1-1  By:  Armbrister, Sibley                                S.B. No. 319
    1-2        (In the Senate - Filed January 25, 1995; January 26, 1995,
    1-3  read first time and referred to Committee on State Affairs;
    1-4  January 30, 1995, reported favorably by the following vote:  Yeas
    1-5  13, Nays 0; January 30, 1995, sent to printer.)
    1-6                         A BILL TO BE ENTITLED
    1-7                                AN ACT
    1-8  relating to a nonsubstantive recodification of the Public Utility
    1-9  Regulatory Act.
   1-10        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-11        SECTION 1.  The Public Utility Regulatory Act of 1995 is
   1-12  enacted to read as follows:
   1-13           TITLE I.  PROVISIONS APPLICABLE TO ALL UTILITIES
   1-14                    SUBTITLE A.  GENERAL PROVISIONS
   1-15        Sec. 1.001.  SHORT TITLE.  This Act may be referred to as the
   1-16  "Public Utility Regulatory Act of 1995."  (Sec. 1)
   1-17        Sec. 1.002.  LEGISLATIVE POLICY AND PURPOSE.  This Act is
   1-18  enacted to protect the public interest inherent in the rates and
   1-19  services of public utilities.  The legislature finds that public
   1-20  utilities are by definition monopolies in the areas they serve;
   1-21  that therefore the normal forces of competition which operate to
   1-22  regulate prices in a free enterprise society do not operate; and
   1-23  that therefore utility rates, operations and services are regulated
   1-24  by public agencies, with the objective that this regulation shall
   1-25  operate as a substitute for competition.  The purpose of this Act
   1-26  is to establish a comprehensive regulatory system which is adequate
   1-27  to the task of regulating public utilities as defined by this Act,
   1-28  to assure rates, operations, and services which are just and
   1-29  reasonable to the consumers and to the utilities.  (Sec. 2)
   1-30        Sec. 1.003.  DEFINITIONS IN ACT.  In this Act:
   1-31              (1)  "Affected person" means any public utility
   1-32  affected by any action of the regulatory authority, any person or
   1-33  corporation whose utility service or rates are affected by any
   1-34  proceeding before the regulatory authority, or any person or
   1-35  corporation that is a competitor of a public utility with respect
   1-36  to any service performed by the utility or that desires to enter
   1-37  into competition.  (Sec. 3(h))
   1-38              (2)  "Affiliated interest" or "affiliate" means:
   1-39                    (A)  any person or corporation owning or holding,
   1-40  directly or indirectly, five percent or more of the voting
   1-41  securities of a public utility;
   1-42                    (B)  any person or corporation in any chain of
   1-43  successive ownership of five percent or more of the voting
   1-44  securities of a public utility;
   1-45                    (C)  any corporation five percent or more of the
   1-46  voting securities of which is owned or controlled, directly or
   1-47  indirectly, by a public utility;
   1-48                    (D)  any corporation five percent or more of the
   1-49  voting securities of which is owned or controlled, directly or
   1-50  indirectly, by any person or corporation that owns or controls,
   1-51  directly or indirectly, five percent or more of the voting
   1-52  securities of any public utility or by any person or corporation in
   1-53  any chain of successive ownership of five percent of such
   1-54  securities;
   1-55                    (E)  any person who is an officer or director of
   1-56  a public utility or of any corporation in any chain of successive
   1-57  ownership of five percent or more of voting securities of a public
   1-58  utility;
   1-59                    (F)  any person or corporation that the
   1-60  commission, after notice and hearing, determines actually exercises
   1-61  any substantial influence or control over the policies and actions
   1-62  of a public utility, or over which a public utility exercises that
   1-63  control, or that is under common control with a public utility,
   1-64  that control being the possession, directly or indirectly, of the
   1-65  power to direct or cause the direction of the management and
   1-66  policies of another, whether that power is established through
   1-67  ownership or voting of securities or by any other direct or
   1-68  indirect means; or
    2-1                    (G)  any person or corporation that the
    2-2  commission after notice and hearing determines is actually
    2-3  exercising that substantial influence over the policies and action
    2-4  of the public utility in conjunction with one or more persons or
    2-5  corporations with which they are related by ownership or blood
    2-6  relationship, or by action in concert, that together they are
    2-7  affiliated with that public utility within the meaning of this
    2-8  section, even though no one of them alone is so affiliated.  (Sec.
    2-9  3(i))
   2-10              (3)  "Allocations" means, for all utilities, the
   2-11  division of plant, revenues, expenses, taxes, and reserves between
   2-12  municipalities or between municipalities and unincorporated areas,
   2-13  where those items are used for providing public utility service in
   2-14  a municipality, or for a municipality and unincorporated areas.
   2-15  (Sec. 3(j))
   2-16              (4)  "Commission," means the Public Utility Commission
   2-17  of Texas.  (Sec. 3(e))
   2-18              (5)  "Commissioner" means a member of the Public
   2-19  Utility Commission of Texas.  (Sec. 3(k))
   2-20              (6)  "Cooperative corporation" means any telephone or
   2-21  electric cooperative corporation organized and operating under the
   2-22  Telephone Cooperative Act (Article 1528c, Vernon's Texas Civil
   2-23  Statutes) or the Electric Cooperative Corporation Act (Article
   2-24  1528b, Vernon's Texas Civil Statutes).  (Sec. 3(l))
   2-25              (7)  "Corporation" means any corporation, joint-stock
   2-26  company, or association, domestic or foreign, and its lessees,
   2-27  assignees, trustees, receivers, or other successors in interest,
   2-28  having any of the powers or privileges of corporations not
   2-29  possessed by individuals or partnerships, but does not include
   2-30  municipal corporations unless expressly provided otherwise in this
   2-31  Act.  (Sec. 3(m))
   2-32              (8)  "Facilities" means all the plant and equipment of
   2-33  a public utility, including all tangible and intangible real and
   2-34  personal property without limitation, and any and all means and
   2-35  instrumentalities in any manner owned, operated, leased, licensed,
   2-36  used, controlled, furnished, or supplied for, by, or in connection
   2-37  with the business of any public utility. (Sec. 3(n))
   2-38              (9)  "Municipally owned utility" means any utility
   2-39  owned, operated, and controlled by a municipality or by a nonprofit
   2-40  corporation whose directors are appointed by one or more
   2-41  municipalities.  (Sec. 3(o))
   2-42              (10)  "Office" means the Office of Public Utility
   2-43  Counsel.  (New)
   2-44              (11)  "Order" means the whole or a part of the final
   2-45  disposition, whether affirmative, negative, injunctive, or
   2-46  declaratory in form, of the regulatory authority in a matter other
   2-47  than rulemaking, but including issuance of certificates of
   2-48  convenience and necessity and ratesetting.  (Sec. 3(p))
   2-49              (12)  "Person," includes a natural person, partnership
   2-50  of two or more persons having a joint or common interest, mutual or
   2-51  cooperative association, and corporation.  (Sec. 3(a))
   2-52              (13)  "Proceeding" means any hearing, investigation,
   2-53  inquiry, or other fact-finding or decision-making procedure under
   2-54  this Act and includes the denial of relief or the dismissal of a
   2-55  complaint.  (Sec. 3(q))
   2-56              (14)  "Rate," means and includes every compensation,
   2-57  tariff, charge, fare, toll, rental, and classification, or any of
   2-58  them demanded, observed, charged, or collected whether directly or
   2-59  indirectly by any public utility for any service, product, or
   2-60  commodity described in the definition of "utility" in Section 2.001
   2-61  or 3.001 of this Act and any rules, regulations, practices, or
   2-62  contracts affecting any such compensation, tariff, charge, fare,
   2-63  toll, rental, or classification.  (Sec. 3(d))
   2-64              (15)  "Regulatory authority," means, in accordance with
   2-65  the context where it is found, either the commission or the
   2-66  governing body of any municipality. (Sec. 3(g))
   2-67              (16)  "Service" is used in this Act in its broadest and
   2-68  most inclusive sense, and includes any and all acts done, rendered,
   2-69  or performed and any and all things furnished or supplied, and any
   2-70  and all facilities used, furnished, or supplied by public utilities
    3-1  in the performance of their duties under this Act to their patrons,
    3-2  employees, other public utilities, and the public, as well as the
    3-3  interchange of facilities between two or more of them.  The term
    3-4  does not include the printing, distribution, or sale of advertising
    3-5  in telephone directories.  (Sec. 3(s))
    3-6              (17)  "Test year" means the most recent 12 months for
    3-7  which operating data for a public utility are available and shall
    3-8  commence with a calendar quarter or a fiscal year quarter.  (Sec.
    3-9  3(t))
   3-10        (Secs. 3(b) and (u) deleted)
   3-11        Sec. 1.004.  DEFINITIONS IN TITLE.  In this title, "public
   3-12  utility" or "utility," means a telecommunications or electric
   3-13  utility. (3(c) (part))
   3-14        Sec. 1.005.  APPLICABILITY OF ADMINISTRATIVE PROCEDURE ACT.
   3-15  Chapter 2001, Government Code, applies to all proceedings under
   3-16  this Act except to the extent inconsistent with this Act.
   3-17  Communications of members and employees of the commission with a
   3-18  party, a party's representative, or other persons are governed by
   3-19  Section 2001.061, Government Code.  (Sec. 4)
   3-20                SUBTITLE B.  ORGANIZATION OF COMMISSION
   3-21        Sec. 1.021.  CREATION OF COMMISSION; APPOINTMENT AND TERMS;
   3-22  CHAIRMAN.  (a)  The Public Utility Commission of Texas consists of
   3-23  three commissioners, who shall be appointed to staggered, six-year
   3-24  terms by the governor, with the advice and consent of two-thirds of
   3-25  the members of the senate present, and who shall have and exercise
   3-26  the jurisdiction and powers herein conferred upon the commission.
   3-27        (b)  Each commissioner shall hold office until his successor
   3-28  is appointed and qualified.
   3-29        (c)  At its first meeting following the biennial appointment
   3-30  and qualification of a commissioner, the commission shall elect one
   3-31  of the commissioners chairman.
   3-32        (d)  Appointments to the commission shall be made without
   3-33  regard to the race, creed, sex, religion, or national origin of the
   3-34  appointees.  (Sec. 5)
   3-35        Sec. 1.022.  SUNSET PROVISION.  The Public Utility Commission
   3-36  of Texas and the Office of Public Utility Counsel are subject to
   3-37  Chapter 325, Government Code (Texas Sunset Act).  Unless continued
   3-38  in existence as provided by that chapter, the commission and the
   3-39  office are abolished and this Act expires September 1, 1995.  (Sec.
   3-40  5a)
   3-41        Sec. 1.023.  QUALIFICATIONS; OATH AND BOND; PROHIBITED
   3-42  ACTIVITIES.  (a)  To be eligible for appointment as a commissioner,
   3-43  a person must be a qualified voter, not less than 30 years of age,
   3-44  a citizen of the United States, and a resident of the State of
   3-45  Texas.
   3-46        (b)  Each commissioner shall qualify for office by taking the
   3-47  oath prescribed for other state officers and shall execute a bond
   3-48  for $5,000 payable to the state and conditioned on the faithful
   3-49  performance of his duties.
   3-50        (c)  A person is not eligible for appointment as a
   3-51  commissioner if at any time during the two-year period immediately
   3-52  preceding his appointment he personally served as an officer,
   3-53  director, owner, employee, partner, or legal representative of any
   3-54  public utility or any affiliated interest, or he owned or
   3-55  controlled, directly or indirectly, stocks or bonds of any class
   3-56  with a value of $10,000, or more in a public utility or any
   3-57  affiliated interest.
   3-58        (d)  A person who is required to register as a lobbyist under
   3-59  Chapter 305, Government Code, may not serve as a member of the
   3-60  commission or public utility counsel or act as the general counsel
   3-61  to the commission. (Sec. 6(a) (reorg.))
   3-62        Sec. 1.024.  PROHIBITED ACTIVITIES.  (a)  A commissioner or
   3-63  employee of the commission may not do any of the following during
   3-64  his period of service with the commission:
   3-65              (1)  have any pecuniary interest, either as an officer,
   3-66  director, partner, owner, employee, attorney, consultant, or
   3-67  otherwise, in any public utility or affiliated interest, or in any
   3-68  person or corporation or other business entity a significant
   3-69  portion of whose business consists of furnishing goods or services
   3-70  to public utilities or affiliated interests, but not including a
    4-1  nonprofit group or association solely supported by gratuitous
    4-2  contributions of money, property or services;
    4-3              (2)  own or control any securities in a public utility
    4-4  or affiliated interest, either directly or indirectly; or
    4-5              (3)  accept any gift, gratuity, or entertainment
    4-6  whatsoever from any public utility or affiliated interest, or from
    4-7  any person, corporation, agent, representative, employee, or other
    4-8  business entity a significant portion of whose business consists of
    4-9  furnishing goods or services to public utilities or affiliated
   4-10  interests, or from any agent, representative, attorney, employee,
   4-11  officer, owner, director, or partner of any such business entity or
   4-12  of any public utility or affiliated interest; provided, however,
   4-13  that the receipt and acceptance of any gifts, gratuities, or
   4-14  entertainment after termination of service with the commission
   4-15  whose cumulative value in any one-year period is less than $100
   4-16  does not constitute a violation of this Act.
   4-17        (b)  The prohibited activities of this section do not include
   4-18  contracts for public utility products and services or equipment for
   4-19  use of public utility products when a member or employee of the
   4-20  commission is acting as a consumer.
   4-21        (c)  A commissioner or employee of the commission may not
   4-22  directly or indirectly solicit or request from or suggest or
   4-23  recommend to, any public utility, or to any agent, representative,
   4-24  attorney, employee, officer, owner, director, or partner thereof,
   4-25  the appointment to any position or the employment in any capacity
   4-26  of any person by such public utility or affiliated interest.
   4-27        (d)  A public utility or affiliated interest or any person,
   4-28  corporation, firm, association, or business that furnishes goods or
   4-29  services to any public utility or affiliated interest, or any
   4-30  agent, representative, attorney, employee, officer, owner,
   4-31  director, or partner of any public utility or affiliated interest,
   4-32  or any person, corporation, firm, association, or business
   4-33  furnishing goods or services to any public utility or affiliated
   4-34  interest may not give, or offer to give, any gift, gratuity,
   4-35  employment, or entertainment whatsoever to any member or employee
   4-36  of the commission except as allowed by Subdivision (3) of
   4-37  Subsection (a) of this section, nor may any such public utility or
   4-38  affiliated interest or any such person, corporation, firm,
   4-39  association, or business aid, abet, or participate with any member,
   4-40  employee, or former employee of the commission in any activity or
   4-41  conduct that would constitute a violation of this subsection or
   4-42  Subdivision (3) of Subsection (a) of this section.
   4-43        (e)  It is not a violation of this section if a member of the
   4-44  commission or a person employed by the commission, upon becoming
   4-45  the owner of any stocks or bonds or other pecuniary interest in a
   4-46  public utility or affiliated interest under the jurisdiction of the
   4-47  commission otherwise than voluntarily, informs the commission and
   4-48  the attorney general of such ownership and divests himself of the
   4-49  ownership or interest within a reasonable time.  In this section, a
   4-50  "pecuniary interest" includes income, compensation and payment of
   4-51  any kind, in addition to ownership interests.  It is not a
   4-52  violation of this section if such a pecuniary interest is held
   4-53  indirectly by ownership of an interest in a retirement system,
   4-54  institution, or fund which in the normal course of business invests
   4-55  in diverse securities independently of the control of the
   4-56  commissioner or employee.
   4-57        (f)  A member of the commission may not seek nomination or
   4-58  election to any other civil office of the State of Texas or of the
   4-59  United States while he is a commissioner.  If any member of the
   4-60  commission files for nomination for or election to any civil office
   4-61  of the State of Texas or of the United States, his office as
   4-62  commissioner immediately becomes vacant, and the governor shall
   4-63  appoint a successor.  (Secs. 6(b)-(h))
   4-64        Sec. 1.025.  PROHIBITION ON EMPLOYMENT OR REPRESENTATION.
   4-65  (a)  A commissioner may not within two years, and an employee may
   4-66  not, within one year after his employment with the commission has
   4-67  ceased, be employed by a public utility which was in the scope of
   4-68  the commissioner's or employee's official responsibility while the
   4-69  commissioner or employee was associated with the commission.
   4-70        (b)  During the time a commissioner or employee of the
    5-1  commission is associated with the commission or at any time after,
    5-2  the commissioner or employee may not represent a person,
    5-3  corporation, or other business entity before the commission or a
    5-4  court in a matter in which the commissioner or employee was
    5-5  personally involved while associated with the commission or a
    5-6  matter that was within the commissioner's or employee's official
    5-7  responsibility while the commissioner or employee was associated
    5-8  with the commission.
    5-9        (c)  The commission shall require its members and employees
   5-10  to read this section and Section 1.024 of this Act and as often as
   5-11  necessary shall provide information regarding their
   5-12  responsibilities under applicable laws relating to standards of
   5-13  conduct for state officers and employees. (Secs. 6(i)-(k))
   5-14        Sec. 1.026.  GROUNDS FOR REMOVAL; VALIDITY OF ACTIONS.
   5-15  (a)  It is a ground for removal from the commission if a member:
   5-16              (1)  does not have at the time of appointment the
   5-17  qualifications required by Section 1.023 of this Act for
   5-18  appointment to the commission; or
   5-19              (2)  does not maintain during the service on the
   5-20  commission the qualifications required by Section 1.023 of this Act
   5-21  for appointment to the commission.
   5-22        (b)  The validity of an action of the commission is not
   5-23  affected by the fact that it was taken when a ground for removal of
   5-24  a member of the commission existed.  (Sec. 6A)
   5-25        Sec. 1.027.  VACANCIES.  Whenever a vacancy in the office of
   5-26  commissioner occurs, it shall be filled in the manner provided
   5-27  herein with respect to the original appointment, except that the
   5-28  governor may make interim appointments to continue until the
   5-29  vacancy can be filled in the manner provided.  Any person appointed
   5-30  with the advice and consent of the senate to fill a vacancy shall
   5-31  hold office during the unexpired portion of the term.  (Sec. 7)
   5-32        Sec. 1.028.  EMPLOYEES.  (a)  The commission shall employ
   5-33  such officers, administrative law judges, hearing examiners,
   5-34  investigators, lawyers, engineers, economists, consultants,
   5-35  statisticians, accountants, administrative assistants, inspectors,
   5-36  clerical staff, and other employees as it deems necessary to carry
   5-37  out the provisions of this Act.  All employees receive such
   5-38  compensation as is fixed by the legislature.
   5-39        (b)  The commission shall employ the following:
   5-40              (1)  an executive director;
   5-41              (2)  a director of hearings who has wide experience in
   5-42  utility regulation and rate determination;
   5-43              (3)  a chief engineer who is a registered engineer and
   5-44  an expert in public utility engineering and rate matters;
   5-45              (4)  a chief accountant who is a certified public
   5-46  accountant, experienced in public utility accounting;
   5-47              (5)  a director of research who is experienced in the
   5-48  conduct of analyses of industry, economics, energy, fuel, and other
   5-49  related matters that the commission may want to undertake;
   5-50              (6)  a director of consumer affairs and public
   5-51  information;
   5-52              (7)  a director of utility evaluation;
   5-53              (8)  a director of energy conservation; and
   5-54              (9)  a general counsel.
   5-55        (c)  The general counsel and his staff are responsible for
   5-56  the gathering of information relating to all matters within the
   5-57  authority of the commission.
   5-58        (d)  The duties of the general counsel include:
   5-59              (1)  accumulation of evidence and other information
   5-60  from public utilities and from the accounting and technical and
   5-61  other staffs of the commission and from other sources for the
   5-62  purposes specified herein;
   5-63              (2)  preparation and presentation of such evidence
   5-64  before the commission or its appointed examiner in proceedings;
   5-65              (3)  conduct of investigations of public utilities
   5-66  under the jurisdiction of the commission;
   5-67              (4)  preparation of proposed changes in the rules of
   5-68  the commission;
   5-69              (5)  preparation of recommendations that the commission
   5-70  undertake investigation of any matter within its authority;
    6-1              (6)  preparation of recommendations and a report of
    6-2  such staff for inclusion in the annual report of the commission;
    6-3              (7)  protection and representation of the public
    6-4  interest and coordination and direction of the preparation and
    6-5  presentation of evidence from the commission staff in all cases
    6-6  before the commission as necessary to effect the objectives and
    6-7  purposes stated in this Act and ensure protection of the public
    6-8  interest; and
    6-9              (8)  such other activities as are reasonably necessary
   6-10  to enable him to perform his duties.
   6-11        (e)  The commission shall employ administrative law judges to
   6-12  preside at hearings of major importance before the commission.  An
   6-13  administrative law judge must be a licensed attorney with not less
   6-14  than five years' general experience or three years' experience in
   6-15  utility regulatory law.  The administrative law judge shall perform
   6-16  his duties independently from the commission.  (Secs. 8(a)-(d))
   6-17        Sec. 1.029.  PERSONNEL POLICIES.  (a)  The executive director
   6-18  or his designee shall develop an intra-agency career ladder
   6-19  program, one part of which shall be the intra-agency posting of all
   6-20  nonentry level positions for at least 10 days before any public
   6-21  posting.  The executive director or his designee shall develop a
   6-22  system of annual performance evaluations based on measurable job
   6-23  tasks.  All merit pay for commission employees must be based on the
   6-24  system established under this section.
   6-25        (b)  The executive director or his/her designee shall prepare
   6-26  and maintain a written plan to assure implementation of a program
   6-27  of equal employment opportunity whereby all personnel transactions
   6-28  are made without regard to race, color, disability, sex, religion,
   6-29  age, or national origin.  The plans shall include:
   6-30              (1)  a comprehensive analysis of all the agency's work
   6-31  force by race, sex, ethnic origin, class of position, and salary or
   6-32  wage;
   6-33              (2)  plans for recruitment, evaluation, selection,
   6-34  appointment, training, promotion, and other personnel policies;
   6-35              (3)  steps reasonably designed to overcome any
   6-36  identified underutilization of minorities and women in the agency's
   6-37  work force; and
   6-38              (4)  objectives and goals, timetables for the
   6-39  achievement of the objectives and goals, and assignments of
   6-40  responsibility for their achievement.
   6-41        (c)  The plans required under Subsection (b) of this section
   6-42  shall be filed with the governor's office within 60 days of the
   6-43  effective date of this Act, cover an annual period, and be updated
   6-44  at least annually.  Progress reports shall be submitted to the
   6-45  governor's office within 30 days of November 1 and April 1 of each
   6-46  year and shall include the steps the agency has taken within the
   6-47  reporting period to comply with these requirements.  (Secs.
   6-48  8(e)-(f))
   6-49        Sec. 1.030.  SALARY.  The annual salary of the commissioners
   6-50  shall be determined by the legislature.  (Sec. 9)
   6-51        Sec. 1.031.  OFFICE; MEETINGS.  The principal office of the
   6-52  commission shall be located in the city of Austin, Texas, and shall
   6-53  be open daily during the usual business hours, Saturdays, Sundays,
   6-54  and legal holidays excepted.  The commission shall hold meetings at
   6-55  its office and at such other convenient places in the state as
   6-56  shall be expedient and necessary for the proper performance of its
   6-57  duties.  (Sec. 10)
   6-58        Sec. 1.032.  SEAL.  The commission shall have a seal bearing
   6-59  the following inscription:  "Public Utility Commission of Texas."
   6-60  The seal shall be affixed to all records and authentications of
   6-61  copies of records and to such other instruments as the commission
   6-62  shall direct.  All courts of this state shall take judicial notice
   6-63  of said seal.  (Sec. 11)
   6-64        Sec. 1.033.  QUORUM.  A majority of the commissioners shall
   6-65  constitute a quorum for the transaction of any business, for the
   6-66  performance of any duty, or for the exercise of any power of the
   6-67  commission.  A vacancy or disqualification does not prevent the
   6-68  remaining commissioner or commissioners from exercising all the
   6-69  powers of the commission.  (Sec. 12)
   6-70        Sec. 1.034.  ORDERS; TRANSCRIPT AND EXHIBITS; PUBLIC RECORDS.
