utility or that desires to enter
    2-7  into competition.  (Sec. 3(h))
    2-8              (2)  "Affiliated interest" or "affiliate" means:
    2-9                    (A)  any person or corporation owning or holding,
   2-10  directly or indirectly, five percent or more of the voting
   2-11  securities of a public utility;
   2-12                    (B)  any person or corporation in any chain of
   2-13  successive ownership of five percent or more of the voting
   2-14  securities of a public utility;
   2-15                    (C)  any corporation five percent or more of the
   2-16  voting securities of which is owned or controlled, directly or
   2-17  indirectly, by a public utility;
   2-18                    (D)  any corporation five percent or more of the
   2-19  voting securities of which is owned or controlled, directly or
   2-20  indirectly, by any person or corporation that owns or controls,
   2-21  directly or indirectly, five percent or more of the voting
   2-22  securities of any public utility or by any person or corporation in
   2-23  any chain of successive ownership of five percent of such
   2-24  securities;
   2-25                    (E)  any person who is an officer or director of
   2-26  a public utility or of any corporation in any chain of successive
   2-27  ownership of five percent or more of voting securities of a public
    3-1  utility;
    3-2                    (F)  any person or corporation that the
    3-3  commission, after notice and hearing, determines actually exercises
    3-4  any substantial influence or control over the policies and actions
    3-5  of a public utility, or over which a public utility exercises that
    3-6  control, or that is under common control with a public utility,
    3-7  that control being the possession, directly or indirectly, of the
    3-8  power to direct or cause the direction of the management and
    3-9  policies of another, whether that power is established through
   3-10  ownership or voting of securities or by any other direct or
   3-11  indirect means; or
   3-12                    (G)  any person or corporation that the
   3-13  commission after notice and hearing determines is actually
   3-14  exercising that substantial influence over the policies and action
   3-15  of the public utility in conjunction with one or more persons or
   3-16  corporations with which they are related by ownership or blood
   3-17  relationship, or by action in concert, that together they are
   3-18  affiliated with that public utility within the meaning of this
   3-19  section, even though no one of them alone is so affiliated.  (Sec.
   3-20  3(i))
   3-21              (3)  "Allocations" means, for all utilities, the
   3-22  division of plant, revenues, expenses, taxes, and reserves between
   3-23  municipalities or between municipalities and unincorporated areas,
   3-24  where those items are used for providing public utility service in
   3-25  a municipality, or for a municipality and unincorporated areas.
   3-26  (Sec. 3(j))
   3-27              (4)  "Commission" means the Public Utility Commission
    4-1  of Texas.  (Sec. 3(e))
    4-2              (5)  "Commissioner" means a member of the Public
    4-3  Utility Commission of Texas.  (Sec. 3(k))
    4-4              (6)  "Cooperative corporation" means any telephone or
    4-5  electric cooperative corporation organized and operating under the
    4-6  Telephone Cooperative Act (Article 1528c, Vernon's Texas Civil
    4-7  Statutes) or the Electric Cooperative Corporation Act (Article
    4-8  1528b, Vernon's Texas Civil Statutes).  (Sec. 3(l))
    4-9              (7)  "Corporation" means any corporation, joint-stock
   4-10  company, or association, domestic or foreign, and its lessees,
   4-11  assignees, trustees, receivers, or other successors in interest,
   4-12  having any of the powers or privileges of corporations not
   4-13  possessed by individuals or partnerships, but does not include
   4-14  municipal corporations unless expressly provided otherwise in this
   4-15  Act.  (Sec. 3(m))
   4-16              (8)  "Facilities" means all the plant and equipment of
   4-17  a public utility, including all tangible and intangible real and
   4-18  personal property without limitation, and any and all means and
   4-19  instrumentalities in any manner owned, operated, leased, licensed,
   4-20  used, controlled, furnished, or supplied for, by, or in connection
   4-21  with the business of any public utility.  (Sec. 3(n))
   4-22              (9)  "Municipally owned utility" means any utility
   4-23  owned, operated, and controlled by a municipality or by a nonprofit
   4-24  corporation whose directors are appointed by one or more
   4-25  municipalities.  (Sec. 3(o))
   4-26              (10)  "Office" means the Office of Public Utility
   4-27  Counsel.  (New)
    5-1              (11)  "Order" means the whole or a part of the final
    5-2  disposition, whether affirmative, negative, injunctive, or
    5-3  declaratory in form, of the regulatory authority in a matter other
    5-4  than rulemaking, but including issuance of certificates of
    5-5  convenience and necessity and ratesetting.  (Sec. 3(p))
    5-6              (12)  "Person" includes a natural person, partnership
    5-7  of two or more persons having a joint or common interest, mutual or
    5-8  cooperative association, and corporation.  (Sec. 3(a))
    5-9              (13)  "Proceeding" means any hearing, investigation,
   5-10  inquiry, or other fact-finding or decision-making procedure under
   5-11  this Act and includes the denial of relief or the dismissal of a
   5-12  complaint.  (Sec. 3(q))
   5-13              (14)  "Rate" means and includes every compensation,
   5-14  tariff, charge, fare, toll, rental, and classification, or any of
   5-15  them demanded, observed, charged, or collected whether directly or
   5-16  indirectly by any public utility for any service, product, or
   5-17  commodity described in the definition of "utility" in Section 2.001
   5-18  or 3.001 of this Act and any rules, regulations, practices, or
   5-19  contracts affecting any such compensation, tariff, charge, fare,
   5-20  toll, rental, or classification.  (Sec. 3(d))
   5-21              (15)  "Regulatory authority" means, in accordance with
   5-22  the context where it is found, either the commission or the
   5-23  governing body of any municipality.  (Sec. 3(g))
   5-24              (16)  "Service" is used in this Act in its broadest and
   5-25  most inclusive sense and includes any and all acts done, rendered,
   5-26  or performed, any and all things furnished or supplied, and any and
   5-27  all facilities used, furnished, or supplied by public utilities in
    6-1  the performance of their duties under this Act to their patrons,
    6-2  employees, other public utilities, and the public, as well as the
    6-3  interchange of facilities between two or more of them.  The term
    6-4  does not include the printing, distribution, or sale of advertising
    6-5  in telephone directories.  (Sec. 3(s))
    6-6              (17)  "Test year" means the most recent 12 months for
    6-7  which operating data for a public utility are available and shall
    6-8  commence with a calendar quarter or a fiscal year quarter.  (Sec.
    6-9  3(t))
   6-10        (Secs. 3(b) and (u) deleted)
   6-11        Sec. 1.004.  DEFINITIONS IN TITLE.  In this title, "public
   6-12  utility" or "utility" has the meaning assigned by Section 2.001 or
   6-13  3.001 of this Act.
   6-14        Sec. 1.005.  APPLICABILITY OF ADMINISTRATIVE PROCEDURE ACT.
   6-15  Chapter 2001, Government Code, applies to all proceedings under
   6-16  this Act except to the extent inconsistent with this Act.
   6-17  Communications of members and employees of the commission with a
   6-18  party, a party's representative, or other persons are governed by
   6-19  Section 2001.061, Government Code.  (Sec. 4)
   6-20                SUBTITLE B.  ORGANIZATION OF COMMISSION
   6-21        Sec. 1.021.  CREATION OF COMMISSION; APPOINTMENT AND TERMS;
   6-22  CHAIRMAN.  (a)  The Public Utility Commission of Texas consists of
   6-23  three commissioners, who shall be appointed to staggered, six-year
   6-24  terms by the governor, with the advice and consent of two-thirds of
   6-25  the members of the senate present, and who shall have and exercise
   6-26  the jurisdiction and powers herein conferred upon the commission.
   6-27        (b)  Each commissioner shall hold office until his successor
    7-1  is appointed and qualified.
    7-2        (c)  At its first meeting following the biennial appointment
    7-3  and qualification of a commissioner, the commission shall elect one
    7-4  of the commissioners chairman.
    7-5        (d)  Appointments to the commission shall be made without
    7-6  regard to the race, creed, sex, religion, or national origin of the
    7-7  appointees.  (Sec. 5)
    7-8        Sec. 1.022.  SUNSET PROVISION.  The Public Utility Commission
    7-9  of Texas and the Office of Public Utility Counsel are subject to
   7-10  Chapter 325, Government Code (Texas Sunset Act).  Unless continued
   7-11  in existence as provided by that chapter, the commission and the
   7-12  office are abolished and this Act expires September 1, 1995.  (Sec.
   7-13  5a)
   7-14        Sec. 1.023.  QUALIFICATIONS; OATH AND BOND; PROHIBITED
   7-15  ACTIVITIES.  (a)  To be eligible for appointment as a commissioner,
   7-16  a person must be a qualified voter, not less than 30 years of age,
   7-17  a citizen of the United States, and a resident of the State of
   7-18  Texas.
   7-19        (b)  Each commissioner shall qualify for office by taking the
   7-20  oath prescribed for other state officers and shall execute a bond
   7-21  for $5,000 payable to the state and conditioned on the faithful
   7-22  performance of his duties.
   7-23        (c)  A person is not eligible for appointment as a
   7-24  commissioner if at any time during the two-year period immediately
   7-25  preceding his appointment he personally served as an officer,
   7-26  director, owner, employee, partner, or legal representative of any
   7-27  public utility or any affiliated interest or he owned or
    8-1  controlled, directly or indirectly, stocks or bonds of any class
    8-2  with a value of $10,000 or more in a public utility or any
    8-3  affiliated interest.
    8-4        (d)  A person who is required to register as a lobbyist under
    8-5  Chapter 305, Government Code, may not serve as a member of the
    8-6  commission or public utility counsel or act as the general counsel
    8-7  to the commission.  (Sec. 6(a) (reorg.))
    8-8        Sec. 1.024.  PROHIBITED ACTIVITIES.  (a)  A commissioner or
    8-9  employee of the commission may not do any of the following during
   8-10  his period of service with the commission:
   8-11              (1)  have any pecuniary interest, either as an officer,
   8-12  director, partner, owner, employee, attorney, consultant, or
   8-13  otherwise, in any public utility or affiliated interest, or in any
   8-14  person or corporation or other business entity a significant
   8-15  portion of whose business consists of furnishing goods or services
   8-16  to public utilities or affiliated interests, but not including a
   8-17  nonprofit group or association solely supported by gratuitous
   8-18  contributions of money, property or services;
   8-19              (2)  own or control any securities in a public utility
   8-20  or affiliated interest, either directly or indirectly; or
   8-21              (3)  accept any gift, gratuity, or entertainment
   8-22  whatsoever from any public utility or affiliated interest, or from
   8-23  any person, corporation, agent, representative, employee, or other
   8-24  business entity a significant portion of whose business consists of
   8-25  furnishing goods or services to public utilities or affiliated
   8-26  interests, or from any agent, representative, attorney, employee,
   8-27  officer, owner, director, or partner of any such business entity or
    9-1  of any public utility or affiliated interest; provided, however,
    9-2  that the receipt and acceptance of any gifts, gratuities, or
    9-3  entertainment after termination of service with the commission
    9-4  whose cumulative value in any one-year period is less than $100
    9-5  does not constitute a violation of this Act.
    9-6        (b)  The prohibited activities of this section do not include
    9-7  contracts for public utility products and services or equipment for
    9-8  use of public utility products when a member or employee of the
    9-9  commission is acting as a consumer.
   9-10        (c)  A commissioner or employee of the commission may not
   9-11  directly or indirectly solicit or request from or suggest or
   9-12  recommend to any public utility or to any agent, representative,
   9-13  attorney, employee, officer, owner, director, or partner thereof
   9-14  the appointment to any position or the employment in any capacity
   9-15  of any person by such public utility or affiliated interest.
   9-16        (d)  A public utility or affiliated interest or any person,
   9-17  corporation, firm, association, or business that furnishes goods or
   9-18  services to any public utility or affiliated interest, or any
   9-19  agent, representative, attorney, employee, officer, owner,
   9-20  director, or partner of any public utility or affiliated interest,
   9-21  or any person, corporation, firm, association, or business
   9-22  furnishing goods or services to any public utility or affiliated
   9-23  interest may not give or offer to give any gift, gratuity,
   9-24  employment, or entertainment whatsoever to any member or employee
   9-25  of the commission except as allowed by Subdivision (3) of
   9-26  Subsection (a) of this section, nor may any such public utility or
   9-27  affiliated interest or any such person, corporation, firm,
   10-1  association, or business aid, abet, or participate with any member,
   10-2  employee, or former employee of the commission in any activity or
   10-3  conduct that would constitute a violation of this subsection or
   10-4  Subdivision (3) of Subsection (a) of this section.
   10-5        (e)  It is not a violation of this section if a member of the
   10-6  commission or a person employed by the commission, upon becoming
   10-7  the owner of any stocks or bonds or other pecuniary interest in a
   10-8  public utility or affiliated interest under the jurisdiction of the
   10-9  commission otherwise than voluntarily, informs the commission and
  10-10  the attorney general of such ownership and divests himself of the
  10-11  ownership or interest within a reasonable time.  In this section, a
  10-12  "pecuniary interest" includes income, compensation, and payment of
  10-13  any kind, in addition to ownership interests.  It is not a
  10-14  violation of this section if such a pecuniary interest is held
  10-15  indirectly by ownership of an interest in a retirement system,
  10-16  institution, or fund which in the normal course of business invests
  10-17  in diverse securities independently of the control of the
  10-18  commissioner or employee.
  10-19        (f)  A member of the commission may not seek nomination or
  10-20  election to any other civil office of the State of Texas or of the
  10-21  United States while he is a commissioner.  If any member of the
  10-22  commission files for nomination for or election to any civil office
  10-23  of the State of Texas or of the United States, his office as
  10-24  commissioner immediately becomes vacant, and the governor shall
  10-25  appoint a successor.  (Secs. 6(b)-(h))
  10-26        Sec. 1.025.  PROHIBITION OF EMPLOYMENT OR REPRESENTATION.
  10-27  (a)  A commissioner may not within two years, and an employee may
   11-1  not, within one year after his employment with the commission has
   11-2  ceased, be employed by a public utility which was in the scope of
   11-3  the commissioner's or employee's official responsibility while the
   11-4  commissioner or employee was associated with the commission.
   11-5        (b)  During the time a commissioner or employee of the
   11-6  commission is associated with the commission or at any time after,
   11-7  the commissioner or employee may not represent a person,
   11-8  corporation, or other business entity before the commission or a
   11-9  court in a matter in which the commissioner or employee was
  11-10  personally involved while associated with the commission or a
  11-11  matter that was within the commissioner's or employee's official
  11-12  responsibility while the commissioner or employee was associated
  11-13  with the commission.
  11-14        (c)  The commission shall require its members and employees
  11-15  to read this section and Section 1.024 of this Act and as often as
  11-16  necessary shall provide information regarding their
  11-17  responsibilities under applicable laws relating to standards of
  11-18  conduct for state officers and employees.  (Secs. 6(i)-(k))
  11-19        Sec. 1.026.  GROUNDS FOR REMOVAL; VALIDITY OF ACTIONS.
  11-20  (a)  It is a ground for removal from the commission if a member:
  11-21              (1)  does not have at the time of appointment the
  11-22  qualifications required by Section 1.023 of this Act for
  11-23  appointment to the commission; or
  11-24              (2)  does not maintain during the service on the
  11-25  commission the qualifications required by Section 1.023 of this Act
  11-26  for appointment to the commission.
  11-27        (b)  The validity of an action of the commission is not
   12-1  affected by the fact that it was taken when a ground for removal of
   12-2  a member of the commission existed.  (Sec. 6A)
   12-3        Sec. 1.027.  VACANCIES.  Whenever a vacancy in the office of
   12-4  commissioner occurs, it shall be filled in the manner provided
   12-5  herein with respect to the original appointment, except that the
   12-6  governor may make interim appointments to continue until the
   12-7  vacancy can be filled in the manner provided.  Any person appointed
   12-8  with the advice and consent of the senate to fill a vacancy shall
   12-9  hold office during the unexpired portion of the term.  (Sec. 7)
  12-10        Sec. 1.028.  EMPLOYEES.  (a)  The commission shall employ
  12-11  such officers, administrative law judges, hearing examiners,
  12-12  investigators, lawyers, engineers, economists, consultants,
  12-13  statisticians, accountants, administrative assistants, inspectors,
  12-14  clerical staff, and other employees as it deems necessary to carry
  12-15  out the provisions of this Act.  All employees receive such
  12-16  compensation as is fixed by the legislature.
  12-17        (b)  The commission shall employ the following:
  12-18              (1)  an executive director;
  12-19              (2)  a director of hearings who has wide experience in
  12-20  utility regulation and rate determination;
  12-21              (3)  a chief engineer who is a registered engineer and
  12-22  an expert in public utility engineering and rate matters;
  12-23              (4)  a chief accountant who is a certified public
  12-24  accountant, experienced in public utility accounting;
  12-25              (5)  a director of research who is experienced in the
  12-26  conduct of analyses of industry, economics, energy, fuel, and other
  12-27  related matters that the commission may want to undertake;
   13-1              (6)  a director of consumer affairs and public
   13-2  information;
   13-3              (7)  a director of utility evaluation;
   13-4              (8)  a director of energy conservation; and
   13-5              (9)  a general counsel.
   13-6        (c)  The general counsel and his staff are responsible for
   13-7  the gathering of information relating to all matters within the
   13-8  authority of the commission.
   13-9        (d)  The duties of the general counsel include:
  13-10              (1)  accumulation of evidence and other information
  13-11  from public utilities and from the accounting and technical and
  13-12  other staffs of the commission and from other sources for the
  13-13  purposes specified herein;
  13-14              (2)  preparation and presentation of such evidence
  13-15  before the commission or its appointed examiner in proceedings;
  13-16              (3)  conduct of investigations of public utilities
  13-17  under the jurisdiction of the commission;
  13-18              (4)  preparation of proposed changes in the rules of
  13-19  the commission;
  13-20              (5)  preparation of recommendations that the commission
  13-21  undertake investigation of any matter within its authority;
  13-22              (6)  preparation of recommendations and a report of
  13-23  such staff for inclusion in the annual report of the commission;
  13-24              (7)  protection and representation of the public
  13-25  interest and coordination and direction of the preparation and
  13-26  presentation of evidence from the commission staff in all cases
  13-27  before the commission as necessary to effect the objectives and
   14-1  purposes stated in this Act and ensure protection of the public
   14-2  interest; and
   14-3              (8)  such other activities as are reasonably necessary
   14-4  to enable him to perform his duties.
   14-5        (e)  The commission shall employ administrative law judges to
   14-6  preside at hearings of major importance before the commission.  An
   14-7  administrative law judge must be a licensed attorney with not less
   14-8  than five years' general experience or three years' experience in
   14-9  utility regulatory law.  The administrative law judge shall perform
  14-10  his duties independently from the commission.  (Secs. 8(a)-(d))
  14-11        Sec. 1.029.  PERSONNEL POLICIES.  (a)  The executive director
  14-12  or his designee shall develop an intra-agency career ladder
  14-13  program, one part of which shall be the intra-agency posting of all
  14-14  nonentry level positions for at least 10 days before any public
  14-15  posting.  The executive director or his designee shall develop a
  14-16  system of annual performance evaluations based on measurable job
  14-17  tasks.  All merit pay for commission employees must be based on the
  14-18  system established under this section.
  14-19        (b)  The executive director or his/her designee shall prepare
  14-20  and maintain a written plan to assure implementation of a program
  14-21  of equal employment opportunity whereby all personnel transactions
  14-22  are made without regard to race, color, disability, sex, religion,
  14-23  age, or national origin.  The plan shall include:
  14-24              (1)  a comprehensive analysis of all the agency's
  14-25  workforce by race, sex, ethnic origin, class of position, and
  14-26  salary or wage;
  14-27              (2)  plans for recruitment, evaluation, selection,
   15-1  appointment, training, promotion, and other personnel policies;
   15-2              (3)  steps reasonably designed to overcome any
   15-3  identified underutilization of minorities and women in the agency's
   15-4  workforce; and
   15-5              (4)  objectives and goals, timetables for the
   15-6  achievement of the objectives and goals, and assignments of
   15-7  responsibility for their achievement.
   15-8        (c)  The plan required under Subsection (b) of this section
   15-9  shall be filed with the governor's office within 60 days of the
  15-10  effective date of this Act, cover an annual period, and be updated
  15-11  at least annually.  Progress reports shall be submitted to the
  15-12  governor's office within 30 days of November 1 and April 1 of each
  15-13  year and shall include the steps the agency has taken within the
  15-14  reporting period to comply with these requirements.  (Secs.
  15-15  8(e)-(f))
  15-16        Sec. 1.030.  SALARY.  The annual salary of the commissioners
  15-17  shall be determined by the legislature.  (Sec. 9)
  15-18        Sec. 1.031.  OFFICE; MEETINGS.  The principal office of the
  15-19  commission shall be located in the City of Austin, Texas, and shall
  15-20  be open daily during the usual business hours, Saturdays, Sundays,
  15-21  and legal holidays excepted.  The commission shall hold meetings at
  15-22  its office and at such other convenient places in the state as
  15-23  shall be expedient and necessary for the proper performance of its
  15-24  duties.  (Sec. 10)
  15-25        Sec. 1.032.  SEAL.  The commission shall have a seal bearing
  15-26  the following inscription:  "Public Utility Commission of Texas."
  15-27  The seal shall be affixed to all records and authentications of
   16-1  copies of records and to such other instruments as the commission
   16-2  shall direct.  All courts of this state shall take judicial notice
   16-3  of said seal.  (Sec. 11)
   16-4        Sec. 1.033.  QUORUM.  A majority of the commissioners shall
   16-5  constitute a quorum for the transaction of any business, for the
   16-6  performance of any duty, or for the exercise of any power of the
   16-7  commission.  A vacancy or disqualification does not prevent the
   16-8  remaining commissioner or commissioners from exercising all the
   16-9  powers of the commission.  (Sec. 12)
  16-10        Sec. 1.034.  ORDERS; TRANSCRIPT AND EXHIBITS; PUBLIC RECORDS.
  16-11  All orders of the commission shall be in writing and shall contain
  16-12  detailed findings of the facts upon which they are passed.  The
  16-13  commission shall retain a copy of the transcript and the exhibits
  16-14  in any matter in which the commission issues an order.  All files
  16-15  pertaining to matters which were at any time pending before the
  16-16  commission and to records, reports, and inspections required by
  16-17  Subtitle E of this title, Title II of this Act, and Title III of
  16-18  this Act shall be public records, subject to the terms of Chapter
  16-19  552, Government Code.  (Sec. 13)
  16-20        Sec. 1.035.  ANNUAL REPORT.  (a)  The commission shall
  16-21  publish an annual report to the governor, summarizing its
  16-22  proceedings, listing its receipts and the sources of its receipts,
  16-23  listing its expenditures and the nature of such expenditures, and
  16-24  setting forth such other information concerning the operations of
  16-25  the commission and the public utility industry as it considers of
  16-26  general interest.
  16-27        (b)  In the annual report issued in the year preceding the
   17-1  convening of each regular session of the legislature, the
   17-2  commission shall make such suggestions regarding modification and
   17-3  improvement of the commission's statutory authority and for the
   17-4  improvement of utility regulation in general as it may deem
   17-5  appropriate for protecting and furthering the interest of the
   17-6  public.  (Sec. 14)
   17-7        Sec. 1.036.  CONSUMER INFORMATION.  The commission shall
   17-8  prepare information of consumer interest describing the regulatory
   17-9  functions of the commission and describing the commission's
  17-10  procedures by which consumer complaints are filed with and resolved
  17-11  by the commission.  The commission shall make the information
  17-12  available to the general public and appropriate state agencies.
  17-13  (Sec. 14A)
  17-14        Sec. 1.037.  ATTORNEY GENERAL TO REPRESENT COMMISSION.  The
  17-15  Attorney General of the State of Texas shall represent the
  17-16  commission in all matters before the state courts, any court of the
  17-17  United States, and any federal public utility regulatory
  17-18  commission.  (Sec. 15)
  17-19             SUBTITLE C.  OFFICE OF PUBLIC UTILITY COUNSEL
  17-20        Sec. 1.051.  OFFICE OF PUBLIC UTILITY COUNSEL.  (a)  The
  17-21  independent Office of Public Utility Counsel represents the
  17-22  interests of residential and small commercial consumers.
  17-23        (b)  The chief executive of the Office of Public Utility
  17-24  Counsel is the public utility counsel, hereinafter referred to as
  17-25  counsellor.  The counsellor is appointed by the governor with the
  17-26  advice and consent of the senate to a two-year term that expires on
  17-27  February 1 of the final year of the term.
   18-1        (c)  The counsellor shall be a resident of Texas and admitted
   18-2  to the practice of law in this state who has demonstrated a strong
   18-3  commitment and involvement in efforts to safeguard the rights of
   18-4  the public and possesses the knowledge and experience necessary to
   18-5  practice effectively in utility proceedings.  (Secs. 15A(a), (b),
   18-6  (d))
   18-7        Sec. 1.052.  INTEREST PROHIBITED.  During the period of the
   18-8  counsellor's employment and for a period of two years following the
   18-9  termination of employment, it shall be unlawful for any person
  18-10  employed as counsellor to have a direct or indirect interest in any
  18-11  utility company regulated under this Act, to provide legal services
  18-12  directly or indirectly to or be employed in any capacity by a
  18-13  utility company regulated under this Act, its parent, or its
  18-14  subsidiary companies, corporations, or cooperatives; but such
  18-15  person may otherwise engage in the private practice of law after
  18-16  the termination of employment as counsellor.  (Sec. 15A(e))
  18-17        Sec. 1.053.  EMPLOYEES.  The counsellor may employ such
  18-18  lawyers, economists, engineers, consultants, statisticians,
  18-19  accountants, clerical staff, and other employees as he or she deems
  18-20  necessary to carry out the provisions of this section.  All
  18-21  employees shall receive such compensation as is fixed by the
  18-22  legislature from the assessment imposed by Section 1.351 of this
  18-23  Act.  (Sec. 15A(c))
  18-24        Sec. 1.054.  POWERS AND DUTIES.  (a)  The Office of Public
  18-25  Utility Counsel:
  18-26              (1)  shall assess the impact of utility rate changes
  18-27  and other regulatory actions on residential consumers in the State
   19-1  of Texas and shall be an advocate in its own name of positions most
   19-2  advantageous to a substantial number of such consumers as
   19-3  determined by the counsellor;
   19-4              (2)  may appear or intervene as a matter of right as a
   19-5  party or otherwise on behalf of residential consumers, as a class,
   19-6  in all proceedings before the commission;
   19-7              (3)  may appear or intervene as a matter of right as a
   19-8  party or otherwise on behalf of small commercial consumers, as a
   19-9  class, in all proceedings where it is deemed by the counsellor that
  19-10  small commercial consumers are in need of representation;
  19-11              (4)  may initiate or intervene as a matter of right or
  19-12  otherwise appear in any judicial proceedings involving or arising
  19-13  out of any action taken by an administrative agency in a proceeding
  19-14  in which the counsellor was authorized to appear;
  19-15              (5)  may have access as any party, other than staff, to
  19-16  all records gathered by the commission under the authority of
  19-17  Subsection (a) of Section 1.203 of this Act;
  19-18              (6)  may obtain discovery of any nonprivileged matter
  19-19  which is relevant to the subject matter involved in any proceeding
  19-20  or petition before the commission;
  19-21              (7)  may represent individual residential and small
  19-22  commercial consumers with respect to their disputed complaints
  19-23  concerning utility services unresolved before the commission; and
  19-24              (8)  may recommend legislation to the legislature which
  19-25  in its judgment would positively affect the interests of
  19-26  residential and small commercial consumers.
  19-27        (b)  Nothing in this section shall be construed as in any way
   20-1  limiting the authority of the commission to represent residential
   20-2  or small commercial consumers.
   20-3        (c)  The appearance of the counsellor in any proceeding in no
   20-4  way precludes the appearance of other parties on behalf of
   20-5  residential ratepayers or small commercial consumers.  The
   20-6  counsellor may not be grouped with any other parties.  (Secs.
   20-7  15A(f)-(h))
   20-8        (Sec. 15A(i) deleted)
   20-9                 SUBTITLE D.  COMMISSION JURISDICTION
  20-10        Sec. 1.101.  GENERAL POWER; RULES; HEARINGS; AUDITS.
  20-11  (a)  The commission has the general power to regulate and supervise
  20-12  the business of every public utility within its jurisdiction and to
  20-13  do all things, whether specifically designated in this Act or
  20-14  implied herein, necessary and convenient to the exercise of this
  20-15  power and jurisdiction.
  20-16        (b)  The commission shall make and enforce rules reasonably
  20-17  required in the exercise of its powers and jurisdiction, including
  20-18  rules governing practice and procedure before the commission.
  20-19        (c)  The commission may call and hold hearings, administer
  20-20  oaths, receive evidence at hearings, issue subpoenas to compel the
  20-21  attendance of witnesses and the production of papers and documents,
  20-22  and make findings of fact and decisions with respect to
  20-23  administering the provisions of this Act or the rules, orders, or
  20-24  other actions of the commission.
  20-25        (d)  Notwithstanding any other provision of this Act or other
  20-26  law, in proceedings other than those involving major rate changes,
  20-27  the commission may delegate to an administrative law judge or
   21-1  hearings examiner the authority to make a final decision and to
   21-2  issue findings of fact, conclusions of law, and other necessary
   21-3  orders in a proceeding in which there is no contested issue of fact
   21-4  or law.  The commission by rule shall define the procedures by
   21-5  which it delegates final decision-making authority authorized by
   21-6  this section.  For review purposes the final decision of the
   21-7  administrative law judge or hearings examiner has the same effect
   21-8  as a final decision of the commission unless a commissioner
   21-9  requests formal review of the decision.  (Sec. 16(a))
  21-10        Sec. 1.102.  AUDITS.  (a)  The commission shall inquire into
  21-11  the management of the business of all public utilities under its
  21-12  jurisdiction, shall keep itself informed as to the manner and
  21-13  method in which the management and business is conducted, and shall
  21-14  obtain from any public utility all necessary information to enable
  21-15  the commission to perform management audits.