    7-1  All orders of the commission shall be in writing and shall contain
    7-2  detailed findings of the facts upon which they are passed.  The
    7-3  commission shall retain a copy of the transcript and the exhibits
    7-4  in any matter in which the commission issues an order.  All files
    7-5  pertaining to matters which were at any time pending before the
    7-6  commission and to records, reports, and inspections required by
    7-7  Subtitle E of this title, Title II of this Act, and Title III of
    7-8  this Act shall be public records, subject to the terms of Chapter
    7-9  552, Government Code.  (Sec. 13)
   7-10        Sec. 1.035.  ANNUAL REPORT.  (a)  The commission shall
   7-11  publish an annual report to the governor, summarizing its
   7-12  proceedings, listing its receipts and the sources of its receipts,
   7-13  listing its expenditures and the nature of such expenditures, and
   7-14  setting forth such other information concerning the operations of
   7-15  the commission and the public utility industry as it considers of
   7-16  general interest.
   7-17        (b)  In the annual report issued in the year preceding the
   7-18  convening of each regular session of the legislature, the
   7-19  commission shall make such suggestions regarding modification and
   7-20  improvement of the commission's statutory authority and for the
   7-21  improvement of utility regulation in general as it may deem
   7-22  appropriate for protecting and furthering the interest of the
   7-23  public.  (Sec. 14)
   7-24        Sec. 1.036.  CONSUMER INFORMATION.  The commission shall
   7-25  prepare information of consumer interest describing the regulatory
   7-26  functions of the commission and describing the commission's
   7-27  procedures by which consumer complaints are filed with and resolved
   7-28  by the commission.  The commission shall make the information
   7-29  available to the general public and appropriate state agencies.
   7-30  (Sec. 14A)
   7-31        Sec. 1.037.  ATTORNEY GENERAL TO REPRESENT COMMISSION.  The
   7-32  Attorney General of the State of Texas shall represent the
   7-33  commission in all matters before the state courts, and any court of
   7-34  the United States, and before any federal public utility regulatory
   7-35  commission. (Sec. 15)
   7-36             SUBTITLE C.  OFFICE OF PUBLIC UTILITY COUNSEL
   7-37        Sec. 1.051.  OFFICE OF PUBLIC UTILITY COUNSEL.  (a)  The
   7-38  independent Office of Public Utility Counsel represents the
   7-39  interests of residential and small commercial consumers.
   7-40        (b)  The chief executive of the Office of Public Utility
   7-41  Counsel is the public utility counsel, hereinafter referred to as
   7-42  counsellor.  The counsellor is appointed by the governor with the
   7-43  advice and consent of the senate to a two-year term that expires on
   7-44  February 1 of the final year of the term.
   7-45        (c)  The counsellor shall be a resident of Texas and admitted
   7-46  to the practice of law in this state who has demonstrated a strong
   7-47  commitment and involvement in efforts to safeguard the rights of
   7-48  the public and possesses the knowledge and experience necessary to
   7-49  practice effectively in utility proceedings.  (Secs. 15A(a), (b),
   7-50  (d))
   7-51        Sec. 1.052.  INTEREST PROHIBITED.  During the period of the
   7-52  counsellor's employment and for a period of two years following the
   7-53  termination of employment, it shall be unlawful for any person
   7-54  employed as counsellor to have a direct or indirect interest in any
   7-55  utility company regulated under the Public Utility Regulatory Act,
   7-56  to provide legal services directly or indirectly to or be employed
   7-57  in any capacity by a utility company regulated under the Public
   7-58  Utility Regulatory Act, its parent, or its subsidiary companies,
   7-59  corporations, or cooperatives; but such person may otherwise engage
   7-60  in the private practice of law after the termination of employment
   7-61  as the counsellor.  (Sec. 15A(e))
   7-62        Sec. 1.053.  EMPLOYEES.  The counsellor may employ such
   7-63  lawyers, economists, engineers, consultants, statisticians,
   7-64  accountants, clerical staff, and other employees as he or she deems
   7-65  necessary to carry out the provisions of this section.  All
   7-66  employees shall receive such compensation as is fixed by the
   7-67  legislature from the assessment imposed by Section 1.351 of this
   7-68  Act.  (Sec. 15A(c))
   7-69        Sec. 1.054.  POWERS AND DUTIES.  (a)  The Office of Public
   7-70  Utility Counsel:
    8-1              (1)  shall assess the impact of utility rate changes
    8-2  and other regulatory actions on residential consumers in the State
    8-3  of Texas and shall be an advocate in its own name of positions most
    8-4  advantageous to a substantial number of such consumers as
    8-5  determined by the counsellor;
    8-6              (2)  may appear or intervene as a matter of right as a
    8-7  party or otherwise on behalf of residential consumers, as a class,
    8-8  in all proceedings before the commission;
    8-9              (3)  may appear or intervene as a matter of right as a
   8-10  party or otherwise on behalf of small commercial consumers, as a
   8-11  class, in all proceedings where it is deemed by the counsel that
   8-12  small commercial consumers are in need of representation;
   8-13              (4)  may initiate or intervene as a matter of right or
   8-14  otherwise appear in any judicial proceedings involving or arising
   8-15  out of any action taken by an administrative agency in a proceeding
   8-16  in which the counsel was authorized to appear;
   8-17              (5)  may have access as any party, other than staff, to
   8-18  all records gathered by the commission under the authority of
   8-19  Subsection (a) of Section 1.203 of this Act;
   8-20              (6)  may obtain discovery of any nonprivileged matter
   8-21  which is relevant to the subject matter involved in any proceeding
   8-22  or petition before the commission;
   8-23              (7)  may represent individual residential and small
   8-24  commercial consumers with respect to their disputed complaints
   8-25  concerning utility services unresolved before the commission; and
   8-26              (8)  may recommend legislation to the legislature which
   8-27  in its judgment would positively affect the interests of
   8-28  residential and small commercial consumers.
   8-29        (b)  Nothing in this section shall be construed as in any way
   8-30  limiting the authority of the commission to represent residential
   8-31  or small commercial consumers.
   8-32        (c)  The appearance of the Public Counsel in any proceeding
   8-33  in no way precludes the appearance of other parties on behalf of
   8-34  residential ratepayers or small commercial consumers.  The Public
   8-35  Counsel may not be grouped with any other parties.  (Secs.
   8-36  15A(f)-(h))
   8-37        (Sec. 15A(i) deleted)
   8-38                 SUBTITLE D.  COMMISSION JURISDICTION
   8-39        Sec. 1.101.  GENERAL POWER; RULES; HEARINGS; AUDITS.
   8-40  (a)  The commission has the general power to regulate and supervise
   8-41  the business of every public utility within its jurisdiction and to
   8-42  do all things, whether specifically designated in this Act or
   8-43  implied herein, necessary and convenient to the exercise of this
   8-44  power and jurisdiction.
   8-45        (b)  The commission shall make and enforce rules reasonably
   8-46  required in the exercise of its powers and jurisdiction, including
   8-47  rules governing practice and procedure before the commission.
   8-48        (c)  The commission may call and hold hearings, administer
   8-49  oaths, receive evidence at hearings, issue subpoenas to compel the
   8-50  attendance of witnesses and the production of papers and documents,
   8-51  and make findings of fact and decisions with respect to
   8-52  administering the provisions of this Act or the rules, orders, or
   8-53  other actions of the commission.
   8-54        (d)  Notwithstanding any other provision of this Act or other
   8-55  law, in proceedings other than those involving major rate changes,
   8-56  the commission may delegate to an administrative law judge or
   8-57  hearings examiner the authority to make a final decision and to
   8-58  issue findings of fact, conclusions of law, and other necessary
   8-59  orders in a proceeding in which there is no contested issue of fact
   8-60  or law.  The commission, by rule, shall define the procedures by
   8-61  which it delegates final decision making authority authorized by
   8-62  this section.  For review purposes the final decision of the
   8-63  administrative law judge or hearings examiner has the same effect
   8-64  as a final decision of the commission unless a commissioner
   8-65  requests formal review of the decision.  (Sec. 16(a))
   8-66        Sec. 1.102.  AUDITS.  (a)  The commission shall inquire into
   8-67  the management of the business of all public utilities under its
   8-68  jurisdiction, shall keep itself informed as to the manner and
   8-69  method in which the management and business is conducted, and shall
   8-70  obtain from any public utility all necessary information to enable
    9-1  the commission to perform management audits.
    9-2        (b)  The commission may audit each utility under the
    9-3  jurisdiction of the commission as frequently as needed, but shall
    9-4  audit each utility at least once every 10 years.  Six months after
    9-5  any audit, the utility shall report to the commission on the status
    9-6  of the implementation of the recommendations of the audit and shall
    9-7  file subsequent reports at such times as the commission deems
    9-8  appropriate.  (Sec. 16(h))
    9-9        Sec. 1.103.  FRANCHISES.  Nothing in this Act shall be
   9-10  construed as in any way limiting the rights and powers of a
   9-11  municipality to grant or refuse franchises to use the streets and
   9-12  alleys within its limits and to make the statutory charges for the
   9-13  use thereof, but a provision of any franchise agreement may not
   9-14  limit or interfere with any power conferred on the commission by
   9-15  this Act.  (Sec. 21 (part))
   9-16       SUBTITLE E.  RECORDS, REPORTS, INSPECTIONS, AND SERVICES
   9-17        Sec. 1.201.  RECORDS OF PUBLIC UTILITY.  (a)  Every public
   9-18  utility shall keep and render to the regulatory authority in the
   9-19  manner and form prescribed by the commission uniform accounts of
   9-20  all business transacted.
   9-21        (b)  The commission may also prescribe forms of books,
   9-22  accounts, records, and memoranda to be kept by such public
   9-23  utilities, including the books, accounts, records, and memoranda of
   9-24  the rendition of and capacity for service as well as the receipts
   9-25  and expenditures of moneys, and any other forms, records, and
   9-26  memoranda which in the judgment of the commission may be necessary
   9-27  to carry out any of the provisions of this Act.
   9-28        (c)  In the case of any public utility subject to regulations
   9-29  by a federal regulatory agency, compliance with the system of
   9-30  accounts prescribed for the particular class of utilities by such
   9-31  agency may be deemed a sufficient compliance with the system
   9-32  prescribed by the commission; provided, however, that the
   9-33  commission may prescribe forms of books, accounts, records, and
   9-34  memoranda covering information in addition to that required by the
   9-35  federal agency.  The system of accounts and the forms of books,
   9-36  accounts, records, and memoranda prescribed by the commission for a
   9-37  public utility or class of utilities may not conflict nor be
   9-38  inconsistent with the systems and forms established by a federal
   9-39  agency for that public utility or class of utilities.
   9-40        (d)  Every public utility is required to keep and render its
   9-41  books, accounts, records, and memoranda accurately and faithfully
   9-42  in the manner and form prescribed by the commission, and to comply
   9-43  with all directions of the regulatory authority relating to such
   9-44  books, accounts, records, and memoranda.  The regulatory authority
   9-45  may require the examination and audit of all accounts.
   9-46        (e)  For the purposes of this section, "public utility"
   9-47  includes "municipally owned utility."  (Secs. 27(a), (d), (f))
   9-48        Sec. 1.202.  POWERS OF COMMISSION.  (a)  The commission shall
   9-49  have the power to:
   9-50              (1)  require that public utilities report to it such
   9-51  information relating to themselves and affiliated interests both
   9-52  within and without the State of Texas as it may consider useful in
   9-53  the administration of this Act;
   9-54              (2)  establish forms for all reports;
   9-55              (3)  determine the time for reports and the frequency
   9-56  with which any reports are to be made;
   9-57              (4)  require that any reports be made under oath;
   9-58              (5)  require that a copy of any contract or arrangement
   9-59  between any public utility and any affiliated interest be filed
   9-60  with it.  It may require any such contract or arrangement not in
   9-61  writing to be reduced to writing and filed with it;
   9-62              (6)  require that a copy of any report filed with any
   9-63  federal agency or any governmental agency or body of any other
   9-64  state be filed with it;
   9-65              (7)  require that a copy of annual reports showing all
   9-66  payments of compensation (other than salary or wages subject to the
   9-67  withholding of federal income tax) to residents of Texas, or with
   9-68  respect to legal, administrative, or legislative matters in Texas,
   9-69  or for representation before the Texas Legislature or any
   9-70  governmental agency or body; and
   10-1              (8)  the railroad commission shall have the power to
   10-2  review and approve, for purposes of the Outer Continental Shelf
   10-3  Lands Act Amendments of 1978  and any other federal authorities,
   10-4  applications by gas utilities for the purchase of natural gas from
   10-5  producing affiliates.
   10-6        (b)  On the request of the governing body of any
   10-7  municipality, the commission may provide sufficient staff members
   10-8  to advise and consult with such municipality on any pending matter.
   10-9  (Sec. 28)
  10-10        Sec. 1.203.  INSPECTIONS; EXAMINATION UNDER OATH; COMPELLING
  10-11  PRODUCTION OF RECORDS; INQUIRY INTO MANAGEMENT AND AFFAIRS.
  10-12  (a)  Any regulatory authority, and when authorized by the
  10-13  regulatory authority, its counsel, agents, and employees, shall
  10-14  have the right, at reasonable times and for reasonable purposes, to
  10-15  inspect and obtain copies of the papers, books, accounts,
  10-16  documents, and other business records, and to inspect the plant,
  10-17  equipment, and other property of any public utility within its
  10-18  jurisdiction.  The regulatory authority may examine under oath, or
  10-19  it may authorize the person conducting such investigation to
  10-20  examine under oath, any officer, agent, or employee of any public
  10-21  utility in connection with such investigation.  The regulatory
  10-22  authority may require, by order or subpoena served on any public
  10-23  utility, the production within this state at the time and place it
  10-24  may designate, of any books, accounts, papers, or records kept by
  10-25  that public utility outside the state, or verified copies in lieu
  10-26  thereof if the commission so orders.  Any public utility failing or
  10-27  refusing to comply with any such order or subpoena is in violation
  10-28  of this Act.
  10-29        (b)  A member, agent, or employee of the regulatory authority
  10-30  may enter the premises occupied by a public utility to make
  10-31  inspections, examinations, and tests and to exercise any authority
  10-32  provided by this Act.  A member, agent, or employee of the
  10-33  regulatory authority may act under this section only during
  10-34  reasonable hours and after giving reasonable notice to the utility.
  10-35  The public utility is entitled to be represented when inspections,
  10-36  examinations, and tests are made on its premises.  Reasonable time
  10-37  for the utility to secure a representative shall be allowed before
  10-38  commencing an inspection, examination, or test.
  10-39        (c)  The regulatory authority may inquire into the management
  10-40  and affairs of all public utilities, and shall keep itself informed
  10-41  as to the manner and method in which the same are conducted.  (Sec.
  10-42  29)
  10-43        Sec. 1.204.  OFFICE OF PUBLIC UTILITY; RECORDS; REMOVAL FROM
  10-44  STATE.  Every public utility shall have an office in a county of
  10-45  this state in which its property or some part thereof is located in
  10-46  which it shall keep all books, accounts, records, and memoranda
  10-47  required by the commission to be kept in the state.  Books,
  10-48  accounts, records, or memoranda required by the regulatory
  10-49  authority to be kept in the state may not be removed from the
  10-50  state, except on conditions prescribed by the commission.  (Sec.
  10-51  33)
  10-52        Sec. 1.205.  COMMUNICATIONS BY PUBLIC UTILITIES WITH
  10-53  REGULATORY AUTHORITY; REGULATIONS AND RECORDS.  (a)  The regulatory
  10-54  authority shall prescribe regulations governing communications by
  10-55  public utilities, their affiliates and their representatives, with
  10-56  the regulatory authority or any member or employee of the
  10-57  regulatory authority.
  10-58        (b)  Such records shall contain the name of the person
  10-59  contacting the regulatory authority or member or employee of the
  10-60  regulatory authority, the name of the business entities
  10-61  represented, a brief description of the subject matter of the
  10-62  communication, and the action, if any, requested by the public
  10-63  utility, affiliate, or representative.  These records shall be
  10-64  available to the public on a monthly basis.  (Sec. 34)
  10-65        Sec. 1.206.  INTERFERENCE WITH TERMS OR CONDITIONS OF
  10-66  EMPLOYMENT.  The commission may not interfere with employee wages
  10-67  and benefits, working conditions, or other terms or conditions of
  10-68  employment that are the product of a collective bargaining
  10-69  agreement recognized under federal law.  Employee wage rates and
  10-70  benefit levels that are the product of such bargaining shall be
   11-1  presumed reasonable.  (Sec. 41B)
   11-2               SUBTITLE F.  SALE OF PROPERTY AND MERGERS
   11-3        Sec. 1.251.  REPORT OF SALE, MERGER, ETC.; INVESTIGATION;
   11-4  DISALLOWANCE OF TRANSACTION.  (a)  A public utility may not sell,
   11-5  acquire, lease, or rent any plant as an operating unit or system in
   11-6  this state for a total consideration in excess of $100,000 or merge
   11-7  or consolidate with another public utility operating in this state
   11-8  unless the public utility reports such transaction to the
   11-9  commission within a reasonable time.
  11-10        (b)  All transactions involving the sale of 50 percent or
  11-11  more of the stock of a public utility shall also be reported to the
  11-12  commission within a reasonable time.  On the filing of a report
  11-13  with the commission, the commission shall investigate the same with
  11-14  or without public hearing, to determine whether the action is
  11-15  consistent with the public interest.  In reaching its
  11-16  determination, the commission shall take into consideration the
  11-17  reasonable value of the property, facilities, or securities to be
  11-18  acquired, disposed of, merged or consolidated.
  11-19        (c)  If the commission finds that such transactions are not
  11-20  in the public interest, the commission shall take the effect of the
  11-21  transaction into consideration in the ratemaking proceedings and
  11-22  disallow the effect of such transaction if it will unreasonably
  11-23  affect rates or service.
  11-24        (d)  The provisions of this section may not be construed as
  11-25  being applicable to the purchase of units of property for
  11-26  replacement or to the addition to the facilities of the public
  11-27  utility by construction.  (Sec. 63)
  11-28        Sec. 1.252.  PURCHASE OF VOTING STOCK IN ANOTHER PUBLIC
  11-29  UTILITY:  REPORT.  A public utility may not purchase voting stock
  11-30  in another public utility doing business in Texas, unless the
  11-31  utility reports such purchase to the commission.  (Sec. 64)
  11-32        Sec. 1.253.  LOANS TO STOCKHOLDERS:  REPORT.  A public
  11-33  utility may not loan money, stocks, bonds, notes, or other
  11-34  evidences of indebtedness to any corporation or person owning or
  11-35  holding directly or indirectly any stock of the public utility
  11-36  unless the public utility reports the transaction to the commission
  11-37  within a reasonable time.  (Sec 65)
  11-38           SUBTITLE G.  RELATIONS WITH AFFILIATED INTERESTS
  11-39        Sec. 1.271.  JURISDICTION OVER AFFILIATED INTERESTS.  The
  11-40  commission shall have jurisdiction over affiliated interests having
  11-41  transactions with public utilities under the jurisdiction of the
  11-42  commission to the extent of access to all accounts and records of
  11-43  such affiliated interests relating to such transactions, including
  11-44  but in no way limited to accounts and records of joint or general
  11-45  expenses, any portion of which may be applicable to such
  11-46  transactions.  (Sec. 67)
  11-47        Sec. 1.272.  DISCLOSURE OF SUBSTANTIAL INTEREST IN VOTING
  11-48  SECURITIES.  The commission may require the disclosure of the
  11-49  identity and respective interests of every owner of any substantial
  11-50  interest in the voting securities of any public utility or its
  11-51  affiliated interest.  One percent or more is a substantial interest
  11-52  within the meaning of this section.  (Sec. 68)
  11-53                     SUBTITLE H.  JUDICIAL REVIEW
  11-54        Sec. 1.301.  RIGHT TO JUDICIAL REVIEW; EVIDENCE; COMMISSION
  11-55  AS PARTY DEFENDANT.  Any party to a proceeding before the
  11-56  commission is entitled to judicial review under the substantial
  11-57  evidence rule.  The commission shall be a party defendant in any
  11-58  such proceeding represented by the attorney general.  (Sec. 69)
  11-59        Sec. 1.302.  COSTS AND ATTORNEYS' FEES.  (a)  Any party
  11-60  represented by counsel who alleges that existing rates are
  11-61  excessive or that those prescribed by the commission are excessive,
  11-62  and who is a prevailing party in proceedings for review of a
  11-63  commission order or decision, may in the same action recover
  11-64  against the regulation fund reasonable fees for attorneys and
  11-65  expert witnesses and other costs for its efforts before the
  11-66  commission and the court, the amount of such attorneys' fees to be
  11-67  fixed by the court.
  11-68        (b)  On a finding by the court that an action under this
  11-69  subtitle was groundless and brought in bad faith and for the
  11-70  purpose of harassment, the court may award to the defendant public
   12-1  utility the reasonable attorneys' fees.  (Sec. 70)
   12-2                SUBTITLE I.  VIOLATIONS AND ENFORCEMENT
   12-3        Sec. 1.321.  ACTION TO ENJOIN OR REQUIRE COMPLIANCE.
   12-4  Whenever it appears to the commission that any public utility or
   12-5  any other person or corporation is engaged in, or is about to
   12-6  engage in, any act in violation of this Act or of any order, rule,
   12-7  or regulation of the commission entered or adopted under the
   12-8  provisions of this Act, or that any public utility or any other
   12-9  person or corporation is failing to comply with the provisions of
  12-10  this Act or with any such rule, regulation, or order, the attorney
  12-11  general on request of the commission, in addition to any other
  12-12  remedies provided herein, shall bring an action in a court of
  12-13  competent jurisdiction in the name of and on behalf of the
  12-14  commission against such public utility or other person or
  12-15  corporation to enjoin the commencement or continuation of any such
  12-16  act, or to require compliance with such Act, rule, regulation, or
  12-17  order.  (Sec. 71)
  12-18        Sec. 1.322.  PENALTY AGAINST PUBLIC UTILITY OR AFFILIATED
  12-19  INTEREST.  (a)  Any public utility, customer-owned pay telephone
  12-20  service provider for purposes of Section 3.305 of this Act, or
  12-21  affiliated interest that knowingly violates a provision of this
  12-22  Act, fails to perform a duty imposed on it, or fails, neglects, or
  12-23  refuses to obey an order, rule, regulation, direction, or
  12-24  requirement of the commission or decree or judgment of a court,
  12-25  shall be subject to a civil penalty of not less than $1,000 nor
  12-26  more than $5,000 for each offense.
  12-27        (b)  A public utility or affiliated interest commits a
  12-28  separate offense each day it continues to violate the provisions of
  12-29  Subsection (a) of this section.
  12-30        (c)  The attorney general shall institute suit on his own
  12-31  initiative or at the request of, in the name of, and on behalf of
  12-32  the commission, in a court of competent jurisdiction to recover the
  12-33  penalty under this section.  (Sec. 72)
  12-34        Sec. 1.323.  PENALTY FOR VIOLATING SECTION  1.024 OF THIS
  12-35  ACT.  (a)  Any member of the commission, or any officer or director
  12-36  of a public utility or affiliated interest, shall be subject to a
  12-37  civil penalty of $1,000 for each and every knowing violation of
  12-38  Section 1.024 of this Act, such penalty to be recovered in a suit
  12-39  filed in a court of competent jurisdiction by the attorney general
  12-40  on his own initiative or at the request of, in the name of, and on
  12-41  behalf of the commission.
  12-42        (b)  Any person, other than an officer or director of a
  12-43  public utility or affiliated interest or a member of the
  12-44  commission, shall be subject to a civil penalty of $500 for each
  12-45  and every knowing violation of Section 1.024 of this Act, such
  12-46  penalty to be recovered in a suit filed in a court of competent
  12-47  jurisdiction by the attorney general on his own initiative or at
  12-48  the request of, in the name of, and on behalf of the commission.