  21-16        (b)  The commission may audit each utility under the
  21-17  jurisdiction of the commission as frequently as needed, but shall
  21-18  audit each utility at least once every 10 years.  Six months after
  21-19  any audit, the utility shall report to the commission on the status
  21-20  of the implementation of the recommendations of the audit and shall
  21-21  file subsequent reports at such times as the commission deems
  21-22  appropriate.  (Sec. 16(h))
  21-23        Sec. 1.103.  FRANCHISES.  Nothing in this Act shall be
  21-24  construed as in any way limiting the rights and powers of a
  21-25  municipality to grant or refuse franchises to use the streets and
  21-26  alleys within its limits and to make the statutory charges for the
  21-27  use thereof, but a provision of any franchise agreement may not
   22-1  limit or interfere with any power conferred on the commission by
   22-2  this Act.  (Sec. 21 (part))
   22-3       SUBTITLE E.  RECORDS, REPORTS, INSPECTIONS, AND SERVICES
   22-4        Sec. 1.201.  RECORDS OF PUBLIC UTILITY.  (a)  Every public
   22-5  utility shall keep and render to the regulatory authority in the
   22-6  manner and form prescribed by the commission uniform accounts of
   22-7  all business transacted.
   22-8        (b)  The commission may also prescribe forms of books,
   22-9  accounts, records, and memoranda to be kept by such public
  22-10  utilities, including the books, accounts, records, and memoranda of
  22-11  the rendition of and capacity for service as well as the receipts
  22-12  and expenditures of money, and any other forms, records, and
  22-13  memoranda which in the judgment of the commission may be necessary
  22-14  to carry out any of the provisions of this Act.
  22-15        (c)  In the case of any public utility subject to regulations
  22-16  by a federal regulatory agency, compliance with the system of
  22-17  accounts prescribed for the particular class of utilities by such
  22-18  agency may be deemed a sufficient compliance with the system
  22-19  prescribed by the commission; provided, however, that the
  22-20  commission may prescribe forms of books, accounts, records, and
  22-21  memoranda covering information in addition to those required by the
  22-22  federal agency.  The system of accounts and the forms of books,
  22-23  accounts, records, and memoranda prescribed by the commission for a
  22-24  public utility or class of utilities may not conflict or be
  22-25  inconsistent with the systems and forms established by a federal
  22-26  agency for that public utility or class of utilities.
  22-27        (d)  Every public utility is required to keep and render its
   23-1  books, accounts, records, and memoranda accurately and faithfully
   23-2  in the manner and form prescribed by the commission and to comply
   23-3  with all directions of the regulatory authority relating to such
   23-4  books, accounts, records, and memoranda.  The regulatory authority
   23-5  may require the examination and audit of all accounts.
   23-6        (e)  For the purposes of this section, "public utility"
   23-7  includes "municipally owned utility."  (Secs. 27(a), (d), (f))
   23-8        Sec. 1.202.  POWERS OF COMMISSION.  (a)  The commission shall
   23-9  have the power to:
  23-10              (1)  require that public utilities report to it such
  23-11  information relating to themselves and affiliated interests both
  23-12  within and without the State of Texas as it may consider useful in
  23-13  the administration of this Act;
  23-14              (2)  establish forms for all reports;
  23-15              (3)  determine the time for reports and the frequency
  23-16  with which any reports are to be made;
  23-17              (4)  require that any reports be made under oath;
  23-18              (5)  require that a copy of any contract or arrangement
  23-19  between any public utility and any affiliated interest be filed
  23-20  with it.  It may require any such contract or arrangement not in
  23-21  writing to be reduced to writing and filed with it;
  23-22              (6)  require that a copy of any report filed with any
  23-23  federal agency or any governmental agency or body of any other
  23-24  state be filed with it; and
  23-25              (7)  require that a copy of annual reports showing all
  23-26  payments of compensation (other than salary or wages subject to the
  23-27  withholding of federal income tax) to residents of Texas, or with
   24-1  respect to legal, administrative, or legislative matters in Texas,
   24-2  or for representation before the Texas Legislature or any
   24-3  governmental agency or body be filed with it.
   24-4        (b)  The railroad commission shall have the power to review
   24-5  and approve, for purposes of the Outer Continental Shelf Lands Act
   24-6  Amendments of 1978  and any other federal authorities, applications
   24-7  by gas utilities for the purchase of natural gas from producing
   24-8  affiliates.
   24-9        (c)  On the request of the governing body of any
  24-10  municipality, the commission may provide sufficient staff members
  24-11  to advise and consult with such municipality on any pending matter.
  24-12  (Sec. 28)
  24-13        Sec. 1.203.  INSPECTIONS; EXAMINATION UNDER OATH; COMPELLING
  24-14  PRODUCTION OF RECORDS; INQUIRY INTO MANAGEMENT AND AFFAIRS.
  24-15  (a)  Any regulatory authority, and when authorized by the
  24-16  regulatory authority, its counsel, agents, and employees, shall
  24-17  have the right, at reasonable times and for reasonable purposes, to
  24-18  inspect and obtain copies of the papers, books, accounts,
  24-19  documents, and other business records and to inspect the plant,
  24-20  equipment, and other property of any public utility within its
  24-21  jurisdiction.  The regulatory authority may examine under oath, or
  24-22  it may authorize the person conducting such investigation to
  24-23  examine under oath, any officer, agent, or employee of any public
  24-24  utility in connection with such investigation.  The regulatory
  24-25  authority may require, by order or subpoena served on any public
  24-26  utility, the production within this state at the time and place it
  24-27  may designate of any books, accounts, papers, or records kept by
   25-1  that public utility outside the state or verified copies in lieu
   25-2  thereof if the commission so orders.  Any public utility failing or
   25-3  refusing to comply with any such order or subpoena is in violation
   25-4  of this Act.
   25-5        (b)  A member, agent, or employee of the regulatory authority
   25-6  may enter the premises occupied by a public utility to make
   25-7  inspections, examinations, and tests and to exercise any authority
   25-8  provided by this Act.  A member, agent, or employee of the
   25-9  regulatory authority may act under this section only during
  25-10  reasonable hours and after giving reasonable notice to the utility.
  25-11  The public utility is entitled to be represented when inspections,
  25-12  examinations, and tests are made on its premises.  Reasonable time
  25-13  for the utility to secure a representative shall be allowed before
  25-14  commencing an inspection, examination, or test.
  25-15        (c)  The regulatory authority may inquire into the management
  25-16  and affairs of all public utilities and shall keep itself informed
  25-17  as to the manner and method in which the same are conducted.  (Sec.
  25-18  29)
  25-19        Sec. 1.204.  OFFICE OF PUBLIC UTILITY; RECORDS; REMOVAL FROM
  25-20  STATE.  Every public utility shall have an office in a county of
  25-21  this state in which its property or some part thereof is located in
  25-22  which it shall keep all books, accounts, records, and memoranda
  25-23  required by the commission to be kept in the state.  Books,
  25-24  accounts, records, or memoranda required by the regulatory
  25-25  authority to be kept in the state may not be removed from the
  25-26  state, except on conditions prescribed by the commission.  (Sec.
  25-27  33)
   26-1        Sec. 1.205.  COMMUNICATIONS BY PUBLIC UTILITIES WITH
   26-2  REGULATORY AUTHORITY; REGULATIONS AND RECORDS.  (a)  The regulatory
   26-3  authority shall prescribe regulations governing communications by
   26-4  public utilities, their affiliates, and their representatives with
   26-5  the regulatory authority or any member or employee of the
   26-6  regulatory authority.
   26-7        (b)  Such records shall contain the name of the person
   26-8  contacting the regulatory authority or member or employee of the
   26-9  regulatory authority, the name of the business entities
  26-10  represented, a brief description of the subject matter of the
  26-11  communication, and the action, if any, requested by the public
  26-12  utility, affiliate, or representative.  These records shall be
  26-13  available to the public on a monthly basis.  (Sec. 34)
  26-14        Sec. 1.206.  INTERFERENCE WITH TERMS OR CONDITIONS OF
  26-15  EMPLOYMENT.  The commission may not interfere with employee wages
  26-16  and benefits, working conditions, or other terms or conditions of
  26-17  employment that are the product of a collective bargaining
  26-18  agreement recognized under federal law.  Employee wage rates and
  26-19  benefit levels that are the product of such bargaining shall be
  26-20  presumed reasonable.  (Sec. 41B)
  26-21               SUBTITLE F.  SALE OF PROPERTY AND MERGERS
  26-22        Sec. 1.251.  REPORT OF SALE, MERGER, ETC.; INVESTIGATION;
  26-23  DISALLOWANCE OF TRANSACTION.  (a)  A public utility may not sell,
  26-24  acquire, lease, or rent any plant as an operating unit or system in
  26-25  this state for a total consideration in excess of $100,000 or merge
  26-26  or consolidate with another public utility operating in this state
  26-27  unless the public utility reports such transaction to the
   27-1  commission within a reasonable time.
   27-2        (b)  All transactions involving the sale of 50 percent or
   27-3  more of the stock of a public utility shall also be reported to the
   27-4  commission within a reasonable time.  On the filing of a report
   27-5  with the commission, the commission shall investigate the same with
   27-6  or without public hearing to determine whether the action is
   27-7  consistent with the public interest.  In reaching its
   27-8  determination, the commission shall take into consideration the
   27-9  reasonable value of the property, facilities, or securities to be
  27-10  acquired, disposed of, merged, or consolidated.
  27-11        (c)  If the commission finds that such transactions are not
  27-12  in the public interest, the commission shall take the effect of the
  27-13  transaction into consideration in the ratemaking proceedings and
  27-14  disallow the effect of such transaction if it will unreasonably
  27-15  affect rates or service.
  27-16        (d)  The provisions of this section may not be construed as
  27-17  being applicable to the purchase of units of property for
  27-18  replacement or to the addition to the facilities of the public
  27-19  utility by construction.  (Sec. 63)
  27-20        Sec. 1.252.  PURCHASE OF VOTING STOCK IN ANOTHER PUBLIC
  27-21  UTILITY:  REPORT.  A public utility may not purchase voting stock
  27-22  in another public utility doing business in Texas, unless the
  27-23  utility reports such purchase to the commission.  (Sec. 64)
  27-24        Sec. 1.253.  LOANS TO STOCKHOLDERS:  REPORT.  A public
  27-25  utility may not loan money, stocks, bonds, notes, or other
  27-26  evidences of indebtedness to any corporation or person owning or
  27-27  holding directly or indirectly any stock of the public utility
   28-1  unless the public utility reports the transaction to the commission
   28-2  within a reasonable time.  (Sec. 65)
   28-3           SUBTITLE G.  RELATIONS WITH AFFILIATED INTERESTS
   28-4        Sec. 1.271.  JURISDICTION OVER AFFILIATED INTERESTS.  The
   28-5  commission shall have jurisdiction over affiliated interests having
   28-6  transactions with public utilities under the jurisdiction of the
   28-7  commission to the extent of access to all accounts and records of
   28-8  such affiliated interests relating to such transactions, including
   28-9  but in no way limited to accounts and records of joint or general
  28-10  expenses, any portion of which may be applicable to such
  28-11  transactions.  (Sec. 67)
  28-12        Sec. 1.272.  DISCLOSURE OF SUBSTANTIAL INTEREST IN VOTING
  28-13  SECURITIES.  The commission may require the disclosure of the
  28-14  identity and respective interests of every owner of any substantial
  28-15  interest in the voting securities of any public utility or its
  28-16  affiliated interest.  One percent or more is a substantial interest
  28-17  within the meaning of this section.  (Sec. 68)
  28-18                     SUBTITLE H.  JUDICIAL REVIEW
  28-19        Sec. 1.301.  RIGHT TO JUDICIAL REVIEW; EVIDENCE; COMMISSION
  28-20  AS PARTY DEFENDANT.  Any party to a proceeding before the
  28-21  commission is entitled to judicial review under the substantial
  28-22  evidence rule.  The commission shall be a party defendant in any
  28-23  such proceeding represented by the attorney general.  (Sec. 69)
  28-24        Sec. 1.302.  COSTS AND ATTORNEYS' FEES.  (a)  Any party
  28-25  represented by counsel who alleges that existing rates are
  28-26  excessive or that those prescribed by the commission are excessive
  28-27  and who is a prevailing party in proceedings for review of a
   29-1  commission order or decision may in the same action recover against
   29-2  the regulation fund reasonable fees for attorneys and expert
   29-3  witnesses and other costs for its efforts before the commission and
   29-4  the court, the amount of such attorneys' fees to be fixed by the
   29-5  court.
   29-6        (b)  On a finding by the court that an action under this
   29-7  subtitle was groundless and brought in bad faith and for the
   29-8  purpose of harassment, the court may award to the defendant public
   29-9  utility reasonable attorneys' fees.  (Sec. 70)
  29-10                SUBTITLE I.  VIOLATIONS AND ENFORCEMENT
  29-11        Sec. 1.321.  ACTION TO ENJOIN OR REQUIRE COMPLIANCE.
  29-12  Whenever it appears to the commission that any public utility or
  29-13  any other person or corporation is engaged in or is about to engage
  29-14  in any act in violation of this Act or of any order, rule, or
  29-15  regulation of the commission entered or adopted under the
  29-16  provisions of this Act or that any public utility or any other
  29-17  person or corporation is failing to comply with the provisions of
  29-18  this Act or with any such rule, regulation, or order, the attorney
  29-19  general on request of the commission, in addition to any other
  29-20  remedies provided herein, shall bring an action in a court of
  29-21  competent jurisdiction in the name of and on behalf of the
  29-22  commission against such public utility or other person or
  29-23  corporation to enjoin the commencement or continuation of any such
  29-24  act or to require compliance with such Act, rule, regulation, or
  29-25  order.  (Sec. 71)
  29-26        Sec. 1.322.  PENALTY AGAINST PUBLIC UTILITY OR AFFILIATED
  29-27  INTEREST.  (a)  Any public utility, customer-owned pay telephone
   30-1  service provider for purposes of Section 3.305 of this Act, or
   30-2  affiliated interest that knowingly violates a provision of this
   30-3  Act, fails to perform a duty imposed on it, or fails, neglects, or
   30-4  refuses to obey an order, rule, regulation, direction, or
   30-5  requirement of the commission or decree or judgment of a court
   30-6  shall be subject to a civil penalty of not less than $1,000 nor
   30-7  more than $5,000 for each offense.
   30-8        (b)  A public utility or affiliated interest commits a
   30-9  separate offense each day it continues to violate the provisions of
  30-10  Subsection (a) of this section.
  30-11        (c)  The attorney general shall institute suit on his own
  30-12  initiative or at the request of, in the name of, and on behalf of
  30-13  the commission in a court of competent jurisdiction to recover the
  30-14  penalty under this section.  (Sec. 72)
  30-15        Sec. 1.323.  PENALTY FOR VIOLATING SECTION  1.024 OF THIS
  30-16  ACT.  (a)  Any member of the commission or any officer or director
  30-17  of a public utility or affiliated interest shall be subject to a
  30-18  civil penalty of $1,000 for each and every knowing violation of
  30-19  Section 1.024 of this Act, such penalty to be recovered in a suit
  30-20  filed in a court of competent jurisdiction by the attorney general
  30-21  on his own initiative or at the request of, in the name of, and on
  30-22  behalf of the commission.
  30-23        (b)  Any person, other than an officer or director of a
  30-24  public utility or affiliated interest or a member of the
  30-25  commission, shall be subject to a civil penalty of $500 for each
  30-26  and every knowing violation of Section 1.024 of this Act, such
  30-27  penalty to be recovered in a suit filed in a court of competent
   31-1  jurisdiction by the attorney general on his own initiative or at
   31-2  the request of, in the name of, and on behalf of the commission.
   31-3        (c)  Any member, officer, or employee of the commission found
   31-4  in any action by a preponderance of the evidence to have violated
   31-5  any provision of Section 1.024 of this Act shall be removed from
   31-6  his office or employment.  (Sec. 73)
   31-7        Sec. 1.324.  CIVIL PENALTY FOR VIOLATIONS RESULTING IN
   31-8  POLLUTION.  (a)  If a public utility or any other person or
   31-9  corporation under the jurisdiction of the railroad commission
  31-10  pursuant to this Act violates this Act and the violation results in
  31-11  pollution of the air or water of this state or poses a threat to
  31-12  the public safety, the public utility or any other person may be
  31-13  assessed a civil penalty by the railroad commission.
  31-14        (b)  The penalty may not exceed $10,000 a day for each
  31-15  violation.  Each day a violation continues may be considered a
  31-16  separate violation for purposes of penalty assessments.
  31-17        (c)  In determining the amount of the penalty, the railroad
  31-18  commission shall consider the public utility's, person's, or
  31-19  corporation's history of previous violations of this Act, the
  31-20  seriousness of the violation, any hazard to the health or safety of
  31-21  the public, and the demonstrated good faith of the permittee or
  31-22  public utility, person, or corporation charged.
  31-23        (d)  A civil penalty may be assessed only after the public
  31-24  utility, person, or corporation charged with a violation described
  31-25  under Subsection (a) of this section has been given an opportunity
  31-26  for a public hearing.
  31-27        (e)  If a public hearing has been held, the railroad
   32-1  commission shall make findings of fact, and it shall issue a
   32-2  written decision as to the occurrence of the violation and the
   32-3  amount of the penalty that is warranted, incorporating, when
   32-4  appropriate, an order requiring that the penalty be paid.
   32-5        (f)  If appropriate, the railroad commission shall
   32-6  consolidate the hearings with other proceedings under this Act.
   32-7        (g)  If the public utility, person, or corporation charged
   32-8  with the violation fails to avail itself of the opportunity for a
   32-9  public hearing, a civil penalty may be assessed by the railroad
  32-10  commission after it has determined that a violation did occur and
  32-11  the amount of the penalty that is warranted.
  32-12        (h)  The railroad commission shall then issue an order
  32-13  requiring that the penalty be paid.
  32-14        (i)  On the issuance of an order finding that a violation has
  32-15  occurred, the railroad commission shall inform the public utility,
  32-16  person, or corporation charged within 30 days of the amount of the
  32-17  penalty.
  32-18        (j)  Within the 30-day period immediately following the day
  32-19  on which the decision or order is final as provided by Section
  32-20  2001.144, Government Code, the public utility, person, or
  32-21  corporation charged with the penalty shall:
  32-22              (1)  pay the penalty in full; or
  32-23              (2)  if the public utility, person, or corporation
  32-24  seeks judicial review of either the amount of the penalty or the
  32-25  fact of the violation, or both:
  32-26                    (A)  forward the amount to the railroad
  32-27  commission for placement in an escrow account; or
   33-1                    (B)  in lieu of payment into escrow, post a
   33-2  supersedeas bond with the railroad commission under the following
   33-3  conditions.  If the decision or order being appealed is the first
   33-4  final railroad commission decision or order assessing any
   33-5  administrative penalty against the public utility, person, or
   33-6  corporation, the railroad commission shall accept a supersedeas
   33-7  bond.  In the case of appeal of any subsequent decision or order
   33-8  assessing any administrative penalty against the public utility,
   33-9  person, or corporation, regardless of the finality of judicial
  33-10  review of any previous decision or order, the railroad commission
  33-11  may accept a supersedeas bond.  Each supersedeas bond shall be for
  33-12  the amount of the penalty and in a form approved by the railroad
  33-13  commission and shall stay the collection of the penalty until all
  33-14  judicial review of the decision or order is final.
  33-15        (k)  If through judicial review of the decision or order it
  33-16  is determined that no violation occurred or that the amount of the
  33-17  penalty should be reduced or not assessed, the railroad commission
  33-18  shall, within the 30-day period immediately following that
  33-19  determination, if the penalty has been paid to the railroad
  33-20  commission, remit the appropriate amount to the public utility,
  33-21  person, or corporation with accrued interest, or where a
  33-22  supersedeas bond has been posted, the railroad commission shall
  33-23  execute a release of such bond.
  33-24        (l)  Failure to forward the money to the railroad commission
  33-25  within the time provided by Subsection (j) of this section results
  33-26  in a waiver of all legal rights to contest the violation or the
  33-27  amount of the penalty.
   34-1        (m)  Civil penalties owed under this section may be recovered
   34-2  in a civil action brought by the attorney general at the request of
   34-3  the railroad commission.
   34-4        (n)  Judicial review of the order or decision of the railroad
   34-5  commission assessing the penalty shall be under the substantial
   34-6  evidence rule and shall be instituted by filing a petition with the
   34-7  district court of Travis County, Texas, and not elsewhere, as
   34-8  provided by Subchapter G, Chapter 2001, Government Code.  (Sec.
   34-9  73A)
  34-10        Sec. 1.325.  PERSONAL PENALTY.  (a)  Except as provided by
  34-11  Section 3.301 of this Act, any person or persons who wilfully and
  34-12  knowingly violate the provisions of this Act shall be guilty of a
  34-13  third degree felony.
  34-14        (b)  All penalties accruing under this Act shall be
  34-15  cumulative, and a suit for the recovery of any penalty does not bar
  34-16  or affect the recovery of any other penalty or bar any criminal
  34-17  prosecution against any public utility or any officer, director,
  34-18  agent, or employee thereof or any other corporation or person.
  34-19  (Sec. 74)
  34-20        Sec. 1.326.  CONTEMPT PROCEEDINGS.  If any person fails to
  34-21  comply with any lawful order of the commission or with any subpoena
  34-22  or subpoena duces tecum or if any witness refuses to testify about
  34-23  any matter on which he may be lawfully interrogated, the commission
  34-24  may apply to any court of competent jurisdiction to compel
  34-25  obedience by proceedings for contempt.  (Sec. 75)
  34-26        Sec. 1.327.  DISPOSITION OF FINES AND PENALTIES.  Fines and
  34-27  penalties collected under this Act in other than criminal
   35-1  proceedings shall be paid to the commission and paid by the
   35-2  commission to the state treasury to be placed in the general
   35-3  revenue fund.  (Sec. 76)
   35-4        Sec. 1.328.  VENUE.  Suits for injunction or penalties under
   35-5  the provisions of this Act may be brought in Travis County, in any
   35-6  county where such violation is alleged to have occurred, or in the
   35-7  county of residence of any defendant.  (Sec. 77)
   35-8                   SUBTITLE J.  COMMISSION FINANCING
   35-9        Sec. 1.351.  ASSESSMENTS UPON PUBLIC UTILITIES.  (a)  An
  35-10  assessment is imposed on each public utility within the
  35-11  commission's jurisdiction, including interexchange
  35-12  telecommunications carriers, serving the ultimate consumer equal to
  35-13  one-sixth of one percent of its gross receipts from rates charged
  35-14  the ultimate consumers in Texas for the purpose of defraying the
  35-15  costs and expenses incurred in the administration of this Act.
  35-16        (b)  The commission shall, subject to the approval of the
  35-17  legislature, adjust this assessment to provide a level of income
  35-18  sufficient to fund the commission and the office of public utility
  35-19  counsel.
  35-20        (c)  Nothing in this Act or any other provision of law shall
  35-21  prohibit interexchange telecommunications carriers who do not
  35-22  provide local exchange telephone service from collecting the fee
  35-23  imposed under this Act as an additional item separately stated on
  35-24  the customer bill as "Utility Gross Receipts Assessment."  (Sec.
  35-25  78)
  35-26        Sec. 1.352.  PAYMENT DATES; DELINQUENCY.  (a)  All
  35-27  assessments shall be due on August 15 of each year.  Any public
   36-1  utility may instead make quarterly payments due on August 15,
   36-2  November 15, February 15, and May 15 of each year.
   36-3        (b)  There shall be assessed as a penalty an additional fee
   36-4  of 10 percent of the amount due for any late payment.  Fees
   36-5  delinquent for more than 30 days shall draw interest at the rate of
   36-6  12 percent per annum on the assessment and penalty due.  (Sec. 79)
   36-7        Sec. 1.353.  PAYMENT OF ASSESSMENTS.  (a)  For the
   36-8  assessments covered by this section, assessments are due as
   36-9  provided by this section notwithstanding Section 1.352 of this Act,
  36-10  based on a public utility's estimate of its gross receipts.
  36-11        (b)  For the assessment due August 15, 1995, 50 percent of
  36-12  the assessment must be paid by August 15, 1994, and 50 percent must
  36-13  be paid by February 15, 1995.
  36-14        (c)  For the assessment due August 15, 1996, 50 percent of
  36-15  the assessment must be paid by August 15, 1995, and 50 percent must
  36-16  be paid by February 15, 1996.
  36-17        (d)  For the assessment due August 15, 1997, 50 percent of
  36-18  the assessment must be paid by August 15, 1996, and the remainder
  36-19  must be paid by August 15, 1997.
  36-20        (e)  Any assessment amounts underpaid on assessments due on
  36-21  August 15, 1995, or August 15, 1996, must be paid by those
  36-22  respective dates.  Any assessment amounts overpaid shall be
  36-23  credited against following assessments.
  36-24        (f)  This section expires September 1, 1997.  (Sec. 79A)
  36-25        Sec. 1.354.  COLLECTION AND PAYMENT INTO GENERAL REVENUE
  36-26  FUND.  All fees, penalties, and interest paid under the provisions
  36-27  of Sections 1.351 and 1.352 of this Act shall be collected by the
   37-1  comptroller of public accounts and paid into the general revenue
   37-2  fund.  The commission shall notify the comptroller of public
   37-3  accounts of any adjustment of the assessment imposed in Section
   37-4  1.351 when made.  (Sec. 80)
   37-5        Sec. 1.355.  APPROVAL OF BUDGET.  The budget of the
   37-6  commission shall be subject to legislative approval as part of the
   37-7  appropriations act.  (Sec. 81)
   37-8        Sec. 1.356.  ACCOUNTING RECORDS; AUDIT.  The commission shall
   37-9  keep such accounting records as required by the comptroller.  The
  37-10  financial transactions of the commission are subject to audit by
  37-11  the state auditor in accordance with Chapter 321, Government Code.
  37-12  (Sec. 82)
  37-13                 SUBTITLE K.  MISCELLANEOUS PROVISIONS
  37-14        Sec. 1.401.  COMPLAINT BY ANY AFFECTED PERSON.  (a)  Any
  37-15  affected person may complain to the regulatory authority in writing
  37-16  setting forth any act or thing done or omitted to be done by any
  37-17  public utility in violation or claimed violation of any law which
  37-18  the regulatory authority has jurisdiction to administer or of any
  37-19  order, ordinance, rule, or regulation of the regulatory authority.
  37-20  The commission shall keep an information file about each complaint
  37-21  filed with the commission relating to a utility.  The commission
  37-22  shall retain the file for a reasonable period.
  37-23        (b)  If a written complaint is filed with the commission
  37-24  relating to a utility, the commission, at least as frequently as
  37-25  quarterly and until final disposition of the complaint, shall
  37-26  notify the parties to the complaint of the status of the complaint
  37-27  unless the notice would jeopardize an undercover investigation.
   38-1        (c)  Any affected person may complain to the regulatory
   38-2  authority in writing setting forth any act or thing done or not
   38-3  done by any recreational vehicle park owner that provides metered
   38-4  electric service under Article 1446d-2, Revised Statutes, in
   38-5  violation or claimed violation of any law that the regulatory
   38-6  authority has jurisdiction to administer or of any order,
   38-7  ordinance, rule, or regulation of the regulatory authority.  The
   38-8  commission shall keep an information file about each complaint
   38-9  filed with the commission relating to a recreational vehicle park
  38-10  owner.  The commission shall retain the file for a reasonable
  38-11  period.  The commission, quarterly or more often until final
  38-12  disposition of the written complaint, shall notify the parties to
  38-13  the complaint of the status of the complaint unless the notice
  38-14  would jeopardize an undercover investigation.  (Sec. 83)
  38-15        Sec. 1.402.  RECORD OF PROCEEDINGS; RIGHT TO HEARING.  A
  38-16  record shall be kept of all proceedings had before the regulatory
  38-17  authority, and all the parties shall be entitled to be heard in
  38-18  person or by attorney.  (Sec. 84)
  38-19        Sec. 1.403.  JUDICIAL STAY OR SUSPENSION OF ORDER, RULING, OR
  38-20  DECISION.  During the pendency of an appeal, the district court,
  38-21  the court of civil appeals, or the supreme court, as the case may
  38-22  be, may stay or suspend in whole or in part the operation of the
  38-23  regulatory authority order, ruling, or decision and such courts in
  38-24  granting or refusing a stay or suspension shall act in accordance
  38-25  with the practice of courts exercising equity jurisdiction.  (Sec.
  38-26  85)
  38-27        (Secs. 87 and 87A deleted)
   39-1        Sec. 1.404.  LIBERAL CONSTRUCTION.  This Act shall be
   39-2  construed liberally to promote the effectiveness and efficiency of
   39-3  regulation of public utilities to the extent that such construction
   39-4  preserves the validity of this Act and its provisions.  The
   39-5  provisions of this Act shall be construed to apply so as not to
   39-6  conflict with any authority of the United States.  (Sec. 89)
   39-7        (Sec. 90 deleted)
   39-8        Sec. 1.405.  TERMINATING SERVICES TO ELDERLY AND DISABLED;
   39-9  CRITERIA AND GUIDELINES; ESTABLISHMENT.  The Public Utility
  39-10  Commission is authorized to establish criteria and guidelines with
  39-11  the utility industry relating to procedures employed by the
  39-12  industry in terminating services to the elderly and disabled.
  39-13  (Sec. 91)
  39-14        Sec. 1.406.  SEVERABILITY.  If any provision of this Act or
  39-15  the application thereof to any person or circumstances is held
  39-16  invalid, such invalidity does not affect other provisions or
  39-17  applications of this Act which can be given effect without the
  39-18  invalid provision or application, and to this end the provisions of
  39-19  this Act are declared to be severable.  (Sec. 92)
  39-20                      TITLE II.  PUBLIC UTILITIES
  39-21                    SUBTITLE A.  GENERAL PROVISIONS
  39-22        Sec. 2.001.  DEFINITIONS.  In this title, "public utility" or
  39-23  "utility" means any person, corporation, river authority,
  39-24  cooperative corporation, or any combination thereof, other than a
  39-25  municipal corporation, or their lessees, trustees, and receivers,
  39-26  now or hereafter owning or operating for compensation in this state
  39-27  equipment or facilities for producing, generating, transmitting,
   40-1  distributing, selling, or furnishing electricity (hereinafter
   40-2  "electric utility"); provided, however, that this definition may
   40-3  not be construed to apply to or include a qualifying small power
   40-4  producer or qualifying cogenerator, as defined in Sections 3(17)(D)
   40-5  and 3(18)(C) of the Federal Power Act, as amended (16 U.S.C.