  12-49        (c)  Any member, officer, or employee of the commission found
  12-50  in any action by a preponderance of the evidence to have violated
  12-51  any provision of Section 1.024 of this Act shall be removed from
  12-52  his office or employment.  (Sec. 73)
  12-53        Sec. 1.324.  CIVIL PENALTY FOR VIOLATIONS RESULTING IN
  12-54  POLLUTION.  (a)  If a public utility or any other person or
  12-55  corporation under the jurisdiction of the railroad commission
  12-56  pursuant to this Act violates this Act and the violation results in
  12-57  pollution of the air or water of this state or poses a threat to
  12-58  the public safety, the public utility or any other person may be
  12-59  assessed a civil penalty by the railroad commission.
  12-60        (b)  The penalty may not exceed $10,000 a day for each
  12-61  violation.  Each day a violation continues may be considered a
  12-62  separate violation for purposes of penalty assessments.
  12-63        (c)  In determining the amount of the penalty, the railroad
  12-64  commission shall consider the public utility's, person's, or
  12-65  corporation's history of previous violations of this Act, the
  12-66  seriousness of the violation, any hazard to the health or safety of
  12-67  the public, and the demonstrated good faith of the permittee or
  12-68  public utility, person, or corporation charged.
  12-69        (d)  A civil penalty may be assessed only after the public
  12-70  utility, person, or corporation charged with a violation described
   13-1  under Subsection (a) of this section has been given an opportunity
   13-2  for a public hearing.
   13-3        (e)  If a public hearing has been held, the railroad
   13-4  commission shall make findings of fact, and it shall issue a
   13-5  written decision as to the occurrence of the violation and the
   13-6  amount of the penalty that is warranted, incorporating, when
   13-7  appropriate, an order requiring that the penalty be paid.
   13-8        (f)  If appropriate, the railroad commission shall
   13-9  consolidate the hearings with other proceedings under this Act.
  13-10        (g)  If the public utility, person, or corporation charged
  13-11  with the violation fails to avail itself of the opportunity for a
  13-12  public hearing, a civil penalty may be assessed by the railroad
  13-13  commission after it has determined that a violation did occur and
  13-14  the amount of the penalty that is warranted.
  13-15        (h)  The railroad commission shall then issue an order
  13-16  requiring that the penalty be paid.
  13-17        (i)  On the issuance of an order finding that a violation has
  13-18  occurred, the railroad commission shall inform the public utility,
  13-19  person, or corporation charged within 30 days of the amount of the
  13-20  penalty.
  13-21        (j)  Within the 30-day period immediately following the day
  13-22  on which the decision or order is final as provided by Section
  13-23  2001.144, Government Code, the public utility, person, or
  13-24  corporation charged with the penalty shall:
  13-25              (1)  pay the penalty in full; or
  13-26              (2)  if the public utility, person, or corporation
  13-27  seeks judicial review of either the amount of the penalty or the
  13-28  fact of the violation, or both:
  13-29                    (A)  forward the amount to the railroad
  13-30  commission for placement in an escrow account; or
  13-31                    (B)  in lieu of payment into escrow, post a
  13-32  supersedeas bond with the railroad commission under the following
  13-33  conditions.  If the decision or order being appealed is the first
  13-34  final railroad commission decision or order assessing any
  13-35  administrative penalty against the public utility, person, or
  13-36  corporation, the railroad commission shall accept a supersedeas
  13-37  bond.  In the case of appeal of any subsequent decision or order
  13-38  assessing any administrative penalty against the public utility,
  13-39  person, or corporation, regardless of the finality of judicial
  13-40  review of any previous decision or order, the railroad commission
  13-41  may accept a supersedeas bond.  Each supersedeas bond shall be for
  13-42  the amount of the penalty and in a form approved by the railroad
  13-43  commission and shall stay the collection of the penalty until all
  13-44  judicial review of the decision or order is final.
  13-45        (k)  If through judicial review of the decision or order it
  13-46  is determined that no violation occurred or that the amount of the
  13-47  penalty should be reduced or not assessed, the railroad commission
  13-48  shall, within the 30-day period immediately following that
  13-49  determination, if the penalty has been paid to the railroad
  13-50  commission, remit the appropriate amount to the public utility,
  13-51  person, or corporation with accrued interest, or where a
  13-52  supersedeas bond has been posted, the railroad commission shall
  13-53  execute a release of such bond.
  13-54        (l)  Failure to forward the money to the railroad commission
  13-55  within the time provided by Subsection (j) of this section results
  13-56  in a waiver of all legal rights to contest the violation or the
  13-57  amount of the penalty.
  13-58        (m)  Civil penalties owed under this section may be recovered
  13-59  in a civil action brought by the attorney general at the request of
  13-60  the railroad commission.
  13-61        (n)  Judicial review of the order or decision of the railroad
  13-62  commission assessing the penalty shall be under the substantial
  13-63  evidence rule and shall be instituted by filing a petition with the
  13-64  district court of Travis County, Texas, and not elsewhere, as
  13-65  provided by Subchapter G, Chapter 2001, Government Code.  (Sec.
  13-66  73A)
  13-67        Sec. 1.325.  PERSONAL PENALTY.  (a)  Except as provided by
  13-68  Section 3.301 of this Act, any person or persons who wilfully and
  13-69  knowingly violate the provisions of this Act shall be guilty of a
  13-70  third degree felony.
   14-1        (b)  All penalties accruing under this Act shall be
   14-2  cumulative and a suit for the recovery of any penalty does not bar
   14-3  or affect the recovery of any other penalty, or bar any criminal
   14-4  prosecution against any public utility or any officer, director,
   14-5  agent, or employee thereof or any other corporation or person.
   14-6  (Sec. 74)
   14-7        Sec. 1.326.  CONTEMPT PROCEEDINGS.  If any person fails to
   14-8  comply with any lawful order of the commission or with any subpoena
   14-9  or subpoena duces tecum or if any witness refuses to testify about
  14-10  any matter on which he may be lawfully interrogated, the commission
  14-11  may apply to any court of competent jurisdiction to compel
  14-12  obedience by proceedings for contempt.  (Sec. 75)
  14-13        Sec. 1.327.  DISPOSITION OF FINES AND PENALTIES.  Fines and
  14-14  penalties collected under this Act in other than criminal
  14-15  proceedings shall be paid to the commission and paid by the
  14-16  commission to the state treasury to be placed in the general
  14-17  revenue fund.  (Sec. 76)
  14-18        Sec. 1.328.  VENUE.  Suits for injunction or penalties under
  14-19  the provisions of this Act may be brought in Travis County, in any
  14-20  county where such violation is alleged to have occurred, or in the
  14-21  county or residence of any defendant.  (Sec. 77)
  14-22                   SUBTITLE J.  COMMISSION FINANCING
  14-23        Sec. 1.351.  ASSESSMENTS UPON PUBLIC UTILITIES.  (a)  An
  14-24  assessment is imposed upon each public utility within the
  14-25  commission's jurisdiction, including interexchange
  14-26  telecommunications carriers, serving the ultimate consumer equal to
  14-27  one-sixth of one percent of its gross receipts from rates charged
  14-28  the ultimate consumers in Texas for the purpose of defraying the
  14-29  costs and expenses incurred in the administration of this Act.
  14-30        (b)  The commission shall, subject to the approval of the
  14-31  Legislature, adjust this assessment to provide a level of income
  14-32  sufficient to fund the commission and the office of public utility
  14-33  counsel.
  14-34        (c)  Nothing in this Act or any other provision of law shall
  14-35  prohibit interexchange telecommunications carriers who do not
  14-36  provide local exchange telephone service from collecting the fee
  14-37  imposed under this Act as an additional item separately stated on
  14-38  the customer bill as "Utility Gross Receipts Assessment."  (Sec.
  14-39  78)
  14-40        Sec. 1.352.  PAYMENT DATES; DELINQUENCY.  (a)  All
  14-41  assessments shall be due on August 15 of each year.  Any public
  14-42  utility may instead make quarterly payments due on August 15,
  14-43  November 15, February 15, and May 15 of each year.
  14-44        (b)  There shall be assessed as a penalty an additional fee
  14-45  of 10 percent of the amount due for any late payment.  Fees
  14-46  delinquent for more than 30 days shall draw interest at the rate of
  14-47  12 percent per annum on the assessment and penalty due.  (Sec. 79)
  14-48        Sec. 1.353.  PAYMENT OF ASSESSMENTS.  (a)  For the
  14-49  assessments covered by this section, assessments are due as
  14-50  provided by this section notwithstanding Section 1.352 of this Act,
  14-51  based on a public utility's estimate of its gross receipts.
  14-52        (b)  For the assessment due August 15, 1995, 50 percent of
  14-53  the assessment must be paid by August 15, 1994, and 50 percent must
  14-54  be paid by February 15, 1995.
  14-55        (c)  For the assessment due August 15, 1996, 50 percent of
  14-56  the assessment must be paid by August 15, 1995, and 50 percent must
  14-57  be paid by February 15, 1996.
  14-58        (d)  For the assessment due August 15, 1997, 50 percent of
  14-59  the assessment must be paid by August 15, 1996, and the remainder
  14-60  must be paid by August 15, 1997.
  14-61        (e)  Any assessment amounts underpaid on assessments due on
  14-62  August 15, 1995, or August 15, 1996, must be paid by those
  14-63  respective dates.  Any assessment amounts overpaid shall be
  14-64  credited against following assessments.
  14-65        (f)  This section expires September 1, 1997.  (Sec. 79A)
  14-66        Sec. 1.354.  COLLECTION AND PAYMENT INTO GENERAL REVENUE
  14-67  FUND.  All fees, penalties, and interest paid under the provisions
  14-68  of Sections 1.351 and 1.352 of this Act shall be collected by the
  14-69  comptroller of public accounts and paid into the general revenue
  14-70  fund.  The commission shall notify the comptroller of public
   15-1  accounts of any adjustment of the assessment imposed in Section
   15-2  1.351 when made.  (Sec. 80)
   15-3        Sec. 1.355.  APPROVAL OF BUDGET.  The budget of the
   15-4  commission shall be subject to legislative approval as part of the
   15-5  appropriations act.  (Sec. 81)
   15-6        Sec. 1.356.  ACCOUNTING RECORDS; AUDIT.  The commission shall
   15-7  keep such accounting records as required by the comptroller.  The
   15-8  financial transactions of the commission are subject to audit by
   15-9  the state auditor in accordance with Chapter 321, Government Code.
  15-10  (Sec. 82)
  15-11                 SUBTITLE K.  MISCELLANEOUS PROVISIONS
  15-12        Sec. 1.401.  COMPLAINT BY ANY AFFECTED PERSON.  (a)  Any
  15-13  affected person may complain to the regulatory authority in writing
  15-14  setting forth any act or thing done or omitted to be done by any
  15-15  public utility in violation or claimed violation of any law which
  15-16  the regulatory authority has jurisdiction to administer, or of any
  15-17  order, ordinance, rule, or regulation of the regulatory authority.
  15-18  The commission shall keep an information file about each complaint
  15-19  filed with the commission relating to a utility.  The commission
  15-20  shall retain the file for a reasonable period.
  15-21        (b)  If a written complaint is filed with the commission
  15-22  relating to a utility, the commission, at least as frequently as
  15-23  quarterly and until final disposition of the complaint, shall
  15-24  notify the parties to the complaint of the status of the complaint
  15-25  unless the notice would jeopardize an undercover investigation.
  15-26        (c)  Any affected person may complain to the regulatory
  15-27  authority in writing setting forth any act or thing done or not
  15-28  done by any recreational vehicle park owner that provides metered
  15-29  electric service under Article 1446d-2, Revised Statutes, in
  15-30  violation or claimed violation of any law that the regulatory
  15-31  authority has jurisdiction to administer or of any order,
  15-32  ordinance, rule, or regulation of the regulatory authority.  The
  15-33  commission shall keep an information file about each complaint
  15-34  filed with the commission relating to a recreational vehicle park
  15-35  owner.  The commission shall retain the file for a reasonable
  15-36  period.  The commission, quarterly or more often until final
  15-37  disposition of the written complaint, shall notify the parties to
  15-38  the complaint of the status of the complaint unless the notice
  15-39  would jeopardize an undercover investigation.  (Sec. 83)
  15-40        Sec. 1.402.  RECORD OF PROCEEDINGS; RIGHT TO HEARING.  A
  15-41  record shall be kept of all proceedings had before the regulatory
  15-42  authority, and all the parties shall be entitled to be heard in
  15-43  person or by attorney.  (Sec. 84)
  15-44        Sec. 1.403.  JUDICIAL STAY OR SUSPENSION OF ORDER, RULING OR
  15-45  DECISION.  During the pendency of an appeal, the district court,
  15-46  the court of civil appeals, or the supreme court, as the case may
  15-47  be, may stay or suspend, in whole or in part, the operation of the
  15-48  regulatory authority order, ruling, or decision and such courts in
  15-49  granting or refusing a stay or suspension shall act in accordance
  15-50  with the practice of courts exercising equity jurisdiction.  (Sec.
  15-51  85)
  15-52        (Secs. 87 and 87A deleted)
  15-53        Sec. 1.404.  LIBERAL CONSTRUCTION.  This Act shall be
  15-54  construed liberally to promote the effectiveness and efficiency of
  15-55  regulation of public utilities to the extent that such construction
  15-56  preserves the validity of this Act and its provisions.  The
  15-57  provisions of this Act shall be construed to apply so as not to
  15-58  conflict with any authority of the United States.  (Sec. 89)
  15-59        (Sec. 90 deleted)
  15-60        Sec. 1.405.  TERMINATING SERVICES TO ELDERLY AND DISABLED;
  15-61  CRITERIA AND GUIDELINES; ESTABLISHMENT.  The Public Utility
  15-62  Commission is authorized to establish criteria and guidelines with
  15-63  the utility industry relating to procedures employed by the
  15-64  industry in terminating services to the elderly and disabled.
  15-65  (Sec. 91)
  15-66        Sec. 1.406.  SEVERABILITY.  If any provision of this Act or
  15-67  the application thereof to any person or circumstances is held
  15-68  invalid, such invalidity does not affect other provisions or
  15-69  applications of this Act which can be given effect without the
  15-70  invalid provision or application, and to this end the provisions of
   16-1  this Act are declared to be severable.  (Sec. 92)
   16-2                     TITLE II.  ELECTRIC UTILITIES
   16-3                    SUBTITLE A.  GENERAL PROVISIONS
   16-4        Sec. 2.001.  DEFINITIONS.  In this title, " electric utility"
   16-5  or "utility" means any person, corporation, river authority,
   16-6  cooperative corporation, or any combination thereof, other than a
   16-7  municipal corporation, or their lessees, trustees, and receivers,
   16-8  now or hereafter owning or operating for compensation in this state
   16-9  equipment or facilities for producing, generating, transmitting,
  16-10  distributing, selling, or furnishing electricity, provided,
  16-11  however, that this definition may not be construed to apply to or
  16-12  include a qualifying small power producer or qualifying
  16-13  cogenerator, as defined in Sections 3(17)(D) and 3(18)(C) of the
  16-14  Federal Power Act, as amended (16 U.S.C. Sections 796(17)(D) and
  16-15  796(18)(C)).  The term does not include any person or corporation
  16-16  not otherwise an electric utility that:
  16-17              (1)  furnishes the services or commodity described in
  16-18  this section only to itself, its employees, or tenants as an
  16-19  incident of such employee service or tenancy, when such service or
  16-20  commodity is not resold to or used by others;
  16-21              (2)  owns or operates in this state equipment or
  16-22  facilities for producing, generating, transmitting, distributing,
  16-23  selling, or furnishing electric energy to an electric utility, if
  16-24  the equipment or facilities are used primarily for the production
  16-25  and generation of electric energy for consumption by the person or
  16-26  corporation; or
  16-27              (3)  owns or operates in this state a recreational
  16-28  vehicle park that provides metered electric service in accordance
  16-29  with Article 1446d-2, Revised Statutes, provided that a
  16-30  recreational vehicle park owner is considered an electric utility
  16-31  if the owner fails to comply with Article 1446d-2, Revised
  16-32  Statutes, with regard to the metered sale of electricity at the
  16-33  recreational vehicle park.  (Sec. 3(c) (part))
  16-34        Sec. 2.002.  COMMISSION AS RESOURCE CENTER; DEVELOPMENT OF
  16-35  ENERGY EFFICIENT SCHOOL FACILITIES.  The commission may serve as a
  16-36  resource center to assist school districts in developing energy
  16-37  efficient facilities.  As such, the commission may:
  16-38              (1)  present to school districts programs relating to
  16-39  managing energy, training school-plant operators, and designing
  16-40  energy efficient buildings;
  16-41              (2)  provide school districts with technical assistance
  16-42  in managing energy;
  16-43              (3)  collect and distribute information relating to
  16-44  energy management in school facilities; and
  16-45              (4)  offer to educators energy resource workshops and
  16-46  make available to educators a film library on energy-related
  16-47  matters and energy education lesson packages.  (Sec. 88A)
  16-48                   SUBTITLE B.  ELECTRICAL PLANNING
  16-49        Sec. 2.051.  ELECTRICAL FORECAST.  (a)  The commission shall
  16-50  develop a long-term statewide electrical energy forecast which
  16-51  shall be sent to the governor biennially.  The forecast will
  16-52  include an assessment of how alternative energy sources,
  16-53  conservation, and load management will meet the state's electricity
  16-54  needs.
  16-55        (b)  Every generating electric utility in the state shall
  16-56  prepare and transmit to the commission every two years a report
  16-57  specifying at least a 10-year forecast for assessments of load and
  16-58  resources for its service area.  The report shall include a list of
  16-59  facilities which will be required to supply electric power during
  16-60  the forecast periods.  The report shall be in a form prescribed by
  16-61  the commission.  The report shall include:
  16-62              (1)  a tabulation of estimated peak load, resources,
  16-63  and reserve margins for each year during the forecast or assessment
  16-64  period;
  16-65              (2)  a list of existing electric generating plants in
  16-66  service with a description of planned and potential generating
  16-67  capacity at existing sites;
  16-68              (3)  a list of facilities which will be needed to serve
  16-69  additional electrical requirements identified in the forecasts or
  16-70  assessments, the general location of such facilities, and the
   17-1  anticipated types of fuel to be utilized in the proposed
   17-2  facilities, including an estimation of shutdown costs and disposal
   17-3  of spent fuel for nuclear power plants;
   17-4              (4)  a description of additional system capacity which
   17-5  might be achieved through, among other things, improvements in:
   17-6                    (A)  generating or transmission efficiency;
   17-7                    (B)  importation of power;
   17-8                    (C)  interstate or interregional pooling;
   17-9                    (D)  other improvements in efficiencies of
  17-10  operation; and
  17-11                    (E)  conservation measures;
  17-12              (5)  an estimation of the mix and type of fuel
  17-13  resources for the forecast or assessment period;
  17-14              (6)  an annual load duration curve and a forecast of
  17-15  anticipated peak loads for the forecast or assessment period for
  17-16  the residential, commercial, industrial, and such other major
  17-17  demand sectors in the service area of the electric utility as the
  17-18  commission shall determine; and
  17-19              (7)  a description of projected population growth,
  17-20  urban development, industrial expansion, and other growth factors
  17-21  influencing increased demand for electric energy and the basis for
  17-22  such projections.
  17-23        (c)  The commission shall establish and every electric
  17-24  utility shall utilize a reporting methodology for preparation of
  17-25  the forecasts of future load and resources.
  17-26        (d)  The commission shall review and evaluate the electric
  17-27  utilities' forecast of load and resources and any public comment on
  17-28  population growth estimates prepared by Bureau of Business
  17-29  Research, University of Texas at Austin.
  17-30        (e)  Within 12 months after the receipt of the reports
  17-31  required by this section, the commission shall hold a public
  17-32  hearing and subsequently issue a final report to the governor and
  17-33  notify every electric utility of the commission's electric forecast
  17-34  for that utility.  The commission shall consider its electric
  17-35  forecast in all certification proceedings covering new generation
  17-36  plant.  (Secs. 16(b)-(f))
  17-37        Sec. 2.052.  ENCOURAGEMENT OF ECONOMIC PRODUCTION.  The
  17-38  commission shall make and enforce rules to encourage the economical
  17-39  production of electric energy by qualifying cogenerators and
  17-40  qualifying small power producers.  (Sec. 16(g))
  17-41                  SUBTITLE C.  MUNICIPAL JURISDICTION
  17-42        Sec. 2.101.  JURISDICTION OF MUNICIPALITY; SURRENDER;
  17-43  ORIGINAL AND APPELLATE JURISDICTION OF COMMISSION.  (a)  Subject to
  17-44  the limitations imposed in this Act, and for the purpose of
  17-45  regulating rates and services so that such rates may be fair, just,
  17-46  and reasonable, and the services adequate and efficient, the
  17-47  governing body of each municipality shall have exclusive original
  17-48  jurisdiction over all electric utility rates, operations, and
  17-49  services provided by an electric utility within its city or town
  17-50  limits.
  17-51        (b)  A municipality may elect to have the commission exercise
  17-52  exclusive original jurisdiction over electric utility rates,
  17-53  operations, and services within the incorporated limits of the
  17-54  municipality.  The governing body of a municipality may by
  17-55  ordinance elect to surrender its original jurisdiction to the
  17-56  commission, or the governing body may submit the question of the
  17-57  surrender to the qualified voters at a municipal election.  Upon
  17-58  receipt of a petition signed by the lesser of 20,000 or 10 percent
  17-59  of the number of qualified voters voting in the last preceding
  17-60  general election in that municipality, the governing body shall
  17-61  submit the question of the surrender of the municipality's original
  17-62  jurisdiction to the commission at a municipal election.
  17-63        (c)  A municipality that surrenders its jurisdiction to the
  17-64  commission may at any time, by vote of the electorate, reinstate
  17-65  the jurisdiction of the governing body; provided, however, that any
  17-66  municipality which reinstates its jurisdiction shall be unable to
  17-67  surrender that jurisdiction for five years after the date of the
  17-68  election at which the municipality elected to reinstate its
  17-69  jurisdiction.  A municipality may not, by vote of the electorate,
  17-70  reinstate the jurisdiction of the governing body during the
   18-1  pendency of any case before the commission involving the
   18-2  municipality.
   18-3        (d)  The commission shall have exclusive appellate
   18-4  jurisdiction to review orders or ordinances of such municipalities
   18-5  as provided in this Act.
   18-6        (e)  The commission shall have exclusive original
   18-7  jurisdiction over electric utility rates, operations, and services
   18-8  not within the incorporated limits of a municipality exercising
   18-9  exclusive original jurisdiction over those rates, operations, and
  18-10  services as provided in this Act.  (Sec. 17)
  18-11        Sec. 2.102.  MUNICIPALLY OWNED UTILITIES.  Nothing in this
  18-12  subtitle shall be construed to confer on the commission power or
  18-13  jurisdiction to regulate or supervise the rates or service of any
  18-14  utility owned and operated by any municipality within its
  18-15  boundaries either directly or through a municipally owned
  18-16  corporation, or to affect or limit the power, jurisdiction, or
  18-17  duties of the municipalities that have elected to regulate and
  18-18  supervise electric utilities within their boundaries, except as
  18-19  provided in this Act.  (Sec. 20)
  18-20        Sec. 2.103.  FRANCHISES.  If a municipality performs
  18-21  regulatory functions under this Act, it may make such other charges
  18-22  as may be provided in the applicable franchise agreement, together
  18-23  with any other charges permitted by this Act.  (Sec. 21 (part))
  18-24        Sec. 2.104.  LOCAL UTILITY SERVICE; EXEMPT AND NONEXEMPT
  18-25  AREAS.  (a)  Notwithstanding any other provision of this section,
  18-26  municipalities shall continue to regulate each kind of local
  18-27  utility service inside their boundaries until the commission has
  18-28  assumed jurisdiction over the respective utility pursuant to this
  18-29  Act.