   40-6  Sections 796(17)(D) and 796(18)(C)).  The term does not include any
   40-7  person or corporation not otherwise a public utility that:
   40-8              (1)  furnishes the services or commodity described in
   40-9  this section only to itself, its employees, or its tenants as an
  40-10  incident of such employee service or tenancy, when such service or
  40-11  commodity is not resold to or used by others;
  40-12              (2)  owns or operates in this state equipment or
  40-13  facilities for producing, generating, transmitting, distributing,
  40-14  selling, or furnishing electric energy to an electric utility, if
  40-15  the equipment or facilities are used primarily for the production
  40-16  and generation of electric energy for consumption by the person or
  40-17  corporation; or
  40-18              (3)  owns or operates in this state a recreational
  40-19  vehicle park that provides metered electric service in accordance
  40-20  with Article 1446d-2, Revised Statutes, provided that a
  40-21  recreational vehicle park owner is considered a public utility if
  40-22  the owner fails to comply with Article 1446d-2, Revised Statutes,
  40-23  with regard to the metered sale of electricity at the recreational
  40-24  vehicle park.  (Sec. 3(c) (part))
  40-25        Sec. 2.002.  COMMISSION AS RESOURCE CENTER; DEVELOPMENT OF
  40-26  ENERGY EFFICIENT SCHOOL FACILITIES.  The commission may serve as a
  40-27  resource center to assist school districts in developing energy
   41-1  efficient facilities.  As such, the commission may:
   41-2              (1)  present to school districts programs relating to
   41-3  managing energy, training school-plant operators, and designing
   41-4  energy efficient buildings;
   41-5              (2)  provide school districts with technical assistance
   41-6  in managing energy;
   41-7              (3)  collect and distribute information relating to
   41-8  energy management in school facilities; and
   41-9              (4)  offer to educators energy resource workshops and
  41-10  make available to educators a film library on energy-related
  41-11  matters and energy education lesson packages.  (Sec. 88A)
  41-12                   SUBTITLE B.  ELECTRICAL PLANNING
  41-13        Sec. 2.051.  ELECTRICAL FORECAST.  (a)  The commission shall
  41-14  develop a long-term statewide electrical energy forecast which
  41-15  shall be sent to the governor biennially.  The forecast will
  41-16  include an assessment of how alternative energy sources,
  41-17  conservation, and load management will meet the state's electricity
  41-18  needs.
  41-19        (b)  Every generating electric utility in the state shall
  41-20  prepare and transmit to the commission every two years a report
  41-21  specifying at least a 10-year forecast for assessments of load and
  41-22  resources for its service area.  The report shall include a list of
  41-23  facilities which will be required to supply electric power during
  41-24  the forecast periods.  The report shall be in a form prescribed by
  41-25  the commission.  The report shall include:
  41-26              (1)  a tabulation of estimated peak load, resources,
  41-27  and reserve margins for each year during the forecast or assessment
   42-1  period;
   42-2              (2)  a list of existing electric generating plants in
   42-3  service with a description of planned and potential generating
   42-4  capacity at existing sites;
   42-5              (3)  a list of facilities which will be needed to serve
   42-6  additional electrical requirements identified in the forecasts or
   42-7  assessments, the general location of such facilities, and the
   42-8  anticipated types of fuel to be utilized in the proposed
   42-9  facilities, including an estimation of shutdown costs and disposal
  42-10  of spent fuel for nuclear power plants;
  42-11              (4)  a description of additional system capacity which
  42-12  might be achieved through, among other things, improvements in:
  42-13                    (A)  generating or transmission efficiency;
  42-14                    (B)  importation of power;
  42-15                    (C)  interstate or interregional pooling;
  42-16                    (D)  other improvements in efficiencies of
  42-17  operation; and
  42-18                    (E)  conservation measures;
  42-19              (5)  an estimation of the mix and type of fuel
  42-20  resources for the forecast or assessment period;
  42-21              (6)  an annual load duration curve and a forecast of
  42-22  anticipated peak loads for the forecast or assessment period for
  42-23  the residential, commercial, industrial, and such other major
  42-24  demand sectors in the service area of the electric utility as the
  42-25  commission shall determine; and
  42-26              (7)  a description of projected population growth,
  42-27  urban development, industrial expansion, and other growth factors
   43-1  influencing increased demand for electric energy and the basis for
   43-2  such projections.
   43-3        (c)  The commission shall establish and every electric
   43-4  utility shall utilize a reporting methodology for preparation of
   43-5  the forecasts of future load and resources.
   43-6        (d)  The commission shall review and evaluate the electric
   43-7  utilities' forecast of load and resources and any public comment on
   43-8  population growth estimates prepared by the Bureau of Business
   43-9  Research, The University of Texas at Austin.
  43-10        (e)  Within 12 months after the receipt of the reports
  43-11  required by this section, the commission shall hold a public
  43-12  hearing and subsequently issue a final report to the governor and
  43-13  notify every electric utility of the commission's electric forecast
  43-14  for that utility.  The commission shall consider its electric
  43-15  forecast in all certification proceedings covering new generation
  43-16  plants.  (Secs. 16(b)-(f))
  43-17        Sec. 2.052.  ENCOURAGEMENT OF ECONOMICAL PRODUCTION.  The
  43-18  commission shall make and enforce rules to encourage the economical
  43-19  production of electric energy by qualifying cogenerators and
  43-20  qualifying small power producers.  (Sec. 16(g))
  43-21                  SUBTITLE C.  MUNICIPAL JURISDICTION
  43-22        Sec. 2.101.  JURISDICTION OF MUNICIPALITY; SURRENDER;
  43-23  ORIGINAL AND APPELLATE JURISDICTION OF COMMISSION.  (a)  Subject to
  43-24  the limitations imposed in this Act, and for the purpose of
  43-25  regulating rates and services so that such rates may be fair, just,
  43-26  and reasonable, and the services adequate and efficient, the
  43-27  governing body of each municipality shall have exclusive original
   44-1  jurisdiction over all electric utility rates, operations, and
   44-2  services provided by an electric utility within its city or town
   44-3  limits.
   44-4        (b)  A municipality may elect to have the commission exercise
   44-5  exclusive original jurisdiction over electric utility rates,
   44-6  operations, and services within the incorporated limits of the
   44-7  municipality.  The governing body of a municipality may by
   44-8  ordinance elect to surrender its original jurisdiction to the
   44-9  commission, or the governing body may submit the question of the
  44-10  surrender to the qualified voters at a municipal election.  Upon
  44-11  receipt of a petition signed by the lesser of 20,000 or 10 percent
  44-12  of the number of qualified voters voting in the last preceding
  44-13  general election in that municipality, the governing body shall
  44-14  submit the question of the surrender of the municipality's original
  44-15  jurisdiction to the commission at a municipal election.
  44-16        (c)  A municipality that surrenders its jurisdiction to the
  44-17  commission may at any time, by vote of the electorate, reinstate
  44-18  the jurisdiction of the governing body; provided, however, that any
  44-19  municipality which reinstates its jurisdiction shall be unable to
  44-20  surrender that jurisdiction for five years after the date of the
  44-21  election at which the municipality elected to reinstate its
  44-22  jurisdiction.  A municipality may not, by vote of the electorate,
  44-23  reinstate the jurisdiction of the governing body during the
  44-24  pendency of any case before the commission involving the
  44-25  municipality.
  44-26        (d)  The commission shall have exclusive appellate
  44-27  jurisdiction to review orders or ordinances of such municipalities
   45-1  as provided in this Act.
   45-2        (e)  The commission shall have exclusive original
   45-3  jurisdiction over electric utility rates, operations, and services
   45-4  not within the incorporated limits of a municipality exercising
   45-5  exclusive original jurisdiction over those rates, operations, and
   45-6  services as provided in this Act.  (Sec. 17)
   45-7        Sec. 2.102.  MUNICIPALLY OWNED UTILITIES.  Nothing in this
   45-8  subtitle shall be construed to confer on the commission power or
   45-9  jurisdiction to regulate or supervise the rates or service of any
  45-10  utility owned and operated by any municipality within its
  45-11  boundaries either directly or through a municipally owned
  45-12  corporation or to affect or limit the power, jurisdiction, or
  45-13  duties of the municipalities that have elected to regulate and
  45-14  supervise public utilities within their boundaries, except as
  45-15  provided in this Act.  (Sec. 20)
  45-16        Sec. 2.103.  FRANCHISES.  If a municipality performs
  45-17  regulatory functions under this Act, it may make such other charges
  45-18  as may be provided in the applicable franchise agreement, together
  45-19  with any other charges permitted by this Act.  (Sec. 21 (part))
  45-20        Sec. 2.104.  LOCAL UTILITY SERVICE; EXEMPT AND NONEXEMPT
  45-21  AREAS.  (a)  Notwithstanding any other provision of this section,
  45-22  municipalities shall continue to regulate each kind of local
  45-23  utility service inside their boundaries until the commission has
  45-24  assumed jurisdiction over the respective utility pursuant to this
  45-25  Act.
  45-26        (b)  If a municipality does not surrender its jurisdiction,
  45-27  local utility service within the boundaries of the municipality
   46-1  shall be exempt from regulation by the commission under the
   46-2  provisions of this Act to the extent that this Act applies to local
   46-3  service, and the municipality shall have, regarding service within
   46-4  its boundaries, the right to exercise the same regulatory powers
   46-5  under the same standards and rules as the commission or other
   46-6  standards and rules not inconsistent therewith.
   46-7        (c)  Notwithstanding any such election, the commission may
   46-8  consider a public utility's revenues and return on investment in
   46-9  exempt areas in fixing rates and charges in nonexempt areas, and
  46-10  may also exercise the powers conferred necessary to give effect to
  46-11  orders under this Act, for the benefit of nonexempt areas.
  46-12  Likewise, in fixing rates and charges in the exempt area, the
  46-13  governing body may consider a public utility's revenues and return
  46-14  on investment in nonexempt areas.
  46-15        (d)  Utilities serving exempt areas shall be subject to the
  46-16  reporting requirements of this Act.  Such reports shall be filed
  46-17  with the governing body of the municipality as well as with the
  46-18  commission.
  46-19        (e)  Nothing in this section shall limit the duty and power
  46-20  of the commission to regulate service and rates of municipally
  46-21  regulated utilities for service provided to other areas in Texas.
  46-22  (Sec. 22)
  46-23        Sec. 2.105.  RATE DETERMINATION.  (a)  Any municipality
  46-24  regulating its public utilities pursuant to this Act shall require
  46-25  from those utilities all necessary data to make a reasonable
  46-26  determination of rate base, expenses, investment, and rate of
  46-27  return within the municipal boundaries.
   47-1        (b)  The standards for such determination shall be based on
   47-2  the procedures and requirements of this Act, and said municipality
   47-3  shall retain any and all personnel necessary to make the
   47-4  determination of reasonable rates required under this Act.  (Sec.
   47-5  23)
   47-6        Sec. 2.106.  RATEMAKING PROCEEDINGS; ENGAGEMENT OF
   47-7  CONSULTANTS, ACCOUNTANTS, AUDITORS, ATTORNEYS, AND ENGINEERS;
   47-8  STANDING.  (a)  The governing body of any municipality
   47-9  participating in or conducting ratemaking proceedings shall have
  47-10  the right to select and engage rate consultants, accountants,
  47-11  auditors, attorneys, engineers, or any combination thereof to
  47-12  conduct investigations, present evidence, advise and represent the
  47-13  governing body, and assist with litigation in public utility
  47-14  ratemaking proceedings before the governing body, any regulatory
  47-15  authority, or in court.  The public utility engaged in such
  47-16  proceedings shall be required to reimburse the governing body for
  47-17  the reasonable costs of such services to the extent found
  47-18  reasonable by the applicable regulatory authority.
  47-19        (b)  Municipalities shall have standing in all cases before
  47-20  the commission regarding utilities serving within their corporate
  47-21  limits subject to the right of the commission to determine standing
  47-22  in cases involving retail service area disputes involving two or
  47-23  more utilities and to consolidate municipalities on issues of
  47-24  common interest and shall be entitled to judicial review of orders
  47-25  regarding said proceedings in accordance with Section 1.301 of this
  47-26  Act.  (Sec. 24)
  47-27        Sec. 2.107.  ASSISTANCE OF COMMISSION.  The commission may
   48-1  advise and assist municipalities upon request in connection with
   48-2  questions and proceedings arising under this Act.  Such assistance
   48-3  may include aid to municipalities in connection with matters
   48-4  pending before the commission or the courts or before the governing
   48-5  body of any municipality, including making members of the staff
   48-6  available as witnesses and otherwise providing evidence to them.
   48-7  (Sec. 25)
   48-8        Sec. 2.108.  APPEAL.  (a)  Any party to a rate proceeding
   48-9  before the governing body of a municipality may appeal the decision
  48-10  of the governing body to the commission.
  48-11        (b)  Citizens of a municipality may appeal the decision of
  48-12  the governing body in any rate proceeding to the commission through
  48-13  the filing of a petition for review signed by the lesser of 20,000
  48-14  or 10 percent of the number of qualified voters of such
  48-15  municipality.
  48-16        (c)(1)  Ratepayers of a municipally owned electric utility
  48-17  outside the municipal limits may appeal any action of the governing
  48-18  body affecting the rates of the municipally owned electric utility
  48-19  through filing with the commission a petition for review signed by
  48-20  the lesser of 10,000 or five percent of the ratepayers served by
  48-21  such utility outside the municipal limits.  For purposes of this
  48-22  subsection each person receiving a separate bill shall be
  48-23  considered as a ratepayer.  But a person is not considered as being
  48-24  more than one ratepayer notwithstanding the number of bills
  48-25  received.  Such petition for review shall be considered properly
  48-26  signed if signed by any person, or spouse of any such person, in
  48-27  whose name residential utility service is carried.
   49-1              (2)  The municipality that owns the electric utility
   49-2  shall on request disclose to any person the number of ratepayers
   49-3  who reside outside the municipal limits.  The municipality shall
   49-4  provide the information by telephone or in a written form, as
   49-5  preferred by the person making the request.  The municipality may
   49-6  not charge a fee for providing the information.  The municipality
   49-7  shall on request provide to any person a list of the names and
   49-8  addresses of the ratepayers who reside outside the municipal
   49-9  limits.  The municipality may charge a reasonable fee to cover the
  49-10  cost of providing the list.
  49-11              (3)  Not later than the 14th day after the date on
  49-12  which the governing body makes a final decision, the municipality
  49-13  shall issue a written report stating the effect of the decision on
  49-14  each class of ratepayers.  The appeal process shall be instituted
  49-15  by filing a petition for review with the commission and serving
  49-16  copies on all parties to the original rate proceeding.  The
  49-17  petition must be filed not later than the 45th day after the date
  49-18  on which the municipality issues the written report prescribed by
  49-19  this subsection.
  49-20              (4)  Not later than the 90th day after the date on
  49-21  which a petition for review that meets the requirements of this
  49-22  subsection is filed, the municipality shall file with the
  49-23  commission a rate application that complies in all material
  49-24  respects with the rules and forms prescribed by the commission.
  49-25  The commission may, for good cause shown, extend the period for
  49-26  filing the rate application.
  49-27        (d)  Any municipally owned electric utility whose rates have
   50-1  been or are appealed under Subsection (c) of this section, and for
   50-2  which the commission has ordered or orders a decrease in annual
   50-3  nonfuel base revenues which exceeds the greater of $25,000,000 or
   50-4  10 percent of the utility's nonfuel base revenues, as calculated on
   50-5  a total system basis (without regard to the municipal utility's
   50-6  corporate boundaries) and established in the rate ordinance or
   50-7  ordinances appealed from, and for which the commission has found or
   50-8  finds that the rates paid by the combined residential or any other
   50-9  major customer class (other than any class or classes where the
  50-10  city is itself the customer of the municipally owned utility) are
  50-11  removed from cost-of-service levels to the extent that, under the
  50-12  nonfuel base revenue requirement adopted by the commission (as
  50-13  computed on a total system basis without regard to the
  50-14  municipality's corporate boundaries), a change in nonfuel base rate
  50-15  revenues in excess of 50 percent from adjusted test year levels
  50-16  would be required to move that class to a relative rate of return
  50-17  of unity (1.00 or 100 percent) under the cost-of-service
  50-18  methodology adopted by the commission in an appeal under Subsection
  50-19  (c) of this section, shall thereafter be subject to the following:
  50-20              (1)  For a period of 10 years beginning on the later of
  50-21  August 28, 1989, or the effective date of the rate ordinance which
  50-22  was the subject of the commission's final order invoking the
  50-23  application of this subsection, the commission shall have appellate
  50-24  jurisdiction over the rates charged by the municipally owned
  50-25  utility, both inside and outside such municipality's corporate
  50-26  limits, in the same manner and subject to the same commission
  50-27  powers and authority as set forth in this Act for public utilities,
   51-1  but specifically limited as follows:
   51-2                    (A)  The commission shall have the jurisdiction
   51-3  to review the cost allocation and rate design methodologies adopted
   51-4  by the city council or other governing body of the municipally
   51-5  owned utility subject to this subsection.
   51-6                          (i)  If the commission finds that such
   51-7  cost-of-service methodologies result in rates which are unjust,
   51-8  unreasonable, or unreasonably discriminatory or unduly preferential
   51-9  to any customer class, then the commission may order the
  51-10  implementation of ratesetting methodologies which the commission
  51-11  finds reasonable.
  51-12                          (ii)  The commission shall ensure that a
  51-13  customer class, other than any class or classes where the city is
  51-14  itself the customer of the municipally owned utility, does not pay
  51-15  rates which result in a relative rate of return exceeding 115
  51-16  percent under the cost-of-service methodology found reasonable by
  51-17  the commission, provided that a customer class may not experience a
  51-18  percentage base rate increase that is greater than 1-1/2  times the
  51-19  system average base increase.  In moving above-cost classes toward
  51-20  cost-of-service levels, those classes farthest above cost shall be
  51-21  moved sequentially toward cost, such that no above-cost class moves
  51-22  toward cost until no other class or classes are further removed
  51-23  from cost.
  51-24                          (iii)  The municipality may, as a matter of
  51-25  intra-class rate design, design residential rates to accomplish
  51-26  reasonable energy conservation goals, notwithstanding any other
  51-27  provision of this Act.
   52-1                    (B)  The commission's jurisdiction under this
   52-2  subsection may be invoked by any party to the local rate
   52-3  proceedings required by this subsection, in the same manner as
   52-4  appeals of the rates of public utilities under Subsection (a) of
   52-5  this section.  Provided, however, that the commission's
   52-6  jurisdiction under this subsection does not extend to the
   52-7  municipally owned utility's revenue requirements, whether base rate
   52-8  or fuel revenues, its invested capital, its return on invested
   52-9  capital, its debt service coverage ratio, or the level of any
  52-10  transfer of revenues from the utility to the municipality's general
  52-11  fund.
  52-12              (2)  The city council or other governing board of a
  52-13  municipally owned utility subject to this subsection shall
  52-14  establish procedures similar to those procedures employed by
  52-15  municipalities which have retained original jurisdiction under
  52-16  Section 2.101(a) of this Act to regulate public utilities operating
  52-17  within such municipalities' corporate boundaries.  Such procedures
  52-18  shall include a public hearing process in which affected ratepayers
  52-19  are granted party status on request and are grouped for purposes of
  52-20  participation in accordance with their common or divergent
  52-21  interests, including but not limited to the particular interests of
  52-22  all-electric and out-of-city residential ratepayers.  Provided,
  52-23  however, that nothing in this Act or this subsection shall require
  52-24  the city council or governing board of the municipally owned
  52-25  utility to which this subsection applies to employ or establish
  52-26  procedures that require the use of the Texas Rules of Evidence, the
  52-27  Texas Rules of Civil Procedure, or the presentation of sworn
   53-1  testimony or other forms of sworn evidence.  The city council or
   53-2  other governing board shall appoint a consumer advocate to
   53-3  represent the interests of residential and small commercial
   53-4  ratepayers in the municipality's local rate proceedings.  The
   53-5  consumer advocate's reasonable costs of participation in said
   53-6  proceedings, including the reasonable costs of ratemaking
   53-7  consultants and expert witnesses, shall be funded by and recovered
   53-8  from such residential and small commercial ratepayers.
   53-9              (3)  The commission shall establish rules applicable to
  53-10  any party to an appeal under Subsection (c) of this section that
  53-11  provide for the public disclosure of financial and in-kind
  53-12  contributions and expenditures related to the preparation and
  53-13  filing of a petition for appeal and in preparation of expert
  53-14  testimony or legal representation for an appeal.  Any party or
  53-15  customer who is a member of a party who makes a financial
  53-16  contribution or in-kind contribution to assist in an appeal of
  53-17  another party or customer class under Subsection (c) of this
  53-18  section shall, upon a finding of the commission to that effect, be
  53-19  required to pay the municipally owned utility a penalty equivalent
  53-20  in amount to two times the contribution.  Nothing in this
  53-21  subsection shall be construed to limit the right of any party or
  53-22  customer to expend funds to represent its own interests following
  53-23  the filing of a petition with the commission under Subsection (c)
  53-24  of this section.
  53-25        (e)  Any municipally owned electric utility whose rates have
  53-26  been or are appealed under Subsection (c) of this section, and for
  53-27  which the commission has ordered or orders a decrease in annual
   54-1  nonfuel base revenues which exceeds the greater of $25,000,000 or
   54-2  10 percent of the utility's nonfuel base revenues, as calculated on
   54-3  a total system basis (without regard to the municipal utility's
   54-4  corporate boundaries) and established in the rate ordinance or
   54-5  ordinances appealed from, and for which the commission has found or
   54-6  finds that the rates paid by the combined residential or any other
   54-7  major customer class (other than any class or classes where the
   54-8  city is itself the customer of the municipally owned utility) are
   54-9  removed from cost-of-service levels to the extent that, under the
  54-10  nonfuel base revenue requirement adopted by the commission (as
  54-11  computed on a total system basis without regard to the
  54-12  municipality's corporate boundaries), a change in nonfuel base rate
  54-13  revenues in excess of 50 percent from adjusted test year levels
  54-14  would be required to move that class to a relative rate of return
  54-15  of unity (1.00 or 100 percent) under the cost-of-service
  54-16  methodology adopted by the commission in an appeal under Subsection
  54-17  (c) of this section, shall thereafter be subject to the following:
  54-18              (1)  For a period of 10 years beginning on the later of
  54-19  August 28, 1989, or the effective date of the rate ordinance which
  54-20  was the subject of the commission's final order invoking the
  54-21  application of this subsection, the commission shall have appellate
  54-22  jurisdiction over the rates charged by the municipally owned
  54-23  utility, outside the municipality's corporate limits, in the manner
  54-24  and to the extent provided in this subsection.
  54-25              (2)  Ratepayers of a municipally owned utility subject
  54-26  to this subsection who reside outside the municipality's corporate
  54-27  limits may appeal any action of the governing body affecting the
   55-1  rates charged by the municipally owned electric utility outside the
   55-2  corporate limits through filing with the commission a petition for
   55-3  review in accordance with the same procedures, requirements, and
   55-4  standards applicable to appeals brought under Subsection (c) of
   55-5  this section, except as otherwise specifically provided in this
   55-6  subsection.  The petition for review must plainly disclose that the
   55-7  cost of bringing and pursuing the appeal will be funded by a
   55-8  surcharge on the monthly electric bills of outside-city ratepayers
   55-9  in a manner prescribed by the commission.
  55-10                    (A)  Upon commission approval of the sufficiency
  55-11  of a petition, the appellants shall submit for the approval of the
  55-12  Office of Public Utility Counsel a budget itemizing the scope and
  55-13  expected cost of consultant services to be purchased by the
  55-14  appellants in connection with the appeal.
  55-15                    (B)  After a final order has been entered by the
  55-16  commission in the appeal, the consultant and legal costs approved
  55-17  by public counsel as reasonable shall be assessed by the
  55-18  municipality on a per capita basis among residential ratepayers who
  55-19  reside outside the municipality.  Surcharges shall be assessed in a
  55-20  one-time charge not later than 120 days following entry of the
  55-21  commission's final order.  Costs incurred by the appellants shall
  55-22  be reimbursed by the municipality within not later than 90 days
  55-23  following the date the commission enters its final order.
  55-24                    (C)  The municipality may not include the costs
  55-25  associated with its defense of an appeal under this subsection in
  55-26  the rates of outside-city ratepayers.  Nor shall the municipality,
  55-27  if it appeals from an order entered by the commission under this
   56-1  subsection, include the costs associated with its appeal in the
   56-2  rates of ratepayers who reside outside the city.
   56-3                    (D)  Ratepayers who appeal under this subsection
   56-4  may not receive funding for rate case expenses except from
   56-5  residential ratepayers who reside outside the municipality's
   56-6  boundaries or from other municipalities inside whose corporate
   56-7  limits the municipally owned utility provides service.  The
   56-8  commission shall adopt rules for the reporting of financial and
   56-9  in-kind contributions in support of appeals brought under this
  56-10  subsection.  Upon a finding by the commission that an appellant has
  56-11  received contributions from any source other than outside-city
  56-12  ratepayers or such other municipalities, the appeal and orders of
  56-13  the commission entered therein shall be null and void.
  56-14              (3)  In appeals under this subsection, the commission
  56-15  shall have jurisdiction and authority to review and ensure that the
  56-16  revenue requirements of any municipally owned utility subject to
  56-17  this subsection are reasonable, but such jurisdiction and authority
  56-18  does not extend to regulation of the use and level of any transfer
  56-19  of the utility's revenues to the municipality's general fund.  The
  56-20  commission shall also have jurisdiction and authority to review the
  56-21  cost allocation and rate design methodologies adopted by the
  56-22  governing body of the municipally owned utility.  If the commission
  56-23  finds that such cost-of-service methodologies result in rates which
  56-24  are unjust, unreasonable, or unreasonably discriminatory or unduly
  56-25  preferential to any customer class, then the commission may order
  56-26  the implementation of ratesetting methodologies which the
  56-27  commission finds reasonable; provided, however, that the
   57-1  commission's jurisdiction under this subsection does not encompass
   57-2  matters of intra-class residential rate design.
   57-3              (4)  An intervenor in an appeal brought under this
   57-4  subsection shall be limited to presenting testimony and evidence on
   57-5  cost allocation and rate design methodologies, except that
   57-6  intervenors may present evidence and testimony in support of the
   57-7  municipality on issues related to utility revenues.
   57-8              (5)  An appellant ratepayer residing outside the
   57-9  corporate limits of a municipally owned utility subject to this
  57-10  subsection shall, in appealing from a rate ordinance or other
  57-11  ratesetting action of the municipality's governing board, elect to
  57-12  petition for review under either Subsection (c) of this section or
  57-13  this subsection.
  57-14        (f)  The appeal process shall be instituted within 30 days of
  57-15  the final decision by the governing body with the filing of a
  57-16  petition for review with the commission and copies served on all
  57-17  parties to the original rate proceeding.
  57-18        (g)  The commission shall hear such appeal de novo based on
  57-19  the test year presented to the municipality and by its final order
  57-20  shall fix such rates as the municipality should have fixed in the
  57-21  ordinance from which the appeal was taken.  In the event that the
  57-22  commission fails to enter its final order:  (1) for proceedings
  57-23  involving the rates of a municipally owned utility, within 185 days
  57-24  from the date on which the appeal is perfected or on which the
  57-25  utility files a rate application as prescribed by Subsection (c) of
  57-26  this section; or (2) for proceedings in which similar relief has
  57-27  also been concurrently sought from the commission under its
   58-1  original jurisdiction, within 120 days from the date such appeal is
   58-2  perfected or the date upon which final action must be taken in the
   58-3  similar proceedings so filed with the commission whichever shall
   58-4  last occur; or (3) in all other proceedings, within 185 days from
   58-5  the date such appeal is perfected, the schedule of rates proposed
   58-6  by the utility shall be deemed to have been approved by the
   58-7  commission and effective upon the expiration of said applicable
   58-8  period.  Any rates, whether temporary or permanent, set by the
   58-9  commission shall be prospective and observed from and after the
  58-10  applicable order of the commission, except interim rate orders
  58-11  necessary to effect uniform system-wide rates.  (Sec. 26--Subsec.
  58-12  (c) fixed)
  58-13                    SUBTITLE D.  RATES AND SERVICES
  58-14        Sec. 2.151.  RATES; METHODS AND ACCOUNTS.  (a)  The
  58-15  commission shall fix proper and adequate rates and methods of
  58-16  depreciation, amortization, or depletion of the several classes of
  58-17  property of each public utility and shall require every public
  58-18  utility to carry a proper and adequate depreciation account in
  58-19  accordance with such rates and methods and with such other rules
  58-20  and regulations as the commission prescribes.  Such rates, methods,
  58-21  and accounts shall be utilized uniformly and consistently
  58-22  throughout the ratesetting and appeal proceedings.
  58-23        (b)  Every public utility shall keep separate accounts to
  58-24  show all profits or losses resulting from the sale or lease of
  58-25  appliances, fixtures, equipment, or other merchandise.  This profit
  58-26  or loss may not be taken into consideration by the regulatory
  58-27  authority in arriving at any rate to be charged for service by any
   59-1  such public utility, to the extent that such merchandise is not
   59-2  integral to the provision of utility service.
   59-3        (c)  In determining the allocation of tax savings derived
   59-4  from application of such methods as liberalized depreciation and
   59-5  amortization and the investment tax credit, the regulatory
   59-6  authority shall equitably balance the interests of present and
   59-7  future customers and shall apportion such benefits between
   59-8  consumers and the public utilities accordingly.  Where any portion
   59-9  of  the  investment  tax  credit  has  been  retained  by  a public
  59-10  utility, that same amount shall be deducted from the original cost
  59-11  of the facilities or other addition to the rate base to which the
  59-12  credit applied, to the extent allowed by the Internal Revenue Code.
  59-13        (d)  For the purposes of this section, "public utility"
  59-14  includes "municipally owned utility."  (Secs. 27(b), (c), (e), (f))
  59-15        Sec. 2.152.  REPORTING OF ADVERTISING OR PUBLIC RELATIONS
  59-16  EXPENSES.  (a)  The regulatory authority may require an annual
  59-17  reporting from each utility company of all its expenditures for
  59-18  business gifts and entertainment and for institutional,
  59-19  consumption-inducing, and other advertising or public relations
  59-20  expenses.
  59-21        (b)  The regulatory authority may not allow as costs or
  59-22  expenses for ratemaking purposes any of these expenditures which
  59-23  the regulatory authority determines not to be in the public
  59-24  interest.
  59-25        (c)  The cost of legislative advocacy expenses may not in any
  59-26  case be allowed as costs or expenses for ratemaking purposes.
  59-27        (d)  Reasonable charitable or civic contributions may be
   60-1  allowed not to exceed the amount approved by the regulatory
   60-2  authority.  (Sec. 30)
   60-3        Sec. 2.153.  UNLAWFUL RATES, RULES, AND REGULATIONS.  It
   60-4  shall be unlawful for any utility to charge, collect, or receive
   60-5  any rate for public utility service or to impose any rule or
   60-6  regulation other than as herein provided.  (Sec. 31)
   60-7        Sec. 2.154.  FILING SCHEDULE OF RATES, RULES, AND
   60-8  REGULATIONS.  (a)  Every public utility shall file with each
   60-9  regulatory authority schedules showing all rates which are subject
  60-10  to the original or appellate jurisdiction of the regulatory
  60-11  authority and which are in force at the time for any public utility
  60-12  service, product, or commodity offered by the utility.
  60-13        (b)  Every public utility shall file with, and as a part of
  60-14  such schedules, all rules and regulations relating to or affecting
  60-15  the rates, public utility service, product, or commodity furnished
  60-16  by such utility.  (Sec. 32)
  60-17        Sec. 2.155.  STANDARDS OF SERVICE.  (a)  Every public utility
  60-18  shall furnish such service, instrumentalities, and facilities as
  60-19  shall be safe, adequate, efficient, and reasonable.
  60-20        (b)  The regulatory authority after reasonable notice and
  60-21  hearing had on its own motion or on complaint may:
  60-22              (1)  ascertain and fix just and reasonable standards,
  60-23  classifications, regulations, or practices to be observed and
  60-24  followed by any or all public utilities with respect to the service
  60-25  to be furnished;
  60-26              (2)  ascertain and fix adequate and reasonable
  60-27  standards for the measurement of the quantity, quality, pressure,
   61-1  initial voltage, or other condition pertaining to the supply of the
   61-2  service;
   61-3              (3)  prescribe reasonable regulations for the
   61-4  examination and testing of the service and for the measurement
   61-5  thereof; and
   61-6              (4)  establish or approve reasonable rules,
   61-7  regulations, specifications, and standards to secure the accuracy
   61-8  of all meters, instruments, and equipment used for the measurement
   61-9  of any service of any public utility.
  61-10        (c)  Any standards, classifications, regulations, or
  61-11  practices now or hereafter observed or followed by any public
  61-12  utility may be filed by it with the regulatory authority, and the
  61-13  same shall continue in force until amended by the public utility or
  61-14  until changed by the regulatory authority as herein provided.
  61-15        (d)  Notwithstanding any other provision of law, all lines
  61-16  owned by a public utility for the transmission and/or distribution
  61-17  of electric energy shall be constructed, operated, and maintained,
  61-18  as to clearances, in accordance with the National Electrical Safety
  61-19  Code Standard ANSI (c)(2), as adopted by the American National
  61-20  Safety Institute and in effect at the time of construction.  (Sec.
  61-21  35)
  61-22        Sec. 2.156.  EXAMINATION AND TEST OF EQUIPMENT.  (a)  The
  61-23  regulatory authority may examine and test any meter, instrument, or
  61-24  equipment used for the measurement of any service of any public
  61-25  utility and may enter any premises occupied by any public utility
  61-26  for the purpose of making such examinations and tests and
  61-27  exercising any power provided for in this Act and may set up and
   62-1  use on such premises any apparatus and appliances necessary
   62-2  therefor.  The public utility shall have the right to be
   62-3  represented at the making of the examinations, tests, and
   62-4  inspections.  The public utility and its officers and employees
   62-5  shall facilitate the examinations, tests, and inspections by giving
   62-6  every reasonable aid to the regulatory authority and any person or
   62-7  persons designated by the regulatory authority for the duties
   62-8  aforesaid.
   62-9        (b)  Any consumer or user may have any meter or measuring
  62-10  device tested by the utility once without charge, after a
  62-11  reasonable period to be fixed by the regulatory authority by rule,
  62-12  and at shorter intervals on payment of reasonable fees fixed by the
  62-13  regulatory authority.  The regulatory authority shall declare and
  62-14  establish reasonable fees to be paid for other examining and
  62-15  testing of such meters and other measuring devices on the request
  62-16  of the consumer.  If the test is requested to be made within the
  62-17  period of presumed accuracy as fixed by the regulatory authority
  62-18  since the last such test of the same meter or other measuring
  62-19  device, the fee to be paid by the consumer or user at the time of
  62-20  his request shall be refunded to the consumer or user if the meter
  62-21  or measuring device is found unreasonably defective or incorrect to
  62-22  the substantial disadvantage of the consumer or user.  If the
  62-23  consumer's request is made at a time beyond the period of presumed
  62-24  accuracy fixed by the regulatory authority since the last such test
  62-25  of the same meter or measuring device, the utility shall make the
  62-26  test without charge to the consumer or user.  (Sec. 36)
  62-27       SUBTITLE E.  PROCEEDINGS BEFORE THE REGULATORY AUTHORITY
   63-1        Sec. 2.201.  POWER TO INSURE COMPLIANCE; RATE REGULATION.
   63-2  Subject to the provisions of this Act, the commission is hereby
   63-3  vested with all authority and power of the State of Texas to insure
   63-4  compliance with the obligations of public utilities in this Act.
   63-5  For this purpose the regulatory authority is empowered to fix and
   63-6  regulate rates of public utilities, including rules and regulations
   63-7  for determining the classification of customers and services and
   63-8  for determining the applicability of rates.  A rule or order of the
   63-9  regulatory authority may not conflict with the rulings of any
  63-10  federal regulatory body.  (Sec. 37)
  63-11        Sec. 2.202.  JUST AND REASONABLE RATES.  It shall be the duty
  63-12  of the regulatory authority to insure that every rate made,
  63-13  demanded, or received by any public utility or by any two or more
  63-14  public utilities jointly shall be just and reasonable.  Rates may
  63-15  not be unreasonably preferential, prejudicial, or discriminatory,
  63-16  but shall be sufficient, equitable, and consistent in application
  63-17  to each class of consumers.  For ratemaking purposes, the
  63-18  commission may treat two or more municipalities served by a public
  63-19  utility as a single class wherever it deems such treatment to be
  63-20  appropriate.  (Sec. 38 (part))
  63-21        Sec. 2.203.  FIXING OVERALL REVENUES.  (a)  In fixing the
  63-22  rates of a public utility, the regulatory authority shall fix its
  63-23  overall revenues at a level which will permit such utility a
  63-24  reasonable opportunity to earn a reasonable return on its invested
  63-25  capital used and useful in rendering service to the public over and
  63-26  above its reasonable and necessary operating expenses.
  63-27        (b)  In fixing a reasonable return on invested capital, the
   64-1  regulatory authority shall consider, in addition to other
   64-2  applicable factors, efforts to comply with the statewide energy
   64-3  plan, the efforts and achievements of such utility in the
   64-4  conservation of resources, the quality of the utility's services,
   64-5  the efficiency of the utility's operations, and the quality of the
   64-6  utility's management.  (Sec. 39)
   64-7        Sec. 2.204.  BURDEN OF PROOF.  Except as hereafter provided,
   64-8  in any proceeding involving any proposed change of rates, the
   64-9  burden of proof to show that the proposed change, if proposed by
  64-10  the utility, or that the existing rate, if it is proposed to reduce
  64-11  the rate, is just and reasonable shall be on the public utility.
  64-12  (Sec. 40 (part))
  64-13        Sec. 2.205.  COMPONENTS OF INVESTED CAPITAL AND NET INCOME.
  64-14  The components of invested capital and net income shall be
  64-15  determined according to Sections 2.206, 2.207, and 2.208.  (Sec. 41
  64-16  (part))
  64-17        Sec. 2.206.  INVESTED CAPITAL.  (a)  Utility rates shall be
  64-18  based on the original cost of property used by and useful to the
  64-19  public utility in providing service, including construction work in
  64-20  progress at cost as recorded on the books of the utility.
  64-21        (b)  The inclusion of construction work in progress is an
  64-22  exceptional form of rate relief to be granted only upon the
  64-23  demonstration by the utility that such inclusion is necessary to
  64-24  the financial integrity of the utility.  Construction work in
  64-25  progress may not be included in the rate base for major projects
  64-26  under construction to the extent that such projects have been
  64-27  inefficiently or imprudently planned or managed.
   65-1        (c)  Original cost shall be the actual money cost, or the
   65-2  actual money value of any consideration paid other than money, of
   65-3  the property at the time it shall have been dedicated to public
   65-4  use, whether by the utility which is the present owner or by a
   65-5  predecessor, less depreciation.  (Sec. 41(a))
   65-6        Sec. 2.207.  SEPARATIONS AND ALLOCATIONS.  Costs of
   65-7  facilities, revenues, expenses, taxes, and reserves shall be
   65-8  separated or allocated as prescribed by the regulatory authority.
   65-9  (Sec. 41(b))
  65-10        Sec. 2.208.  NET INCOME.  (a)  Net Income.  "Net income"
  65-11  means the total revenues of the public utility less all reasonable
  65-12  and necessary expenses as determined by the regulatory authority.
  65-13  The regulatory authority shall determine expenses and revenues in a
  65-14  manner consistent with this section.
  65-15        (b)  Transactions with Affiliated Interests.  Payment to
  65-16  affiliated interests for costs of any services or any property,
  65-17  right, or thing or for interest expense may not be allowed either
  65-18  as capital cost or as expense except to the extent that the
  65-19  regulatory authority shall find such payment to be reasonable and
  65-20  necessary for each item or class of items as determined by the
  65-21  commission.  Any such finding shall include specific findings of
  65-22  the reasonableness and necessity of each item or class of items
  65-23  allowed and a finding that the price to the utility is no higher
  65-24  than prices charged by the supplying affiliate to its other
  65-25  affiliates or divisions for the same item or class of items or to
  65-26  unaffiliated persons or corporations.  The price paid by gas
  65-27  utilities to affiliated interests for natural gas from Outer
   66-1  Continental Shelf lands shall be subject to a rebuttable
   66-2  presumption that such price is reasonable if the price paid does
   66-3  not exceed the price permitted by federal regulation if such gas is
   66-4  regulated by any federal agency or if not regulated by a federal
   66-5  agency does not exceed the price paid by nonaffiliated parties for
   66-6  natural gas from Outer Continental Shelf lands.  The burden of
   66-7  establishing that such a price paid is not reasonable shall be on
   66-8  any party challenging the reasonableness of such price.
   66-9        (c)  Income Taxes.  If the public utility is a member of an
  66-10  affiliated group that is eligible to file a consolidated income tax
  66-11  return and if it is advantageous to the public utility to do so,
  66-12  income taxes shall be computed as though a consolidated return had
  66-13  been so filed and the utility had realized its fair share of the
  66-14  savings resulting from the consolidated return, unless it is shown
  66-15  to the satisfaction of the regulatory authority that it was
  66-16  reasonable to choose not to consolidate returns.  The amounts of
  66-17  income taxes saved by a consolidated group of which a public
  66-18  utility is a member by reason of the elimination in the
  66-19  consolidated return of the intercompany profit on purchases by the
  66-20  public utility from an affiliate shall be applied to reduce the
  66-21  cost of the property or services so purchased.  The investment tax
  66-22  credit allowed against federal income taxes, to the extent retained
  66-23  by the utility, shall be applied as a reduction in the rate-based
  66-24  contribution of the assets to which such credit applies, to the
  66-25  extent and at such rate as allowed by the Internal Revenue Code.
  66-26        (d)  Expenses Disallowed.  The regulatory authority may not
  66-27  consider for ratemaking purposes the following expenses:
   67-1              (1)  legislative advocacy expenses, whether made
   67-2  directly or indirectly, including but not limited to legislative
   67-3  advocacy expenses included in trade association dues;
   67-4              (2)  payments, except those made under an insurance or
   67-5  risk-sharing arrangement executed before the date of loss, made to
   67-6  cover costs of an accident, equipment failure, or negligence at a
   67-7  utility facility owned by a person or governmental body not selling
   67-8  power inside the State of Texas;
   67-9              (3)  costs of processing a refund or credit under
  67-10  Subsection (e) of Section 2.212 of this Act; or
  67-11              (4)  any expenditure found by the regulatory authority
  67-12  to be unreasonable, unnecessary, or not in the public interest,
  67-13  including but not limited to executive salaries, advertising
  67-14  expenses, legal expenses, and civil penalties or fines.
  67-15        (e)  Rules.  The regulatory authority may promulgate
  67-16  reasonable rules and regulations with respect to the allowance or
  67-17  disallowance of any expenses for ratemaking purposes.  (Sec. 41(c))
  67-18        Sec. 2.209.  COGENERATOR OR SMALL-POWER PRODUCER; AGREEMENT
  67-19  WITH ELECTRIC UTILITY FOR PURCHASE OF CAPACITY; CERTIFICATION BY
  67-20  COMMISSION.  (a)  In this section "qualifying facility" means a
  67-21  qualifying cogenerator or a qualifying small-power producer, as
  67-22  defined by Sections 3(18)(C) and 3(17)(D), respectively, Federal
  67-23  Power Act (16 U.S.C. Sections 796(18)(C) and 796(17)(D)).
  67-24        (b)  If an electric utility and a qualifying facility enter
  67-25  into an agreement providing for the purchase of capacity, the
  67-26  electric utility or qualifying facility may submit a copy of the
  67-27  agreement to the commission for certification under this section.
   68-1  The agreement may provide that it is contingent on that
   68-2  certification.  Before the deadline specified by Subsection (d) of
   68-3  this section, the commission shall determine whether:
   68-4              (1)  the payments provided for in the agreement over
   68-5  the contract term are equal to or less than the utility's avoided
   68-6  costs as established by the commission and in effect at the time
   68-7  the agreement was signed; contracts entered into before the
   68-8  effective date of this section may not be submitted for
   68-9  certification by the commission; and
  68-10              (2)  the agreement provides the electric utility the
  68-11  opportunity to acquire the cogeneration or small-power production
  68-12  installation before the installation is offered to another
  68-13  purchaser in the event of its abandonment, or provides other
  68-14  sufficient assurance that the electric utility will be provided
  68-15  with a comparable supply of electricity, if the qualifying facility
  68-16  ceases to operate the installation.
  68-17        (c)  If the commission determines that the agreement meets
  68-18  the requirements of Subdivisions (1) and (2) of Subsection (b) of
  68-19  this section, it shall certify that the agreement meets these
  68-20  requirements.  If the commission does not make a determination
  68-21  under Subsection (b) of this section before the deadline specified
  68-22  by Subsection (d) of this section, the agreement is considered to
  68-23  meet the requirements of Subdivisions (1) and (2) of Subsection (b)
  68-24  of this section and certification is considered granted.  A
  68-25  certification is effective until the earlier of 15 years after the
  68-26  date of the certification or the expiration date of the agreement.
  68-27        (d)  The commission shall make its determination under this
   69-1  section within 90 days after the date that the agreement is
   69-2  submitted, unless before this deadline the electric utility, the
   69-3  qualifying facility, or an affected person requests a hearing or
   69-4  the commission on its own motion decides to hold a hearing.  If a
   69-5  hearing is requested or the commission decides to hold a hearing,
   69-6  the commission shall hold the hearing and make its determination
   69-7  within 120 days after the date that the agreement is submitted,
   69-8  except that this deadline is extended two days for each day in
   69-9  excess of five days on which the commission conducts a hearing on
  69-10  the merits of the case.
  69-11        (e)  In setting the electric utility's rates for a period
  69-12  during which the certification is effective, the regulatory
  69-13  authority shall consider payments made under the agreement to be
  69-14  reasonable and necessary operating expenses of the electric
  69-15  utility.  The regulatory authority shall allow full, concurrent,
  69-16  and monthly recovery of the amount of the payments.  (Sec. 41A)
  69-17        Sec. 2.210.  SELF-INSURANCE.  (a)  A public utility may
  69-18  self-insure all or a portion of its potential liability or
  69-19  catastrophic property loss, including windstorm, fire, and
  69-20  explosion losses which could not have been reasonably anticipated
  69-21  and included under operating and maintenance expenses.  The
  69-22  commission shall approve a self-insurance plan under this section
  69-23  if it finds that the coverage is in the public interest and the
  69-24  plan is a lower cost alternative to purchasing commercial
  69-25  insurance, considering all costs, and that ratepayers will receive
  69-26  the benefits of that saving.
  69-27        (b)  In computing a utility's reasonable and necessary
   70-1  expenses under Section 2.208 of this Act, the regulatory authority
   70-2  shall allow as a necessary expense the funds credited to reserve
   70-3  accounts for the self-insurance, to the extent the regulatory
   70-4  authority finds it in the public interest.  After the reserve
   70-5  account is established, the regulatory authority shall consider if
   70-6  the reserve account has a surplus or shortage in determining the
   70-7  utility's rate base.  A surplus in the reserve account will exist
   70-8  if the charges against the reserve account are less than the funds
   70-9  credited to the reserve.  A shortage in the reserve account will
  70-10  exist if the charges against the account are greater than the funds
  70-11  credited to the reserve.  The regulatory authority shall subtract
  70-12  any surplus from and add any shortage to the rate base.
  70-13        (c)  The regulatory authority shall determine reasonableness
  70-14  under Subsection (b) of this section from information provided at
  70-15  the time the self-insurance plan and reserve account are
  70-16  established and upon the filing of each rate case by a utility that
  70-17  has such a fund.
  70-18        (d)  The commission shall adopt rules governing
  70-19  self-insurance under this section.
  70-20        (e)  The allowance for self-insurance under this Act for
  70-21  ratemaking purposes will not be applicable to nuclear plant
  70-22  investment.  (Sec. 41B)
  70-23        Sec. 2.211.  UNREASONABLE OR VIOLATIVE EXISTING RATES;
  70-24  INVESTIGATING COSTS OF OBTAINING SERVICE FROM ANOTHER SOURCE.
  70-25  (a)  Whenever the regulatory authority, after reasonable notice and
  70-26  hearing, on its own motion or on complaint by any affected person,
  70-27  finds that the existing rates of any public utility for any service
   71-1  are unreasonable or in any way in violation of any provision of
   71-2  law, the regulatory authority shall determine the just and
   71-3  reasonable rates, including maximum or minimum rates, to be
   71-4  thereafter observed and in force and shall fix the same by order to
   71-5  be served on the public utility, and such rates shall constitute
   71-6  the legal rates of the public utility until changed as provided in
   71-7  this Act.
   71-8        (b)  Whenever a public utility does not itself produce or
   71-9  generate that which it distributes, transmits, or furnishes to the
  71-10  public for compensation but obtains the same from another source,
  71-11  the regulatory authority shall have the power and authority to
  71-12  investigate the cost of such production or generation in any
  71-13  investigation of the reasonableness of the rates of such public
  71-14  utility.  (Sec. 42)
  71-15        Sec. 2.212.  STATEMENT OF INTENT TO CHANGE RATES; MAJOR
  71-16  CHANGES; HEARING; SUSPENSION OF RATE SCHEDULE; DETERMINATION OF
  71-17  RATE LEVEL.  (a)  A utility may not make changes in its rates
  71-18  except by filing a statement of intent with the regulatory
  71-19  authority having original jurisdiction at least 35 days prior to
  71-20  the effective date of the proposed change.  The statement of intent
  71-21  shall include proposed revisions of tariffs and schedules and a
  71-22  statement specifying in detail each proposed change, the effect the
  71-23  proposed change is expected to have on the revenues of the company,
  71-24  the classes and numbers of utility consumers affected, and such
  71-25  other information as may be required by the regulatory authority's
  71-26  rules and regulations.  A copy of the statement of intent shall be
  71-27  mailed or delivered to the appropriate officer of each affected
   72-1  municipality, and notice shall be given by publication in
   72-2  conspicuous form and place of a notice to the public of such
   72-3  proposed change once in each week for four successive weeks prior
   72-4  to the effective date of the proposed change in a newspaper having
   72-5  general circulation in each county containing territory affected by
   72-6  the proposed change and by mail to such other affected persons as
   72-7  may be required by the regulatory authority's rules and
   72-8  regulations.  The regulatory authority may waive the publication of
   72-9  notice requirement prescribed by this subsection in a proceeding
  72-10  that involves a rate reduction for all affected ratepayers only.
  72-11  The applicant shall give notice of the proposed rate change by mail
  72-12  to all affected utility customers.  The regulatory authority by
  72-13  rule shall also define other proceedings for which the publication
  72-14  of notice requirement prescribed by this subsection may be waived
  72-15  on a showing of good cause, provided that a waiver may not be
  72-16  granted in any proceeding involving a rate increase to any class or
  72-17  category of ratepayer.
  72-18        (b)  The regulatory authority, for good cause shown, may,
  72-19  except in the case of major changes, allow changes in rate to take
  72-20  effect prior to the end of such 35-day period under such conditions
  72-21  as it may prescribe, subject to suspension as provided herein.  All
  72-22  such changes shall be indicated immediately upon its schedules by
  72-23  such utility.  "Major changes" shall mean an increase in rates
  72-24  which would increase the aggregate revenues of the applicant more
  72-25  than the greater of $100,000 or 2-1/2 percent, but does not include
  72-26  changes in rates allowed to go into effect by the regulatory
  72-27  authority or made by the utility pursuant to an order of the
   73-1  regulatory authority after hearings held upon notice to the public.
   73-2        (c)  Whenever there is filed with the regulatory authority
   73-3  any schedule modifying or resulting in a change in any rates then
   73-4  in force, the regulatory authority shall on complaint by any
   73-5  affected person or may on its own motion, at any time within 30
   73-6  days from the date when such change would or has become effective,
   73-7  and, if it so orders, without answer or other formal pleading by
   73-8  the utility, but on reasonable notice, including notice to the
   73-9  governing bodies of all affected municipalities and counties, enter
  73-10  on a hearing to determine the propriety of such change.  The
  73-11  regulatory authority shall hold such a hearing in every case in
  73-12  which the change constitutes a major change in rates, provided that
  73-13  an informal proceeding may satisfy this requirement if a complaint
  73-14  has not been received before the expiration of 45 days after notice
  73-15  of the change shall have been filed.  In each case where the
  73-16  commission determines it is in the public interest to collect
  73-17  testimony at a regional hearing for inclusion in the record, the
  73-18  commission shall hold a regional hearing at an appropriate
  73-19  location.  A regional hearing is not required in a case involving a
  73-20  member-owned utility, unless the commission determines otherwise.
  73-21        (d)  Pending the hearing and decision, the local regulatory
  73-22  authority, after delivery to the affected utility of a statement in
  73-23  writing of its reasons therefor, may suspend the operation of the
  73-24  schedule for a period not to exceed 90 days beyond the date on
  73-25  which the schedule of rates would otherwise go into effect, and the
  73-26  commission may suspend the operation of the schedule for a period
  73-27  not to exceed 150 days beyond the date on which the schedule would
   74-1  otherwise go into effect.  If the regulatory authority does not
   74-2  make a final determination concerning any schedule of rates prior
   74-3  to expiration of the period or periods of suspension, the schedule
   74-4  shall be deemed to have been approved by the regulatory authority.
   74-5  However, the 150-day period shall be extended two days for each one
   74-6  day of actual hearing on the merits of the case that exceeds 15
   74-7  days.  This approval is subject to the authority of the regulatory
   74-8  authority thereafter to continue a hearing in progress.  The
   74-9  regulatory authority may in its discretion fix temporary rates for
  74-10  any period of suspension under this section.  During the suspension
  74-11  by the regulatory authority as above provided, the rates in force
  74-12  when the suspended schedule was filed shall continue in force
  74-13  unless the regulatory authority shall establish a temporary rate.
  74-14  The regulatory authority shall give preference to the hearing and
  74-15  decision of questions arising under this section over all other
  74-16  questions pending before it and decide the same as speedily as
  74-17  possible.
  74-18        (e)  If the 150-day period has been extended, as provided for
  74-19  in Subsection (d) of this section, and the commission fails to make
  74-20  its final determination of rates within 150 days from the date that
  74-21  the proposed change otherwise would have gone into effect, the
  74-22  utility concerned may put a changed rate, not to exceed the
  74-23  proposed rate, into effect on the filing with the regulatory
  74-24  authority of a bond payable to the regulatory authority in an
  74-25  amount and with sureties approved by the regulatory authority
  74-26  conditioned upon refund and in a form approved by the regulatory
  74-27  authority.  The utility concerned shall refund or credit against
   75-1  future bills all sums collected during the period of suspension in
   75-2  excess of the rate finally ordered plus interest at the current
   75-3  rate as finally determined by the regulatory authority.
   75-4        (f)  If, after hearing, the regulatory authority finds the
   75-5  rates to be unreasonable or in any way in violation of any
   75-6  provision of law, the regulatory authority shall determine the
   75-7  level of rates to be charged or applied by the utility for the
   75-8  service in question and shall fix the same by order to be served
   75-9  upon the utility; these rates are thereafter to be observed until
  75-10  changed, as provided by this Act.
  75-11        (g)(1)  A rate or tariff set by the commission may not
  75-12  authorize a utility to automatically adjust and pass through to its
  75-13  customers changes in fuel or other costs of the utility.
  75-14              (2)(A)  Any revision of a utility's billings to its
  75-15  customers to allow for the recovery of additional fuel costs may be
  75-16  made only upon a public hearing and order of the commission.
  75-17                    (B)  The commission may consider any evidence
  75-18  that is appropriate and in the public interest at such hearing.
  75-19                    (C)  A proceeding under this subsection may not
  75-20  be considered a rate case under this section.
  75-21              (3)  The commission may, after a hearing, grant interim
  75-22  relief for fuel cost increases that are the result of unusual and
  75-23  emergency circumstances or conditions.
  75-24              (4)(A)  This subsection applies only to increases or
  75-25  decreases in the cost of purchased electricity which have been:
  75-26                          (i)  accepted by a federal regulatory
  75-27  authority; or
   76-1                          (ii)  approved after a hearing by the
   76-2  commission.
   76-3                    (B)  The commission may utilize any appropriate
   76-4  method to provide for the adjustment of the cost of purchased
   76-5  electricity upon such terms and conditions as the commission may
   76-6  determine.  Such purchased electricity costs may be recovered
   76-7  concurrently with the effective date of the changed costs to the
   76-8  purchasing utility or as soon thereafter as is reasonably
   76-9  practical.
  76-10        (old Subsec. (h) deleted)
  76-11        (h)  The commission on its own motion or on the petition of a
  76-12  utility shall provide for the adjustment of a utility's billing to
  76-13  reflect any increase or decrease of tax liability of the utility to
  76-14  the state resulting from Chapter 5, Acts of the 72nd Legislature,
  76-15  1st Called Session, 1991, and that is attributable to activities
  76-16  that are subject to the jurisdiction of the commission.  Any
  76-17  adjustment to billings under this section must be apportioned
  76-18  pro-rata to all types and classes of service provided by the
  76-19  utility and is effective only until the commission alters the
  76-20  adjustment as provided by this subsection or enters an order for
  76-21  the utility under this section or Section 2.211 of this Act.  The
  76-22  adjustment of billings must be made effective at the same time as
  76-23  the increase or decrease of tax liability resulting from Chapter 5,
  76-24  Acts of the 72nd Legislature, 1st Called Session, 1991, or as soon
  76-25  after as is reasonably practical.  Each year after any original
  76-26  adjustment, the commission shall review the utility's increase or
  76-27  decrease of tax liability resulting from Chapter 5, Acts of the
   77-1  72nd Legislature, 1st Called Session, 1991, and alter the
   77-2  adjustment to reflect the increase or decrease.  A proceeding under
   77-3  this subsection is not a rate case under this section.  (Sec. 43)
   77-4        Sec. 2.213.  RATES FOR AREAS NOT WITHIN MUNICIPALITY.  Public
   77-5  utility rates for areas not within any municipality may not exceed
   77-6  without commission approval 115 percent of the average of all rates
   77-7  for similar services of all municipalities served by the same
   77-8  utility within the same county.  (Sec. 44)
   77-9        Sec. 2.214.  UNREASONABLE PREFERENCE OR PREJUDICE AS TO RATES
  77-10  OR SERVICES.  A public utility may not, as to rates or services,
  77-11  make or grant any unreasonable preference or advantage to any
  77-12  corporation or person within any classification or subject any
  77-13  corporation or person within any classification to any unreasonable
  77-14  prejudice or disadvantage.  A public utility may not establish and
  77-15  maintain any unreasonable differences as to rates of service either
  77-16  as between localities or as between classes of service.  (Sec. 45)
  77-17        Sec. 2.215.  EQUALITY OF RATES AND SERVICES.  (a)  A public
  77-18  utility may not, directly or indirectly, by any device whatsoever
  77-19  or in any manner, charge, demand, collect, or receive from any
  77-20  person a greater or less compensation for any service rendered or
  77-21  to be rendered by the utility than that prescribed in the schedule
  77-22  of rates of the public utility applicable thereto when filed in the
  77-23  manner provided in this Act, nor may any person knowingly receive
  77-24  or accept any service from a public utility for a compensation
  77-25  greater or less than that prescribed in the schedules.