  18-30        (b)  If a municipality does not surrender its jurisdiction,
  18-31  local utility service within the boundaries of the municipality
  18-32  shall be exempt from regulation by the commission under the
  18-33  provisions of this Act to the extent that this Act applies to local
  18-34  service, and the municipality shall have, regarding service within
  18-35  its boundaries, the right to exercise the same regulatory powers
  18-36  under the same standards and rules as the commission, or other
  18-37  standards and rules not inconsistent therewith.
  18-38        (c)  Notwithstanding any such election, the commission may
  18-39  consider an electric utility's revenues and return on investment in
  18-40  exempt areas in fixing rates and charges in nonexempt areas, and
  18-41  may also exercise the powers conferred necessary to give effect to
  18-42  orders under this Act, for the benefit of nonexempt areas.
  18-43  Likewise, in fixing rates and charges in the exempt area, the
  18-44  governing body may consider an electric utility's revenues and
  18-45  return on investment in nonexempt areas.
  18-46        (d)  Utilities serving exempt areas shall be subject to the
  18-47  reporting requirements of this Act.  Such reports shall be filed
  18-48  with the governing body of the municipality as well as with the
  18-49  commission.
  18-50        (e)  Nothing in this section shall limit the duty and power
  18-51  of the commission to regulate service and rates of municipally
  18-52  regulated utilities for service provided to other areas in Texas.
  18-53  (Sec. 22)
  18-54        Sec. 2.105.  RATE DETERMINATION.  (a)  Any municipality
  18-55  regulating its electric utilities pursuant to this Act shall
  18-56  require from those utilities all necessary data to make a
  18-57  reasonable determination of rate base, expenses, investment, and
  18-58  rate of return within the municipal boundaries.
  18-59        (b)  The standards for such determination shall be based on
  18-60  the procedures and requirements of this Act and said municipality
  18-61  shall retain any and all personnel necessary to make the
  18-62  determination of reasonable rates required under this Act.  (Sec.
  18-63  23)
  18-64        Sec. 2.106.  RATEMAKING PROCEEDINGS; ENGAGEMENT OF
  18-65  CONSULTANTS, ACCOUNTANTS, AUDITORS, ATTORNEYS AND ENGINEERS;
  18-66  STANDING.  (a)  The governing body of any municipality
  18-67  participating in or conducting ratemaking proceedings shall have
  18-68  the right to select and engage rate consultants, accountants,
  18-69  auditors, attorneys, engineers, or any combination thereof, to
  18-70  conduct investigations, present evidence, advise and represent the
   19-1  governing body, and assist with litigation in electric utility
   19-2  ratemaking proceedings before the governing body, any regulatory
   19-3  authority, or in court.  The electric utility engaged in such
   19-4  proceedings shall be required to reimburse the governing body for
   19-5  the reasonable costs of such services to the extent found
   19-6  reasonable by the applicable regulatory authority.
   19-7        (b)  Municipalities shall have standing in all cases before
   19-8  the commission regarding utilities serving within their corporate
   19-9  limits subject to the right of the commission to determine standing
  19-10  in cases involving retail service area disputes involving two or
  19-11  more utilities and to consolidate municipalities on issues of
  19-12  common interest and shall be entitled to judicial review of orders
  19-13  regarding said proceedings in accordance with Section 1.301 of the
  19-14  Act.  (Sec. 24)
  19-15        Sec. 2.107.  ASSISTANCE OF COMMISSION.  The commission may
  19-16  advise and assist municipalities upon request in connection with
  19-17  questions and proceedings arising under this Act.  Such assistance
  19-18  may include aid to municipalities in connection with matters
  19-19  pending before the commission or the courts, or before the
  19-20  governing body of any municipality, including making members of the
  19-21  staff available as witnesses and otherwise providing evidence to
  19-22  them.  (Sec. 25)
  19-23        Sec. 2.108.  APPEAL.  (a)  Any party to a rate proceeding
  19-24  before the governing body of a municipality may appeal the decision
  19-25  of the governing body to the commission.
  19-26        (b)  Citizens of a municipality may appeal the decision of
  19-27  the governing body in any rate proceeding to the commission through
  19-28  the filing of a petition for review signed by the lesser of 20,000
  19-29  or 10 percent of the number of qualified voters of such
  19-30  municipality.
  19-31        (c)(1)  Ratepayers of a municipally owned electric utility
  19-32  outside the municipal limits may appeal any action of the governing
  19-33  body affecting the rates of the municipally owned electric utility
  19-34  through filing with the commission a petition for review signed by
  19-35  the lesser of 10,000 or five percent of the ratepayers served by
  19-36  such utility outside the municipal limits.  For purposes of this
  19-37  subsection each person receiving a separate bill shall be
  19-38  considered as a ratepayer.  But a person is not considered as being
  19-39  more than one ratepayer notwithstanding the number of bills
  19-40  received.  Such petition for review shall be considered properly
  19-41  signed if signed by any person, or spouse of any such person, in
  19-42  whose name residential utility service is carried.
  19-43              (2)  The municipality that owns the electric utility
  19-44  shall on request disclose to any person the number of ratepayers
  19-45  who reside outside the municipal limits.  The municipality shall
  19-46  provide the information by telephone or in a written form, as
  19-47  preferred by the person making the request.  The municipality may
  19-48  not charge a fee for providing the information.  The municipality
  19-49  shall on request provide to any person a list of the names and
  19-50  addresses of the ratepayers who reside outside the municipal
  19-51  limits.  The municipality may charge a reasonable fee to cover the
  19-52  cost of providing the list.
  19-53              (3)  Not later than the 14th day after the date on
  19-54  which the governing body makes a final decision, the municipality
  19-55  shall issue a written report stating the effect of the decision on
  19-56  each class of ratepayers.  The appeal process shall be instituted
  19-57  by filing a petition for review with the commission and serving
  19-58  copies on all parties to the original rate proceeding.  The
  19-59  petition must be filed not later than the 45th day after the date
  19-60  on which the municipality issues the written report prescribed by
  19-61  this subsection.
  19-62              (4)  Not later than the 90th day after the date on
  19-63  which a petition for review that meets the requirements of this
  19-64  subsection is filed, the municipality shall file with the
  19-65  commission a rate application that complies in all material
  19-66  respects with the rules and forms prescribed by the commission.
  19-67  The commission may, for good cause shown, extend the period for
  19-68  filing the rate application.
  19-69        (d)  Any municipally owned electric utility whose rates have
  19-70  been or are appealed under Subsection (c) of this section, and for
   20-1  which the commission has ordered or orders a decrease in annual
   20-2  nonfuel base revenues which exceeds the greater of $25,000,000 or
   20-3  10 percent of the utility's nonfuel base revenues, as calculated on
   20-4  a total system basis (without regard to the municipal utility's
   20-5  corporate boundaries) and established in the rate ordinance or
   20-6  ordinances appealed from, and for which the commission has found or
   20-7  finds that the rates paid by the combined residential or any other
   20-8  major customer class (other than any class or classes where the
   20-9  city is itself the customer of the municipally owned utility) are
  20-10  removed from cost of service levels to the extent that, under the
  20-11  nonfuel base revenue requirement adopted by the commission (as
  20-12  computed on a total system basis without regard to the
  20-13  municipality's corporate boundaries), a change in nonfuel base rate
  20-14  revenues in excess of 50 percent from adjusted test year levels
  20-15  would be required to move that class to a relative rate of return
  20-16  of unity (1.00 or 100 percent) under the cost of service
  20-17  methodology adopted by the commission in an appeal under Subsection
  20-18  (c) of this section, shall thereafter be subject to the following:
  20-19              (1)  For a period of 10 years beginning on the later of
  20-20  August 28, 1989, or the effective date of the rate ordinance which
  20-21  was the subject of the commission's final order invoking the
  20-22  application of this subsection, the commission shall have appellate
  20-23  jurisdiction over the rates charged by the municipally owned
  20-24  utility, both inside and outside such municipality's corporate
  20-25  limits, in the same manner and subject to the same commission
  20-26  powers and authority as set forth in this Act for electric
  20-27  utilities, but specifically limited as follows:
  20-28                    (A)  The commission shall have the jurisdiction
  20-29  to review the cost allocation and rate design methodologies adopted
  20-30  by the City Council or other governing body of the municipally
  20-31  owned utility subject to this subsection.
  20-32                          (i)  If the commission finds that such cost
  20-33  of service methodologies result in rates which are unjust,
  20-34  unreasonable, or unreasonably discriminatory or unduly preferential
  20-35  to any customer class, then the commission may order the
  20-36  implementation of ratesetting methodologies which the commission
  20-37  finds reasonable.
  20-38                          (ii)  The commission shall ensure that a
  20-39  customer class, other than any class or classes where the city is
  20-40  itself the customer of the municipally owned utility, does not pay
  20-41  rates which result in a relative rate of return exceeding 115
  20-42  percent under the cost-of-service methodology found reasonable by
  20-43  the commission, provided that a customer class may not experience a
  20-44  percentage base rate increase that is greater than 1 1/2  times the
  20-45  system average base increase.  In moving above-cost classes toward
  20-46  cost-of-service levels, those classes farthest above cost shall be
  20-47  moved sequentially toward cost, such that no above-cost class moves
  20-48  toward cost until no other class or classes are further removed
  20-49  from cost.
  20-50                          (iii)  The municipality may, as a matter of
  20-51  intra-class rate design, design residential rates to accomplish
  20-52  reasonable energy conservation goals, notwithstanding any other
  20-53  provision of this Act.
  20-54                    (B)  The commission's jurisdiction under this
  20-55  subsection may be invoked by any party to the local rate
  20-56  proceedings required by this subsection, in the same manner as
  20-57  appeals of the rates of electric utilities under Subsection (a) of
  20-58  this section.  Provided, however, that the commission's
  20-59  jurisdiction under this subsection does not extend to the
  20-60  municipally owned utility's revenue requirements, whether base rate
  20-61  or fuel revenues, its invested capital, its return on invested
  20-62  capital, its debt service coverage ratio, or the level of any
  20-63  transfer of revenues from the utility to the municipality's general
  20-64  fund.
  20-65              (2)  The City Council or other governing board of a
  20-66  municipally owned utility subject to this subsection shall
  20-67  establish procedures similar to those procedures employed by
  20-68  municipalities which have retained original jurisdiction under
  20-69  Section 2.101(a) of this Act to regulate electric utilities
  20-70  operating within such municipalities' corporate boundaries.  Such
   21-1  procedures shall include a public hearing process in which affected
   21-2  ratepayers are granted party status on request and are grouped for
   21-3  purposes of participation in accordance with their common or
   21-4  divergent interests, including but not limited to the particular
   21-5  interests of all-electric and out-of-city residential ratepayers.
   21-6  Provided, however, that nothing in this Act or this subsection
   21-7  shall require the City Council or governing board of the
   21-8  municipally owned utility to which this subsection applies to
   21-9  employ or establish procedures that require the use of the Texas
  21-10  Rules of Evidence, the Texas Rules of Civil Procedure, or the
  21-11  presentation of sworn testimony or other forms of sworn evidence.
  21-12  The City Council or other governing board shall appoint a consumer
  21-13  advocate to represent the interests of residential and small
  21-14  commercial ratepayers in the municipality's local rate proceedings.
  21-15  The consumer advocate's reasonable costs of participation in said
  21-16  proceedings, including the reasonable costs of ratemaking
  21-17  consultants and expert witnesses, shall be funded by and recovered
  21-18  from such residential and small commercial ratepayers.
  21-19              (3)  The commission shall establish rules applicable to
  21-20  any party to an appeal under Subsection (c) of this section that
  21-21  provide for the public disclosure of financial and in-kind
  21-22  contributions and expenditures related to preparation of and filing
  21-23  of a petition for appeal and in preparation of expert testimony or
  21-24  legal representation for an appeal.  Any party or customer who is a
  21-25  member of a party who makes a financial contribution or in-kind
  21-26  contribution to assist in an appeal of another party or customer
  21-27  class under Subsection (c) of this section shall, upon a finding of
  21-28  the commission to that effect, be required to pay the municipally
  21-29  owned utility a penalty equivalent in amount to two times the
  21-30  contribution.  Nothing in this subsection shall be construed to
  21-31  limit the right of any party or customer to expend funds to
  21-32  represent its own interests following the filing of a petition with
  21-33  the commission under Subsection (c) of this section.
  21-34        (e)  Any municipally owned electric utility whose rates have
  21-35  been or are appealed under Subsection (c) of this section, and for
  21-36  which the commission has ordered or orders a decrease in annual
  21-37  nonfuel base revenues which exceeds the greater of $25,000,000 or
  21-38  10 percent of the utility's nonfuel base revenues, as calculated on
  21-39  a total system basis (without regard to the municipal utility's
  21-40  corporate boundaries) and established in the rate ordinance or
  21-41  ordinances appealed from, and for which the commission has found or
  21-42  finds that the rates paid by the combined residential or any other
  21-43  major customer class (other than any class or classes where the
  21-44  city is itself the customer of the municipally owned utility) are
  21-45  removed from cost of service levels to the extent that, under the
  21-46  nonfuel base revenue requirement adopted by the commission (as
  21-47  computed on a total system basis without regard to the
  21-48  municipality's corporate boundaries), a change in nonfuel base rate
  21-49  revenues in excess of 50 percent from adjusted test year levels
  21-50  would be required to move that class to a relative rate of return
  21-51  of unity (1.00 or 100 percent) under the cost of service
  21-52  methodology adopted by the commission in an appeal under Subsection
  21-53  (c) of this section, shall thereafter be subject to the following:
  21-54              (1)  For a period of 10 years beginning on the later of
  21-55  August 28, 1989, or the effective date of the rate ordinance which
  21-56  was the subject of the commission's final order invoking the
  21-57  application of this subsection, the commission shall have appellate
  21-58  jurisdiction over the rates charged by the municipally owned
  21-59  utility, outside the municipality's corporate limits, in the manner
  21-60  and to the extent provided in this subsection.
  21-61              (2)  Ratepayers of a municipally owned utility subject
  21-62  to this subsection who reside outside the municipality's corporate
  21-63  limits may appeal any action of the governing body affecting the
  21-64  rates charged by the municipally owned electric utility outside the
  21-65  corporate limits through filing with the commission a petition for
  21-66  review in accordance with the same procedures, requirements, and
  21-67  standards applicable to appeals brought under Subsection (c) of
  21-68  this section, except as otherwise specifically provided in this
  21-69  subsection.  The petition for review must plainly disclose that the
  21-70  cost of bringing and pursuing the appeal will be funded by a
   22-1  surcharge on the monthly electric bills of outside-city ratepayers
   22-2  in a manner prescribed by the commission.
   22-3                    (A)  Upon commission approval of the sufficiency
   22-4  of a petition, the appellants shall submit for the approval of the
   22-5  Office of Public Utility Counsel a budget itemizing the scope and
   22-6  expected cost of consultant services to be purchased by the
   22-7  appellants in connection with the appeal.
   22-8                    (B)  After a final order has been entered by the
   22-9  commission in the appeal, the consultant and legal costs approved
  22-10  by public counsel as reasonable shall be assessed by the
  22-11  municipality on a per capita basis among residential ratepayers who
  22-12  reside outside the municipality.  Surcharges shall be assessed in a
  22-13  one-time charge not later than 120 days following entry of the
  22-14  commission's final order.  Costs incurred by the appellants shall
  22-15  be reimbursed by the municipality within not later than 90 days
  22-16  following the date the commission enters its final order.
  22-17                    (C)  The municipality may not include the costs
  22-18  associated with its defense of an appeal under this subsection in
  22-19  the rates of outside-city ratepayers.  Nor shall the municipality,
  22-20  if it appeals from an order entered by the commission under this
  22-21  subsection, include the costs associated with its appeal in the
  22-22  rates of ratepayers who reside outside the city.
  22-23                    (D)  Ratepayers who appeal under this subsection
  22-24  may not receive funding for rate case expenses except from
  22-25  residential ratepayers who reside outside the municipality's
  22-26  boundaries or from other municipalities inside whose corporate
  22-27  limits the municipally owned utility provides service.  The
  22-28  commission shall adopt rules for the reporting of financial and
  22-29  in-kind contributions in support of appeals brought under this
  22-30  subsection.  Upon a finding by the commission that an appellant has
  22-31  received contributions from any source other than outside-city
  22-32  ratepayers or such other municipalities, the appeal and orders of
  22-33  the commission entered therein shall be null and void.
  22-34              (3)  In appeals under this subsection, the commission
  22-35  shall have jurisdiction and authority to review and ensure that the
  22-36  revenue requirements of any municipally owned utility subject to
  22-37  this subsection are reasonable, but such jurisdiction and authority
  22-38  does not extend to regulation of the use and level of any transfer
  22-39  of the utility's revenues to the municipality's general fund.  The
  22-40  commission shall also have jurisdiction and authority to review the
  22-41  cost allocation and rate design methodologies adopted by the
  22-42  governing body of the municipally owned utility.  If the commission
  22-43  finds that such cost of service methodologies result in rates which
  22-44  are unjust, unreasonable, or unreasonably discriminatory or unduly
  22-45  preferential to any customer class, then the commission may order
  22-46  the implementation of ratesetting methodologies which the
  22-47  commission finds reasonable; provided, however, that the
  22-48  commission's jurisdiction under this subsection does not encompass
  22-49  matters of intra-class residential rate design.
  22-50              (4)  An intervenor in an appeal brought under this
  22-51  subsection shall be limited to presenting testimony and evidence on
  22-52  cost allocation and rate design methodologies, except that
  22-53  intervenors may present evidence and testimony in support of the
  22-54  municipality on issues related to utility revenues.
  22-55              (5)  An appellant ratepayer residing outside the
  22-56  corporate limits of a municipally owned utility subject to this
  22-57  subsection shall, in appealing from a rate ordinance or other
  22-58  ratesetting action of the municipality's governing board, elect to
  22-59  petition for review under either Subsection (c) of this section or
  22-60  this subsection.
  22-61        (f)  The appeal process shall be instituted within 30 days of
  22-62  the final decision by the governing body with the filing of a
  22-63  petition for review with the commission and copies served on all
  22-64  parties to the original rate proceeding.
  22-65        (g)  The commission shall hear such appeal de novo based on
  22-66  the test year presented to the municipality and by its final order
  22-67  shall fix such rates as the municipality should have fixed in the
  22-68  ordinance from which the appeal was taken.  In the event that the
  22-69  commission fails to enter its final order:  (1)  for proceedings
  22-70  involving the rates of a municipally owned utility, within 185 days
   23-1  from the date on which the appeal is perfected or on which the
   23-2  utility files a rate application as prescribed by Subsection (c) of
   23-3  this section; or (2)  for proceedings in which similar relief has
   23-4  also been concurrently sought from the commission under its
   23-5  original jurisdiction, within 120 days from the date such appeal is
   23-6  perfected or the date upon which final action must be taken in the
   23-7  similar proceedings so filed with the commission whichever shall
   23-8  last occur; or (3)  in all other proceedings, within 185 days from
   23-9  the date such appeal is perfected, the schedule of rates proposed
  23-10  by the utility shall be deemed to have been approved by the
  23-11  commission and effective upon the expiration of said applicable
  23-12  period.  Any rates, whether temporary or permanent, set by the
  23-13  commission shall be prospective and observed from and after the
  23-14  applicable order of the commission, except interim rate orders
  23-15  necessary to effect uniform system-wide rates.  (Sec. 26--Subsec.
  23-16  (c) fixed)
  23-17                    SUBTITLE D.  RATES AND SERVICES
  23-18        Sec. 2.151.  RATES; METHODS AND ACCOUNTS.  (a)  The
  23-19  commission shall fix proper and adequate rates and methods of
  23-20  depreciation, amortization, or depletion of the several classes of
  23-21  property of each electric utility, and shall require every electric
  23-22  utility to carry a proper and adequate depreciation account in
  23-23  accordance with such rates and methods and with such other rules
  23-24  and regulations as the commission prescribes.  Such rates, methods,
  23-25  and accounts shall be utilized uniformly and consistently
  23-26  throughout the ratesetting and appeal proceedings.
  23-27        (b)  Every electric utility shall keep separate accounts to
  23-28  show all profits or losses resulting from the sale or lease of
  23-29  appliances, fixtures, equipment, or other merchandise.  This profit
  23-30  or loss may not be taken into consideration by the regulatory
  23-31  authority in arriving at any rate to be charged for service by any
  23-32  such electric utility, to the extent that such merchandise is not
  23-33  integral to the provision of utility service.
  23-34        (c)  In determining the allocation of tax savings derived
  23-35  from application of such methods as liberalized depreciation and
  23-36  amortization and the investment tax credit, the regulatory
  23-37  authority shall equitably balance the interests of present and
  23-38  future customers and shall apportion such benefits between
  23-39  consumers and the electric utilities accordingly.  Where any
  23-40  portion of the investment tax credit has been retained by an
  23-41  electric utility, that same amount shall be deducted from the
  23-42  original cost of the facilities or other addition to the rate base
  23-43  to which the credit applied, to the extent allowed by the Internal
  23-44  Revenue Code.
  23-45        (d)  For the purposes of this section, "electric utility"
  23-46  includes "municipally owned utility."  (Secs. 27(b), (c), (e), (f))
  23-47        Sec. 2.152.  REPORTING OF ADVERTISING OR PUBLIC RELATIONS
  23-48  EXPENSES.  (a)  The regulatory authority may require an annual
  23-49  reporting from each utility company of all its expenditures for
  23-50  business gifts and entertainment, and institutional,
  23-51  consumption-inducing and other advertising or public relations
  23-52  expenses.
  23-53        (b)  The regulatory authority may not allow as costs or
  23-54  expenses for ratemaking purposes any of these expenditures which
  23-55  the regulatory authority determines not to be in the public
  23-56  interest.
  23-57        (c)  The cost of legislative advocacy expenses may not in any
  23-58  case be allowed as costs or expenses for ratemaking purposes.
  23-59        (d)  Reasonable charitable or civic contributions may be
  23-60  allowed not to exceed the amount approved by the regulatory
  23-61  authority.  (Sec. 30)
  23-62        Sec. 2.153.  UNLAWFUL RATES, RULES AND REGULATIONS.  It shall
  23-63  be unlawful for any utility to charge, collect, or receive any rate
  23-64  for electric utility service or to impose any rule or regulation
  23-65  other than as herein provided.  (Sec. 31)
  23-66        Sec. 2.154.  FILING SCHEDULE OF RATES, RULES AND REGULATIONS.
  23-67  (a)  Every electric utility shall file with each regulatory
  23-68  authority schedules showing all rates which are subject to the
  23-69  original or appellate jurisdiction of the regulatory authority and
  23-70  which are in force at the time for any electric utility service,
   24-1  product, or commodity offered by the utility.
   24-2        (b)  Every electric utility shall file with, and as a part of
   24-3  such schedules, all rules and regulations relating to or affecting
   24-4  the rates, electric utility service, product, or commodity
   24-5  furnished by such utility.  (Sec. 32)
   24-6        Sec. 2.155.  STANDARDS OF SERVICE.  (a)  Every electric
   24-7  utility shall furnish such service, instrumentalities, and
   24-8  facilities as shall be safe, adequate, efficient, and reasonable.
   24-9        (b)  The regulatory authority after reasonable notice and
  24-10  hearing had on its own motion or on complaint, may:
  24-11              (1)  ascertain and fix just and reasonable standards,
  24-12  classifications, regulations, or practices to be observed and
  24-13  followed by any or all electric utilities with respect to the
  24-14  service to be furnished;
  24-15              (2)  ascertain and fix adequate and reasonable
  24-16  standards for the measurement of the quantity, quality, pressure,
  24-17  initial voltage, or other condition pertaining to the supply of the
  24-18  service;
  24-19              (3)  prescribe reasonable regulations for the
  24-20  examination and testing of the service and for the measurement
  24-21  thereof; and
  24-22              (4)  establish or approve reasonable rules,
  24-23  regulations, specifications, and standards to secure the accuracy
  24-24  of all meters, instruments and equipment used for the measurement
  24-25  of any service of any electric utility.