  77-26        (b)  Nothing in this Act shall prevent a cooperative
  77-27  corporation from returning to its members the whole or any part of
   78-1  the net earnings resulting from its operations in proportion to
   78-2  their purchases from or through the corporation.  (Sec. 46)
   78-3        Sec. 2.216.  DISCRIMINATION; RESTRICTION ON COMPETITION.  A
   78-4  public utility may not discriminate against any person or
   78-5  corporation that sells or leases equipment or performs services in
   78-6  competition with the public utility, nor may any public utility
   78-7  engage in any other practice that tends to restrict or impair such
   78-8  competition.  (Sec. 47)
   78-9        Sec. 2.217.  PAYMENTS IN LIEU OF TAXES.  Payments made in
  78-10  lieu of taxes by a public utility to the municipality by which it
  78-11  is owned may not be considered an expense of operation for the
  78-12  purpose of determining, fixing, or regulating the rates to be
  78-13  charged for the provision of utility service to a school district
  78-14  or hospital district.  Rates received by a public utility from a
  78-15  school district or hospital district may not be used to make or to
  78-16  cover the cost of making payments in lieu of taxes to the
  78-17  municipality by which the public utility is owned.  (Sec. 48)
  78-18        SUBTITLE F.  CERTIFICATES OF CONVENIENCE AND NECESSITY
  78-19        Sec. 2.251.  DEFINITION.  For the purposes of this subtitle
  78-20  only, "retail public utility" means any person, corporation,
  78-21  municipality, political subdivision or agency, or cooperative
  78-22  corporation, now or hereafter operating, maintaining, or
  78-23  controlling in Texas facilities for providing retail public utility
  78-24  service.  (Sec. 49--Subsec. (b) deleted)
  78-25        Sec. 2.252.  CERTIFICATE REQUIRED.  (a)  A public utility may
  78-26  not in any way render service directly or indirectly to the public
  78-27  under any franchise or permit without first having obtained from
   79-1  the commission a certificate that the present or future public
   79-2  convenience and necessity require or will require such
   79-3  installation, operation, or extension.
   79-4        (b)  Except as otherwise provided in this subtitle, a retail
   79-5  public utility may not furnish, make available, render, or extend
   79-6  retail public utility service to any area to which retail utility
   79-7  service is being lawfully furnished by another retail public
   79-8  utility without first having obtained a certificate of public
   79-9  convenience and necessity that includes the area in which the
  79-10  consuming facility is located.  (Sec. 50)
  79-11        Sec. 2.253.  EXCEPTIONS FOR EXTENSION OF SERVICE.  (a)  A
  79-12  public utility is not required to secure a certificate of public
  79-13  convenience and necessity for:
  79-14              (1)  an extension into territory contiguous to that
  79-15  already served by it and not receiving similar service from another
  79-16  public utility and not within the area of public convenience and
  79-17  necessity of another utility of the same kind;
  79-18              (2)  an extension within or to territory already served
  79-19  by it or to be served by it under a certificate of public
  79-20  convenience and necessity; or
  79-21              (3)  operation, extension, or service in progress on
  79-22  September 1, 1975.
  79-23        (b)  Any extensions allowed by Subsection (a) of this section
  79-24  shall be limited to devices for interconnection of existing
  79-25  facilities or devices used solely for transmitting public utility
  79-26  services from existing facilities to customers of retail utility
  79-27  service.  (Sec. 51)
   80-1        Sec. 2.254.  APPLICATION; MAPS; EVIDENCE OF CONSENT.  (a)  A
   80-2  public utility shall submit to the commission an application to
   80-3  obtain a certificate of public convenience and necessity or an
   80-4  amendment thereof.
   80-5        (b)  On or before 90 days after September 1, 1975, or at a
   80-6  later date on request in writing by a public utility when good
   80-7  cause is shown, or at such later dates as the commission may order,
   80-8  each public utility shall file with the commission a map or maps
   80-9  showing all its facilities and illustrating separately facilities
  80-10  for generation, transmission, and distribution of its services.
  80-11        (c)  Each applicant for a certificate shall file with the
  80-12  commission such evidence as is required by the commission to show
  80-13  that the applicant has received the required consent, franchise, or
  80-14  permit of the proper municipality or other public authority.  (Sec.
  80-15  52)
  80-16        (Sec. 53 deleted)
  80-17        Sec. 2.255.  NOTICE AND HEARING; ISSUANCE OR REFUSAL; FACTORS
  80-18  CONSIDERED; FILING OF NOTICE OF INTENT BY ELECTRIC UTILITIES; TIME
  80-19  FOR APPROVAL OR DENIAL OF NEW TRANSMISSION FACILITIES.  (a)  When
  80-20  an application for a certificate of public convenience and
  80-21  necessity is filed, the commission shall give notice of such
  80-22  application to interested parties and, if requested, shall fix a
  80-23  time and place for a hearing and give notice of the hearing.  Any
  80-24  person interested in the application may intervene at the hearing.
  80-25        (b)  The commission may grant applications and issue
  80-26  certificates only if the commission finds that the certificate is
  80-27  necessary for the service, accommodation, convenience, or safety of
   81-1  the public.  The commission may issue the certificate as prayed
   81-2  for, refuse to issue it, or issue it for the construction of a
   81-3  portion only of the contemplated system or facility or extension
   81-4  thereof or for the partial exercise only of the right or privilege.
   81-5        (c)  Certificates of convenience and necessity shall be
   81-6  granted on a nondiscriminatory basis after consideration by the
   81-7  commission of the adequacy of existing service, the need for
   81-8  additional service, the effect of the granting of a certificate on
   81-9  the recipient of the certificate, on any public utility of the same
  81-10  kind already serving the proximate area, and on such factors as
  81-11  community values, recreational and park areas, historical and
  81-12  aesthetic values, environmental integrity, and the probable
  81-13  improvement of service or lowering of cost to consumers in such
  81-14  area resulting from the granting of such certificate.
  81-15        (d)(1)  In addition to the requirements of this section, an
  81-16  electric utility applying for a certificate of convenience and
  81-17  necessity for a new generating plant must first file a notice of
  81-18  intent to file an application for certification.
  81-19              (2)  The notice of intent shall set out alternative
  81-20  methods considered to help meet the electrical needs, related
  81-21  electrical facilities, and the advantages and disadvantages of the
  81-22  alternatives.  In addition, the notice shall indicate compatibility
  81-23  with the most recent long-term forecast provided in this Act.
  81-24              (3)  The commission shall conduct a hearing on the
  81-25  notice of intent to determine the appropriateness of the proposed
  81-26  generating plant as compared to the alternatives and shall issue a
  81-27  report on its findings.  In conjunction with the issuance of the
   82-1  report, the commission shall render a decision approving or
   82-2  disapproving the notice.  Such decision shall be rendered within
   82-3  180 days from the date of filing the notice of intent.
   82-4        (e)(1)  On approval of the notice of intent, a utility may
   82-5  apply for certification for a generating plant, site, and site
   82-6  facilities not later than 12 months before construction is to
   82-7  commence.
   82-8              (2)  The application for certification shall contain
   82-9  such information as the commission may require to justify the
  82-10  proposed generating plant, site, and site facilities and to allow a
  82-11  determination showing compatibility with the most recent forecast.
  82-12              (3)  Certificates of convenience and necessity shall be
  82-13  granted on a nondiscriminatory basis if the commission finds that
  82-14  the proposed new plant is required under the service area forecast,
  82-15  that it is the best and most economical choice of technology for
  82-16  that service area as compatible with the commission's forecast, and
  82-17  that conservation and alternative energy sources cannot meet the
  82-18  need.
  82-19        (f)  If the application for a certificate of convenience and
  82-20  necessity involves new transmission facilities, the commission
  82-21  shall approve or deny the application within one year after the
  82-22  date the application is filed.  If the commission does not approve
  82-23  or deny the application before this deadline, any party may seek a
  82-24  writ of mandamus in a district court of Travis County to compel the
  82-25  commission to make a decision on the application.  (Sec. 54)
  82-26        Sec. 2.256.  AREA INCLUDED WITHIN CITY, TOWN, OR VILLAGE.
  82-27  (a)  If an area has been or shall be included within the boundaries
   83-1  of a city, town, or village as the result of annexation,
   83-2  incorporation, or otherwise, all public utilities certified or
   83-3  entitled to certification under this Act to provide service or
   83-4  operate facilities in such area prior to the inclusion shall have
   83-5  the right to continue and extend service in its area of public
   83-6  convenience and necessity within the annexed or incorporated area,
   83-7  pursuant to the rights granted by its certificate and this Act.
   83-8        (b)  Notwithstanding any other provision of law, a public
   83-9  utility shall have the right to continue and extend service within
  83-10  its area of public convenience and necessity and to utilize the
  83-11  roads, streets, highways, alleys, and public property for the
  83-12  purpose of furnishing such retail utility service, subject to the
  83-13  authority of the governing body of a municipality to require any
  83-14  public utility, at its own expense, to relocate its facilities to
  83-15  permit the widening or straightening of streets by giving to the
  83-16  public utility 30 days' notice and specifying the new location for
  83-17  the facilities along the right-of-way of the street or streets.
  83-18        (c)  This section may not be construed as limiting the power
  83-19  of cities, towns, and villages to incorporate or extend their
  83-20  boundaries by annexation, nor may this section be construed as
  83-21  prohibiting any city or town from levying taxes and other special
  83-22  charges for the use of the streets as are authorized by Section
  83-23  182.025, Tax Code.
  83-24        (d)  Where a municipal corporation offers retail electric
  83-25  utility service in a city of more than 135,000 population located
  83-26  in a county of more than 1,500,000 population according to the last
  83-27  federal decennial census, the commission shall singly certificate
   84-1  areas within the corporate limits of such municipality where more
   84-2  than one electric utility provides electric utility service within
   84-3  such corporate limits.  In singly certificating such areas, the
   84-4  commission shall preserve the respective electric utilities' rights
   84-5  to serve the customers such electric utilities are serving on June
   84-6  17, 1983.  Provided, however, the foregoing does not apply to
   84-7  customers served, at least partially, by a nominal 69,000 volts
   84-8  system, who have given notice of termination to the utility
   84-9  servicing that customer prior to June 17, 1983.  (Sec. 55)
  84-10        Sec. 2.257.  CONTRACTS VALID AND ENFORCEABLE.  Contracts
  84-11  between retail public utilities designating areas to be served and
  84-12  customers to be served by those utilities, when approved by the
  84-13  commission, shall be valid and enforceable and shall be
  84-14  incorporated into the appropriate areas of public convenience and
  84-15  necessity.  (Sec. 56)
  84-16        Sec. 2.258.  PRELIMINARY ORDER FOR CERTIFICATE.  If a public
  84-17  utility desires to exercise a right or privilege under a franchise
  84-18  or permit which it contemplates securing but which has not as yet
  84-19  been granted to it, such public utility may apply to the commission
  84-20  for an order preliminary to the issuance of the certificate.  The
  84-21  commission may thereupon make an order declaring that it will, on
  84-22  application, under such rules as it prescribes, issue the desired
  84-23  certificate on such terms and conditions as it designates, after
  84-24  the public utility has obtained the contemplated franchise or
  84-25  permit.  On presentation to the commission of evidence satisfactory
  84-26  to it that the franchise or permit has been secured by the public
  84-27  utility, the commission shall issue the certificate.  (Sec. 57)
   85-1        Sec. 2.259.  CONTINUOUS AND ADEQUATE SERVICE; DISCONTINUANCE,
   85-2  REDUCTION, OR IMPAIRMENT OF SERVICE.  (a)  Except as provided by
   85-3  this section or Section 2.260 of this Act, the holder of any
   85-4  certificate of public convenience and necessity shall serve every
   85-5  consumer within its certified area and shall render continuous and
   85-6  adequate service within the area or areas.
   85-7        (b)  Unless the commission issues a certificate that neither
   85-8  the present or future convenience and necessity will be adversely
   85-9  affected, the holder of a certificate may not discontinue, reduce,
  85-10  or impair service to a certified service area or part thereof
  85-11  except for:
  85-12              (1)  nonpayment of charges;
  85-13              (2)  nonuse; or
  85-14              (3)  other similar reasons in the usual course of
  85-15  business.
  85-16        (c)  Any discontinuance, reduction, or impairment of service,
  85-17  whether with or without approval of the commission, shall be in
  85-18  conformity with and subject to such conditions, restrictions, and
  85-19  limitations as the commission shall prescribe.  (Sec. 58)
  85-20        Sec. 2.260.  CONDITIONS REQUIRING REFUSAL OF SERVICE.  The
  85-21  holder of a certificate of public convenience and necessity shall
  85-22  refuse to serve a customer within its certified area if the holder
  85-23  of the certificate is prohibited from providing the service under
  85-24  Section 212.012 or 232.0047, Local Government Code.  (Sec. 58A)
  85-25        Sec. 2.261.  SALE, ASSIGNMENT, OR LEASE OF CERTIFICATE.  If
  85-26  the commission determines that a purchaser, assignee, or lessee is
  85-27  capable of rendering adequate service, a public utility may sell,
   86-1  assign, or lease a certificate of public convenience and necessity
   86-2  or any rights obtained under the certificate.  The sale,
   86-3  assignment, or lease shall be on the conditions prescribed by the
   86-4  commission.  (Sec. 59)
   86-5        Sec. 2.262.  INTERFERENCE WITH OTHER UTILITY.  If a public
   86-6  utility in constructing or extending its lines, plant, or system
   86-7  interferes or attempts to interfere with the operation of a line,
   86-8  plant, or system of any other utility, the commission may issue an
   86-9  order prohibiting the construction or extension or prescribing
  86-10  terms and conditions for locating the lines, plants, or systems
  86-11  affected.  (Sec. 60)
  86-12        Sec. 2.263.  IMPROVEMENTS IN SERVICE; INTERCONNECTING
  86-13  SERVICE.  After notice and hearing, the commission may:
  86-14              (1)  order a public utility to provide specified
  86-15  improvements in its service in a defined area, if service in such
  86-16  area is inadequate or is substantially inferior to service in a
  86-17  comparable area and it is reasonable to require the company to
  86-18  provide such improved service; and
  86-19              (2)  order two or more public utilities to establish
  86-20  specified facilities for the interconnecting service.  (Sec. 61
  86-21  (part))
  86-22        Sec. 2.264.  REVOCATION OR AMENDMENT OF CERTIFICATE.
  86-23  (a)  The commission at any time after notice and hearing may revoke
  86-24  or amend any certificate of convenience and necessity if it finds
  86-25  that the certificate holder has never provided or is no longer
  86-26  providing service in the area, or part of the area, covered by the
  86-27  certificate.
   87-1        (b)  When the certificate of any public utility is revoked or
   87-2  amended, the commission may require one or more public utilities to
   87-3  provide service in the area in question.  (Sec. 62)
   87-4               TITLE III.  TELECOMMUNICATIONS UTILITIES
   87-5                    SUBTITLE A.  GENERAL PROVISIONS
   87-6        Sec. 3.001.  DEFINITIONS.  In this title:
   87-7              (1)  "Dominant carrier" means:
   87-8                    (A)  a provider of any particular communication
   87-9  service which is provided in whole or in part over a telephone
  87-10  system who as to such service has sufficient market power in a
  87-11  telecommunications market as determined by the commission to enable
  87-12  such provider to control prices in a manner adverse to the public
  87-13  interest for such service in such market; and
  87-14                    (B)  any provider of local exchange telephone
  87-15  service within a certificated exchange area as to such service.  A
  87-16  telecommunications market shall be statewide until January 1, 1985.
  87-17  After this date the commission may, if it determines that the
  87-18  public interest will be served, establish separate markets within
  87-19  the state.  Prior to January 1, 1985, the commission shall hold
  87-20  such hearings and require such evidence as is necessary to carry
  87-21  out the public purpose of this Act and to determine the need and
  87-22  effect of establishing separate markets.  Any such provider
  87-23  determined to be a dominant carrier as to a particular
  87-24  telecommunications service in a market may not be presumed to be a
  87-25  dominant carrier of a different telecommunications service in that
  87-26  market.  The term does not include an interexchange carrier that is
  87-27  not a certificated local exchange company, with respect to
   88-1  interexchange services.  (Sec. 3(c) (part))
   88-2              (2)  "Local exchange company" means a
   88-3  telecommunications utility certificated to provide local exchange
   88-4  service within the state.  (Sec. 3(v))
   88-5              (3)  "Public utility" or "utility" means any person,
   88-6  corporation, river authority, cooperative corporation, or any
   88-7  combination thereof, other than a municipal corporation, or their
   88-8  lessees, trustees, and receivers, now or hereafter owning or
   88-9  operating for compensation in this state equipment or facilities
  88-10  for the conveyance, transmission, or reception of communications
  88-11  over a telephone system as a dominant carrier (hereinafter
  88-12  "telecommunications utility").   A person or  corporation not
  88-13  otherwise a public utility within the meaning of this Act may not
  88-14  be deemed such solely because of the furnishing or furnishing and
  88-15  maintenance of a private system or the manufacture, distribution,
  88-16  installation, or maintenance of customer premise communications
  88-17  equipment and accessories.  Nothing in this Act shall be construed
  88-18  to apply to telegraph services, television stations, radio
  88-19  stations, community antenna television services, or radio-telephone
  88-20  services that may be authorized under the Public Mobile Radio
  88-21  Services rules of the Federal Communications Commission, other than
  88-22  such radio-telephone services provided by wire-line telephone
  88-23  companies under the Domestic Public Land Mobile Radio Service and
  88-24  Rural Radio Service rules of the Federal Communications Commission.
  88-25  Interexchange telecommunications carriers (including resellers of
  88-26  interexchange telecommunications services), specialized
  88-27  communications common carriers, other resellers of communications,
   89-1  other communications carriers who convey, transmit, or receive
   89-2  communications in whole or in part over a telephone system, and
   89-3  providers of operator services as defined in Section 3.052(a) of
   89-4  this Act (except that subscribers to customer-owned pay telephone
   89-5  service may not be deemed to be telecommunications utilities) are
   89-6  also telecommunications utilities, but the commission's regulatory
   89-7  authority as to them is only as hereinafter defined.  The term
   89-8  "public utility" or "utility" does not include any person or
   89-9  corporation not otherwise a public utility that furnishes the
  89-10  services or commodity described in this section only to itself, its
  89-11  employees, or its tenants as an incident of such employee service
  89-12  or tenancy, when such service or commodity is not resold to or used
  89-13  by others.  (Sec. 3(c) (part))
  89-14              (4)  "Separation" means the division of plant,
  89-15  revenues, expenses, taxes, and reserves, applicable to exchange or
  89-16  local service where such items are used in common for providing
  89-17  public utility service to both local exchange service and other
  89-18  service, such as interstate or intrastate toll service.  (Sec.
  89-19  3(r))
  89-20                SUBTITLE B.  JURISDICTION OF COMMISSION
  89-21        Sec. 3.051.  TELECOMMUNICATIONS UTILITIES; REGULATION OF
  89-22  COMPETITION.  (a)  It is the policy of this state to protect the
  89-23  public interest in having adequate and efficient telecommunications
  89-24  service available to all citizens of the state at just, fair, and
  89-25  reasonable rates.  The legislature finds that the
  89-26  telecommunications industry through technical advancements, federal
  89-27  judicial and administrative actions, and the formulation of new
   90-1  telecommunications enterprises has become and will continue to be
   90-2  in many and growing areas a competitive industry which does not
   90-3  lend itself to traditional public utility regulatory rules,
   90-4  policies, and principles and that, therefore, the public interest
   90-5  requires that new rules, policies, and principles be formulated and
   90-6  applied to protect the public interest and to provide equal
   90-7  opportunity to all telecommunications utilities in a competitive
   90-8  marketplace.  It is the purpose of this section to grant to the
   90-9  commission the authority and the power under this Act to carry out
  90-10  the public policy herein stated.
  90-11        (b)  Subject to the limitations imposed in this Act, and for
  90-12  the purpose of carrying out the public policy above stated and of
  90-13  regulating rates, operations, and services so that such rates may
  90-14  be just, fair, and reasonable, and the services adequate and
  90-15  efficient, the commission shall have exclusive original
  90-16  jurisdiction over the business and property of all
  90-17  telecommunications utilities in this state.  In the exercise of its
  90-18  jurisdiction to regulate the rates, operations, and services of a
  90-19  telecommunications utility providing service in a municipality on
  90-20  the state line adjacent to a municipality in an adjoining state,
  90-21  the commission may cooperate with the utility regulatory commission
  90-22  of the adjoining state or the federal government and may hold joint
  90-23  hearings and make joint investigations with any of those
  90-24  commissions.
  90-25        (c)  Except as provided by Subsections (l) and (m) of this
  90-26  section and Section 3.052 of this Act, the commission shall only
  90-27  have the following jurisdiction over all telecommunications
   91-1  utilities who are not dominant carriers:
   91-2              (1)  to require registration as provided in Subsection
   91-3  (d) of this section;
   91-4              (2)  to conduct such investigations as are necessary to
   91-5  determine the existence, impact, and scope of competition in the
   91-6  telecommunications industry, including identifying dominant
   91-7  carriers in the local exchange and intralata interexchange
   91-8  telecommunications industry and defining the telecommunications
   91-9  market or markets, and in connection therewith may call and hold
  91-10  hearings, issue subpoenas to compel the attendance of witnesses and
  91-11  the production of papers and documents, and make findings of fact
  91-12  and decisions with respect to administering the provisions of this
  91-13  Act or the rules, orders, and other actions of the commission;
  91-14              (3)  to require the filing of such reports as the
  91-15  commission may direct from time to time;
  91-16              (4)  to require the maintenance of statewide average
  91-17  rates or prices of telecommunications service;
  91-18              (5)  to require that every local exchange area have
  91-19  access to interexchange telecommunications service, except that an
  91-20  interexchange telecommunications carrier must be allowed to
  91-21  discontinue service to a local exchange area if comparable service
  91-22  is available in the area and the discontinuance is not contrary to
  91-23  the public interest; this section does not authorize the commission
  91-24  to require an interexchange telecommunications carrier that has not
  91-25  provided services to a local exchange area during the previous 12
  91-26  months and that has never provided services to that same local
  91-27  exchange area for a cumulative period of one year at any time in
   92-1  the past to initiate services to that local exchange area; and
   92-2              (6)  to require the quality of interexchange
   92-3  telecommunications service provided in each exchange to be adequate
   92-4  to protect the public interest and the interests of customers of
   92-5  that exchange if the commission determines that service to a local
   92-6  exchange has deteriorated to the point that long distance service
   92-7  is not reliable.
   92-8        (d)  All providers of communications service described in
   92-9  Subsection (c) of this section who commence such service to the
  92-10  public shall register with the commission within 30 days of
  92-11  commencing service.  Such registration shall be accomplished by
  92-12  filing with the commission a description of the location and type
  92-13  of service provided, the cost to the public of such service, and
  92-14  such other registration information as the commission may direct.
  92-15  Notwithstanding any other provision of this Act, an interexchange
  92-16  telecommunications carrier doing business in this state shall
  92-17  continue to maintain on file with the commission tariffs or lists
  92-18  governing the terms of providing its services.
  92-19        (e)(1)  For the purpose of carrying out the public policy
  92-20  stated in Subsection (a) of this section and any other section of
  92-21  this Act notwithstanding, the commission is granted all necessary
  92-22  power and authority under this Act to promulgate rules and
  92-23  establish procedures applicable to local exchange companies for
  92-24  determining the level of competition in specific telecommunications
  92-25  markets and submarkets and providing appropriate regulatory
  92-26  treatment to allow local exchange companies to respond to
  92-27  significant competitive challenges.  Nothing in this section is
   93-1  intended to change the burden of proof of the local exchange
   93-2  company under Sections 3.202, 3.203, 3.204, 3.205, 3.206, 3.207,
   93-3  and 3.208 of this Act.
   93-4              (2)  In determining the level of competition in a
   93-5  specific market or submarket, the commission shall hold an
   93-6  evidentiary hearing to consider the following:
   93-7                    (A)  the number and size of telecommunications
   93-8  utilities or other persons providing the same, equivalent, or
   93-9  substitutable service;
  93-10                    (B)  the extent to which the same, equivalent, or
  93-11  substitutable service is available;
  93-12                    (C)  the ability of customers to obtain the same,
  93-13  equivalent, or substitutable services at comparable rates, terms,
  93-14  and conditions;
  93-15                    (D)  the ability of telecommunications utilities
  93-16  or other persons to make the same, equivalent, or substitutable
  93-17  service readily available at comparable rates, terms, and
  93-18  conditions;
  93-19                    (E)  the existence of any significant barrier to
  93-20  the entry or exit of a provider of the service; and
  93-21                    (F)  other relevant information deemed
  93-22  appropriate.
  93-23              (3)  The regulatory treatments which the commission may
  93-24  implement include but are not limited to:
  93-25                    (A)  approval of a range of rates for a specific
  93-26  service;
  93-27                    (B)  approval of customer-specific contracts for
   94-1  a specific service; provided, however, that the commission shall
   94-2  approve a contract to provide central office based PBX-type
   94-3  services for systems of 200 stations or more, billing and
   94-4  collection services, high-speed private line services of 1.544
   94-5  megabits or greater, and customized services, provided that the
   94-6  contract is filed at least 30 days before initiation of the service
   94-7  contracted for; that the contract is accompanied with an affidavit
   94-8  from the person or entity contracting for the telecommunications
   94-9  service stating that he considered the acquisition of the same,
  94-10  equivalent, or substitutable services by bid or quotation from a
  94-11  source other than the local exchange company; that the local
  94-12  exchange company is recovering the appropriate costs of providing
  94-13  the services; and that approval of the contract is in the public
  94-14  interest; the contract shall be approved or denied within 30 days
  94-15  after filing, unless the commission for good cause extends the
  94-16  effective date for an additional 35 days; and
  94-17                    (C)  the detariffing of rates.
  94-18        (f)  Moreover, in order to encourage the rapid introduction
  94-19  of new or experimental services or promotional rates, the
  94-20  commission shall promulgate rules and establish procedures which
  94-21  allow the expedited introduction of, the establishment and
  94-22  adjustment of rates for, and the withdrawal of such services,
  94-23  including requests for such services made to the commission by the
  94-24  governing body of a municipality served by a local exchange company
  94-25  having more than 500,000 access lines throughout the state.  Rates
  94-26  established or adjusted at the request of a municipality may not
  94-27  result in higher rates for ratepayers outside the boundaries of the
   95-1  municipality and may not include any rates for local exchange
   95-2  company interexchange services or interexchange carrier access
   95-3  service.
   95-4        (g)  In promulgating new rules and establishing the
   95-5  procedures contemplated in Subsections (e) and (f) of this section,
   95-6  the commission shall seek to balance the public interest in a
   95-7  technologically advanced telecommunications system providing a wide
   95-8  range of new and innovative services with traditional regulatory
   95-9  concerns for preserving universal service, prohibiting
  95-10  anticompetitive practices, and preventing the subsidization of
  95-11  competitive services with revenues from regulated monopoly
  95-12  services.  The commission shall promulgate these rules and
  95-13  establish these procedures so as to incorporate an appropriate mix
  95-14  of regulatory and market mechanisms reflecting the level and nature
  95-15  of competition in the marketplace.  Rates established under
  95-16  Subsections (e) and (f) of this section may not be:
  95-17              (1)  unreasonably preferential, prejudicial, or
  95-18  discriminatory;
  95-19              (2)  subsidized either directly or indirectly by
  95-20  regulated monopoly services; or
  95-21              (3)  predatory or anticompetitive.
  95-22        (h)  The commission shall initiate a rulemaking proceeding
  95-23  and take public comment and promulgate rules which prescribe the
  95-24  standards necessary to ensure that all rates set under the
  95-25  provisions of this section cover their appropriate costs as
  95-26  determined by the commission.  Until such rules are promulgated,
  95-27  the commission shall use a costing methodology that is in the
   96-1  public interest in determining whether the rates set under the
   96-2  provisions of this section cover their appropriate costs.
   96-3        (i)  The commission is granted all necessary power and
   96-4  authority to prescribe and collect fees and assessments from local
   96-5  exchange companies necessary to recover the commission's and the
   96-6  office's costs of activities carried out and services provided
   96-7  under this subsection and Subsections (e), (f), (g), (h), (j), and
   96-8  (k) of this section.
   96-9        (j)  Subsections (e) and (f) of this section are not
  96-10  applicable to basic local exchange service, including local
  96-11  measured service.  Paragraph (B) of Subdivision (3) of Subsection
  96-12  (e) of this section is not applicable to message telecommunications
  96-13  services, switched access services for interexchange carriers, or
  96-14  wide area telecommunications service.  A local exchange company may
  96-15  not price similar services provided pursuant to contracts under
  96-16  Paragraph (B) of Subdivision (3) of Subsection (e) of this section
  96-17  in an unreasonably discriminatory manner.  For purposes of this
  96-18  section, similar services shall be defined as those services which
  96-19  are provided at or near the same point in time, which have the same
  96-20  characteristics, and which are provided under the same or similar
  96-21  circumstances.
  96-22        (k)  Before January 15 of each odd-numbered year, the
  96-23  commission shall report to the legislature on the scope of
  96-24  competition in regulated telecommunications markets and the impact
  96-25  of competition on customers in both competitive and noncompetitive
  96-26  markets, with a specific focus on rural markets.  The report shall
  96-27  include an assessment of the impact of competition on the rates and
   97-1  availability of telecommunications services for residential and
   97-2  business customers and shall specifically address any effects on
   97-3  universal service.  The report shall provide a summary of
   97-4  commission actions over the preceding two years which reflect
   97-5  changes in the scope of competition in regulated telecommunications
   97-6  markets.  The report shall also include recommendations to the
   97-7  legislature for further legislation which the commission finds
   97-8  appropriate to promote the public interest in the context of a
   97-9  partially competitive telecommunications market.
  97-10        (l)  Notwithstanding any other provision of this Act, the
  97-11  commission may enter such orders as may be necessary to protect the
  97-12  public interest, including the imposition on any specific service
  97-13  or services of its full regulatory authority under this subtitle,
  97-14  Subtitles C through F of this title, and Subtitles D through I of
  97-15  Title I of this Act, if the commission upon complaint from another
  97-16  interexchange telecommunications carrier finds by a preponderance
  97-17  of the evidence upon notice and hearing that an interexchange
  97-18  telecommunications carrier has engaged in predatory pricing or
  97-19  attempted to engage in predatory pricing.
  97-20        (m)  Notwithstanding any other provision of this Act, the
  97-21  commission may enter such orders as may be necessary to protect the
  97-22  public interest if the commission finds upon notice and hearing
  97-23  that an interexchange telecommunications carrier has:
  97-24              (1)  failed to maintain statewide average rates;
  97-25              (2)  abandoned interexchange message telecommunications
  97-26  service to a local exchange area in a manner contrary to the public
  97-27  interest; or
   98-1              (3)  engaged in a pattern of preferential or
   98-2  discriminatory activities prohibited by Sections 3.213 and 3.215 of
   98-3  this Act, except that nothing in this Act shall prohibit volume
   98-4  discounts or other discounts based on reasonable business purposes.
   98-5        (n)  In any proceeding before the commission alleging conduct
   98-6  or activities by an interexchange telecommunications carrier
   98-7  against another interexchange carrier in contravention of
   98-8  Subsections (l), (m), and (o) of this section, the burden of proof
   98-9  shall be upon the complaining interexchange telecommunications
  98-10  carrier; however, in such proceedings brought by customers or their
  98-11  representatives who are not themselves interexchange
  98-12  telecommunications carriers or in such proceedings initiated by the
  98-13  commission, the burden of proof shall be upon the respondent
  98-14  interexchange telecommunications carrier.  However, if the
  98-15  commission finds it to be in the public interest, the commission
  98-16  may impose the burden of proof in such proceedings on the
  98-17  complaining party.
  98-18        (o)  The commission shall have the authority to require that
  98-19  a service provided by an interexchange telecommunications carrier
  98-20  described in Subsection (c) of this section be made available in an
  98-21  exchange served by the carrier within a reasonable time after
  98-22  receipt of a bona fide request for such service in that exchange,
  98-23  subject to the ability of the local exchange company to provide the
  98-24  required access or other service.  A carrier may not be required to
  98-25  extend a service to an area if provision of that service would
  98-26  impose, after consideration of the public interest to be served,
  98-27  unreasonable costs upon or require unreasonable investments by the
   99-1  interexchange telecommunications carrier.  The commission may
   99-2  require such information from interexchange carriers and local
   99-3  exchange carriers as may be necessary to enforce this provision.
   99-4        (p)  The commission may exempt from any requirement of this
   99-5  section an interexchange telecommunications carrier that the
   99-6  commission determines does not have a significant effect on the
   99-7  public interest, and it may exempt any interexchange carrier which
   99-8  solely relies on the facilities of others to complete long distance
   99-9  calls if the commission deems this action to be in the public
  99-10  interest.
  99-11        (q)  Requirements imposed by Subsections (c), (d), (k), (l),
  99-12  (m), (n), (o), and (p) of this section on an interexchange
  99-13  telecommunications carrier shall apply to nondominant carriers and
  99-14  shall constitute the minimum requirements to be imposed by the
  99-15  commission for any dominant carrier.  (Sec. 18--old Subsec. (p)
  99-16  deleted)
  99-17        Sec. 3.052.  OPERATOR SERVICE; REGULATION AND DISCLOSURE OF
  99-18  INFORMATION.  (a)  In this section "operator service" means any
  99-19  service using live operator or automated operator functions for the
  99-20  handling of telephone service such as toll calling via collect,
  99-21  third-number billing, and calling card services.  Calls for which
  99-22  the called party has arranged to be billed (800 service) are not
  99-23  considered operator services.
  99-24        (b)  Prior to the connection of each call the operator
  99-25  service provider shall:
  99-26              (1)  announce the provider's name; and
  99-27              (2)  quote, at the caller's request, the rate and any
  100-1  other fees or surcharges applicable to the call and charged by the
  100-2  provider.
  100-3        (c)  An operator service provider shall furnish each entity
  100-4  with which it contracts to provide operator service a sticker,
  100-5  card, or other form of information approved by the commission for
  100-6  each telephone that has access to the service and is intended to be
  100-7  utilized by the public, unless the owner of the telephone has
  100-8  received approval from the commission for an alternative form of
  100-9  information.  The information must state the provider's name, that
 100-10  the operator service provider will provide rate information on the
 100-11  caller's request, that the caller will be informed how to access
 100-12  the local exchange company operator on request, and that any
 100-13  complaint about the service may be made to the provider or the
 100-14  commission at the designated telephone number.  The operator
 100-15  service provider shall require by contract that the entity
 100-16  receiving the information display it on or near each of the
 100-17  telephones that has access to the service and is intended for use
 100-18  by the public.
 100-19        (d)  An operator service provider must, on request, inform
 100-20  the caller how to access the operator for the local exchange
 100-21  company serving the exchange from which the call is made.  A charge
 100-22  may not be made for this information.
 100-23        (e)  The commission shall adopt rules requiring an operator
 100-24  service provider to include in its contract with each entity
 100-25  through which it provides operator service a requirement that the
 100-26  telephones subscribed to its services shall allow access to the
 100-27  local exchange carrier operator serving the exchange from which the
  101-1  call is made and to other telecommunications utilities; but in
  101-2  order to prevent fraudulent use of its services, an operator
  101-3  service provider and individual entities through which it provides
  101-4  operator services may block access if either obtains a waiver for
  101-5  this purpose from the commission or the Federal Communications
  101-6  Commission.  The procedure and criteria for obtaining a waiver from
  101-7  the commission shall be set forth in the commission's rules.
  101-8        (f)  The commission shall promulgate rules consistent with
  101-9  the requirements of this section and any additional requirements
 101-10  deemed necessary to protect the public interest by January 1, 1990.
 101-11  All rules promulgated under this section shall be nondiscriminatory
 101-12  and designed to promote competition that facilitates consumer
 101-13  choice.
 101-14        (g)  The commission may investigate a complaint that it
 101-15  receives concerning operator services.  If the commission
 101-16  determines that an operator service provider has violated or is
 101-17  about to violate this section, the commission may, upon proper
 101-18  notice and evidentiary hearing, take action to stop, correct, or
 101-19  prevent the violation.
 101-20        (h)  Except as provided by Subsection (i) of this section,
 101-21  this section applies only to a telecommunications utility that is
 101-22  not a dominant carrier.  The commission is granted all necessary
 101-23  power and authority under this Act to promulgate rules and
 101-24  establish procedures for the purposes of enforcing and implementing
 101-25  this section.
 101-26        (i)  Each dominant or nondominant telecommunications utility
 101-27  that provides operator service shall ensure that a caller may
  102-1  access a live operator at the beginning of all live or mechanized
  102-2  operator assisted calls through a method designed to be easily and
  102-3  clearly understandable and accessible to the caller.  A
  102-4  telecommunications utility shall submit to the commission the
  102-5  method by which the utility will provide access to a live operator
  102-6  for review.  This subsection applies regardless of the method by
  102-7  which the telecommunications utility provides the operator service.
  102-8  The requirements of this subsection do not apply to telephones
  102-9  located in prison or jail facilities.  (Sec. 18A)
 102-10                      SUBTITLE C.  MUNICIPALITIES
 102-11        Sec. 3.101.  RATEMAKING PROCEEDINGS; ENGAGEMENT OF
 102-12  CONSULTANTS, ACCOUNTANTS, AUDITORS, ATTORNEYS, AND ENGINEERS;
 102-13  STANDING.  (a)  The governing body of any municipality
 102-14  participating in ratemaking proceedings shall have the right to
 102-15  select and engage rate consultants, accountants, auditors,
 102-16  attorneys, engineers, or any combination thereof to conduct
 102-17  investigations, present evidence, advise and represent the
 102-18  governing body, and assist with litigation in public utility
 102-19  ratemaking proceedings before the commission or in court.  The
 102-20  public utility engaged in such proceedings shall be required to
 102-21  reimburse the governing body for the reasonable costs of such
 102-22  services to the extent found reasonable by the commission.
 102-23        (b)  Municipalities shall have standing in all cases before
 102-24  the commission regarding utilities serving within their corporate
 102-25  limits subject to the right of the commission to determine standing
 102-26  in cases involving retail service area disputes involving two or
 102-27  more utilities and to consolidate municipalities on issues of
  103-1  common interest and shall be entitled to judicial review of orders
  103-2  regarding said proceedings in accordance with Section 1.301 of the
  103-3  Act.  (Sec. 24 (part))
  103-4        Sec. 3.102.  ASSISTANCE OF COMMISSION.  The commission may
  103-5  advise and assist municipalities on request in connection with
  103-6  questions and proceedings arising under this Act.  Such assistance
  103-7  may include aid to municipalities in connection with matters
  103-8  pending before the commission or the courts, including making
  103-9  members of the staff available as witnesses and otherwise providing
 103-10  evidence to them.  (Sec. 25)
 103-11                    SUBTITLE D.  RATES AND SERVICES
 103-12        Sec. 3.151.  RATES; METHODS AND ACCOUNTS.  (a)  The
 103-13  commission shall fix proper and adequate rates and methods of
 103-14  depreciation, amortization, or depletion of the several classes of
 103-15  property of each public utility and shall require every public
 103-16  utility to carry a proper and adequate depreciation account in
 103-17  accordance with such rates and methods and with such other rules
 103-18  and regulations as the commission prescribes.  Such rates, methods,
 103-19  and accounts shall be utilized uniformly and consistently
 103-20  throughout the ratesetting and appeal proceedings.
 103-21        (b)  Every public utility shall keep separate accounts to
 103-22  show all profits or losses resulting from the sale or lease of
 103-23  appliances, fixtures, equipment, or other merchandise.  This profit
 103-24  or loss may not be taken into consideration by the commission in
 103-25  arriving at any rate to be charged for service by any such public
 103-26  utility, to the extent that such merchandise is not integral to the
 103-27  provision of utility service.
  104-1        (c)  In determining the allocation of tax savings derived
  104-2  from application of such methods as liberalized depreciation and
  104-3  amortization and the investment tax credit, the commission shall
  104-4  equitably balance the interests of present and future customers and
  104-5  shall apportion such benefits between consumers and the utilities
  104-6  accordingly.  Where any portion of the investment tax credit has
  104-7  been retained by a public utility, that same amount shall be
  104-8  deducted from the original cost of the facilities or other addition
  104-9  to the rate base to which the credit applied, to the extent allowed
 104-10  by the Internal Revenue Code.  (Secs. 27(b), (c), (e))
 104-11        Sec. 3.152.  REPORTING OF ADVERTISING OR PUBLIC RELATIONS
 104-12  EXPENSES.  (a)  The commission may require an annual reporting from
 104-13  each utility company of all its expenditures for business gifts and
 104-14  entertainment and for institutional, consumption-inducing, and
 104-15  other advertising or public relations expenses.
 104-16        (b)  The commission may not allow as costs or expenses for
 104-17  ratemaking purposes any of these expenditures which the commission
 104-18  determines not to be in the public interest.
 104-19        (c)  The cost of legislative advocacy expenses may not in any
 104-20  case be allowed as costs or expenses for ratemaking purposes.
 104-21        (d)  Reasonable charitable or civic contributions may be
 104-22  allowed not to exceed the amount approved by the commission.  (Sec.
 104-23  30)
 104-24        Sec. 3.153.  UNLAWFUL RATES, RULES, AND REGULATIONS.  It
 104-25  shall be unlawful for any utility to charge, collect, or receive
 104-26  any rate for utility service or to impose any rule or regulation
 104-27  other than as herein provided.  (Sec. 31)
  105-1        Sec. 3.154.  FILING SCHEDULE OF RATES, RULES, AND
  105-2  REGULATIONS.  (a)  Every public utility shall file with the
  105-3  commission schedules showing all rates which are subject to the
  105-4  jurisdiction of the commission and which are in force at the time
  105-5  for any utility service, product, or commodity offered by the
  105-6  utility.
  105-7        (b)  Every public utility shall file with and as a part of
  105-8  such schedules all rules and regulations relating to or affecting
  105-9  the rates, utility service, product, or commodity furnished by such
 105-10  utility.  (Sec. 32 (part))
 105-11        Sec. 3.155.  STANDARDS OF SERVICE.  (a)  Every public utility
 105-12  shall furnish such service, instrumentalities, and facilities as
 105-13  shall be safe, adequate, efficient, and reasonable.
 105-14        (b)  The commission after reasonable notice and hearing had
 105-15  on its own motion or on complaint may:
 105-16              (1) ascertain and fix just and reasonable standards,
 105-17  classifications, regulations, or practices to be observed and
 105-18  followed by any or all utilities with respect to the service to be
 105-19  furnished;
 105-20              (2)  ascertain and fix adequate and reasonable
 105-21  standards for the measurement of the quantity, quality, or other
 105-22  condition pertaining to the supply of the service;
 105-23              (3)  prescribe reasonable regulations for the
 105-24  examination and testing of the service and for the measurement
 105-25  thereof; and
 105-26              (4)  establish or approve reasonable rules,
 105-27  regulations, specifications, and standards to secure the accuracy
  106-1  of all meters, instruments, and equipment used for the measurement
  106-2  of any service of any public utility.
  106-3        (c)  Any standards, classifications, regulations, or
  106-4  practices now or hereafter observed or followed by any public
  106-5  utility may be filed by it with the commission, and the same shall
  106-6  continue in force until amended by the public utility or until
  106-7  changed by the commission as herein provided.  (Sec. 35 (part))
  106-8            SUBTITLE E.  PROCEEDINGS BEFORE THE COMMISSION
  106-9        Sec. 3.201.  POWER TO INSURE COMPLIANCE; RATE REGULATION.
 106-10  Subject to the provisions of this Act, the commission is hereby
 106-11  vested with all authority and power of the State of Texas to insure
 106-12  compliance with the obligations of public utilities in this Act.
 106-13  To the extent otherwise provided by this Act, the commission is
 106-14  empowered to fix and regulate rates of public utilities, including
 106-15  rules and regulations for determining the classification of
 106-16  customers and services and for determining the applicability of
 106-17  rates.  A rule or order of the commission may not conflict with the
 106-18  rulings of any federal regulatory body.  (Sec. 37--changed to
 106-19  reflect different regulation)
 106-20        Sec. 3.202.  JUST AND REASONABLE RATES.  It shall be the duty
 106-21  of the commission to insure that every rate made, demanded, or
 106-22  received by any public utility or by any two or more utilities
 106-23  jointly shall be just and reasonable.  Rates may not be
 106-24  unreasonably preferential, prejudicial, or discriminatory, but
 106-25  shall be sufficient, equitable, and consistent in application to
 106-26  each class of consumers.  For ratemaking purposes, the commission
 106-27  may treat two or more municipalities served by a public utility as
  107-1  a single class wherever it deems such treatment to be appropriate.
  107-2  Approval by the commission of a reduced rate for service for a
  107-3  class of consumers eligible under Section 3.352 of this Act for
  107-4  tel-assistance service does not constitute a violation of this
  107-5  section.  (Sec. 38)
  107-6        Sec. 3.203.  FIXING OVERALL REVENUES.  (a)  In fixing the
  107-7  rates of a public utility the commission shall fix its overall
  107-8  revenues at a level which will permit such utility a reasonable
  107-9  opportunity to earn a reasonable return on its invested capital
 107-10  used and useful in rendering service to the public over and above
 107-11  its reasonable and necessary operating expenses.
 107-12        (b)  In fixing a reasonable return on invested capital, the
 107-13  commission shall consider, in addition to other applicable factors,
 107-14  the quality of the utility's services, the efficiency of the
 107-15  utility's operations, and the quality of the utility's management.
 107-16  (Sec. 39 (part))
 107-17        Sec. 3.204.  BURDEN OF PROOF.  Except as hereafter provided,
 107-18  in any proceeding involving any proposed change of rates, the
 107-19  burden of proof to show that the proposed change, if proposed by
 107-20  the utility, or that the existing rate, if it is proposed to reduce
 107-21  the rate, is just and reasonable shall be on the public utility.
 107-22  In any proceeding involving a local exchange company in which the
 107-23  local exchange company's rate or rates are in issue, the burden of
 107-24  proof that such rate or rates are just and reasonable shall be on
 107-25  the local exchange company.  (Sec. 40)
 107-26        Sec. 3.205.  COMPONENTS OF INVESTED CAPITAL AND NET INCOME.
 107-27  The components of invested capital and net income shall be
  108-1  determined according to Sections 3.206, 3.207, and 3.208.  (Sec. 41
  108-2  (part))
  108-3        Sec. 3.206.  INVESTED CAPITAL.  (a)  Utility rates shall be
  108-4  based upon the original cost of property used by and useful to the
  108-5  public utility in providing service including construction work in
  108-6  progress at cost as recorded on the books of the utility.
  108-7        (b)  The inclusion of construction work in progress is an
  108-8  exceptional form of rate relief to be granted only upon the
  108-9  demonstration by the utility that such inclusion is necessary to
 108-10  the financial integrity of the utility.  Construction work in
 108-11  progress may not be included in the rate base for major projects
 108-12  under construction to the extent that such projects have been
 108-13  inefficiently or imprudently planned or managed.
 108-14        (c)  Original cost shall be the actual money cost or the
 108-15  actual money value of any consideration paid other than money of
 108-16  the property at the time it shall have been dedicated to public
 108-17  use, whether by the utility which is the present owner or by a
 108-18  predecessor, less depreciation.  (Sec. 41(a))
 108-19        Sec. 3.207.  SEPARATIONS AND ALLOCATIONS.  Costs of
 108-20  facilities, revenues, expenses, taxes, and reserves shall be
 108-21  separated or allocated as prescribed by the commission.  (Sec.
 108-22  41(b))
 108-23        Sec. 3.208.  NET INCOME.  (a)  Net Income.  "Net income"
 108-24  means the total revenues of the public utility less all reasonable
 108-25  and necessary expenses as determined by the commission.  The
 108-26  commission shall determine expenses and revenues in a manner
 108-27  consistent with this section.
  109-1        (b)  Transactions with Affiliated Interests.  Payment to
  109-2  affiliated interests for costs of any services or any property,
  109-3  right, or thing or for interest expense may not be allowed either
  109-4  as capital cost or as expense except to the extent that the
  109-5  commission shall find such payment to be reasonable and necessary
  109-6  for each item or class of items as determined by the commission.
  109-7  Any such finding shall include specific findings of the
  109-8  reasonableness and necessity of each item or class of items allowed
  109-9  and a finding that the price to the utility is no higher than
 109-10  prices charged by the supplying affiliate to its other affiliates
 109-11  or divisions for the same item or class of items, or to
 109-12  unaffiliated persons or corporations.
 109-13        (c)  Income Taxes.  If the public utility is a member of an
 109-14  affiliated group that is eligible to file a consolidated income tax
 109-15  return and if it is advantageous to the public utility to do so,
 109-16  income taxes shall be computed as though a consolidated return had
 109-17  been so filed and the utility had realized its fair share of the
 109-18  savings resulting from the consolidated return, unless it is shown
 109-19  to the satisfaction of the commission that it was reasonable to
 109-20  choose not to consolidate returns.  The amounts of income taxes
 109-21  saved by a consolidated group of which a public utility is a member
 109-22  by reason of the elimination in the consolidated return of the
 109-23  intercompany profit on purchases by the public utility from an
 109-24  affiliate shall be applied to reduce the cost of the property or
 109-25  services so purchased.  The investment tax credit allowed against
 109-26  federal income taxes, to the extent retained by the utility, shall
 109-27  be applied as a reduction in the rate-based contribution of the
  110-1  assets to which such credit applies, to the extent and at such rate
  110-2  as allowed by the Internal Revenue Code.
  110-3        (d)  Expenses Disallowed.  The commission may not consider
  110-4  for ratemaking purposes the following expenses:
  110-5              (1)  legislative advocacy expenses, whether made
  110-6  directly or indirectly, including but not limited to legislative
  110-7  advocacy expenses included in trade association dues;
  110-8              (2)  costs of processing a refund or credit under
  110-9  Subsection (e) of Section 3.211 of this Act; or
 110-10              (3)  any expenditure found by the commission to be
 110-11  unreasonable, unnecessary, or not in the public interest, including
 110-12  but not limited to executive salaries, advertising expenses, legal
 110-13  expenses, and civil penalties or fines.
 110-14        (e)  Rules.  The commission may promulgate reasonable rules
 110-15  and regulations with respect to the allowance or disallowance of
 110-16  any expenses for ratemaking purposes.  (Sec. 41(c))
 110-17        Sec. 3.209.  SELF-INSURANCE.  (a)  A public utility may
 110-18  self-insure all or a portion of its potential liability or
 110-19  catastrophic property loss, including windstorm, fire, and
 110-20  explosion losses, which could not have been reasonably anticipated
 110-21  and included under operating and maintenance expenses.  The
 110-22  commission shall approve a self-insurance plan under this section
 110-23  if it finds that the coverage is in the public interest and the
 110-24  plan is a lower cost alternative to purchasing commercial
 110-25  insurance, considering all costs, and that ratepayers will receive
 110-26  the benefits of that saving.
 110-27        (b)  In computing a utility's reasonable and necessary
  111-1  expenses under Section 3.208 of this Act, the commission shall
  111-2  allow as a necessary expense the funds credited to reserve accounts
  111-3  for the self-insurance, to the extent the commission finds it in
  111-4  the public interest.  After the reserve account is established, the
  111-5  commission shall consider if the reserve account has a surplus or
  111-6  shortage in determining the utility's rate base.  A surplus in the
  111-7  reserve account will exist if the charges against the reserve
  111-8  account are less than the funds credited to the reserve.  A
  111-9  shortage in the reserve account will exist if the charges against
 111-10  the account are greater than the funds credited to the reserve.
 111-11  The commission shall subtract any surplus from and add any shortage
 111-12  to the rate base.
 111-13        (c)  The commission shall determine reasonableness under
 111-14  Subsection (b) of this section from information provided at the
 111-15  time the self-insurance plan and reserve account are established
 111-16  and upon the filing of each rate case by a utility that has such a
 111-17  fund.
 111-18        (d)  The commission shall adopt rules governing
 111-19  self-insurance under this section.  (Secs. 41B(a)-(d))
 111-20        Sec. 3.210.  UNREASONABLE OR VIOLATIVE EXISTING RATES;
 111-21  INVESTIGATING COSTS OF OBTAINING SERVICE FROM ANOTHER SOURCE.
 111-22  (a)  Whenever the commission, after reasonable notice and hearing,
 111-23  on its own motion or on complaint by any affected person, finds
 111-24  that the existing rates of any public utility for any service are
 111-25  unreasonable or in any way in violation of any provision of law,
 111-26  the commission shall determine the just and reasonable rates,
 111-27  including maximum or minimum rates, to be thereafter observed and
  112-1  in force and shall fix the same by order to be served on the public
  112-2  utility; and such rates shall constitute the legal rates of the
  112-3  public utility until changed as provided in this Act.
  112-4        (b)  Whenever a public utility does not itself produce or
  112-5  generate that which it distributes, transmits, or furnishes to the
  112-6  public for compensation but obtains the same from another source,
  112-7  the commission shall have the power and authority to investigate
  112-8  the cost of such production or generation in any investigation of
  112-9  the reasonableness of the rates of such public utility.  (Sec. 42
 112-10  (part))
 112-11        Sec. 3.211.  STATEMENT OF INTENT TO CHANGE RATES; MAJOR
 112-12  CHANGES; HEARING; SUSPENSION OF RATE SCHEDULE; DETERMINATION OF
 112-13  RATE LEVEL.  (a)  A utility may not make changes in its rates
 112-14  except by filing a statement of intent with the commission at least
 112-15  35 days prior to the effective date of the proposed change.  The
 112-16  statement of intent shall include proposed revisions of tariffs and
 112-17  schedules and a statement specifying in detail each proposed
 112-18  change, the effect the proposed change is expected to have on the
 112-19  revenues of the company, the classes and numbers of utility
 112-20  consumers affected, and such other information as may be required
 112-21  by the commission's rules and regulations.  A copy of the statement
 112-22  of intent shall be mailed or delivered to the appropriate officer
 112-23  of each affected municipality, and notice shall be given by
 112-24  publication in conspicuous form and place of a notice to the public
 112-25  of such proposed change once in each week for four successive weeks
 112-26  prior to the effective date of the proposed change in a newspaper
 112-27  having general circulation in each county containing territory
  113-1  affected by the proposed change, and by mail to such other affected
  113-2  persons as may be required by the commission's rules and
  113-3  regulations.  The commission may waive the publication of notice
  113-4  requirement prescribed by this subsection in a proceeding that
  113-5  involves a rate reduction for all affected ratepayers only.  The
  113-6  applicant shall give notice of the proposed rate change by mail to
  113-7  all affected utility customers.  The commission by rule shall also
  113-8  define other proceedings for which the publication of notice
  113-9  requirement prescribed by this subsection may be waived on a
 113-10  showing of good cause, provided that a waiver may not be granted in
 113-11  any proceeding involving a rate increase to any class or category
 113-12  of ratepayer.
 113-13        (b)  The commission, for good cause shown, may, except in the
 113-14  case of major changes, allow changes in rate to take effect prior
 113-15  to the end of such 35-day period under such conditions as it may
 113-16  prescribe, subject to suspension as provided herein.  All such
 113-17  changes shall be indicated immediately upon its schedules by such
 113-18  utility.  "Major changes" shall mean an increase in rates which
 113-19  would increase the aggregate revenues of the applicant more than
 113-20  the greater of $100,000 or 2-1/2 percent, but does not include
 113-21  changes in rates allowed to go into effect by the commission or
 113-22  made by the utility pursuant to an order of the commission after
 113-23  hearings held upon notice to the public.
 113-24        (c)  Whenever there is filed with the commission any schedule
 113-25  modifying or resulting in a change in any rates then in force, the
 113-26  commission shall on complaint by any affected person or may on its
 113-27  own motion, at any time within 30 days from the date when such
  114-1  change would or has become effective, and, if it so orders, without
  114-2  answer or other formal pleading by the utility, but on reasonable
  114-3  notice, including notice to the governing bodies of all affected
  114-4  municipalities and counties, enter on a hearing to determine the
  114-5  propriety of such change.  The commission shall hold such a hearing
  114-6  in every case in which the change constitutes a major change in
  114-7  rates, provided that an informal proceeding may satisfy this
  114-8  requirement if a complaint has not been received before the
  114-9  expiration of 45 days after notice of the change shall have been
 114-10  filed.  In each case where the commission determines it is in the
 114-11  public interest to collect testimony at a regional hearing for the
 114-12  inclusion in the record, the commission shall hold a regional
 114-13  hearing at an appropriate location.  A regional hearing is not
 114-14  required in a case involving a member-owned utility, unless the
 114-15  commission determines otherwise.
 114-16        (d)  Pending the hearing and decision, the commission, after
 114-17  delivery to the affected utility of a statement in writing of its
 114-18  reasons therefor, may suspend the operation of the schedule for a
 114-19  period not to exceed 150 days beyond the date on which the schedule
 114-20  would otherwise go into effect.  If the commission does not make a
 114-21  final determination concerning any schedule of rates prior to
 114-22  expiration of the period or periods of suspension, the schedule
 114-23  shall be deemed to have been approved by the commission.  However,
 114-24  the 150-day period shall be extended two days for each one day of
 114-25  actual hearing on the merits of the case that exceeds 15 days.
 114-26  This approval is subject to the authority of the commission
 114-27  thereafter to continue a hearing in progress.  The commission may
  115-1  in its discretion fix temporary rates for any period of suspension
  115-2  under this section.  During the suspension by the commission as
  115-3  above provided, the rates in force when the suspended schedule was
  115-4  filed shall continue in force unless the commission shall establish
  115-5  a temporary rate.  The commission shall give preference to the
  115-6  hearing and decision of questions arising under this section over
  115-7  all other questions pending before it and decide the same as
  115-8  speedily as possible.
  115-9        (e)  If the 150-day period has been extended, as provided by
 115-10  Subsection (d) of this section, and the commission fails to make
 115-11  its final determination of rates within 150 days from the date that
 115-12  the proposed change otherwise would have gone into effect, the
 115-13  utility concerned may put a changed rate, not to exceed the
 115-14  proposed rate, into effect upon the filing with the commission of a
 115-15  bond payable to the commission in an amount and with sureties
 115-16  approved by the commission conditioned upon refund and in a form
 115-17  approved by the commission.  The utility concerned shall refund or
 115-18  credit against future bills all sums collected during the period of
 115-19  suspension in excess of the rate finally ordered plus interest at
 115-20  the current rate as finally determined by the commission.
 115-21        (f)  If, after hearing, the commission finds the rates to be
 115-22  unreasonable or in any way in violation of any provision of law,
 115-23  the commission shall determine the level of rates to be charged or
 115-24  applied by the utility for the service in question and shall fix
 115-25  the same by order to be served upon the utility; these rates are
 115-26  thereafter to be observed until changed, as provided by this Act.
 115-27        (g)  A rate or tariff set by the commission may not authorize
  116-1  a utility to automatically adjust and pass through to its customers
  116-2  changes in costs of the utility.
  116-3        (h)  If the commission does not make a final determination
  116-4  concerning a local exchange company's schedule of rates prior to
  116-5  the expiration of the 150-day suspension period, the schedule of
  116-6  rates finally approved by the commission shall become effective and
  116-7  the local exchange company shall be entitled to collect such rates
  116-8  from the date the 150-day suspension period expired.  Any
  116-9  surcharges or other charges necessary to effectuate this subsection
 116-10  may not be recovered over a period of less than 90 days from the
 116-11  date of the commission's final order.