  24-26        (c)  Any standards, classifications, regulations, or
  24-27  practices now or hereafter observed or followed by any electric
  24-28  utility may be filed by it with the regulatory authority, and the
  24-29  same shall continue in force until amended by the electric utility
  24-30  or until changed by the regulatory authority as herein provided.
  24-31        (d)  Notwithstanding any other provision of law, all lines
  24-32  owned by an electric utility for the transmission and/or
  24-33  distribution of electric energy shall be constructed, operated, and
  24-34  maintained, as to clearances, in accordance with the National
  24-35  Electrical Safety Code Standard ANSI (c)(2), as adopted by the
  24-36  American National Safety Institute and in effect at the time of
  24-37  construction.  (Sec. 35)
  24-38        Sec. 2.156.  EXAMINATION AND TEST OF EQUIPMENT.  (a)  The
  24-39  regulatory authority may examine and test any meter, instrument, or
  24-40  equipment used for the measurement of any service of any electric
  24-41  utility and may enter any premises occupied by any electric utility
  24-42  for the purpose of making such examinations and tests and
  24-43  exercising any power provided for in this Act and may set up and
  24-44  use on such premises any apparatus and appliances necessary
  24-45  therefor.  The electric utility shall have the right to be
  24-46  represented at the making of the examinations, tests, and
  24-47  inspections.  The electric utility and its officers and employees
  24-48  shall facilitate the examinations, tests, and inspections by giving
  24-49  every reasonable aid to the regulatory authority and any person or
  24-50  persons designated by the regulatory authority for the duties
  24-51  aforesaid.
  24-52        (b)  Any consumer or user may have any meter or measuring
  24-53  device tested by the utility once without charge, after a
  24-54  reasonable period to be fixed by the regulatory authority by rule,
  24-55  and at shorter intervals on payment of reasonable fees fixed by the
  24-56  regulatory authority.  The regulatory authority shall declare and
  24-57  establish reasonable fees to be paid for other examining and
  24-58  testing such meters and other measuring devices on the request of
  24-59  the consumer.  If the test is requested to be made within the
  24-60  period of presumed accuracy as fixed by the regulatory authority
  24-61  since the last such test of the same meter or other measuring
  24-62  device, the fee to be paid by the consumer or user at the time of
  24-63  his request shall be refunded to the consumer or user if the meter
  24-64  or measuring device is found unreasonably defective or incorrect to
  24-65  the substantial disadvantage of the consumer or user.  If the
  24-66  consumer's request is made at a time beyond the period of presumed
  24-67  accuracy fixed by the regulatory authority since the last such test
  24-68  of the same meter or measuring device, the utility shall make the
  24-69  test without charge to the consumer or user.  (Sec. 36)
  24-70       SUBTITLE E.  PROCEEDINGS BEFORE THE REGULATORY AUTHORITY
   25-1        Sec. 2.201.  POWER TO INSURE COMPLIANCE; RATE REGULATION.
   25-2  Subject to the provisions of this Act, the commission is hereby
   25-3  vested with all authority and power of the State of Texas to insure
   25-4  compliance with the obligations of electric utilities in this Act.
   25-5  For this purpose the regulatory authority is empowered to fix and
   25-6  regulate rates of electric utilities, including rules and
   25-7  regulations for determining the classification of customers and
   25-8  services and for determining the applicability of rates.  A rule or
   25-9  order of the regulatory authority may not conflict with the rulings
  25-10  of any federal regulatory body.  (Sec. 37)
  25-11        Sec. 2.202.  JUST AND REASONABLE RATES.  It shall be the duty
  25-12  of the regulatory authority to insure that every rate made,
  25-13  demanded, or received by any electric utility, or by any two or
  25-14  more electric utilities jointly, shall be just and reasonable.
  25-15  Rates may not be unreasonably preferential, prejudicial, or
  25-16  discriminatory, but shall be sufficient, equitable, and consistent
  25-17  in application to each class of consumers.  For ratemaking
  25-18  purposes, the commission may treat two or more municipalities
  25-19  served by an electric utility as a single class wherever it deems
  25-20  such treatment to be appropriate.  (Sec. 38 (part))
  25-21        Sec. 2.203.  FIXING OVERALL REVENUES.  (a)  In fixing the
  25-22  rates of an electric utility the regulatory authority shall fix its
  25-23  overall revenues at a level which will permit such utility a
  25-24  reasonable opportunity to earn a reasonable return on its invested
  25-25  capital used and useful in rendering service to the public over and
  25-26  above its reasonable and necessary operating expenses.
  25-27        (b)  In fixing a reasonable return on invested capital, the
  25-28  regulatory authority shall consider, in addition to other
  25-29  applicable factors, efforts to comply with the statewide energy
  25-30  plan, the efforts and achievements of such utility in the
  25-31  conservation of resources, the quality of the utility's services,
  25-32  the efficiency of the utility's operations, and the quality of the
  25-33  utility's management.  (Sec. 39)
  25-34        Sec. 2.204.  BURDEN OF PROOF.  Except as hereafter provided,
  25-35  in any proceeding involving any proposed change of rates, the
  25-36  burden of proof to show that the proposed change, if proposed by
  25-37  the utility, or that the existing rate, if it is proposed to reduce
  25-38  the rate, is just and reasonable shall be on the electric utility.
  25-39  (Sec. 40 (part))
  25-40        Sec. 2.205.  COMPONENTS OF INVESTED CAPITAL AND NET INCOME.
  25-41  The components of invested capital and net income shall be
  25-42  determined according to Sections 2.206, 2.207, and 2.208.  (Sec. 41
  25-43  (part))
  25-44        Sec. 2.206.  INVESTED CAPITAL.  (a)  Utility rates shall be
  25-45  based upon the original cost of property used by and useful to the
  25-46  electric utility in providing service including construction work
  25-47  in progress at cost as recorded on the books of the utility.
  25-48        (b)  The inclusion of construction work in progress is an
  25-49  exceptional form of rate relief to be granted only upon the
  25-50  demonstration by the utility that such inclusion is necessary to
  25-51  the financial integrity of the utility.  Construction work in
  25-52  progress may not be included in the rate base for major projects
  25-53  under construction to the extent that such projects have been
  25-54  inefficiently or imprudently planned or managed.
  25-55        (c)  Original cost shall be the actual money cost, or the
  25-56  actual money value of any consideration paid other than money, of
  25-57  the property at the time it shall have been dedicated to public
  25-58  use, whether by the utility which is the present owner or by a
  25-59  predecessor, less depreciation.  (Sec. 41(a))
  25-60        Sec. 2.207.  SEPARATIONS AND ALLOCATIONS.  Costs of
  25-61  facilities, revenues, expenses, taxes, and reserves shall be
  25-62  separated or allocated as prescribed by the regulatory authority.
  25-63  (Sec. 41(b))
  25-64        Sec. 2.208.  NET INCOME.  (a)  "Net income" means the total
  25-65  revenues of the electric utility less all reasonable and necessary
  25-66  expenses as determined by the regulatory authority.  The regulatory
  25-67  authority shall determine expenses and revenues in a manner
  25-68  consistent with this section.
  25-69        (b)  Transactions with Affiliated Interests.  Payment to
  25-70  affiliated interests for costs of any services, or any property,
   26-1  right or thing, or for interest expense may not be allowed either
   26-2  as capital cost or as expense except to the extent that the
   26-3  regulatory authority shall find such payment to be reasonable and
   26-4  necessary for each item or class of items as determined by the
   26-5  commission.  Any such finding shall include specific findings of
   26-6  the reasonableness and necessity of each item or class of items
   26-7  allowed and a finding that the price to the utility is no higher
   26-8  than prices charged by the supplying affiliate to its other
   26-9  affiliates or divisions for the same item or class of items, or to
  26-10  unaffiliated persons or corporations.  The price paid by gas
  26-11  utilities to affiliated interests for natural gas from Outer
  26-12  Continental Shelf lands shall be subject to a rebuttable
  26-13  presumption that such price is reasonable if the price paid does
  26-14  not exceed the price permitted by federal regulation if such gas is
  26-15  regulated by any federal agency or if not regulated by a federal
  26-16  agency does not exceed the price paid by nonaffiliated parties for
  26-17  natural gas from Outer Continental Shelf lands.  The burden of
  26-18  establishing that such a price paid is not reasonable shall be on
  26-19  any party challenging the reasonableness of such price.
  26-20        (c)  Income Taxes.  If the electric utility is a member of an
  26-21  affiliated group that is eligible to file a consolidated income tax
  26-22  return, and if it is advantageous to the electric utility to do so,
  26-23  income taxes shall be computed as though a consolidated return had
  26-24  been so filed and the utility had realized its fair share of the
  26-25  savings resulting from the consolidated return, unless it is shown
  26-26  to the satisfaction of the regulatory authority that it was
  26-27  reasonable to choose not to consolidate returns.  The amounts of
  26-28  income taxes saved by a consolidated group of which an electric
  26-29  utility is a member by reason of the elimination in the
  26-30  consolidated return of the intercompany profit on purchases by the
  26-31  electric utility from an affiliate shall be applied to reduce the
  26-32  cost of the property or services so purchased.  The investment tax
  26-33  credit allowed against federal income taxes, to the extent retained
  26-34  by the utility, shall be applied as a reduction in the rate-based
  26-35  contribution of the assets to which such credit applies, to the
  26-36  extent and at such rate as allowed by the Internal Revenue Code.
  26-37        (d)  Expenses Disallowed.  The regulatory authority may not
  26-38  consider for ratemaking purposes the following expenses:
  26-39              (1)  legislative advocacy expenses, whether made
  26-40  directly or indirectly, including but not limited to legislative
  26-41  advocacy expenses included in trade association dues;
  26-42              (2)  payments, except those made under an insurance or
  26-43  risk-sharing arrangement executed before the date of loss, made to
  26-44  cover costs of an accident, equipment failure, or negligence at a
  26-45  utility facility owned by a person or governmental body not selling
  26-46  power inside the State of Texas;
  26-47              (3)  costs of processing a refund or credit under
  26-48  Subsection (e) of Section 2.212 of this Act; or
  26-49              (4)  any expenditure found by the regulatory authority
  26-50  to be unreasonable, unnecessary, or not in the public interest,
  26-51  including but not limited to executive salaries, advertising
  26-52  expenses, legal expenses, and civil penalties or fines.
  26-53        (e)  The regulatory authority may promulgate reasonable rules
  26-54  and regulations with respect to the allowance or disallowance of
  26-55  any expenses for ratemaking purposes.  (Sec. 41(c))
  26-56        Sec. 2.209.  COGENERATOR OR SMALL-POWER PRODUCER; AGREEMENT
  26-57  WITH ELECTRIC UTILITY FOR PURCHASE OF CAPACITY; CERTIFICATION BY
  26-58  COMMISSION.  (a)  In this section "qualifying facility" means a
  26-59  qualifying cogenerator or a qualifying small-power producer, as
  26-60  defined by Sections 3(18)(C) and 3(17)(D), respectively, Federal
  26-61  Power Act (16 U.S.C. Sections 796(18)(C) and 796(17)(D)).
  26-62        (b)  If an electric utility and a qualifying facility enter
  26-63  into an agreement providing for the purchase of capacity, the
  26-64  electric utility or qualifying facility may submit a copy of the
  26-65  agreement to the commission for certification under this section.
  26-66  The agreement may provide that it is contingent on that
  26-67  certification.  Before the deadline specified by Subsection (d) of
  26-68  this section, the commission shall determine whether:
  26-69              (1)  the payments provided for in the agreement over
  26-70  the contract term are equal to or less than the utility's avoided
   27-1  costs as established by the commission and in effect at the time
   27-2  the agreement was signed.  Contracts entered into before the
   27-3  effective date of this section may not be submitted for
   27-4  certification by the commission; and
   27-5              (2)  the agreement provides the electric utility the
   27-6  opportunity to acquire the cogeneration or small-power production
   27-7  installation before the installation is offered to another
   27-8  purchaser in the event of its abandonment, or provides other
   27-9  sufficient assurance that the electric utility will be provided
  27-10  with a comparable supply of electricity, if the qualifying facility
  27-11  ceases to operate the installation.
  27-12        (c)  If the commission determines that the agreement meets
  27-13  the requirements of Subdivisions (1) and (2) of Subsection (b) of
  27-14  this section, it shall certify that the agreement meets these
  27-15  requirements.  If the commission does not make a determination
  27-16  under Subsection (b) of this section before the deadline specified
  27-17  by Subsection (d) of this section, the agreement is considered to
  27-18  meet the requirements of Subdivisions (1) and (2) of Subsection (b)
  27-19  of this section and certification is considered granted.  A
  27-20  certification is effective until the earlier of 15 years after the
  27-21  date of the certification or the expiration date of the agreement.
  27-22        (d)  The commission shall make its determination under this
  27-23  section within 90 days after the date that the agreement is
  27-24  submitted, unless before this deadline the electric utility, the
  27-25  qualifying facility, or an affected person requests a hearing or
  27-26  the commission on its own motion decides to hold a hearing.  If a
  27-27  hearing is requested or the commission decides to hold a hearing,
  27-28  the commission shall hold the hearing and make its determination
  27-29  within 120 days after the date that the agreement is submitted,
  27-30  except that this deadline is extended two days for each day in
  27-31  excess of five days on which the commission conducts a hearing on
  27-32  the merits of the case.
  27-33        (e)  In setting the electric utility's rates for a period
  27-34  during which the certification is effective, the regulatory
  27-35  authority shall consider payments made under the agreement to be
  27-36  reasonable and necessary operating expenses of the electric
  27-37  utility.  The regulatory authority shall allow full, concurrent,
  27-38  and monthly recovery of the amount of the payments.  (Sec. 41A)
  27-39        Sec. 2.210.  SELF-INSURANCE.  (a)  An electric utility may
  27-40  self-insure all or a portion of its potential liability or
  27-41  catastrophic property loss, including windstorm, fire, and
  27-42  explosion losses which could not have been reasonably anticipated
  27-43  and included under operating and maintenance expenses.  The
  27-44  commission shall approve a self-insurance plan under this section
  27-45  if it finds that the coverage is in the public interest and the
  27-46  plan is a lower cost alternative to purchasing commercial
  27-47  insurance, considering all costs, and that ratepayers will receive
  27-48  the benefits of that saving.
  27-49        (b)  In computing a utility's reasonable and necessary
  27-50  expenses under Section 2.208 of this Act, the regulatory authority
  27-51  shall allow as a necessary expense the funds credited to reserve
  27-52  accounts for the self-insurance, to the extent the regulatory
  27-53  authority finds it in the public interest.  After the reserve
  27-54  account is established, the regulatory authority shall consider if
  27-55  the reserve account has a surplus or shortage in determining the
  27-56  utility's rate base.  A surplus in the reserve account will exist
  27-57  if the charges against the reserve account are less than the funds
  27-58  credited to the reserve.  A shortage in the reserve account will
  27-59  exist if the charges against the account are greater than the funds
  27-60  credited to the reserve.  The regulatory authority shall subtract
  27-61  any surplus from and add any shortage to the rate base.
  27-62        (c)  The regulatory authority shall determine reasonableness
  27-63  under Subsection (b) of this section from information provided at
  27-64  the time the self-insurance plan and reserve account are
  27-65  established and upon the filing of each rate case by a utility that
  27-66  has such a fund.
  27-67        (d)  The commission shall adopt rules governing
  27-68  self-insurance under this section.
  27-69        (e)  The allowance for self-insurance under this Act for
  27-70  ratemaking purposes will not be applicable to nuclear plant
   28-1  investment.  (Sec. 41B)
   28-2        Sec. 2.211.  UNREASONABLE OR VIOLATIVE EXISTING RATES;
   28-3  INVESTIGATING COSTS OF OBTAINING SERVICE FROM ANOTHER SOURCE.
   28-4  (a)  Whenever the regulatory authority, after reasonable notice and
   28-5  hearing, on its own motion or on complaint by any affected person,
   28-6  finds that the existing rates of any electric utility for any
   28-7  service are unreasonable or in any way in violation of any
   28-8  provision of law, the regulatory authority shall determine the just
   28-9  and reasonable rates, including maximum or minimum rates, to be
  28-10  thereafter observed and in force, and shall fix the same by order
  28-11  to be served on the electric utility; and such rates shall
  28-12  constitute the legal rates of the electric utility until changed as
  28-13  provided in this Act.
  28-14        (b)  Whenever an electric utility does not itself produce or
  28-15  generate that which it distributes, transmits, or furnishes to the
  28-16  public for compensation, but obtains the same from another source,
  28-17  the regulatory authority shall have the power and authority to
  28-18  investigate the cost of such production or generation in any
  28-19  investigation of the reasonableness of the rates of such electric
  28-20  utility.  (Sec. 42)
  28-21        Sec. 2.212.  STATEMENT OF INTENT TO CHANGE RATES; MAJOR
  28-22  CHANGES; HEARING; SUSPENSION OF RATE SCHEDULE; DETERMINATION OF
  28-23  RATE LEVEL.  (a)  A utility may not make changes in its rates
  28-24  except by filing a statement of intent with the regulatory
  28-25  authority having original jurisdiction at least 35 days prior to
  28-26  the effective date of the proposed change.  The statement of intent
  28-27  shall include proposed revisions of tariffs and schedules and a
  28-28  statement specifying in detail each proposed change, the effect the
  28-29  proposed change is expected to have on the revenues of the company,
  28-30  the classes and numbers of utility consumers affected, and such
  28-31  other information as may be required by the regulatory authority's
  28-32  rules and regulations.  A copy of the statement of intent shall be
  28-33  mailed or delivered to the appropriate officer of each affected
  28-34  municipality, and notice shall be given by publication in
  28-35  conspicuous form and place of a notice to the public of such
  28-36  proposed change once in each week for four successive weeks prior
  28-37  to the effective date of the proposed change in a newspaper having
  28-38  general circulation in each county containing territory affected by
  28-39  the proposed change, and by mail to such other affected persons as
  28-40  may be required by the regulatory authority's rules and
  28-41  regulations. The regulatory authority may waive the publication of
  28-42  notice requirement prescribed by this subsection in a proceeding
  28-43  that involves a rate reduction for all affected ratepayers only.
  28-44  The applicant shall give notice of the proposed rate change by mail
  28-45  to all affected utility customers.  The regulatory authority by
  28-46  rule shall also define other proceedings for which the publication
  28-47  of notice requirement prescribed by this subsection may be waived
  28-48  on a showing of good cause, provided that a waiver may not be
  28-49  granted in any proceeding involving a rate increase to any class or
  28-50  category of ratepayer.
  28-51        (b)  The regulatory authority, for good cause shown, may,
  28-52  except in the case of major changes, allow changes in rate to take
  28-53  effect prior to the end of such 35 day period under such conditions
  28-54  as it may prescribe, subject to suspension as provided herein.  All
  28-55  such changes shall be indicated immediately upon its schedules by
  28-56  such utility.  "Major changes" shall mean an increase in rates
  28-57  which would increase the aggregate revenues of the applicant more
  28-58  than the greater of $100,000 or two and one-half percent, but does
  28-59  not include changes in rates allowed to go into effect by the
  28-60  regulatory authority or made by the utility pursuant to an order of
  28-61  the regulatory authority after hearings held upon notice to the
  28-62  public.
  28-63        (c)  Whenever there is filed with the Regulatory Authority
  28-64  any schedule modifying or resulting in a change in any rates then
  28-65  in force, the Regulatory Authority shall on complaint by any
  28-66  affected person or may on its own motion, at any time within 30
  28-67  days from the date when such change would or has become effective,
  28-68  and, if it so orders, without answer or other formal pleading by
  28-69  the utility, but on reasonable notice, including notice to the
  28-70  governing bodies of all affected municipalities and counties, enter
   29-1  on a hearing to determine the propriety of such change.  The
   29-2  Regulatory Authority shall hold such a hearing in every case in
   29-3  which the change constitutes a major change in rates, provided that
   29-4  an informal proceeding may satisfy this requirement if a complaint
   29-5  has not been received before the expiration of 45 days after notice
   29-6  of the change shall have been filed.  In each case where the
   29-7  commission determines it is in the public interest to collect
   29-8  testimony at a regional hearing for the inclusion in the record,
   29-9  the commission shall hold a regional hearing at an appropriate
  29-10  location.  A regional hearing is not required in a case involving a
  29-11  member-owned utility, unless the commission determines otherwise.
  29-12        (d)  Pending the hearing and decision, the local Regulatory
  29-13  Authority, after delivery to the affected utility of a statement in
  29-14  writing of its reasons therefor, may suspend the operation of the
  29-15  schedule for a period not to exceed 90 days beyond the date on
  29-16  which the schedule of rates would otherwise go into effect and the
  29-17  commission may suspend the operation of the schedule for a period
  29-18  not to exceed 150 days beyond the date on which the schedule would
  29-19  otherwise go into effect.  If the Regulatory Authority does not
  29-20  make a final determination concerning any schedule of rates prior
  29-21  to expiration of the period or periods of suspension, the schedule
  29-22  shall be deemed to have been approved by the Regulatory Authority.
  29-23  However, the 150-day period shall be extended two days for each one
  29-24  day of actual hearing on the merits of the case that exceeds 15
  29-25  days.  This approval is subject to the authority of the Regulatory
  29-26  Authority thereafter to continue a hearing in progress.  The
  29-27  Regulatory Authority may in its discretion fix temporary rates for
  29-28  any period of suspension under this section.  During the suspension
  29-29  by the Regulatory Authority as above provided, the rates in force
  29-30  when the suspended schedule was filed shall continue in force
  29-31  unless the Regulatory Authority shall establish a temporary rate.
  29-32  The Regulatory Authority shall give preference to the hearing and
  29-33  decision of questions arising under this section over all other
  29-34  questions pending before it and decide the same as speedily as
  29-35  possible.
  29-36        (e)  If the 150-day period has been extended, as provided for
  29-37  in Subsection (d) of this section, and the commission fails to make
  29-38  its final determination of rates within 150 days from the date that
  29-39  the proposed change otherwise would have gone into effect, the
  29-40  utility concerned may put a changed rate, not to exceed the
  29-41  proposed rate, into effect upon the filing with the regulatory
  29-42  authority of a bond payable to the regulatory authority in an
  29-43  amount and with sureties approved by the regulatory authority
  29-44  conditioned upon refund and in a form approved by the regulatory
  29-45  authority.  The utility concerned shall refund or credit against
  29-46  future bills all sums collected during the period of suspension in
  29-47  excess of the rate finally ordered plus interest at the current
  29-48  rate as finally determined by the regulatory authority.
  29-49        (f)  If, after hearing, the Regulatory Authority finds the
  29-50  rates to be unreasonable or in any way in violation of any
  29-51  provision of law, the Regulatory Authority shall determine the
  29-52  level of rates to be charged or applied by the utility for the
  29-53  service in question and shall fix the same by order to be served
  29-54  upon the utility; these rates are thereafter to be observed until
  29-55  changed, as provided by this Act.
  29-56        (g)(1)  A rate or tariff set by the commission may not
  29-57  authorize a utility to automatically adjust and pass through to its
  29-58  customers changes in fuel or other costs of the utility.
  29-59              (2)(A)  Any revision of a utility's billings to its
  29-60  customers to allow for the recovery of additional fuel costs may be
  29-61  made only upon a public hearing and order of the commission.
  29-62                    (B)  The commission may consider any evidence
  29-63  that is appropriate and in the public interest at such hearing.
  29-64                    (C)  A proceeding under this subsection may not
  29-65  be considered a rate case under this section.
  29-66              (3)  The commission may, after a hearing, grant interim
  29-67  relief for fuel cost increases that are the result of unusual and
  29-68  emergency circumstances or conditions.
  29-69              (4)(A)  This subsection applies only to increases or
  29-70  decreases in the cost of purchased electricity which have been:
   30-1                          (i)  accepted by a federal regulatory
   30-2  authority; or
   30-3                          (ii)  approved after a hearing by the
   30-4  commission.
   30-5                    (B)  The commission may utilize any appropriate
   30-6  method to provide for the adjustment of the cost of purchased
   30-7  electricity upon such terms and conditions as the commission may
   30-8  determine.  Such purchased electricity costs may be recovered
   30-9  concurrently with the effective date of the changed costs to the
  30-10  purchasing utility or as soon thereafter as is reasonably
  30-11  practical.
  30-12        (old Subsec. (h) deleted)
  30-13        (h)  The commission on its own motion or on the petition of a
  30-14  utility shall provide for the adjustment of a utility's billing to
  30-15  reflect any increase or decrease of tax liability of the utility to
  30-16  the state resulting from House Bill 11, Acts of the 72nd
  30-17  Legislature, 1st Called Session, 1991, and that is attributable to
  30-18  activities that are subject to the jurisdiction of the commission.
  30-19  Any adjustment to billings under this section must be apportioned
  30-20  pro-rata to all types and classes of service provided by the
  30-21  utility and is effective only until the commission alters the
  30-22  adjustment as provided by this subsection or enters an order for
  30-23  the utility under this section or Section 2.211 of this Act.  The
  30-24  adjustment of billings must be made effective at the same time as
  30-25  the increase or decrease of tax liability resulting from House Bill
  30-26  11, Acts of the 72nd Legislature, 1st Called Session, 1991, or as
  30-27  soon after as is reasonably practical.  Each year after any
  30-28  original adjustment, the commission shall review the utility's
  30-29  increase or decrease of tax liability resulting from House Bill 11,
  30-30  Acts of the 72nd Legislature, 1st Called Session, 1991, and alter
  30-31  the adjustment to reflect the increase or decrease.  A proceeding
  30-32  under this subsection is not a rate case under this section.  (Sec.
  30-33  43)
  30-34        Sec. 2.213.  RATES FOR AREAS NOT WITHIN MUNICIPALITY.
  30-35  Electric utility rates for areas not within any municipality may
  30-36  not exceed without commission approval 115 percent of the average
  30-37  of all rates for similar services of all municipalities served by
  30-38  the same utility within the same county.  (Sec. 44)
  30-39        Sec. 2.214.  UNREASONABLE PREFERENCE OR PREJUDICE AS TO RATES
  30-40  OR SERVICES.  An electric utility may not, as to rates or services,
  30-41  make or grant any unreasonable preference or advantage to any
  30-42  corporation or person within any classification, or subject any
  30-43  corporation or person within any classification to any unreasonable
  30-44  prejudice or disadvantage.  An electric utility may not establish
  30-45  and maintain any unreasonable differences as to rates of service
  30-46  either as between localities or as between classes of service.
  30-47  (Sec. 45)
  30-48        Sec. 2.215.  EQUALITY OF RATES AND SERVICES.  (a)  An
  30-49  electric utility may not, directly or indirectly, by any device
  30-50  whatsoever or in any manner, charge, demand, collect, or receive
  30-51  from any person a greater or less compensation for any service
  30-52  rendered or to be rendered by the utility than that prescribed in
  30-53  the schedule of rates of the electric utility applicable thereto
  30-54  when filed in the manner provided in this Act, nor may any person
  30-55  knowingly receive or accept any service from an electric utility
  30-56  for a compensation greater or less than that prescribed in the
  30-57  schedules.
  30-58        (b)  Nothing in this Act shall prevent a cooperative
  30-59  corporation from returning to its members the whole, or any part
  30-60  of, the net earnings resulting from its operations in proportion to
  30-61  their purchases from or through the corporation.  (Sec. 46)
  30-62        Sec. 2.216.  DISCRIMINATION; RESTRICTION ON COMPETITION.  An
  30-63  electric utility may not discriminate against any person or
  30-64  corporation that sells or leases equipment or performs services in
  30-65  competition with the electric utility, nor may any electric utility
  30-66  engage in any other practice that tends to restrict or impair such
  30-67  competition.  (Sec. 47)
  30-68        Sec. 2.217.  PAYMENTS IN LIEU OF TAXES.  Payments made in
  30-69  lieu of taxes by an electric utility to the municipality by which
  30-70  it is owned may not be considered an expense of operation for the
   31-1  purpose of determining, fixing, or regulating the rates to be
   31-2  charged for the provision of utility service to a school district
   31-3  or hospital district.  Rates received by an electric utility from a
   31-4  school district or hospital district may not be used to make or to
   31-5  cover the cost of making payments in lieu of taxes to the
   31-6  municipality by which the electric utility is owned.  (Sec. 48)
   31-7        SUBTITLE F.  CERTIFICATES OF CONVENIENCE AND NECESSITY
   31-8        Sec. 2.251.  DEFINITION.  For the purposes of this subtitle
   31-9  only, "retail electric utility" means any person, corporation,
  31-10  municipality, political subdivision or agency, or cooperative
  31-11  corporation, now or hereafter operating, maintaining, or
  31-12  controlling in Texas facilities for providing retail electric
  31-13  utility service.  (Sec. 49--Subsec. (b) deleted)
  31-14        Sec. 2.252.  CERTIFICATE REQUIRED.  (a)  An electric utility
  31-15  may not in any way render service directly or indirectly to the
  31-16  public under any franchise or permit without first having obtained
  31-17  from the commission a certificate that the present or future public
  31-18  convenience and necessity require or will require such
  31-19  installation, operation, or extension.
  31-20        (b)  Except as otherwise provided in this subtitle, a retail
  31-21  electric utility may not furnish, make available, render, or extend
  31-22  retail electric utility service to any area to which retail utility
  31-23  service is being lawfully furnished by another retail electric
  31-24  utility without first having obtained a certificate of public
  31-25  convenience and necessity that includes the area in which the
  31-26  consuming facility is located.  (Sec. 50)
  31-27        Sec. 2.253.  EXCEPTIONS FOR EXTENSION OF SERVICE.  (a)  An
  31-28  electric utility is not required to secure a certificate of public
  31-29  convenience and necessity for:
  31-30              (1)  an extension into territory contiguous to that
  31-31  already served by it and not receiving similar service from another
  31-32  electric utility and not within the area of public convenience and
  31-33  necessity of another utility of the same kind;
  31-34              (2)  an extension within or to territory already served
  31-35  by it or to be served by it under a certificate of public
  31-36  convenience and necessity; or
  31-37              (3)  operation, extension, or service in progress on
  31-38  September 1, 1975.
  31-39        (b)  Any extensions allowed by Subsection (a) of this section
  31-40  shall be limited to devices for interconnection of existing
  31-41  facilities or devices used solely for transmitting electric utility
  31-42  services from existing facilities to customers of retail utility
  31-43  service.  (Sec. 51)
  31-44        Sec. 2.254.  APPLICATION; MAPS; EVIDENCE OF CONSENT.  (a)  An
  31-45  electric utility shall submit to the commission an application to
  31-46  obtain a certificate of public convenience and necessity or an
  31-47  amendment thereof.
  31-48        (b)  On or before 90 days after September 1, 1975, or at a
  31-49  later date on request in writing by an electric utility when good
  31-50  cause is shown, or at such later dates as the commission may order,
  31-51  each electric utility shall file with the commission a map or maps
  31-52  showing all its facilities and illustrating separately facilities
  31-53  for generation, transmission, and distribution of its services.
  31-54        (c)  Each applicant for a certificate shall file with the
  31-55  commission such evidence as is required by the commission to show
  31-56  that the applicant has received the required consent, franchise, or
  31-57  permit of the proper municipality or other public authority.  (Sec.
  31-58  52)
  31-59        (Sec. 53 deleted)
  31-60        Sec. 2.255.  NOTICE AND HEARING; ISSUANCE OR REFUSAL; FACTORS
  31-61  CONSIDERED; FILING OF NOTICE OF INTENT BY ELECTRIC UTILITIES; TIME
  31-62  FOR APPROVAL OR DENIAL OF NEW TRANSMISSION FACILITIES.  (a)  When
  31-63  an application for a certificate of public convenience and
  31-64  necessity is filed, the commission shall give notice of such
  31-65  application to interested parties and, if requested, shall fix a
  31-66  time and place for a hearing and give notice of the hearing.  Any
  31-67  person interested in the application may intervene at the hearing.
  31-68        (b)  The commission may grant applications and issue
  31-69  certificates only if the commission finds that the certificate is
  31-70  necessary for the service, accommodation, convenience, or safety of
   32-1  the public.  The commission may issue the certificate as prayed
   32-2  for, or refuse to issue it, or issue it for the construction of a
   32-3  portion only of the contemplated system or facility or extension
   32-4  thereof, or for the partial exercise only of the right or
   32-5  privilege.
   32-6        (c)  Certificates of convenience and necessity shall be
   32-7  granted on a nondiscriminatory basis after consideration by the
   32-8  commission of the adequacy of existing service, the need for
   32-9  additional service, the effect of the granting of a certificate on
  32-10  the recipient of the certificate and on any electric utility of the
  32-11  same kind already serving the proximate area, and on such factors
  32-12  as community values, recreational and park areas, historical and
  32-13  aesthetic values, environmental integrity, and the probable
  32-14  improvement of service or lowering of cost to consumers in such
  32-15  area resulting from the granting of such certificate.
  32-16        (d)  In addition to the requirements of this section, an
  32-17  electric utility applying for certificate of convenience and
  32-18  necessity for a new generating plant must first file a notice of
  32-19  intent to file an application for certification.
  32-20              (1)  The notice of intent shall set out alternative
  32-21  methods considered to help meet the electrical needs, related
  32-22  electrical facilities, and the advantages and disadvantages of the
  32-23  alternatives.  In addition, the notice shall indicate compatibility
  32-24  with the most recent long-term forecast provided in this Act.
  32-25              (2)  The commission shall conduct a hearing on the
  32-26  notice of intent to determine the appropriateness of the proposed
  32-27  generating plant as compared to the alternatives and shall issue a
  32-28  report on its findings.  In conjunction with the issuance of the
  32-29  report, the commission shall render a decision approving or
  32-30  disapproving the notice.  Such decision shall be rendered within
  32-31  180 days from the date of filing the notice of intent.
  32-32        (e)  On approval of the notice of intent, a utility may apply
  32-33  for certification for a generating plant, site, and site facilities
  32-34  not later than 12 months before construction is to commence.
  32-35              (1)  The application for certification shall contain
  32-36  such information as the commission may require to justify the
  32-37  proposed generating plant, site, and site facilities and to allow a
  32-38  determination showing compatibility with the most recent forecast.
  32-39              (2)  Certificates of convenience and necessity shall be
  32-40  granted on a nondiscriminatory basis if the commission finds that
  32-41  the proposed new plant is required under the service area forecast,
  32-42  that it is the best and most economical choice of technology for
  32-43  that service area as compatible with the commission's forecast, and
  32-44  that conservation and alternative energy sources cannot meet the
  32-45  need.
  32-46        (f)  If the application for a certificate of convenience and
  32-47  necessity involves new transmission facilities, the commission
  32-48  shall approve or deny the application within one year after the
  32-49  date the application is filed.  If the commission does not approve
  32-50  or deny the application before this deadline, any party may seek a
  32-51  writ of mandamus in a district court of Travis County to compel the
  32-52  commission to make a decision on the application.  (Sec. 54)
  32-53        Sec. 2.256.  AREA INCLUDED WITHIN CITY, TOWN OR VILLAGE.
  32-54  (a)  If an area has been or shall be included within the boundaries
  32-55  of a city, town, or village as the result of annexation,
  32-56  incorporation, or otherwise, all electric utilities certified or
  32-57  entitled to certification under this Act to provide service or
  32-58  operate facilities in such area prior to the inclusion shall have
  32-59  the right to continue and extend service in its area of public
  32-60  convenience and necessity within the annexed or incorporated area,
  32-61  pursuant to the rights granted by its certificate and this Act.
  32-62        (b)  Notwithstanding any other provision of law, an electric
  32-63  utility shall have the right to continue and extend service within
  32-64  its area of public convenience and necessity and to utilize the
  32-65  roads, streets, highways, alleys, and public property for the
  32-66  purpose of furnishing such retail utility service, subject to the
  32-67  authority of the governing body of a municipality to require any
  32-68  electric utility, at its own expense, to relocate its facilities to
  32-69  permit the widening or straightening of streets by giving to the
  32-70  electric utility 30 days' notice and specifying the new location
   33-1  for the facilities along the right-of-way of the street or streets.
   33-2        (c)  This section may not be construed as limiting the power
   33-3  of cities, towns, and villages to incorporate or extend their
   33-4  boundaries by annexation, nor may this section be construed as
   33-5  prohibiting any city or town from levying taxes and other special
   33-6  charges for the use of the streets as are authorized by Section
   33-7  182.025, Tax Code.
   33-8        (d)  Where a municipal corporation offers retail electric
   33-9  utility service in a city of more than 135,000 population located
  33-10  in a county of more than 1,500,000 population according to the last
  33-11  federal decennial census, the commission shall singly certificate
  33-12  areas within the corporate limits of such municipality where more
  33-13  than one electric utility provides electric utility service within
  33-14  such corporate limits.  In singly certificating such areas, the
  33-15  commission shall preserve the respective electric utilities' rights
  33-16  to serve the customers such electric utilities are serving on June
  33-17  17, 1983.  Provided, however, the foregoing does not apply to
  33-18  customers served, at least partially, by a nominal 69,000 volts
  33-19  system, who have given notice of termination to the utility
  33-20  servicing that customer prior to June 17, 1983.  (Sec. 55)
  33-21        Sec. 2.257.  CONTRACTS VALID AND ENFORCEABLE.  Contracts
  33-22  between retail electric utilities designating areas to be served
  33-23  and customers to be served by those utilities, when approved by the
  33-24  commission, shall be valid and enforceable and shall be
  33-25  incorporated into the appropriate areas of public convenience and
  33-26  necessity.  (Sec. 56)
  33-27        Sec. 2.258.  PRELIMINARY ORDER FOR CERTIFICATE.  If an
  33-28  electric utility desires to exercise a right or privilege under a
  33-29  franchise or permit which it contemplates securing but which has
  33-30  not as yet been granted to it, such electric utility may apply to
  33-31  the commission for an order preliminary to the issuance of the
  33-32  certificate.  The commission may thereupon make an order declaring
  33-33  that it will, on application, under such rules as it prescribes,
  33-34  issue the desired certificate on such terms and conditions as it
  33-35  designates, after the electric utility has obtained the
  33-36  contemplated franchise or permit.  On presentation to the
  33-37  commission of evidence satisfactory to it that the franchise or
  33-38  permit has been secured by the electric utility, the commission
  33-39  shall issue the certificate.  (Sec. 57)
  33-40        Sec. 2.259.  CONTINUOUS AND ADEQUATE SERVICE; DISCONTINUANCE,
  33-41  REDUCTION OR IMPAIRMENT OF SERVICE.  (a)  Except as provided by
  33-42  this section or Section 2.260 of this Act, the holder of any
  33-43  certificate of public convenience and necessity shall serve every
  33-44  consumer within its certified area and shall render continuous and
  33-45  adequate service within the area or areas.
  33-46        (b)  Unless the commission issues a certificate that neither
  33-47  the present or future convenience and necessity will be adversely
  33-48  affected, the holder of a certificate may not discontinue, reduce,
  33-49  or impair service to a certified service area or part thereof
  33-50  except for:
  33-51              (1)  nonpayment of charges;
  33-52              (2)  nonuse; or
  33-53              (3)  other similar reasons in the usual course of
  33-54  business.
  33-55        (c)  Any discontinuance, reduction, or impairment of service,
  33-56  whether with or without approval of the commission, shall be in
  33-57  conformity with and subject to such conditions, restrictions, and
  33-58  limitations as the commission shall prescribe.  (Sec. 58)
  33-59        Sec. 2.260.  CONDITIONS REQUIRING REFUSAL OF SERVICE.  The
  33-60  holder of a certificate of public convenience and necessity shall
  33-61  refuse to serve a customer within its certified area if the holder
  33-62  of the certificate is prohibited from providing the service under
  33-63  Section 212.012 or 232.0047, Local Government Code.  (Sec. 58A)
  33-64        Sec. 2.261.  SALE, ASSIGNMENT OR LEASE OF CERTIFICATE.  If
  33-65  the commission determines that a purchaser, assignee, or lessee is
  33-66  capable of rendering adequate service, an electric utility may
  33-67  sell, assign, or lease a certificate of public convenience and
  33-68  necessity or any rights obtained under the certificate.  The sale,
  33-69  assignment, or lease shall be on the conditions prescribed by the
  33-70  commission.  (Sec. 59)
   34-1        Sec. 2.262.  INTERFERENCE WITH OTHER UTILITY.  If an electric
   34-2  utility in constructing or extending its lines, plant, or system
   34-3  interferes or attempts to interfere with the operation of a line,
   34-4  plant, or system of any other utility, the commission may issue an
   34-5  order prohibiting the construction or extension or prescribing
   34-6  terms and conditions for locating the lines, plants, or systems
   34-7  affected.  (Sec. 60)
   34-8        Sec. 2.263.  IMPROVEMENTS IN SERVICE; INTERCONNECTING
   34-9  SERVICE.  After notice and hearing, the commission may:
  34-10              (1)  order an electric utility to provide specified
  34-11  improvements in its service in a defined area, if service in such
  34-12  area is inadequate or is substantially inferior to service in a
  34-13  comparable area and it is reasonable to require the company to
  34-14  provide such improved service; and
  34-15              (2)  order two or more electric utilities to establish
  34-16  specified facilities for the interconnecting service.  (Sec. 61
  34-17  (part))
  34-18        Sec. 2.264.  REVOCATION OR AMENDMENT OF CERTIFICATE.
  34-19  (a)  The commission at any time after notice and hearing may revoke
  34-20  or amend any certificate of convenience and necessity if it finds
  34-21  that the certificate holder has never provided or is no longer
  34-22  providing service in the area, or part of the area, covered by the
  34-23  certificate.
  34-24        (b)  When the certificate of any electric utility is revoked
  34-25  or amended, the commission may require one or more electric
  34-26  utilities to provide service in the area in question.  (Sec. 62)
  34-27               TITLE III.  TELECOMMUNICATIONS UTILITIES
  34-28                    SUBTITLE A.  GENERAL PROVISIONS
  34-29        Sec. 3.001.  DEFINITIONS.  In this title:
  34-30              (1)  "Dominant carrier"  means:
  34-31                    (A)  a provider of any particular communication
  34-32  service which is provided in whole or in part over a telephone
  34-33  system who as to such service has sufficient market power in a
  34-34  telecommunications market as determined by the commission to enable
  34-35  such provider to control prices in a manner adverse to the public
  34-36  interest for such service in such market; and
  34-37                    (B)  any provider of local exchange telephone
  34-38  service within a certificated exchange area as to such service.  A
  34-39  telecommunications market shall be statewide until January 1, 1985.
  34-40  After this date the commission may, if it determines that the
  34-41  public interest will be served, establish separate markets within
  34-42  the state.  Prior to January 1, 1985, the commission shall hold
  34-43  such hearings and require such evidence as is necessary to carry
  34-44  out the public purpose of this Act and to determine the need and
  34-45  effect of establishing separate markets.  Any such provider
  34-46  determined to be a dominant carrier as to a particular
  34-47  telecommunications service in a market may not be presumed to be a
  34-48  dominant carrier of a different telecommunications service in that
  34-49  market.  The term does not include an interexchange carrier that is
  34-50  not a certificated local exchange company, with respect to
  34-51  interexchange services.  (Sec. 3(c) (part))
  34-52              (2)  "Local exchange company" means a
  34-53  telecommunications utility certificated to provide local exchange
  34-54  service within the state.  (Sec. 3(v))
  34-55              (3)  "Telecommunications utility" or "utility" means
  34-56  any person, corporation, river authority, cooperative corporation,
  34-57  or any combination thereof, other than a municipal corporation, or
  34-58  their lessees, trustees, and receivers, now or hereafter owning or
  34-59  operating for compensation in this state equipment or facilities
  34-60  for the conveyance, transmission, or reception of communications
  34-61  over a telephone system as a dominant carrier.   A person or
  34-62  corporation not otherwise a telecommunications utility within the
  34-63  meaning of this Act may not be deemed such solely because of the
  34-64  furnishing or furnishing and maintenance of a private system or the
  34-65  manufacture, distribution, installation, or maintenance of customer
  34-66  premise communications equipment and accessories.  Nothing in this
  34-67  Act shall be construed to apply to telegraph services, television
  34-68  stations, radio stations, community antenna television services, or
  34-69  radio-telephone services that may be authorized under the Public
  34-70  Mobile Radio Services rules of the Federal Communications
   35-1  Commission, other than such radio-telephone services provided by
   35-2  wire-line telephone companies under the Domestic Public Land Mobile
   35-3  Radio Service and Rural Radio Service rules of the Federal
   35-4  Communications Commission.  Interexchange telecommunications
   35-5  carriers (including resellers of interexchange telecommunications
   35-6  services), specialized communications common carriers, other
   35-7  resellers of communications, other communications carriers who
   35-8  convey, transmit, or receive communications in whole or in part
   35-9  over a telephone system, and providers of operator services as
  35-10  defined in Section 3.052(a) of this Act (except that subscribers to
  35-11  customer-owned pay telephone service may not be deemed to be
  35-12  telecommunications utilities) are also telecommunications
  35-13  utilities, but the commission's regulatory authority as to them is
  35-14  only as hereinafter defined.  The term "telecommunications utility"
  35-15  or "utility" does not include any person or corporation not
  35-16  otherwise a telecommunications utility that furnishes the services
  35-17  or commodity described in this section only to itself, its
  35-18  employees, or tenants as an incident of such employee service or
  35-19  tenancy, when such service or commodity is not resold to or used by
  35-20  others.  (Sec. 3(c) (part))
  35-21              (4)  "Separation" means the division of plant,
  35-22  revenues, expenses, taxes, and reserves, applicable to exchange or
  35-23  local service where such items are used in common for providing
  35-24  telecommunications utility service to both local exchange service
  35-25  and other service, such as interstate or intrastate toll service.
  35-26  (Sec. 3(r))
  35-27                SUBTITLE B.  JURISDICTION OF COMMISSION
  35-28        Sec. 3.051.  TELECOMMUNICATIONS UTILITIES; REGULATION OF
  35-29  COMPETITION.  (a)  It is the policy of this state to protect the
  35-30  public interest in having adequate and efficient telecommunications
  35-31  service available to all citizens of the state at just, fair, and
  35-32  reasonable rates.  The legislature finds that the
  35-33  telecommunications industry through technical advancements, federal
  35-34  judicial and administrative actions, and the formulation of new
  35-35  telecommunications enterprises has become and will continue to be
  35-36  in many and growing areas a competitive industry which does not
  35-37  lend itself to traditional public utility regulatory rules,
  35-38  policies, and principles; and that therefore, the public interest
  35-39  requires that new rules, policies, and principles be formulated and
  35-40  applied to protect the public interest and to provide equal
  35-41  opportunity to all telecommunications utilities in a competitive
  35-42  marketplace.  It is the purpose of this section to grant to the
  35-43  commission the authority and the power under this Act to carry out
  35-44  the public policy herein stated.
  35-45        (b)  Subject to the limitations imposed in this Act, and for
  35-46  the purpose of carrying out the public policy above stated and of
  35-47  regulating rates, operations, and services so that such rates may
  35-48  be just, fair, and reasonable, and the services adequate and
  35-49  efficient, the commission shall have exclusive original
  35-50  jurisdiction over the business and property of all
  35-51  telecommunications utilities in this state.  In the exercise of its
  35-52  jurisdiction to regulate the rates, operations, and services of a
  35-53  telecommunications utility providing service in a municipality on
  35-54  the state line adjacent to a municipality in an adjoining state,
  35-55  the commission may cooperate with the utility regulatory commission
  35-56  of the adjoining state or the federal government and may hold joint
  35-57  hearings and make joint investigations with any of those
  35-58  commissions.