 116-12        (i)  The commission on its own motion or on the petition of a
 116-13  utility shall provide for the adjustment of a utility's billing to
 116-14  reflect any increase or decrease of tax liability of the utility to
 116-15  the state resulting from Chapter 5, Acts of the 72nd Legislature,
 116-16  1st Called Session, 1991, and that is attributable to activities
 116-17  that are subject to the jurisdiction of the commission.  Any
 116-18  adjustment to billings under this section must be apportioned
 116-19  pro-rata to all types and classes of service provided by the
 116-20  utility and is effective only until the commission alters the
 116-21  adjustment as provided by this subsection or enters an order for
 116-22  the utility under this section or Section 3.210 of this Act.  The
 116-23  adjustment of billings must be made effective at the same time as
 116-24  the increase or decrease of tax liability resulting from Chapter 5,
 116-25  Acts of the 72nd Legislature, 1st Called Session, 1991, or as soon
 116-26  after as is reasonably practical.  Each year after any original
 116-27  adjustment, the commission shall review the utility's increase or
  117-1  decrease of tax liability resulting from House Bill 11, Acts of the
  117-2  72nd Legislature, 1st Called Session, 1991, and alter the
  117-3  adjustment to reflect the increase or decrease.  A proceeding under
  117-4  this subsection is not a rate case under this section.  (Sec. 43
  117-5  (part))
  117-6        Sec. 3.212.  CHANGES BY LOCAL EXCHANGE COMPANIES; HEARINGS;
  117-7  SUSPENSION OF PROPOSED CHANGES.  (a)  A local exchange company may
  117-8  make changes in its tariffed rules, regulations, or practices that
  117-9  do not affect its charges or rates by filing the proposed changes
 117-10  with the commission at least 35 days prior to the effective date of
 117-11  the changes.  The commission may require such notice to ratepayers
 117-12  as it considers appropriate.
 117-13        (b)  The commission may on complaint by any affected person
 117-14  or on its own motion hold a hearing, after reasonable notice, to
 117-15  determine the propriety of the change.  Pending the hearing and
 117-16  decision, the commission may suspend the operation of the proposed
 117-17  changes for a period not to exceed 120 days after the date on which
 117-18  the changes would otherwise go into effect.
 117-19        (c)  The commission shall approve, deny, or modify the
 117-20  proposed changes before expiration of the suspension period.  In
 117-21  any proceeding under this section, the burden of proving that the
 117-22  requested relief is in the public interest and complies with this
 117-23  Act shall be borne by the local exchange company.  (Sec. 43A)
 117-24        Sec. 3.213.  COOPERATIVE OR SMALL LOCAL EXCHANGE COMPANIES;
 117-25  STATEMENT OF INTENT TO CHANGE RATES; NOTICE OF INTENT; SUSPENSION
 117-26  OF RATE SCHEDULE; REVIEW.  (a)  Except as otherwise provided by
 117-27  this section, a local exchange company that is a cooperative
  118-1  corporation or that has fewer than 5,000 access lines in service in
  118-2  this state may change rates by publishing notice of the change at
  118-3  least 60 days before the date of the change in the place and form
  118-4  as prescribed by the commission.  The notice must include:
  118-5              (1)  the reasons for the rate change;
  118-6              (2)  a description of the affected service;
  118-7              (3)  an explanation of the right of the subscriber to
  118-8  petition the commission for a hearing on the rate change; and
  118-9              (4)  a list of rates that are affected by the proposed
 118-10  rate change.
 118-11        (b)  At least 60 days before the date of the change, the
 118-12  local exchange company shall file with the commission a statement
 118-13  of intent to change rates containing:
 118-14              (1)  a copy of the notice required by Subsection (a) of
 118-15  this section;
 118-16              (2)  the number of access lines the company has in
 118-17  service in this state;
 118-18              (3)  the date of the most recent commission order
 118-19  setting rates of the company;
 118-20              (4)  the increase in total gross annual local revenues
 118-21  that will be produced by the proposed rates;
 118-22              (5)  the increase in total gross annual local revenues
 118-23  that will be produced by the proposed rates together with any local
 118-24  rate changes which went into effect during the 12 months preceding
 118-25  the proposed effective date of the requested rate change and any
 118-26  other proposed local rate changes then pending before the
 118-27  commission;
  119-1              (6)  the increase in rates for each service category;
  119-2  and
  119-3              (7)  other information the commission by rule requires.
  119-4        (c)  The commission shall review a proposed change in the
  119-5  rates set by a local exchange company under this section upon the
  119-6  receipt of complaints signed by at least five percent of all
  119-7  affected subscribers or upon its own motion.  The commission may
  119-8  require notice to ratepayers as it considers appropriate.  If
  119-9  sufficient complaints are presented to the commission within 60
 119-10  days after the date notice of the rate change was sent to
 119-11  subscribers, the commission shall review the proposed change.
 119-12  After notice to the local exchange company, the commission may
 119-13  suspend the rates during the pendency of the review and reinstate
 119-14  the rates previously in effect.  Review under this subsection shall
 119-15  be as provided by Section 3.211 of this Act.  The period for review
 119-16  by the commission does not begin until the local exchange company
 119-17  files a complete rate-filing package.
 119-18        (d)  If the commission has entered an order setting a rate,
 119-19  the affected local exchange company may not change that rate under
 119-20  this section before 365 days after the date of the commission's
 119-21  order setting the rate.
 119-22        (e)  This section does not prohibit a local exchange company
 119-23  from filing for a rate change under any other applicable section of
 119-24  this Act.
 119-25        (f)  The commission shall review a proposed change in the
 119-26  rates of a local exchange company under this section if the
 119-27  proposed rates, together with any local rate changes which went
  120-1  into effect during the 12 months preceding the proposed effective
  120-2  date of the requested rate change as well as any other proposed
  120-3  local rate changes then pending before the commission, will
  120-4  increase its total gross annual local revenues by more than 2-1/2
  120-5  percent or if the proposed change would increase the rate of any
  120-6  service category by more than 25 percent, except for basic local
  120-7  service, which shall be limited to a maximum of 2-1/2  percent of
  120-8  the total gross annual local revenue.  Review under this subsection
  120-9  shall be as provided by Section 3.211 of this Act.  Each local
 120-10  exchange company may receive a change in its local rates or in any
 120-11  service category pursuant to this section only one time in any
 120-12  12-month period.
 120-13        (g)  Rates established under this section must be in
 120-14  accordance with the rate-setting principles of this subtitle.
 120-15        (h)  The commission is granted all necessary power and
 120-16  authority to prescribe and collect fees and assessments from local
 120-17  exchange companies necessary to recover the commission's and the
 120-18  office's costs of activities carried out and services provided
 120-19  under this section, Subsection (h) of Section 3.211, and Section
 120-20  3.212 of this Act.  (Sec. 43B)
 120-21        Sec. 3.214.  RATES FOR AREAS NOT WITHIN MUNICIPALITY.  Public
 120-22  utility rates for areas not within any municipality may not exceed
 120-23  without commission approval 115 percent of the average of all rates
 120-24  for similar services of all municipalities served by the same
 120-25  utility within the same county.  (Sec. 44)
 120-26        Sec. 3.215.  UNREASONABLE PREFERENCE OR PREJUDICE AS TO RATES
 120-27  OR SERVICES.  A public utility may not, as to rates or services,
  121-1  make or grant any unreasonable preference or advantage to any
  121-2  corporation or person within any classification or subject any
  121-3  corporation or person within any classification to any unreasonable
  121-4  prejudice or disadvantage.  A public utility may not establish and
  121-5  maintain any unreasonable differences as to rates of service either
  121-6  as between localities or as between classes of service.  (Sec. 45)
  121-7        Sec. 3.216.  EQUALITY OF RATES AND SERVICES.  (a)  A public
  121-8  utility may not, directly or indirectly, by any device whatsoever
  121-9  or in any manner, charge, demand, collect, or receive from any
 121-10  person a greater or less compensation for any service rendered or
 121-11  to be rendered by the utility than that prescribed in the schedule
 121-12  of rates of the public utility applicable thereto when filed in the
 121-13  manner provided in this Act, nor may any person knowingly receive
 121-14  or accept any service from a public utility for a compensation
 121-15  greater or less than that prescribed in the schedules.
 121-16        (b)  Nothing in this Act shall prevent a cooperative
 121-17  corporation from returning to its members the whole or any part of
 121-18  the net earnings resulting from its operations in proportion to
 121-19  their purchases from or through the corporation.  (Sec. 46)
 121-20        Sec. 3.217.  DISCRIMINATION; RESTRICTION ON COMPETITION.  A
 121-21  public utility may not discriminate against any person or
 121-22  corporation that sells or leases equipment or performs services in
 121-23  competition with the public utility, nor may any public utility
 121-24  engage in any other practice that tends to restrict or impair such
 121-25  competition.  (Sec. 47)
 121-26        Sec. 3.218.  TELECOMMUNICATIONS UTILITY PROVIDING SERVICE TO
 121-27  THE STATE; DELINQUENT PAYMENT CHARGES.  A telecommunications
  122-1  utility providing any service to the state, including service to an
  122-2  agency in any branch of state government, may not charge a fee,
  122-3  penalty, interest, or other charge for delinquent payment of a bill
  122-4  for that service.  (Sec. 48A)
  122-5        SUBTITLE F.  CERTIFICATES OF CONVENIENCE AND NECESSITY
  122-6        Sec. 3.251.  CERTIFICATE REQUIRED.  (a)  A public utility may
  122-7  not in any way render service directly or indirectly to the public
  122-8  under any franchise or permit without first having obtained from
  122-9  the commission a certificate that the present or future public
 122-10  convenience and necessity require or will require such
 122-11  installation, operation, or extension.
 122-12        (b)  Except as otherwise provided in this subtitle, a public
 122-13  utility may not furnish, make available, render, or extend retail
 122-14  public utility service to any area to which retail utility service
 122-15  is being lawfully furnished by another public utility, without
 122-16  first having obtained a certificate of public convenience and
 122-17  necessity that includes the area in which the consuming facility is
 122-18  located.  (Sec. 50)
 122-19        Sec. 3.252.  EXCEPTIONS FOR EXTENSION OF SERVICE.  (a)  A
 122-20  public utility is not required to secure a certificate of public
 122-21  convenience and necessity for:
 122-22              (1)  an extension into territory contiguous to that
 122-23  already served by it and not receiving similar service from another
 122-24  public utility and not within the area of public convenience and
 122-25  necessity of another utility of the same kind;
 122-26              (2)  an extension within or to territory already served
 122-27  by it or to be served by it under a certificate of public
  123-1  convenience and necessity; or
  123-2              (3)  operation, extension, or service in progress on
  123-3  September 1, 1975.
  123-4        (b)  Any extensions allowed by Subsection (a) of this section
  123-5  shall be limited to devices for interconnection of existing
  123-6  facilities or devices used solely for transmitting public utility
  123-7  services from existing facilities to customers of retail utility
  123-8  service.  (Sec. 51)
  123-9        Sec. 3.253.  APPLICATION; MAPS; EVIDENCE OF CONSENT.  (a)  A
 123-10  public utility shall submit to the commission an application to
 123-11  obtain a certificate of public convenience and necessity or an
 123-12  amendment thereof.
 123-13        (b)  On or before 90 days after September 1, 1975, or at a
 123-14  later date on request in writing by a public utility when good
 123-15  cause is shown, or at such later dates as the commission may order,
 123-16  each public utility shall file with the commission a map or maps
 123-17  showing all its facilities and illustrating separately facilities
 123-18  for transmission and distribution of its services.
 123-19        (c)  Each applicant for a certificate shall file with the
 123-20  commission such evidence as is required by the commission to show
 123-21  that the applicant has received the required consent, franchise, or
 123-22  permit of the proper municipality or other public authority.  (Sec.
 123-23  52)
 123-24        Sec. 3.254.  NOTICE AND HEARING; ISSUANCE OR REFUSAL; FACTORS
 123-25  CONSIDERED.  (a)  When an application for a certificate of public
 123-26  convenience and necessity is filed, the commission shall give
 123-27  notice of such application to interested parties and, if requested,
  124-1  shall fix a time and place for a hearing and give notice of the
  124-2  hearing.  Any person interested in the application may intervene at
  124-3  the hearing.
  124-4        (b)  The commission may grant applications and issue
  124-5  certificates only if the commission finds that the certificate is
  124-6  necessary for the service, accommodation, convenience, or safety of
  124-7  the public.  The commission may issue the certificate as prayed
  124-8  for, refuse to issue it, or issue it for the construction of a
  124-9  portion only of the contemplated system or facility or extension
 124-10  thereof or for the partial exercise only of the right or privilege.
 124-11        (c)  Certificates of convenience and necessity shall be
 124-12  granted on a nondiscriminatory basis after consideration by the
 124-13  commission of the adequacy of existing service, the need for
 124-14  additional service, the effect of the granting of a certificate on
 124-15  the recipient of the certificate and on any public utility of the
 124-16  same kind already serving the proximate area, and on such factors
 124-17  as community values, recreational and park areas, historical and
 124-18  aesthetic values, environmental integrity, and the probable
 124-19  improvement of service or lowering of cost to consumers in such
 124-20  area resulting from the granting of such certificate.  (Sec. 54
 124-21  (part))
 124-22        Sec. 3.255.  AREA INCLUDED WITHIN CITY, TOWN, OR VILLAGE.
 124-23  (a)  If an area has been or shall be included within the boundaries
 124-24  of a city, town, or village as the result of annexation,
 124-25  incorporation, or otherwise, all public utilities certified or
 124-26  entitled to certification under this Act to provide service or
 124-27  operate facilities in such area prior to the inclusion shall have
  125-1  the right to continue and extend service in its area of public
  125-2  convenience and necessity within the annexed or incorporated area,
  125-3  pursuant  to  the  rights  granted  by  its  certificate  and  this
  125-4  Act.
  125-5        (b)  Notwithstanding any other provision of law, a public
  125-6  utility shall have the right to continue and extend service within
  125-7  its area of public convenience and necessity and to utilize the
  125-8  roads, streets, highways, alleys, and public property for the
  125-9  purpose of furnishing such retail utility service, subject to the
 125-10  authority of the governing body of a municipality to require any
 125-11  public utility, at its own expense, to relocate its facilities to
 125-12  permit the widening or straightening of streets by giving to the
 125-13  public utility 30 days' notice and specifying the new location for
 125-14  the facilities along the right-of-way of the street or streets.
 125-15        (c)  This section may not be construed as limiting the power
 125-16  of cities, towns, and villages to incorporate or extend their
 125-17  boundaries by annexation.  (Sec. 55 (part))
 125-18        Sec. 3.256.  CONTRACTS VALID AND ENFORCEABLE.  Contracts
 125-19  between public utilities designating areas to be served and
 125-20  customers to be served by those utilities, when approved by the
 125-21  commission, shall be valid and enforceable and shall be
 125-22  incorporated into the appropriate areas of public convenience and
 125-23  necessity.  (Sec. 56)
 125-24        Sec. 3.257.  PRELIMINARY ORDER FOR CERTIFICATE.  If a public
 125-25  utility desires to exercise a right or privilege under a franchise
 125-26  or permit which it contemplates securing but which has not as yet
 125-27  been granted to it, such public utility may apply to the commission
  126-1  for an order preliminary to the issuance of the certificate.  The
  126-2  commission may thereupon make an order declaring that it will, on
  126-3  application, under such rules as it prescribes, issue the desired
  126-4  certificate on such terms and conditions as it designates, after
  126-5  the public utility has obtained the contemplated franchise or
  126-6  permit.  On presentation to the commission of evidence satisfactory
  126-7  to it that the franchise or permit has been secured by the public
  126-8  utility, the commission shall issue the certificate.  (Sec. 57)
  126-9        Sec. 3.258.  CONTINUOUS AND ADEQUATE SERVICE; DISCONTINUANCE,
 126-10  REDUCTION, OR IMPAIRMENT OF SERVICE.  (a)  Except as provided by
 126-11  this section or Section 3.259 of this Act, the holder of any
 126-12  certificate of public convenience and necessity shall serve every
 126-13  consumer within its certified area and shall render continuous and
 126-14  adequate service within the area or areas.
 126-15        (b)  Unless the commission issues a certificate that neither
 126-16  the present or future convenience and necessity will be adversely
 126-17  affected, the holder of a certificate may not discontinue, reduce,
 126-18  or impair service to a certified service area or part thereof
 126-19  except for:
 126-20              (1)  nonpayment of charges;
 126-21              (2)  nonuse; or
 126-22              (3)  other similar reasons in the usual course of
 126-23  business.
 126-24        (c)  Any discontinuance, reduction, or impairment of service,
 126-25  whether with or without approval of the commission, shall be in
 126-26  conformity with and subject to such conditions, restrictions, and
 126-27  limitations as the commission shall prescribe.  (Sec. 58)
  127-1        Sec. 3.259.  CONDITIONS REQUIRING REFUSAL OF SERVICE.  The
  127-2  holder of a certificate of public convenience and necessity shall
  127-3  refuse to serve a customer within its certified area if the holder
  127-4  of the certificate is prohibited from providing the service under
  127-5  Section 212.012 or 232.0047, Local Government Code.  (Sec. 58A)
  127-6        Sec. 3.260.  SALE, ASSIGNMENT, OR LEASE OF CERTIFICATE.  If
  127-7  the commission determines that a purchaser, assignee, or lessee is
  127-8  capable of rendering adequate service, a public utility may sell,
  127-9  assign, or lease a certificate of public convenience and necessity
 127-10  or any rights obtained under the certificate.  The sale,
 127-11  assignment, or lease shall be on the conditions prescribed by the
 127-12  commission.  (Sec. 59)
 127-13        Sec. 3.261.  INTERFERENCE WITH OTHER PUBLIC UTILITY.  If a
 127-14  public utility in constructing or extending its lines, plant, or
 127-15  system interferes or attempts to interfere with the operation of a
 127-16  line, plant, or system of any other utility, the commission may
 127-17  issue an order prohibiting the construction or extension or
 127-18  prescribing terms and conditions for locating the lines, plants, or
 127-19  systems affected.  (Sec. 60)
 127-20        Sec. 3.262.  IMPROVEMENTS IN SERVICE; INTERCONNECTING
 127-21  SERVICE; EXTENDED AREA TOLL-FREE TELEPHONE SERVICE.  After notice
 127-22  and hearing, the commission may:
 127-23              (1)  order a public utility to provide specified
 127-24  improvements in its service in a defined area, if service in such
 127-25  area is inadequate or is substantially inferior to service in a
 127-26  comparable area and it is reasonable to require the company to
 127-27  provide such improved service;
  128-1              (2)  order two or more utilities to establish specified
  128-2  facilities for the interconnecting service; and
  128-3              (3)  order a telephone company or telephone companies
  128-4  to provide extended area toll-free service within a specified
  128-5  metropolitan area where there is a sufficient community of interest
  128-6  within the area and such service can reasonably be provided.  (Sec.
  128-7  61)
  128-8        Sec. 3.263.  REVOCATION OR AMENDMENT OF CERTIFICATE.
  128-9  (a)  The commission at any time after notice and hearing may revoke
 128-10  or amend any certificate of convenience and necessity if it finds
 128-11  that the certificate holder has never provided or is no longer
 128-12  providing service in the area or part of the area covered by the
 128-13  certificate.
 128-14        (b)  When the certificate of any public utility is revoked or
 128-15  amended, the commission may require one or more public utilities to
 128-16  provide service in the area in question.  (Sec. 62)
 128-17              SUBTITLE G.  PROVISION OF TELEPHONE SERVICE
 128-18        Sec. 3.301.  DEDICATED LINE LONG DISTANCE SERVICE.  A
 128-19  telecommunications utility providing dedicated line long distance
 128-20  service (TEXAN) to the state on August 31, 1987, shall continue to
 128-21  have this type of service available to the state on a
 128-22  month-to-month contract basis until September 1, 1988.  The
 128-23  contract will become effective on September 1, 1987, and shall be
 128-24  under terms and conditions negotiated by the state and the utility
 128-25  in accordance with the amounts appropriated by the General
 128-26  Appropriations Act for this purpose.  The General Services
 128-27  Commission shall perform all actions necessary to insure that one
  129-1  or more contracts for telecommunications services as provided in
  129-2  Article 10 of the State Purchasing and General Services Act
  129-3  (Article 601b, Vernon's Texas Civil Statutes) (TEXAN II) are
  129-4  awarded pursuant to the requirements of the State Purchasing and
  129-5  General Services Act (Article 601b, Vernon's Texas Civil Statutes)
  129-6  by October 15, 1987, and that TEXAN II is operational not later
  129-7  than August 31, 1988.  Those funds appropriated by the General
  129-8  Appropriations Act for extending the existing TEXAN contract which
  129-9  are not expended in fiscal year 1988 shall be transferred to the
 129-10  General Services Commission for the sole purpose of offsetting the
 129-11  expenses associated with the administration of the TEXAN II
 129-12  network.  If, during the period of time this section is in effect,
 129-13  any supplemental or other telecommunications service is required by
 129-14  the state, it may be acquired from vendors other than the utility
 129-15  or utilities providing TEXAN or TEXAN II service.  (Sec. 87B)
 129-16        Sec. 3.302.  CALLER IDENTIFICATION SERVICES.  (a)  This
 129-17  section applies only to the provision of caller identification
 129-18  service.
 129-19        (b)  A person may not offer a caller identification service
 129-20  unless the person obtains written authorization from the
 129-21  commission.
 129-22        (c)  The commission shall require that a provider of caller
 129-23  identification service offer per-call blocking at no charge to each
 129-24  telephone subscriber in the specific area in which the service is
 129-25  offered.
 129-26        (d)  The commission shall require that a provider offer
 129-27  per-line blocking at no charge to a particular customer if the
  130-1  commission receives from the customer written certification that
  130-2  the customer has a compelling need for per-line blocking.  If a
  130-3  customer later removes the per-line block, the provider may assess
  130-4  a service order charge relating to administrative costs in an
  130-5  amount approved by the commission to reinstate the per-line block.
  130-6  The commission may prescribe and assess fees and assessments from
  130-7  providers of caller identification service in an amount sufficient
  130-8  to cover the additional expenses incurred by the commission in
  130-9  implementing the customer certification provisions of this
 130-10  subsection.  Reports, records, and information received under this
 130-11  subsection by the commission or by a provider of caller
 130-12  identification service are confidential and may be used only for
 130-13  the purposes of administering this subsection.
 130-14        (e)  The commission may only prescribe in relation to
 130-15  blocking the requirements prescribed by Subsections (c) and (d) of
 130-16  this section.
 130-17        (f)  A person may not use a caller identification service to
 130-18  compile and sell specific local call information without the
 130-19  affirmative consent and approval of the originating telephone
 130-20  customer.  This subsection does not prohibit the provider from:
 130-21              (1)  verifying network performance or from testing the
 130-22  provision of caller identification service;
 130-23              (2)  compiling, using, and disclosing aggregate caller
 130-24  identification information; or
 130-25              (3)  complying with applicable law or legal process.
 130-26        (g)  This section does not apply to:
 130-27              (1)  an identification service that is used within the
  131-1  same limited system, including a central office based PBX-type
  131-2  system;
  131-3              (2)  information that is used on a public agency's
  131-4  emergency telephone line or on a line that receives the primary
  131-5  emergency telephone number (9-1-1);
  131-6              (3)  information passed between telecommunications
  131-7  utilities, enhanced service providers, or other entities that is
  131-8  necessary for the set-up, processing, transmission, or billing of
  131-9  telecommunications or related services;
 131-10              (4)  information provided in compliance with applicable
 131-11  law or legal process; or
 131-12              (5)  an identification service provided in connection
 131-13  with a "700," "800," or "900" access code telecommunications
 131-14  service.
 131-15        (h)  In this section:
 131-16              (1)  "Caller identification information" means:
 131-17                    (A)  the telephone listing number and/or name of
 131-18  the customer from whose telephone instrument a telephone number is
 131-19  dialed; or
 131-20                    (B)  other information that may be used to
 131-21  identify the specific originating number or originating location of
 131-22  a wire or electronic communication transmitted by a telephone
 131-23  instrument.
 131-24              (2)  "Caller identification service" means a service
 131-25  offered by a telecommunications utility that provides caller
 131-26  identification information to a device capable of displaying the
 131-27  information.
  132-1              (3)  "Per-call blocking" means a telecommunications
  132-2  service that prevents the transmission of caller identification
  132-3  information to a called party on an individual call if the calling
  132-4  party acts affirmatively to prevent the transmission of the caller
  132-5  identification information.
  132-6              (4)  "Per-line blocking" means a telecommunications
  132-7  service that prevents the transmission of caller identification
  132-8  information to a called party on every call unless the calling
  132-9  party acts affirmatively to release the caller identification
 132-10  information.  (Sec. 87C)
 132-11        Sec. 3.303.  INTEREXCHANGE SERVICES; LOCAL EXCHANGE
 132-12  COMPANIES' RATES.  Local exchange companies' rates for
 132-13  interexchange telecommunications services must be statewide average
 132-14  rates unless the commission on application and hearing orders
 132-15  otherwise.  Nothing in this section limits a local exchange
 132-16  company's ability to enter into contracts for high speed private
 132-17  line services of 1.544 megabits or greater under the provisions of
 132-18  Section 3.051 of this Act.  (Sec. 93)
 132-19        Sec. 3.304.  EXPANSION OF TOLL-FREE CALLING AREAS; CRITERIA.
 132-20  (a)  To address telephone calling needs between nearby telephone
 132-21  exchanges, the commission shall initiate a rulemaking proceeding to
 132-22  approve rules to provide for an expedited hearing to allow the
 132-23  expanding of toll-free calling areas according to the following
 132-24  criteria:
 132-25              (1)  Toll-free calling boundaries may only be expanded
 132-26  under this section after the filing of a petition signed by the
 132-27  lesser of five percent of the subscribers or 100 subscribers within
  133-1  an exchange.  If such a petition is filed with the commission, the
  133-2  commission shall order the local exchange company to provide for
  133-3  the balloting of its subscribers within the petitioning exchange
  133-4  and, if there is an affirmative vote of at least 70 percent of
  133-5  those responding, the commission shall consider the request.
  133-6              (2)  The commission shall provide for the expansion of
  133-7  toll-free calling areas for each local exchange customer in the
  133-8  petitioning exchange if the petitioning exchange serves not more
  133-9  than 10,000 lines and if:
 133-10                    (A)  the petitioning exchange is located within
 133-11  22 miles of the exchange requested for toll-free calling service;
 133-12  or
 133-13                    (B)  the petitioning exchange shares a community
 133-14  of interest with the exchange requested for toll-free calling
 133-15  service.  For purposes of this paragraph, "community of interest"
 133-16  includes areas that have a relationship because of schools,
 133-17  hospitals, local governments, business centers, and other
 133-18  relationships the unavailability of which would cause a hardship to
 133-19  the residents of the area but need not include an area where the
 133-20  affected central offices are more than 50 miles apart.
 133-21              (3)(A)  The local exchange company shall recover all of
 133-22  its costs incurred and all loss of revenue from any expansion of
 133-23  toll-free calling areas under this section through a request other
 133-24  than a revenue requirement showing by:
 133-25                          (i)  a monthly fee for toll-free calling
 133-26  service of not more than $3.50 per line for residential customers
 133-27  nor more than $7 per line for business customers, to be collected
  134-1  from all such residential or business customers in the petitioning
  134-2  exchange and only until the local exchange company's next general
  134-3  rate case;
  134-4                          (ii)  a monthly fee for toll-free calling
  134-5  service for all of the local exchange company's local exchange
  134-6  service customers in the state in addition to the company's current
  134-7  local exchange rates; or
  134-8                          (iii)  both (i) and (ii).
  134-9                    (B)  A local exchange company may not recover
 134-10  regulatory case expenses under this section by surcharging
 134-11  petitioning exchange subscribers.
 134-12        (b)(1)  The commission and a local exchange company are not
 134-13  required to comply with this section with regard to a petitioning
 134-14  exchange or petitioned exchange if:
 134-15                    (A)  the commission determines that there has
 134-16  been a good and sufficient showing of a geographic or technological
 134-17  infeasibility to serve the area;
 134-18                    (B)  the local exchange company has less than
 134-19  10,000 lines;
 134-20                    (C)  the petitioning or petitioned exchange is
 134-21  served by a cooperative;
 134-22                    (D)  extended area service or extended
 134-23  metropolitan service is currently available between the petitioning
 134-24  and petitioned exchanges; or
 134-25                    (E)  the petitioning or petitioned exchange is a
 134-26  metropolitan exchange.
 134-27              (2)  The commission may expand the toll-free calling
  135-1  area into an exchange not within a metropolitan exchange but within
  135-2  the local calling area contiguous to a metropolitan exchange that
  135-3  the commission determines to have a community of interest
  135-4  relationship with the petitioning exchange.  For the purposes of
  135-5  this section, metropolitan exchange, local calling area of a
  135-6  metropolitan exchange, and exchange have the meanings and
  135-7  boundaries as defined and approved by the commission on September
  135-8  1, 1993.  However, under no circumstances shall a petitioning or
  135-9  petitioned exchange be split in the provision of a toll-free
 135-10  calling area.
 135-11        (c)  The commission may, in order to promote the wide
 135-12  dispersion of pay telephones, either exempt such telephones from
 135-13  the provisions of this section or change the rates to be charged
 135-14  from such telephones in an amount sufficient to promote this goal.
 135-15  (Sec. 93A)
 135-16        Sec. 3.305.  PAY TELEPHONES; NUMBERS AND NOTICES DISPLAYED.
 135-17  (a)  A pay telephone service provider may not display the telephone
 135-18  number of a pay telephone that cannot receive a telephone call.
 135-19        (b)  A pay telephone service provider shall place in a
 135-20  conspicuous location on each pay telephone that cannot receive
 135-21  telephone calls a notice stating in letters one-fourth inch high:
 135-22  "THIS TELEPHONE CANNOT RECEIVE TELEPHONE CALLS."
 135-23        (c)  A pay telephone service provider that violates a
 135-24  provision of this section or a rule or order adopted by the
 135-25  commission under this section is subject to a civil penalty as
 135-26  provided by Section 1.322 of this Act, unless such provider, within
 135-27  14 days of receiving written notice of a violation, takes
  136-1  corrective action to comply with the provisions of this section.
  136-2        (d)  The commission has jurisdiction over all pay telephone
  136-3  service providers to the extent necessary to enforce this section
  136-4  regardless of whether a pay telephone service provider is a
  136-5  telecommunications utility regulated under this Act.
  136-6        (e)  The commission may adopt rules and establish procedures
  136-7  to enforce this section.  (Sec. 93A)
  136-8        Sec. 3.306.  HOTELS OR MOTELS; CHARGES FOR TELEPHONE CALLS.