  35-59        (c)  Except as provided by Subsections (l) and (m) of this
  35-60  section and Section 3.052 of this Act, the commission shall only
  35-61  have the following jurisdiction over all telecommunications
  35-62  utilities who are not dominant carriers:
  35-63              (1)  to require registration as provided in Subsection
  35-64  (d) of this section;
  35-65              (2)  to conduct such investigations as are necessary to
  35-66  determine the existence, impact, and scope of competition in the
  35-67  telecommunications industry, including identifying dominant
  35-68  carriers in the local exchange and intralata interexchange
  35-69  telecommunications industry and defining the telecommunications
  35-70  market or markets, and in connection therewith may call and hold
   36-1  hearings, issue subpoenas to compel the attendance of witnesses and
   36-2  the production of papers and documents, and make findings of fact
   36-3  and decisions with respect to administering the provisions of this
   36-4  Act or the rules, orders, and other actions of the commission;
   36-5              (3)  to require the filing of such reports as the
   36-6  commission may direct from time to time;
   36-7              (4)  to require the maintenance of statewide average
   36-8  rates or prices of telecommunications service;
   36-9              (5)  to require that every local exchange area have
  36-10  access to interexchange telecommunications service, except that an
  36-11  interexchange telecommunications carrier must be allowed to
  36-12  discontinue service to a local exchange area if comparable service
  36-13  is available in the area and the discontinuance is not contrary to
  36-14  the public interest.  This section does not authorize the
  36-15  commission to require an interexchange telecommunications carrier
  36-16  that has not provided services to a local exchange area during the
  36-17  previous 12 months and that has never provided services to that
  36-18  same local exchange area for a cumulative period of one year at any
  36-19  time in the past to initiate services to that local exchange area;
  36-20  and
  36-21              (6)  to require the quality of interexchange
  36-22  telecommunications service provided in each exchange to be adequate
  36-23  to protect the public interest and the interests of customers of
  36-24  that exchange if the commission determines that service to a local
  36-25  exchange has deteriorated to the point that long distance service
  36-26  is not reliable.
  36-27        (d)  All providers of communications service described in
  36-28  Subsection (c) of this section who commence such service to the
  36-29  public shall register with the commission within 30 days of
  36-30  commencing service.  Such registration shall be accomplished by
  36-31  filing with the commission a description of the location and type
  36-32  of service provided, the cost to the public of such service, and
  36-33  such other registration information as the commission may direct.
  36-34  Notwithstanding any other provision of this Act, an interexchange
  36-35  telecommunications carrier doing business in this state shall
  36-36  continue to maintain on file with the commission tariffs or lists
  36-37  governing the terms of providing its services.
  36-38        (e)(1)  For the purpose of carrying out the public policy
  36-39  stated in Subsection (a) of this section and any other section of
  36-40  this Act notwithstanding, the commission is granted all necessary
  36-41  power and authority under this Act to promulgate rules and
  36-42  establish procedures applicable to local exchange companies for
  36-43  determining the level of competition in specific telecommunications
  36-44  markets and submarkets and providing appropriate regulatory
  36-45  treatment to allow local exchange companies to respond to
  36-46  significant competitive challenges.  Nothing in this section is
  36-47  intended to change the burden of proof of the local exchange
  36-48  company under Sections 3.202, 3.203, 3.204, 3.205, 3.206, 3.207,
  36-49  and 3.208 of this Act.
  36-50              (2)  In determining the level of competition in a
  36-51  specific market or submarket, the commission shall hold an
  36-52  evidentiary hearing to consider the following:
  36-53                    (A)  the number and size of telecommunications
  36-54  utilities or other persons providing the same, equivalent, or
  36-55  substitutable service;
  36-56                    (B)  the extent to which the same, equivalent, or
  36-57  substitutable service is available;
  36-58                    (C)  the ability of customers to obtain the same,
  36-59  equivalent, or substitutable services at comparable rates, terms,
  36-60  and conditions;
  36-61                    (D)  the ability of telecommunications utilities
  36-62  or other persons to make the same, equivalent, or substitutable
  36-63  service readily available at comparable rates, terms, and
  36-64  conditions;
  36-65                    (E)  the existence of any significant barrier to
  36-66  the entry or exit of a provider of the service; and
  36-67                    (F)  other relevant information deemed
  36-68  appropriate.
  36-69              (3)  The regulatory treatments which the commission may
  36-70  implement include but are not limited to:
   37-1                    (A)  approval of a range of rates for a specific
   37-2  service;
   37-3                    (B)  approval of customer-specific contracts for
   37-4  a specific service; provided, however, that the commission shall
   37-5  approve a contract to provide central office based PBX-type
   37-6  services for systems of 200 stations or more, billing and
   37-7  collection services, high-speed private line services of 1.544
   37-8  megabits or greater, and customized services, provided that the
   37-9  contract is filed at least 30 days before initiation of the service
  37-10  contracted for; that the contract is accompanied with an affidavit
  37-11  from the person or entity contracting for the telecommunications
  37-12  service stating that he considered the acquisition of the same,
  37-13  equivalent, or substitutable services by bid or quotation from a
  37-14  source other than the local exchange company; that the local
  37-15  exchange company is recovering the appropriate costs of providing
  37-16  the services; and that approval of the contract is in the public
  37-17  interest.  The contract shall be approved or denied within 30 days
  37-18  after filing, unless the commission for good cause extends the
  37-19  effective date for an additional 35 days; and
  37-20                    (C)  the detariffing of rates.
  37-21        (f)  Moreover, in order to encourage the rapid introduction
  37-22  of new or experimental services or promotional rates, the
  37-23  commission shall promulgate rules and establish procedures which
  37-24  allow the expedited introduction of, the establishment and
  37-25  adjustment of rates for, and withdrawal of such services, including
  37-26  requests for such services made to the commission by the governing
  37-27  body of a municipality served by a local exchange company having
  37-28  more than 500,000 access lines throughout the state.  Rates
  37-29  established or adjusted at the request of a municipality may not
  37-30  result in higher rates for ratepayers outside the boundaries of the
  37-31  municipality and may not include any rates for local exchange
  37-32  company interexchange services or interexchange carrier access
  37-33  service.
  37-34        (g)  In promulgating new rules and establishing the
  37-35  procedures contemplated in Subsections (e) and (f) of this section,
  37-36  the commission shall seek to balance the public interest in a
  37-37  technologically advanced telecommunications system providing a wide
  37-38  range of new and innovative services with traditional regulatory
  37-39  concerns for preserving universal service, prohibiting
  37-40  anticompetitive practices, and preventing the subsidization of
  37-41  competitive services with revenues from regulated monopoly
  37-42  services.  The commission shall promulgate these rules and
  37-43  establish these procedures so as to incorporate an appropriate mix
  37-44  of regulatory and market mechanisms reflecting the level and nature
  37-45  of competition in the marketplace.  Rates established under
  37-46  Subsections (e) and (f) of this section may not be:
  37-47              (1)  unreasonably preferential, prejudicial, or
  37-48  discriminatory;
  37-49              (2)  subsidized either directly or indirectly by
  37-50  regulated monopoly services; or
  37-51              (3)  predatory or anticompetitive.
  37-52        (h)  The commission shall initiate a rulemaking proceeding
  37-53  and take public comment and promulgate rules which prescribe the
  37-54  standards necessary to ensure that all rates set under the
  37-55  provisions of this section cover their appropriate costs as
  37-56  determined by the commission.  Until such rules are promulgated,
  37-57  the commission shall use a costing methodology that is in the
  37-58  public interest in determining whether the rates set under the
  37-59  provisions of this section cover their appropriate costs.
  37-60        (i)  The commission is granted all necessary power and
  37-61  authority to prescribe and collect fees and assessments from local
  37-62  exchange companies necessary to recover the commission's and the
  37-63  office's costs of activities carried out and services provided
  37-64  under this subsection and Subsections (e), (f), (g), (h), (j), and
  37-65  (k) of this section.
  37-66        (j)  Subsections (e) and (f) of this section are not
  37-67  applicable to basic local exchange service, including local
  37-68  measured service.  Paragraph (B) of Subdivision (3) of Subsection
  37-69  (e) of this section is not applicable to message telecommunications
  37-70  services, switched access services for interexchange carriers, or
   38-1  wide area telecommunications service.  A local exchange company may
   38-2  not price similar services provided pursuant to contracts under
   38-3  Paragraph (B) of Subdivision (3) of Subsection (e) of this section
   38-4  in an unreasonably discriminatory manner.  For purposes of this
   38-5  section, similar services shall be defined as those services which
   38-6  are provided at or near the same point in time, which have the same
   38-7  characteristics and which are provided under the same or similar
   38-8  circumstances.
   38-9        (k)  Before January 15 of each odd-numbered year, the
  38-10  commission shall report to the legislature on the scope of
  38-11  competition in regulated telecommunications markets and the impact
  38-12  of competition on customers in both competitive and noncompetitive
  38-13  markets, with a specific focus on rural markets.  The report shall
  38-14  include an assessment of the impact of competition on the rates and
  38-15  availability of telecommunications services for residential and
  38-16  business customers and shall specifically address any effects on
  38-17  universal service.  The report shall provide a summary of
  38-18  commission actions over the preceding two years which reflect
  38-19  changes in the scope of competition in regulated telecommunications
  38-20  markets.  The report shall also include recommendations to the
  38-21  legislature for further legislation which the commission finds
  38-22  appropriate to promote the public interest in the context of a
  38-23  partially competitive telecommunications market.
  38-24        (l)  Notwithstanding any other provision of this Act, the
  38-25  commission may enter such orders as may be necessary to protect the
  38-26  public interest, including the imposition on any specific service
  38-27  or services of its full regulatory authority under this subtitle,
  38-28  Subtitles C-F of this title, and Subtitles D-I of Title I of this
  38-29  Act, if the commission upon complaint from another interexchange
  38-30  telecommunications carrier finds by a preponderance of the evidence
  38-31  upon notice and hearing that an interexchange telecommunications
  38-32  carrier has engaged in predatory pricing or attempted to engage in
  38-33  predatory pricing.
  38-34        (m)  Notwithstanding any other provision of this Act, the
  38-35  commission may enter such orders as may be necessary to protect the
  38-36  public interest if the commission finds upon notice and hearing
  38-37  that an interexchange telecommunications carrier has:
  38-38              (1)  failed to maintain statewide average rates;
  38-39              (2)  abandoned interexchange message telecommunications
  38-40  service to a local exchange area in a manner contrary to the public
  38-41  interest; or
  38-42              (3)  engaged in a pattern of preferential or
  38-43  discriminatory activities prohibited by Sections 3.213 and 3.215 of
  38-44  this Act, except that nothing in this Act shall prohibit volume
  38-45  discounts or other discounts based on reasonable business purposes.
  38-46        (n)  In any proceeding before the commission alleging conduct
  38-47  or activities by an interexchange telecommunications carrier
  38-48  against another interexchange carrier in contravention of
  38-49  Subsections (l), (m), and (o) of this section, the burden of proof
  38-50  shall be upon the complaining interexchange telecommunications
  38-51  carrier; however, in such proceedings brought by customers or their
  38-52  representatives who are not themselves interexchange
  38-53  telecommunications carriers or in such proceedings initiated by the
  38-54  commission, the burden of proof shall be upon the respondent
  38-55  interexchange telecommunications carrier.  However, if the
  38-56  commission finds it to be in the public interest, the commission
  38-57  may impose the burden of proof in such proceedings on the
  38-58  complaining party.
  38-59        (o)  The commission shall have the authority to require that
  38-60  a service provided by an interexchange telecommunications carrier
  38-61  described in Subsection (c) of this section be made available in an
  38-62  exchange served by the carrier within a reasonable time after
  38-63  receipt of a bona fide request for such service in that exchange,
  38-64  subject to the ability of the local exchange company to provide the
  38-65  required access or other service.  A carrier may not be required to
  38-66  extend a service to an area if provision of that service would
  38-67  impose, after consideration of the public interest to be served,
  38-68  unreasonable costs upon or require unreasonable investments by the
  38-69  interexchange telecommunications carrier.  The commission may
  38-70  require such information from interexchange carriers and local
   39-1  exchange carriers as may be necessary to enforce this provision.
   39-2        (p)  The commission may exempt from any requirement of this
   39-3  section an interexchange telecommunications carrier that the
   39-4  commission determines does not have a significant effect on the
   39-5  public interest, and it may exempt any interexchange carrier which
   39-6  solely relies on the facilities of others to complete long distance
   39-7  calls if the commission deems this action to be in the public
   39-8  interest.
   39-9        (q)  Requirements imposed by Subsections (c), (d), (k), (l),
  39-10  (m), (n), (o), and (p) of this section on an interexchange
  39-11  telecommunications carrier shall apply to nondominant carriers and
  39-12  shall constitute the minimum requirements to be imposed by the
  39-13  commission for any dominant carrier.  (Sec. 18--old Subsec. (p)
  39-14  deleted)
  39-15        Sec. 3.052.  OPERATOR SERVICE; REGULATION AND DISCLOSURE OF
  39-16  INFORMATION.  (a)  In this section "operator service" means any
  39-17  service using live operator or automated operator functions for the
  39-18  handling of telephone service such as toll calling via collect,
  39-19  third number billing, and calling card services.  Calls for which
  39-20  the called party has arranged to be billed (800 service) are not
  39-21  considered operator services.
  39-22        (b)  Prior to the connection of each call the operator
  39-23  service provider shall:
  39-24              (1)  announce the provider's name; and
  39-25              (2)  quote, at the caller's request, the rate and any
  39-26  other fees or surcharges applicable to the call and charged by the
  39-27  provider.
  39-28        (c)  An operator service provider shall furnish each entity
  39-29  with which it contracts to provide operator service a sticker,
  39-30  card, or other form of information approved by the commission for
  39-31  each telephone that has access to the service and is intended to be
  39-32  utilized by the public, unless the owner of the telephone has
  39-33  received approval from the commission for an alternative form of
  39-34  information.  The information must state the provider's name, that
  39-35  the operator service provider will provide rate information on the
  39-36  caller's request, that the caller will be informed how to access
  39-37  the local exchange company operator on request, and that any
  39-38  complaint about the service may be made to the provider or the
  39-39  commission at the designated telephone number.  The operator
  39-40  service provider shall require by contract that the entity
  39-41  receiving the information display it on or near each of the
  39-42  telephones that has access to the service and is intended for use
  39-43  by the public.
  39-44        (d)  An operator service provider must, on request, inform
  39-45  the caller how to access the operator for the local exchange
  39-46  company serving the exchange from which the call is made.  A charge
  39-47  may not be made for this information.
  39-48        (e)  The commission shall adopt rules requiring an operator
  39-49  service provider to include in its contract with each entity
  39-50  through which it provides operator service a requirement that the
  39-51  telephones subscribed to its services shall allow access to the
  39-52  local exchange carrier operator serving the exchange from which the
  39-53  call is made and to other telecommunications utilities; but in
  39-54  order to prevent fraudulent use of its services, an operator
  39-55  service provider and individual entities through which it provides
  39-56  operator services may block access if either obtains a waiver for
  39-57  this purpose from the commission or the Federal Communications
  39-58  Commission.  The procedure and criteria for obtaining a waiver from
  39-59  the commission shall be set forth in the commission's rules.
  39-60        (f)  The commission shall promulgate rules consistent with
  39-61  the requirements of this section and any additional requirements
  39-62  deemed necessary to protect the public interest by January 1, 1990.
  39-63  All rules promulgated under this section shall be nondiscriminatory
  39-64  and designed to promote competition that facilitates consumer
  39-65  choice.
  39-66        (g)  The commission may investigate a complaint that it
  39-67  receives concerning operator services.  If the commission
  39-68  determines that an operator service provider has violated or is
  39-69  about to violate this section, the commission may, upon proper
  39-70  notice and evidentiary hearing, take action to stop, correct, or
   40-1  prevent the violation.
   40-2        (h)  Except as provided by Subsection (i) of this section,
   40-3  this section applies only to a telecommunications utility that is
   40-4  not a dominant carrier.  The commission is granted all necessary
   40-5  power and authority under this Act to promulgate rules and
   40-6  establish procedures for the purposes of enforcing and implementing
   40-7  this section.
   40-8        (i)  Each dominant or nondominant telecommunications utility
   40-9  that provides operator service shall ensure that a caller may
  40-10  access a live operator at the beginning of all live or mechanized
  40-11  operator assisted calls through a method designed to be easily and
  40-12  clearly understandable and accessible to the caller.  A
  40-13  telecommunications utility shall submit to the commission the
  40-14  method by which the utility will provide access to a live operator
  40-15  for review.  This subsection applies regardless of the method by
  40-16  which the telecommunications utility provides the operator service.
  40-17  The requirements of this subsection do not apply to telephones
  40-18  located in prison or jail facilities.  (Sec. 18A)
  40-19                      SUBTITLE C.  MUNICIPALITIES
  40-20        Sec. 3.101.  RATEMAKING PROCEEDINGS; ENGAGEMENT OF
  40-21  CONSULTANTS, ACCOUNTANTS, AUDITORS, ATTORNEYS AND ENGINEERS;
  40-22  STANDING.  (a)  The governing body of any municipality
  40-23  participating in ratemaking proceedings shall have the right to
  40-24  select and engage rate consultants, accountants, auditors,
  40-25  attorneys, engineers, or any combination thereof, to conduct
  40-26  investigations, present evidence, advise and represent the
  40-27  governing body, and assist with litigation in telecommunications
  40-28  utility ratemaking proceedings before the commission or in court.
  40-29  The telecommunications utility engaged in such proceedings shall be
  40-30  required to reimburse the governing body for the reasonable costs
  40-31  of such services to the extent found reasonable by the commission.
  40-32        (b)  Municipalities shall have standing in all cases before
  40-33  the commission regarding utilities serving within their corporate
  40-34  limits subject to the right of the commission to determine standing
  40-35  in cases involving retail service area disputes involving two or
  40-36  more utilities and to consolidate municipalities on issues of
  40-37  common interest and shall be entitled to judicial review of orders
  40-38  regarding said proceedings in accordance with Section 1.301 of the
  40-39  Act.  (Sec. 24 (part))
  40-40        Sec. 3.102.  ASSISTANCE OF COMMISSION.  The commission may
  40-41  advise and assist municipalities upon request in connection with
  40-42  questions and proceedings arising under this Act.  Such assistance
  40-43  may include aid to municipalities in connection with matters
  40-44  pending before the commission or the courts, including making
  40-45  members of the staff available as witnesses and otherwise providing
  40-46  evidence to them.  (Sec. 25)
  40-47                    SUBTITLE D.  RATES AND SERVICES
  40-48        Sec. 3.151.  RATES; METHODS AND ACCOUNTS.  (a)  The
  40-49  commission shall fix proper and adequate rates and methods of
  40-50  depreciation, amortization, or depletion of the several classes of
  40-51  property of each telecommunications utility, and shall require
  40-52  every telecommunications utility to carry a proper and adequate
  40-53  depreciation account in accordance with such rates and methods and
  40-54  with such other rules and regulations as the commission prescribes.
  40-55  Such rates, methods, and accounts shall be utilized uniformly and
  40-56  consistently throughout the ratesetting and appeal proceedings.
  40-57        (b)  Every telecommunications utility shall keep separate
  40-58  accounts to show all profits or losses resulting from the sale or
  40-59  lease of appliances, fixtures, equipment, or other merchandise.
  40-60  This profit or loss may not be taken into consideration by the
  40-61  commission in arriving at any rate to be charged for service by any
  40-62  such telecommunications utility, to the extent that such
  40-63  merchandise is not integral to the provision of utility service.
  40-64        (c)  In determining the allocation of tax savings derived
  40-65  from application of such methods as liberalized depreciation and
  40-66  amortization and the investment tax credit, the commission shall
  40-67  equitably balance the interests of present and future customers and
  40-68  shall apportion such benefits between consumers and the utilities
  40-69  accordingly.  Where any portion of the investment tax credit has
  40-70  been retained by a telecommunications utility, that same amount
   41-1  shall be deducted from the original cost of the facilities or other
   41-2  addition to the rate base to which the credit applied, to the
   41-3  extent allowed by the Internal Revenue Code.  (Secs. 27(b), (c),
   41-4  (e))
   41-5        Sec. 3.152.  REPORTING OF ADVERTISING OR PUBLIC RELATIONS
   41-6  EXPENSES.  (a)  The commission may require an annual reporting from
   41-7  each utility company of all its expenditures for business gifts and
   41-8  entertainment, and institutional, consumption-inducing and other
   41-9  advertising or public relations expenses.
  41-10        (b)  The commission may not allow as costs or expenses for
  41-11  ratemaking purposes any of these expenditures which the commission
  41-12  determines not to be in the public interest.
  41-13        (c)  The cost of legislative advocacy expenses may not in any
  41-14  case be allowed as costs or expenses for ratemaking purposes.
  41-15        (d)  Reasonable charitable or civic contributions may be
  41-16  allowed not to exceed the amount approved by the commission.  (Sec.
  41-17  30)
  41-18        Sec. 3.153.  UNLAWFUL RATES, RULES AND REGULATIONS.  It shall
  41-19  be unlawful for any utility to charge, collect, or receive any rate
  41-20  for utility service or to impose any rule or regulation other than
  41-21  as herein provided.  (Sec. 31)
  41-22        Sec. 3.154.  FILING SCHEDULE OF RATES, RULES AND REGULATIONS.
  41-23  (a)  Every telecommunications utility shall file with the
  41-24  commission schedules showing all rates which are subject to the
  41-25  jurisdiction of the commission and which are in force at the time
  41-26  for any utility service, product, or commodity offered by the
  41-27  utility.
  41-28        (b)  Every telecommunications utility shall file with, and as
  41-29  a part of such schedules, all rules and regulations relating to or
  41-30  affecting the rates, utility service, product, or commodity
  41-31  furnished by such utility.  (Sec. 32 (part))
  41-32        Sec. 3.155.  STANDARDS OF SERVICE.  (a)  Every
  41-33  telecommunications utility shall furnish such service,
  41-34  instrumentalities, and facilities as shall be safe, adequate,
  41-35  efficient, and reasonable.
  41-36        (b)  The commission after reasonable notice and hearing had
  41-37  on its own motion or on complaint, may:
  41-38              (1) ascertain and fix just and reasonable standards,
  41-39  classifications, regulations, or practices to be observed and
  41-40  followed by any or all utilities with respect to the service to be
  41-41  furnished;
  41-42              (2)  ascertain and fix adequate and reasonable
  41-43  standards for the measurement of the quantity, quality, or other
  41-44  condition pertaining to the supply of the service;
  41-45              (3)  prescribe reasonable regulations for the
  41-46  examination and testing of the service and for the measurement
  41-47  thereof; and
  41-48              (4)  establish or approve reasonable rules,
  41-49  regulations, specifications, and standards to secure the accuracy
  41-50  of all meters, instruments and equipment used for the measurement
  41-51  of any service of any telecommunications utility.
  41-52        (c)  Any standards, classifications, regulations, or
  41-53  practices now or hereafter observed or followed by any
  41-54  telecommunications utility may be filed by it with the commission,
  41-55  and the same shall continue in force until amended by the
  41-56  telecommunications utility or until changed by the commission as
  41-57  herein provided.  (Sec. 35 (part))
  41-58            SUBTITLE E.  PROCEEDINGS BEFORE THE COMMISSION
  41-59        Sec. 3.201.  POWER TO INSURE COMPLIANCE; RATE REGULATION.