  136-9  The amount a hotel or motel charges for a local telephone call, a
 136-10  credit card telephone call, a collect telephone call, or any other
 136-11  local telephone call for which assistance from the hotel or motel
 136-12  operator is not required may not exceed 50 cents.  (Sec. 93B)
 136-13        Sec. 3.307.  "1-900" SERVICE.  (a)  A telecommunications
 136-14  utility that transports or provides a "1-900" service under a
 136-15  contract authorized by Article 42.131 or 42.18, Code of Criminal
 136-16  Procedure, and its subsequent amendments, that is used by a
 136-17  defendant under the supervision of a community supervision and
 136-18  corrections department or the pardons and paroles division of the
 136-19  Texas Department of Criminal Justice to pay a fee or cost or to
 136-20  comply with telephone reporting requirements may adjust or
 136-21  authorize the adjustment of an end-user's bill for those fees or
 136-22  costs or charges for reporting only with the consent of the
 136-23  contracting community supervision and corrections department or the
 136-24  contracting pardons and paroles division of the Texas Department of
 136-25  Criminal Justice.
 136-26        (b)  This section applies only to an intrastate "1-900"
 136-27  service.  (Sec. 93C)
  137-1      SUBTITLE H.  TELECOMMUNICATIONS SERVICE ASSISTANCE PROGRAM;
  137-2                        UNIVERSAL SERVICE FUND
  137-3        Sec. 3.351.  TEL-ASSISTANCE SERVICE.  The commission shall
  137-4  adopt and enforce rules requiring each local exchange company to
  137-5  establish a telecommunications service assistance program to be
  137-6  called "tel-assistance service."  This service is established to
  137-7  provide eligible consumers with a reduction in costs of
  137-8  telecommunications services.  (Sec. 94)
  137-9        Sec. 3.352.  ELIGIBILITY FOR TEL-ASSISTANCE SERVICE; BURDEN
 137-10  OF PROOF; BILLING.  (a)  To be eligible for tel-assistance service,
 137-11  an applicant must be a head of household, 65 years of age or older,
 137-12  and disabled as determined by the Texas Department of Human
 137-13  Services and must have a household income at or below the poverty
 137-14  level as determined by the United States Office of Management and
 137-15  Budget and reported annually in the Federal Register.  The
 137-16  department, in accordance with this subtitle and rules adopted by
 137-17  the department for the program, shall develop procedures for taking
 137-18  applications for certification of eligibility and for determining
 137-19  program eligibility.  The burden of proving eligibility for
 137-20  tel-assistance service is on the consumer applying for the service.
 137-21        (b)  Each six months the department shall provide a list or
 137-22  lists of the names, addresses, and, if applicable, telephone
 137-23  numbers of all persons eligible for tel-assistance service to each
 137-24  local exchange company.  The local exchange company shall determine
 137-25  from the list those consumers to whom the company provides service
 137-26  and within 60 days after receiving the list shall begin
 137-27  tel-assistance billing for eligible consumers.  This billing shall
  138-1  continue until the local exchange company is notified by the
  138-2  department that a consumer is no longer eligible to receive
  138-3  tel-assistance service.  (Sec. 95)
  138-4        Sec. 3.353.  TEL-ASSISTANCE SERVICES; BILLING; RATES.
  138-5  (a)  The local exchange company shall provide tel-assistance
  138-6  service to all eligible consumers within its certificated area in
  138-7  the form of a reduction on each eligible consumer's telephone bill.
  138-8  The reduction shall apply only to the following types of service:
  138-9              (1)  residential flat rate basic local exchange
 138-10  service;
 138-11              (2)  residential local exchange access service; and
 138-12              (3)  residential local area calling usage, except that
 138-13  the reduction for local area calling usage shall be limited to an
 138-14  amount such that together with the reduction for local exchange
 138-15  access service the rate does not exceed the comparable reduced flat
 138-16  rate for the service.
 138-17        (b)  No other local voice service may be provided to the
 138-18  dwelling place of a tel-assistance consumer, nor may single or
 138-19  party line optional extended area service, optional extended area
 138-20  calling service, foreign zone, or foreign exchange service be
 138-21  provided to a tel-assistance consumer.  Nothing in this section
 138-22  shall prohibit a person otherwise eligible to receive
 138-23  tel-assistance service from obtaining and using telecommunications
 138-24  equipment designed to aid such person in utilizing
 138-25  telecommunications services.
 138-26        (c)  The reduction allowed by the telecommunications service
 138-27  assistance program shall be 65 percent of the applicable tariff
  139-1  rate for the service provided.  (Sec. 96)
  139-2        Sec. 3.354.  STATEWIDE TELECOMMUNICATIONS RELAY ACCESS
  139-3  SERVICE FOR HEARING-IMPAIRED AND SPEECH-IMPAIRED.  (a)  The
  139-4  commission shall adopt and enforce rules establishing a statewide
  139-5  telecommunications relay access service for the hearing-impaired
  139-6  and speech-impaired using specialized communications equipment such
  139-7  as telecommunications devices for the deaf (TDD) and operator
  139-8  translations.  The purpose of this section is to provide for the
  139-9  uniform and coordinated provision of the service on a statewide
 139-10  basis by one telecommunications carrier.
 139-11        (b)  Commission rules relating to a statewide
 139-12  telecommunications relay access service for the hearing-impaired
 139-13  and speech-impaired shall provide that:
 139-14              (1)  the service shall provide the hearing-impaired and
 139-15  speech-impaired with access to the telecommunications network in
 139-16  Texas equal to that provided other customers;
 139-17              (2)  the service shall consist of the following:
 139-18                    (A)  switching and transmission of the call;
 139-19                    (B)  verbal and print translations by either live
 139-20  or automated means between hearing-impaired and speech-impaired
 139-21  individuals who use TDD equipment or similar automated devices and
 139-22  others who do not have such equipment; and
 139-23                    (C)  other service enhancements proposed by the
 139-24  carrier and approved by the commission;
 139-25              (3)  the calling or called party shall bear no charge
 139-26  for calls originating and terminating within the same local calling
 139-27  area;
  140-1              (4)  the calling or called party shall bear one-half of
  140-2  the total charges established by contract with the commission for
  140-3  intrastate interexchange calls;
  140-4              (5)  as specified in its contract with the commission,
  140-5  charges related to providing the service which are not borne by a
  140-6  calling or called party pursuant to Subdivisions (3) and (4) of
  140-7  this subsection shall be funded from the universal service fund;
  140-8              (6)  local exchange companies may not impose
  140-9  interexchange carrier access charges on calls which make use of
 140-10  this service and which originate and terminate in the same local
 140-11  calling area;
 140-12              (7)  local exchange companies shall provide billing and
 140-13  collection services in support of this service at just and
 140-14  reasonable rates; and
 140-15              (8)  if the commission orders a local exchange company
 140-16  to provide for a trial telecommunications relay access service for
 140-17  the hearing-impaired or speech-impaired, all pertinent costs and
 140-18  design information from this trial shall be available to the
 140-19  general public.
 140-20        (c)  The commission shall allow telecommunications utilities
 140-21  to recover their universal service fund assessment related to this
 140-22  service through a surcharge which the utility may add to its
 140-23  customers' bills.  The commission shall specify how the amount of
 140-24  the surcharge is to be determined by each utility.  If a utility
 140-25  chooses to impose the surcharge, the bill shall list the surcharge
 140-26  as the "universal service fund surcharge."
 140-27        (d)  The commission shall set the appropriate assessments for
  141-1  the funding of the service by all telecommunications utilities.  In
  141-2  setting the appropriate assessments, the commission shall consider
  141-3  the aggregate calling pattern of the users of the service and all
  141-4  other factors found appropriate and in the public interest by the
  141-5  commission.  The commission shall review the assessments annually
  141-6  and adjust the assessments as found appropriate hereunder.
  141-7        (e)  The commission shall select the telecommunications
  141-8  carrier which will provide the statewide telecommunications relay
  141-9  access service for the hearing-impaired and speech-impaired.  In
 141-10  awarding the contract for this service, the commission shall make a
 141-11  written award of the contract to the offerer whose proposal is the
 141-12  most advantageous to the state, considering price, the interests of
 141-13  the hearing-impaired and speech-impaired community in having access
 141-14  to a high quality and technologically advanced telecommunications
 141-15  system, and all other factors listed in the commission's request
 141-16  for proposals.  The commission shall consider each proposal in a
 141-17  manner that does not disclose the contents of the proposal to
 141-18  competing offerers.  The commission's evaluation of the proposals
 141-19  shall include:
 141-20              (1)  charges for the service;
 141-21              (2)  service enhancements proposed by the offerers;
 141-22              (3)  technological sophistication of the network
 141-23  proposed by the offerers; and
 141-24              (4)  the proposed commencement date for the service.
 141-25        (f)  The telecommunications carrier providing the service
 141-26  shall be compensated for providing such service at rates, terms,
 141-27  and conditions established in its contract with the commission.
  142-1  This compensation may include a return on the investment required
  142-2  to provide the service and compensation for unbillable and
  142-3  uncollectible calls placed through the service, provided that
  142-4  compensation for unbillable and uncollectible calls shall be
  142-5  subject to a reasonable limitation as determined by the commission.
  142-6        (g)  The advisory committee to assist the commission in
  142-7  administering this section is composed of the following persons
  142-8  appointed by the commission:
  142-9              (1)  two deaf persons recommended by the Texas
 142-10  Association of the Deaf;
 142-11              (2)  one hearing-impaired person recommended by
 142-12  Self-Help for the Hard of Hearing;
 142-13              (3)  one hearing-impaired person recommended by the
 142-14  American Association of Retired Persons;
 142-15              (4)  one deaf and blind person recommended by the Texas
 142-16  Deaf/Blind Association;
 142-17              (5)  one speech-impaired person and one speech-impaired
 142-18  and hearing-impaired person recommended by the Coalition of Texans
 142-19  with Disabilities;
 142-20              (6)  two representatives of telecommunications
 142-21  utilities, one representing a nonlocal exchange utility and one
 142-22  representing a local exchange company, chosen from a list of
 142-23  candidates provided by the Texas Telephone Association;
 142-24              (7)  two persons, at least one of whom is deaf, with
 142-25  experience in providing relay services recommended by the Texas
 142-26  Commission for the Deaf and Hearing-Impaired; and
 142-27              (8)  two public members recommended by organizations
  143-1  representing consumers of telecommunications services.
  143-2        (h)  The commission shall appoint advisory committee members
  143-3  based on recommended lists of candidates submitted in accordance
  143-4  with Subdivision (6) of Subsection (g) of this section.  The
  143-5  advisory committee shall monitor the establishment, administration,
  143-6  and promotion of the statewide telecommunications relay access
  143-7  service and advise the commission in pursuing a service which meets
  143-8  the needs of the hearing-impaired and speech-impaired in
  143-9  communicating with other users of telecommunications services.  The
 143-10  terms of office of each member of the advisory committee shall be
 143-11  two years.  A member whose term has expired shall continue to serve
 143-12  until a qualified replacement is appointed.  The members of the
 143-13  advisory committee shall serve without compensation but shall be
 143-14  entitled to reimbursement at rates established for state employees
 143-15  for travel and per diem incurred in the performance of their
 143-16  official duties.  The commission shall reimburse members of the
 143-17  advisory committee in accordance with this subsection and shall
 143-18  provide clerical and staff support to the advisory committee,
 143-19  including a secretary to record the committee meetings.  The
 143-20  commission's costs associated with the advisory committee shall be
 143-21  reimbursed from the universal service fund.  (Sec. 96A)
 143-22        Sec. 3.355.  DISTANCE LEARNING ACTIVITIES BY EDUCATIONAL
 143-23  INSTITUTIONS; REDUCED RATES.  (a)  The commission by rule shall
 143-24  require a dominant carrier to file a tariff containing a reduced
 143-25  rate for a telecommunications service the commission finds is
 143-26  directly related to a distance learning activity that is or could
 143-27  be conducted by an educational institution in this state.
  144-1        (b)  The commission rules shall specify:
  144-2              (1)  the telecommunications services that qualify under
  144-3  this section;
  144-4              (2)  the process by which an educational institution
  144-5  qualifies for a reduced rate;
  144-6              (3)  the date by which a dominant carrier shall file a
  144-7  tariff;
  144-8              (4)  guidelines and criteria by which the services and
  144-9  reduced rates shall further the goals stated in Subsection (d) of
 144-10  this section; and
 144-11              (5)  any other requirements, terms, and conditions that
 144-12  the commission determines to be in the public interest.
 144-13        (c)  A tariff filing by a dominant carrier under this
 144-14  section:
 144-15              (1)  shall concern only the implementation of this
 144-16  section;
 144-17              (2)  is not a rate change under Section 3.211 of this
 144-18  Act; and
 144-19              (3)  does not affect any of the carrier's other rates
 144-20  or services.
 144-21        (d)  The services and reduced rates shall be designed to:
 144-22              (1)  encourage the development and offering of distance
 144-23  learning activities by educational institutions;
 144-24              (2)  meet the distance learning needs identified by the
 144-25  educational community; and
 144-26              (3)  recover the long-run incremental costs of
 144-27  providing the services, to the extent those costs can be
  145-1  identified, so as to avoid subsidizing educational institutions.
  145-2        (e)  The commission is not required to determine the long-run
  145-3  incremental cost of providing a service before approving a reduced
  145-4  rate for the service.  Until cost determination rules are developed
  145-5  and the rates established under this section are changed as
  145-6  necessary to ensure proper cost recovery, the reduced rates
  145-7  established by the commission shall be equal to 75 percent of the
  145-8  otherwise applicable rate.  After the commission develops cost
  145-9  determination rules for telecommunications services generally, it
 145-10  shall ensure that a reduced rate approved under this section
 145-11  recovers service-specific long-run incremental costs and avoids
 145-12  subsidization.
 145-13        (f)  An educational institution or dominant carrier may at
 145-14  any time request the commission to:
 145-15              (1)  provide for a reduced rate for a service directly
 145-16  related to a distance learning activity that is not covered by
 145-17  commission rules;
 145-18              (2)  change a rate;
 145-19              (3)  amend a tariff; or
 145-20              (4)  amend a commission rule.
 145-21        (g)  If the commission determines that a change requested
 145-22  under Subsection (f) is appropriate, it shall make the requested
 145-23  change.
 145-24        (h)  In this section:
 145-25              (1)  "Distance learning" means instruction, learning,
 145-26  and training that is transmitted from one site to one or more sites
 145-27  by telecommunications services that are used by an educational
  146-1  institution predominantly for such instruction, learning, or
  146-2  training, including video, data, voice, and electronic information.
  146-3              (2)  "Educational institution" means and includes:
  146-4                    (A)  accredited primary or secondary schools
  146-5  owned or operated by state and local governmental entities or
  146-6  private entities;
  146-7                    (B)  institutions of higher education as defined
  146-8  by Section 61.003, Education Code;
  146-9                    (C)  private institutions of higher education
 146-10  accredited by a recognized accrediting agency as defined by Section
 146-11  61.003(13), Education Code;
 146-12                    (D)  the Central Education Agency, its successors
 146-13  and assigns;
 146-14                    (E)  regional education service centers
 146-15  established and operated pursuant to Sections 11.32 and 11.33,
 146-16  Education Code; and
 146-17                    (F)  the Texas Higher Education Coordinating
 146-18  Board, its successors and assigns.  (Sec. 96B)
 146-19        Sec. 3.356.  RECOVERY OF LOST REVENUES.  A local exchange
 146-20  company is entitled to recover the lost revenue, if any, resulting
 146-21  solely from the provision of tel-assistance service from the
 146-22  universal service fund, the establishment of which is provided for
 146-23  by this Act.  (Sec. 97)
 146-24        Sec. 3.357.  UNIVERSAL SERVICE FUND.  (a)  The commission
 146-25  shall adopt and enforce rules requiring local exchange companies to
 146-26  establish a universal service fund to assist local exchange
 146-27  companies in providing basic local exchange service at reasonable
  147-1  rates in high cost rural areas, to reimburse local exchange
  147-2  companies for revenues lost as a result of providing tel-assistance
  147-3  service under this Act, to reimburse the telecommunications carrier
  147-4  providing the statewide telecommunications relay access service for
  147-5  the hearing-impaired and speech-impaired as authorized in Section
  147-6  3.354 of this Act, and to reimburse the Texas Department of Human
  147-7  Services and the commission for costs incurred in implementing the
  147-8  provisions of this subtitle.
  147-9        (b)  The universal service fund shall be funded by a
 147-10  statewide uniform charge, at rates and on services determined by
 147-11  the commission, payable by all telecommunications utilities that
 147-12  have access to the customer base.  In establishing the uniform
 147-13  level of the charge and the services to which it will apply, the
 147-14  commission may not make or grant an unreasonable preference or
 147-15  advantage to a telecommunications utility or subject a
 147-16  telecommunications utility to unreasonable prejudice or
 147-17  disadvantage.  The charge shall be paid in accordance with
 147-18  procedures approved by the commission.
 147-19        (c)  The commission shall:
 147-20              (1)  establish, in a manner that assures reasonable
 147-21  rates for basic local exchange service, eligibility criteria it
 147-22  finds necessary for participation in the universal service fund;
 147-23              (2)  determine which local exchange companies meet the
 147-24  eligibility criteria;
 147-25              (3)  determine the amount of and approve a procedure
 147-26  for reimbursement to local exchange companies of revenue lost in
 147-27  providing tel-assistance service under this Act;
  148-1              (4)  prescribe and collect fees from the universal
  148-2  service fund necessary to recover the costs the Texas Department of
  148-3  Human Services and the commission incurred in implementing and
  148-4  administrating the provisions of this subtitle; and
  148-5              (5)  approve procedures for the collection and
  148-6  disbursal of the revenues of the universal service fund.
  148-7        (d)  The commission shall adopt rules for the implementation
  148-8  and administration of the universal service fund.
  148-9        (e)  The commission may do all things necessary and
 148-10  convenient to implement and administer the universal service fund.
 148-11  (Sec. 98)
 148-12        Sec. 3.358.  INTERACTIVE MULTIMEDIA COMMUNICATIONS.  (a)  The
 148-13  commission shall permit a local exchange company that provides
 148-14  interactive multimedia communications services to establish rates
 148-15  at levels necessary, using sound ratemaking principles, to recover
 148-16  costs associated with providing the services.  Unless determined by
 148-17  the commission to be in the public interest, a local exchange
 148-18  company may not establish rates under this subsection that are less
 148-19  than the local exchange company's long-run incremental costs of
 148-20  providing the interactive multimedia communications services.
 148-21        (b)  In this section, "interactive multimedia communications"
 148-22  has the meaning assigned by Section 14.0451(a), Education Code, as
 148-23  added by Chapter 868, Acts of the 73rd Legislature, Regular
 148-24  Session, 1993.  (Sec. 98A)
 148-25        Sec. 3.359.  SEVERABILITY.  If this subtitle conflicts with
 148-26  another provision of this Act, this subtitle prevails.  (Sec. 99)
 148-27            SUBTITLE I.  AUTOMATIC DIAL ANNOUNCING DEVICES
  149-1        Sec. 3.401.  DEFINITIONS.  In this subtitle:
  149-2              (1)  "Automated dial announcing device" or "ADAD" means
  149-3  automated equipment used for telephone solicitation or collection
  149-4  that is capable:
  149-5                    (A)  of storing telephone numbers to be called or
  149-6  that has a random or sequential number generator capable of
  149-7  producing numbers to be called; and
  149-8                    (B)  alone or in conjunction with other
  149-9  equipment, of conveying a prerecorded or synthesized voice message
 149-10  to the number called without the use of a live operator.
 149-11              (2)  "LEC" means a local exchange company, as that term
 149-12  is defined by Section 3.001 of this Act.  (Sec. 111)
 149-13        Sec. 3.402.  EXEMPTIONS.  This subtitle does not apply to the
 149-14  use of an ADAD to make a telephone call:
 149-15              (1)  relating to an emergency or a public service under
 149-16  a program developed or approved by the emergency management
 149-17  coordinator of the county in which the call was received; or
 149-18              (2)  made by a public or private primary or secondary
 149-19  school system to locate or account for a truant student.  (Sec.
 149-20  112)
 149-21        Sec. 3.403.  REQUIREMENTS FOR OPERATION OF ADAD.  (a)  A
 149-22  person may not operate an ADAD to make a telephone call if the
 149-23  device plays a recorded message when a connection is completed to a
 149-24  telephone number unless:
 149-25              (1)  the person has obtained a permit from the
 149-26  commission and given written notice specifying the type of device
 149-27  to each telecommunications utility over whose system the device is
  150-1  to be used;
  150-2              (2)  the device is not used for random number dialing
  150-3  or to dial numbers determined by successively increasing or
  150-4  decreasing integers;
  150-5              (3)  the message states during the first 30 seconds of
  150-6  the call the nature of the call, the identity of the person,
  150-7  company, or organization making the call, and the telephone number
  150-8  from which the call was made;
  150-9              (4)  the device disconnects from the called person's
 150-10  line not later than 30 seconds after the call is terminated by
 150-11  either party or, if the device cannot disconnect within that
 150-12  period, a live operator introduces the call and receives the oral
 150-13  consent of the called person before beginning a prerecorded or
 150-14  synthesized voice message; and
 150-15              (5)  for calls terminating in this state, the device is
 150-16  not used to make a call:
 150-17                    (A)  before noon or after 9 p.m. on a Sunday or
 150-18  before 9 a.m. or after 9 p.m. on a weekday or a Saturday, if the
 150-19  device is used for solicitation; or
 150-20                    (B)  at an hour at which collection calls would
 150-21  be prohibited under the federal Fair Debt Collection Practices Act
 150-22  (15 U.S.C. Section 1692 et seq.), if the device is used for
 150-23  collection purposes.
 150-24        (b)  In addition to the requirements prescribed by Subsection
 150-25  (a) of this section, if during the call a cross-promotion or
 150-26  reference to a pay-per-call information service is made, the call
 150-27  shall include:
  151-1              (1)  a statement that a charge will be incurred by a
  151-2  caller who makes a call to a pay-per-call information services
  151-3  telephone number;
  151-4              (2)  the amount of the flat-rate or cost-per-minute
  151-5  charge that will be incurred or the amount of both if both charges
  151-6  will be incurred; and
  151-7              (3)  the estimated amount of time required to receive
  151-8  the entire information offered by the service during a call.
  151-9        (c)  In this section, "pay-per-call information service"
 151-10  means a service that allows a caller to dial a specified "900" or
 151-11  "976" number to call a service that routinely delivers, for a
 151-12  predetermined and sometimes time-sensitive fee, a prerecorded or
 151-13  live message or interactive program.  (Sec. 113)
 151-14        Sec. 3.404.  INVESTIGATION OF COMPLAINTS; VIOLATIONS;
 151-15  DISCONNECTION OF SERVICE.  (a)  The commission shall investigate
 151-16  complaints relating to the use of an ADAD and enforce this
 151-17  subtitle.
 151-18        (b)  If the commission or a court determines that a person
 151-19  has violated this subtitle, the commission or court shall require a
 151-20  telecommunications utility to disconnect service to the person.
 151-21  The telecommunications utility may reconnect service to the person
 151-22  only on a determination by the commission that the person will
 151-23  comply with this subtitle.  The utility shall give notice to the
 151-24  person using the device of its intent to disconnect service not
 151-25  later than the third day before the date of the disconnection,
 151-26  except that if the device is causing network congestion or
 151-27  blockage, the notice may be given on the day before the date of
  152-1  disconnection.
  152-2        (c)  A telecommunications utility may, without an order by
  152-3  the commission or a court, disconnect or refuse to connect service
  152-4  to a person using or intending to use an ADAD if the utility
  152-5  determines that the device would cause or is causing network harm.
  152-6  (Sec. 114)
  152-7        Sec. 3.405.  APPLICATION FOR PERMIT TO OPERATE ADAD.  (a)  An
  152-8  application for a permit to use one or more ADADs must be made
  152-9  using the form prescribed by the commission and must be accompanied
 152-10  by a fee in a reasonable amount computed to cover the enforcement
 152-11  cost to the commission, but not to exceed $500, as determined by
 152-12  the commission.  A permit is valid for one year after its effective
 152-13  date.  Subject to Subsection (c) of this section, a permit may be
 152-14  renewed annually by making the filing required by this section and
 152-15  paying a filing fee of not more than $100, as determined by the
 152-16  commission.  The proceeds of the fees shall be deposited to the
 152-17  credit of the general revenue fund.
 152-18        (b)  Each application for the issuance or renewal of a permit
 152-19  under this section must contain the telephone number of each ADAD
 152-20  that will be used and the physical address from which the ADAD will
 152-21  operate.  If the telephone number of an ADAD or the physical
 152-22  address from which the ADAD operates changes, the owner or operator
 152-23  of the ADAD shall notify the commission by certified mail of each
 152-24  new number or address not later than the 48th hour before the hour
 152-25  at which the ADAD will begin operating with the new telephone
 152-26  number or at the new address.  If the owner or operator of an ADAD
 152-27  fails to notify the commission as required by this subsection
  153-1  within the period prescribed by this subsection, the permit is
  153-2  automatically invalid.
  153-3        (c)  In determining if a permit should be issued or renewed,
  153-4  the commission shall consider the compliance record of the owner or
  153-5  operator of the ADAD.  The commission may deny an application for
  153-6  the issuance or renewal of a permit because of the applicant's
  153-7  compliance record.
  153-8        (d)  The commission shall provide to an LEC on request a copy
  153-9  of a permit issued under this section and of any changes relating
 153-10  to the permit.
 153-11        (e)  An LEC that receives a complaint relating to the use of
 153-12  an ADAD shall send the complaint to the commission.  The commission
 153-13  by rule shall prescribe the procedures and requirements for sending
 153-14  a complaint to the commission.  (Sec. 115)
 153-15        Sec. 3.406.  VIOLATIONS; PENALTIES.  (a)  A person who owns
 153-16  or operates an ADAD and who operates the ADAD without a valid
 153-17  permit or with an expired permit or who operates the ADAD in
 153-18  violation of this subtitle or a commission rule or order is subject
 153-19  to an administrative penalty of not more than $1,000 for each day
 153-20  or portion of a day during which the ADAD was operating in
 153-21  violation of this section.
 153-22        (b)  The administrative penalty authorized by this section is
 153-23  civil in nature and is cumulative of any other penalty provided by
 153-24  law.
 153-25        (c)  The commission by rule shall prescribe the procedures
 153-26  for assessing an administrative penalty under this section.  The
 153-27  procedures shall require proper notice and hearing in accordance
  154-1  with Chapter 2001, Government Code.
  154-2        (d)  A person may appeal the final order of the commission
  154-3  under Chapter 2001, Government Code, using the substantial evidence
  154-4  rule on appeal.
  154-5        (e)  The proceeds of administrative penalties collected under
  154-6  this section shall be deposited to the credit of the general
  154-7  revenue fund.  (Sec. 116)
  154-8        Sec. 3.407.  REVOCATION OF PERMIT; OFFENSES.  (a)  The
  154-9  commission may revoke a permit issued under this subtitle for
 154-10  failure to comply with this subtitle.
 154-11        (b)  A person commits an offense if the person owns or
 154-12  operates an ADAD that the person knows is operating in violation of
 154-13  this subtitle.  An offense under this subsection is a Class A
 154-14  misdemeanor.  (Sec. 117)
 154-15        Sec. 3.408.  RULEMAKING AUTHORITY.  The commission may adopt
 154-16  any rules necessary to carry out its powers and duties under this
 154-17  subtitle.  (Sec. 118)
 154-18        Sec. 3.409.  COMPLIANCE WITH CONSUMERS' REQUESTS NOT TO BE
 154-19  CALLED.  Every telephone solicitor operating in this state who
 154-20  makes consumer telephone calls subject to Section 37.02 of the
 154-21  Business & Commerce Code shall implement in-house systems and
 154-22  procedures so that every effort is made not to call consumers who
 154-23  ask not to be called again.  The commission is granted all
 154-24  necessary power and authority to enforce the provisions of this
 154-25  section.  (Sec. 119)
 154-26        Sec. 3.410.  NOTICE TO CONSUMER OF PROVISIONS OF CHAPTER 37
 154-27  OF THE BUSINESS & COMMERCE CODE AND SECTION 3.409.  The commission
  155-1  by rule shall require that a local exchange company or telephone
  155-2  cooperative inform its customers of the provisions of Chapter 37 of
  155-3  the Business & Commerce Code and Section 3.409 of this Act by:
  155-4              (1)  inserting the notice annually in the billing
  155-5  statement mailed to a customer; or
  155-6              (2)  publishing the notice in the consumer information
  155-7  pages of its local telephone directory.  (Sec. 120)
  155-8        SECTION 2.  (a)  The Public Utility Regulatory Act (Article
  155-9  1446c, Vernon's Texas Civil Statutes) is repealed.
 155-10        (b)  A reference in law to the "Public Utility Regulatory
 155-11  Act" means the "Public Utility Regulatory Act of 1995."
 155-12        SECTION 3.  (a)  This Act is a nonsubstantive revision of the
 155-13  Public Utility Regulatory Act (Article 1446c, Vernon's Texas Civil
 155-14  Statutes) and is subject to the applicable provisions of law
 155-15  relating to the interpretation of nonsubstantive revisions of law.
 155-16        (b)  The repeal of the Public Utility Regulatory Act by this
 155-17  Act does not affect an amendment of the Public Utility Regulatory
 155-18  Act by the 74th Legislature, Regular Session, 1995.  The amendment
 155-19  is preserved and given effect as part of this Act.
 155-20        (c)  If a provision of this Act conflicts with a statute
 155-21  enacted by the 74th Legislature, Regular Session, 1995, the statute
 155-22  controls.
 155-23        SECTION 4.  The importance of this legislation and the
 155-24  crowded condition of the calendars in both houses create an
 155-25  emergency and an imperative public necessity that the
 155-26  constitutional rule requiring bills to be read on three several
 155-27  days in each house be suspended, and this rule is hereby suspended,
  156-1  and that this Act take effect and be in force from and after its
  156-2  passage, and it is so enacted.