  41-60  Subject to the provisions of this Act, the commission is hereby
  41-61  vested with all authority and power of the State of Texas to insure
  41-62  compliance with the obligations of telecommunications utilities in
  41-63  this Act.  To the extent otherwise provided by this Act, the
  41-64  commission is empowered to fix and regulate rates of
  41-65  telecommunications utilities, including rules and regulations for
  41-66  determining the classification of customers and services and for
  41-67  determining the applicability of rates.  A rule or order of the
  41-68  commission may not conflict with the rulings of any federal
  41-69  regulatory body.  (Sec. 37--changed to reflect different
  41-70  regulation)
   42-1        Sec. 3.202.  JUST AND REASONABLE RATES.  It shall be the duty
   42-2  of the commission to insure that every rate made, demanded, or
   42-3  received by any telecommunications utility, or by any two or more
   42-4  utilities jointly, shall be just and reasonable.  Rates may not be
   42-5  unreasonably preferential, prejudicial, or discriminatory, but
   42-6  shall be sufficient, equitable, and consistent in application to
   42-7  each class of consumers.  For ratemaking purposes, the commission
   42-8  may treat two or more municipalities served by a telecommunications
   42-9  utility as a single class wherever it deems such treatment to be
  42-10  appropriate.  Approval by the commission of a reduced rate for
  42-11  service for a class of consumers eligible under Section 3.352 of
  42-12  this Act for tel-assistance service does not constitute a violation
  42-13  of this section.  (Sec. 38)
  42-14        Sec. 3.203.  FIXING OVERALL REVENUES.  (a)  In fixing the
  42-15  rates of a telecommunications utility the commission shall fix its
  42-16  overall revenues at a level which will permit such utility a
  42-17  reasonable opportunity to earn a reasonable return on its invested
  42-18  capital used and useful in rendering service to the public over and
  42-19  above its reasonable and necessary operating expenses.
  42-20        (b)  In fixing a reasonable return on invested capital, the
  42-21  commission shall consider, in addition to other applicable factors,
  42-22  the quality of the utility's services, the efficiency of the
  42-23  utility's operations, and the quality of the utility's management.
  42-24  (Sec. 39 (part))
  42-25        Sec. 3.204.  BURDEN OF PROOF.  Except as hereafter provided,
  42-26  in any proceeding involving any proposed change of rates, the
  42-27  burden of proof to show that the proposed change, if proposed by
  42-28  the utility, or that the existing rate, if it is proposed to reduce
  42-29  the rate, is just and reasonable shall be on the telecommunications
  42-30  utility.  In any proceeding involving a local exchange company in
  42-31  which the local exchange company's rate or rates are in issue, the
  42-32  burden of proof that such rate or rates are just and reasonable
  42-33  shall be on the local exchange company.  (Sec. 40)
  42-34        Sec. 3.205.  COMPONENTS OF INVESTED CAPITAL AND NET INCOME.
  42-35  The components of invested capital and net income shall be
  42-36  determined according to Sections 3.206, 3.207, and 3.208.  (Sec. 41
  42-37  (part))
  42-38        Sec. 3.206.  INVESTED CAPITAL.  (a)  Utility rates shall be
  42-39  based upon the original cost of property used by and useful to the
  42-40  telecommunications utility in providing service including
  42-41  construction work in progress at cost as recorded on the books of
  42-42  the utility.
  42-43        (b)  The inclusion of construction work in progress is an
  42-44  exceptional form of rate relief to be granted only upon the
  42-45  demonstration by the utility that such inclusion is necessary to
  42-46  the financial integrity of the utility.  Construction work in
  42-47  progress may not be included in the rate base for major projects
  42-48  under construction to the extent that such projects have been
  42-49  inefficiently or imprudently planned or managed.
  42-50        (c)  Original cost shall be the actual money cost, or the
  42-51  actual money value of any consideration paid other than money, of
  42-52  the property at the time it shall have been dedicated to public
  42-53  use, whether by the utility which is the present owner or by a
  42-54  predecessor, less depreciation.  (Sec. 41(a))
  42-55        Sec. 3.207.  SEPARATIONS AND ALLOCATIONS.  Costs of
  42-56  facilities, revenues, expenses, taxes, and reserves shall be
  42-57  separated or allocated as prescribed by the commission.  (Sec.
  42-58  41(b))
  42-59        Sec. 3.208.  NET INCOME.  (a)  "Net income" means the total
  42-60  revenues of the telecommunications utility less all reasonable and
  42-61  necessary expenses as determined by the commission.  The commission
  42-62  shall determine expenses and revenues in a manner consistent with
  42-63  this section.
  42-64        (b)  Transactions with Affiliated Interests.  Payment to
  42-65  affiliated interests for costs of any services, or any property,
  42-66  right or thing, or for interest expense may not be allowed either
  42-67  as capital cost or as expense except to the extent that the
  42-68  commission shall find such payment to be reasonable and necessary
  42-69  for each item or class of items as determined by the commission.
  42-70  Any such finding shall include specific findings of the
   43-1  reasonableness and necessity of each item or class of items allowed
   43-2  and a finding that the price to the utility is no higher than
   43-3  prices charged by the supplying affiliate to its other affiliates
   43-4  or divisions for the same item or class of items, or to
   43-5  unaffiliated persons or corporations.
   43-6        (c)  Income Taxes.  If the telecommunications utility is a
   43-7  member of an affiliated group that is eligible to file a
   43-8  consolidated income tax return, and if it is advantageous to the
   43-9  telecommunications utility to do so, income taxes shall be computed
  43-10  as though a consolidated return had been so filed and the utility
  43-11  had realized its fair share of the savings resulting from the
  43-12  consolidated return, unless it is shown to the satisfaction of the
  43-13  commission that it was reasonable to choose not to consolidate
  43-14  returns.  The amounts of income taxes saved by a consolidated group
  43-15  of which a telecommunications utility is a member by reason of the
  43-16  elimination in the consolidated return of the intercompany profit
  43-17  on purchases by the telecommunications utility from an affiliate
  43-18  shall be applied to reduce the cost of the property or services so
  43-19  purchased.  The investment tax credit allowed against federal
  43-20  income taxes, to the extent retained by the utility, shall be
  43-21  applied as a reduction in the rate based contribution of the assets
  43-22  to which such credit applies, to the extent and at such rate as
  43-23  allowed by the Internal Revenue Code.
  43-24        (d)  Expenses Disallowed.  The commission may not consider
  43-25  for ratemaking purposes the following expenses:
  43-26              (1)  legislative advocacy expenses, whether made
  43-27  directly or indirectly, including but not limited to legislative
  43-28  advocacy expenses included in trade association dues;
  43-29              (2)  costs of processing a refund or credit under
  43-30  Subsection (e) of Section 3.211 of this Act; or
  43-31              (3)  any expenditure found by the commission to be
  43-32  unreasonable, unnecessary, or not in the public interest, including
  43-33  but not limited to executive salaries, advertising expenses, legal
  43-34  expenses, and civil penalties or fines.
  43-35        (e)  The commission may promulgate reasonable rules and
  43-36  regulations with respect to the allowance or disallowance of any
  43-37  expenses for ratemaking purposes.  (Sec. 41(c))
  43-38        Sec. 3.209.  SELF-INSURANCE.  (a)  A telecommunications
  43-39  utility may self-insure all or a portion of its potential liability
  43-40  or catastrophic property loss, including windstorm, fire, and
  43-41  explosion losses which could not have been reasonably anticipated
  43-42  and included under operating and maintenance expenses.  The
  43-43  commission shall approve a self-insurance plan under this section
  43-44  if it finds that the coverage is in the public interest and the
  43-45  plan is a lower cost alternative to purchasing commercial
  43-46  insurance, considering all costs, and that ratepayers will receive
  43-47  the benefits of that saving.
  43-48        (b)  In computing a utility's reasonable and necessary
  43-49  expenses under Section 3.208 of this Act, the commission shall
  43-50  allow as a necessary expense the funds credited to reserve accounts
  43-51  for the self-insurance, to the extent the commission finds it in
  43-52  the public interest.  After the reserve account is established, the
  43-53  commission shall consider if the reserve account has a surplus or
  43-54  shortage in determining the utility's rate base.  A surplus in the
  43-55  reserve account will exist if the charges against the reserve
  43-56  account are less than the funds credited to the reserve.  A
  43-57  shortage in the reserve account will exist if the charges against
  43-58  the account are greater than the funds credited to the reserve.
  43-59  The commission shall subtract any surplus from and add any shortage
  43-60  to the rate base.
  43-61        (c)  The commission shall determine reasonableness under
  43-62  Subsection (b) of this section from information provided at the
  43-63  time the self-insurance plan and reserve account are established
  43-64  and upon the filing of each rate case by a utility that has such a
  43-65  fund.
  43-66        (d)  The commission shall adopt rules governing
  43-67  self-insurance under this section.  (Secs. 41B(a)-(d))
  43-68        Sec. 3.210.  UNREASONABLE OR VIOLATIVE EXISTING RATES;
  43-69  INVESTIGATING COSTS OF OBTAINING SERVICE FROM ANOTHER SOURCE.
  43-70  (a)  Whenever the commission, after reasonable notice and hearing,
   44-1  on its own motion or on complaint by any affected person, finds
   44-2  that the existing rates of any telecommunications utility for any
   44-3  service are unreasonable or in any way in violation of any
   44-4  provision of law, the commission shall determine the just and
   44-5  reasonable rates, including maximum or minimum rates, to be
   44-6  thereafter observed and in force, and shall fix the same by order
   44-7  to be served on the telecommunications utility; and such rates
   44-8  shall constitute the legal rates of the telecommunications utility
   44-9  until changed as provided in this Act.
  44-10        (b)  Whenever a telecommunications utility does not itself
  44-11  produce or generate that which it distributes, transmits, or
  44-12  furnishes to the public for compensation, but obtains the same from
  44-13  another source, the commission shall have the power and authority
  44-14  to investigate the cost of such production or generation in any
  44-15  investigation of the reasonableness of the rates of such
  44-16  telecommunications utility.  (Sec. 42 (part))
  44-17        Sec. 3.211.  STATEMENT OF INTENT TO CHANGE RATES; MAJOR
  44-18  CHANGES; HEARING; SUSPENSION OF RATE SCHEDULE; DETERMINATION OF
  44-19  RATE LEVEL.  (a)  A utility may not make changes in its rates
  44-20  except by filing a statement of intent with the commission at least
  44-21  35 days prior to the effective date of the proposed change.  The
  44-22  statement of intent shall include proposed revisions of tariffs and
  44-23  schedules and a statement specifying in detail each proposed
  44-24  change, the effect the proposed change is expected to have on the
  44-25  revenues of the company, the classes and numbers of utility
  44-26  consumers affected, and such other information as may be required
  44-27  by the commission's rules and regulations.  A copy of the statement
  44-28  of intent shall be mailed or delivered to the appropriate officer
  44-29  of each affected municipality, and notice shall be given by
  44-30  publication in conspicuous form and place of a notice to the public
  44-31  of such proposed change once in each week for four successive weeks
  44-32  prior to the effective date of the proposed change in a newspaper
  44-33  having general circulation in each county containing territory
  44-34  affected by the proposed change, and by mail to such other affected
  44-35  persons as may be required by the commission's rules and
  44-36  regulations. The commission may waive the publication of notice
  44-37  requirement prescribed by this subsection in a proceeding that
  44-38  involves a rate reduction for all affected ratepayers only.  The
  44-39  applicant shall give notice of the proposed rate change by mail to
  44-40  all affected utility customers.  The commission by rule shall also
  44-41  define other proceedings for which the publication of notice
  44-42  requirement prescribed by this subsection may be waived on a
  44-43  showing of good cause, provided that a waiver may not be granted in
  44-44  any proceeding involving a rate increase to any class or category
  44-45  of ratepayer.
  44-46        (b)  The commission, for good cause shown, may, except in the
  44-47  case of major changes, allow changes in rate to take effect prior
  44-48  to the end of such 35-day period under such conditions as it may
  44-49  prescribe, subject to suspension as provided herein.  All such
  44-50  changes shall be indicated immediately upon its schedules by such
  44-51  utility.  "Major changes" shall mean an increase in rates which
  44-52  would increase the aggregate revenues of the applicant more than
  44-53  the greater of $100,000 or 2 1/2 percent, but does not include
  44-54  changes in rates allowed to go into effect by the commission or
  44-55  made by the utility pursuant to an order of the commission after
  44-56  hearings held upon notice to the public.
  44-57        (c)  Whenever there is filed with the commission any schedule
  44-58  modifying or resulting in a change in any rates then in force, the
  44-59  commission shall on complaint by any affected person or may on its
  44-60  own motion, at any time within 30 days from the date when such
  44-61  change would or has become effective, and, if it so orders, without
  44-62  answer or other formal pleading by the utility, but on reasonable
  44-63  notice, including notice to the governing bodies of all affected
  44-64  municipalities and counties, enter on a hearing to determine the
  44-65  propriety of such change.  The commission shall hold such a hearing
  44-66  in every case in which the change constitutes a major change in
  44-67  rates, provided that an informal proceeding may satisfy this
  44-68  requirement if a complaint has not been received before the
  44-69  expiration of 45 days after notice of the change shall have been
  44-70  filed.  In each case where the commission determines it is in the
   45-1  public interest to collect testimony at a regional hearing for the
   45-2  inclusion in the record, the commission shall hold a regional
   45-3  hearing at an appropriate location.  A regional hearing is not
   45-4  required in a case involving a member-owned utility, unless the
   45-5  commission determines otherwise.
   45-6        (d)  Pending the hearing and decision, the commission, after
   45-7  delivery to the affected utility of a statement in writing of its
   45-8  reasons therefor, may suspend the operation of the schedule for a
   45-9  period not to exceed 150 days beyond the date on which the schedule
  45-10  would otherwise go into effect.  If the commission does not make a
  45-11  final determination concerning any schedule of rates prior to
  45-12  expiration of the period or periods of suspension, the schedule
  45-13  shall be deemed to have been approved by the commission.  However,
  45-14  the 150-day period shall be extended two days for each one day of
  45-15  actual hearing on the merits of the case that exceeds 15 days.
  45-16  This approval is subject to the authority of the commission
  45-17  thereafter to continue a hearing in progress.  The commission may
  45-18  in its discretion fix temporary rates for any period of suspension
  45-19  under this section.  During the suspension by the commission as
  45-20  above provided, the rates in force when the suspended schedule was
  45-21  filed shall continue in force unless the commission shall establish
  45-22  a temporary rate.  The commission shall give preference to the
  45-23  hearing and decision of questions arising under this section over
  45-24  all other questions pending before it and decide the same as
  45-25  speedily as possible.
  45-26        (e)  If the 150-day period has been extended, as provided by
  45-27  Subsection (d) of this section, and the commission fails to make
  45-28  its final determination of rates within 150 days from the date that
  45-29  the proposed change otherwise would have gone into effect, the
  45-30  utility concerned may put a changed rate, not to exceed the
  45-31  proposed rate, into effect upon the filing with the commission of a
  45-32  bond payable to the commission in an amount and with sureties
  45-33  approved by the commission conditioned upon refund and in a form
  45-34  approved by the commission.  The utility concerned shall refund or
  45-35  credit against future bills all sums collected during the period of
  45-36  suspension in excess of the rate finally ordered plus interest at
  45-37  the current rate as finally determined by the commission.
  45-38        (f)  If, after hearing, the commission finds the rates to be
  45-39  unreasonable or in any way in violation of any provision of law,
  45-40  the commission shall determine the level of rates to be charged or
  45-41  applied by the utility for the service in question and shall fix
  45-42  the same by order to be served upon the utility; these rates are
  45-43  thereafter to be observed until changed, as provided by this Act.
  45-44        (g)  A rate or tariff set by the commission may not authorize
  45-45  a utility to automatically adjust and pass through to its customers
  45-46  changes in costs of the utility.
  45-47        (h)  If the commission does not make a final determination
  45-48  concerning a local exchange company's schedule of rates prior to
  45-49  the expiration of the 150-day suspension period, the schedule of
  45-50  rates finally approved by the commission shall become effective and
  45-51  the local exchange company shall be entitled to collect such rates
  45-52  from the date the 150-day suspension period expired.  Any
  45-53  surcharges or other charges necessary to effectuate this subsection
  45-54  may not be recovered over a period of less than 90 days from the
  45-55  date of the commission's final order.
  45-56        (i)  The commission on its own motion or on the petition of a
  45-57  utility shall provide for the adjustment of a utility's billing to
  45-58  reflect any increase or decrease of tax liability of the utility to
  45-59  the state resulting from House Bill 11, Acts of the 72nd
  45-60  Legislature, 1st Called Session, 1991, and that is attributable to
  45-61  activities that are subject to the jurisdiction of the commission.
  45-62  Any adjustment to billings under this section must be apportioned
  45-63  pro-rata to all types and classes of service provided by the
  45-64  utility and is effective only until the commission alters the
  45-65  adjustment as provided by this subsection or enters an order for
  45-66  the utility under this section or Section 3.210 of this Act.  The
  45-67  adjustment of billings must be made effective at the same time as
  45-68  the increase or decrease of tax liability resulting from House Bill
  45-69  11, Acts of the 72nd Legislature, 1st Called Session, 1991, or as
  45-70  soon after as is reasonably practical.  Each year after any
   46-1  original adjustment, the commission shall review the utility's
   46-2  increase or decrease of tax liability resulting from House Bill 11,
   46-3  Acts of the 72nd Legislature, 1st Called Session, 1991, and alter
   46-4  the adjustment to reflect the increase or decrease.  A proceeding
   46-5  under this subsection is not a rate case under this section.  (Sec.
   46-6  43 (part))
   46-7        Sec. 3.212.  CHANGES BY LOCAL EXCHANGE COMPANIES; HEARINGS;
   46-8  SUSPENSION OF PROPOSED CHANGES.  (a)  A local exchange company may
   46-9  make changes in its tariffed rules, regulations, or practices that
  46-10  do not affect its charges or rates by filing the proposed changes
  46-11  with the commission at least 35 days prior to the effective date of
  46-12  the changes.  The commission may require such notice to ratepayers
  46-13  as it considers appropriate.
  46-14        (b)  The commission may on complaint by any affected person
  46-15  or on its own motion hold a hearing, after reasonable notice, to
  46-16  determine the propriety of the change.  Pending the hearing and
  46-17  decision, the commission may suspend the operation of the proposed
  46-18  changes for a period not to exceed 120 days after the date on which
  46-19  the changes would otherwise go into effect.
  46-20        (c)  The commission shall approve, deny, or modify the
  46-21  proposed changes before expiration of the suspension period.  In
  46-22  any proceeding under this section, the burden of proving that the
  46-23  requested relief is in the public interest and complies with this
  46-24  Act shall be borne by the local exchange company.  (Sec. 43A)
  46-25        Sec. 3.213.  COOPERATIVE OR SMALL LOCAL EXCHANGE COMPANIES;
  46-26  STATEMENT OF INTENT TO CHANGE RATES; NOTICE OF INTENT; SUSPENSION
  46-27  OF RATE SCHEDULE; REVIEW.  (a)  Except as otherwise provided by
  46-28  this section, a local exchange company that is a cooperative
  46-29  corporation or that has fewer than 5,000 access lines in service in
  46-30  this state may change rates by publishing notice of the change at
  46-31  least 60 days before the date of the change in the place and form
  46-32  as prescribed by the commission.  The notice must include:
  46-33              (1)  the reasons for the rate change;
  46-34              (2)  a description of the affected service;
  46-35              (3)  an explanation of the right of the subscriber to
  46-36  petition the commission for a hearing on the rate change; and
  46-37              (4)  a list of rates that are affected by the proposed
  46-38  rate change.
  46-39        (b)  At least 60 days before the date of the change, the
  46-40  local exchange company shall file with the commission a statement
  46-41  of intent to change rates containing:
  46-42              (1)  a copy of the notice required by Subsection (a) of
  46-43  this section;
  46-44              (2)  the number of access lines the company has in
  46-45  service in this state;
  46-46              (3)  the date of the most recent commission order
  46-47  setting rates of the company;
  46-48              (4)  the increase in total gross annual local revenues
  46-49  that will be produced by the proposed rates;
  46-50              (5)  the increase in total gross annual local revenues
  46-51  that will be produced by the proposed rates together with any local
  46-52  rate changes which went into effect during the 12 months preceding
  46-53  the proposed effective date of the requested rate change and any
  46-54  other proposed local rate changes then pending before the
  46-55  commission;
  46-56              (6)  the increase in rates for each service category;
  46-57  and
  46-58              (7)  other information the commission by rule requires.
  46-59        (c)  The commission shall review a proposed change in the
  46-60  rates set by a local exchange company under this section upon the
  46-61  receipt of complaints signed by at least five percent of all
  46-62  affected subscribers or upon its own motion.  The commission may
  46-63  require notice to ratepayers as it considers appropriate.  If
  46-64  sufficient complaints are presented to the commission within 60
  46-65  days after the date notice of the rate change was sent to
  46-66  subscribers, the commission shall review the proposed change.
  46-67  After notice to the local exchange company, the commission may
  46-68  suspend the rates during the pendency of the review and reinstate
  46-69  the rates previously in effect.  Review under this subsection shall
  46-70  be as provided by Section 3.211 of this Act.  The period for review
   47-1  by the commission does not begin until the local exchange company
   47-2  files a complete rate-filing package.
   47-3        (d)  If the commission has entered an order setting a rate,
   47-4  the affected local exchange company may not change that rate under
   47-5  this section before 365 days after the date of the commission's
   47-6  order setting the rate.
   47-7        (e)  This section does not prohibit a local exchange company
   47-8  from filing for a rate change under any other applicable section of
   47-9  this Act.
  47-10        (f)  The commission shall review a proposed change in the
  47-11  rates of a local exchange company under this section if the
  47-12  proposed rates, together with any local rate changes which went
  47-13  into effect during the 12 months preceding the proposed effective
  47-14  date of the requested rate change as well as any other proposed
  47-15  local rate changes then pending before the commission, will
  47-16  increase its total gross annual local revenues by more than 2 1/2
  47-17  percent or if the proposed change would increase the rate of any
  47-18  service category by more than 25 percent, except for basic local
  47-19  service, which shall be limited to a maximum of 2 1/2  percent of
  47-20  the total gross annual local revenue.  Review under this subsection
  47-21  shall be as provided by Section 3.211 of this Act.  Each local
  47-22  exchange company may receive a change in its local rates or in any
  47-23  service category pursuant to this section only one time in any
  47-24  12-month period.
  47-25        (g)  Rates established under this section must be in
  47-26  accordance with the rate-setting principles of this subtitle.
  47-27        (h)  The commission is granted all necessary power and
  47-28  authority to prescribe and collect fees and assessments from local
  47-29  exchange companies necessary to recover the commission's and the
  47-30  office's costs of activities carried out and services provided
  47-31  under this section, Subsection (h) of Section 3.211 and Section
  47-32  3.212 of this Act.  (Sec. 43B)
  47-33        Sec. 3.214.  RATES FOR AREAS NOT WITHIN MUNICIPALITY.
  47-34  Telecommunications utility rates for areas not within any
  47-35  municipality may not exceed without commission approval 115 percent
  47-36  of the average of all rates for similar services of all
  47-37  municipalities served by the same utility within the same county.
  47-38  (Sec. 44)
  47-39        Sec. 3.215.  UNREASONABLE PREFERENCE OR PREJUDICE AS TO RATES
  47-40  OR SERVICES.  A telecommunications utility may not, as to rates or
  47-41  services, make or grant any unreasonable preference or advantage to
  47-42  any corporation or person within any classification, or subject any
  47-43  corporation or person within any classification to any unreasonable
  47-44  prejudice or disadvantage.  A telecommunications utility may not
  47-45  establish and maintain any unreasonable differences as to rates of
  47-46  service either as between localities or as between classes of
  47-47  service.  (Sec. 45)
  47-48        Sec. 3.216.  EQUALITY OF RATES AND SERVICES.  (a)  A
  47-49  telecommunications utility may not, directly or indirectly, by any
  47-50  device whatsoever or in any manner, charge, demand, collect, or
  47-51  receive from any person a greater or less compensation for any
  47-52  service rendered or to be rendered by the utility than that
  47-53  prescribed in the schedule of rates of the telecommunications
  47-54  utility applicable thereto when filed in the manner provided in
  47-55  this Act, nor may any person knowingly receive or accept any
  47-56  service from a telecommunications utility for a compensation
  47-57  greater or less than that prescribed in the schedules.
  47-58        (b)  Nothing in this Act shall prevent a cooperative
  47-59  corporation from returning to its members the whole, or any part
  47-60  of, the net earnings resulting from its operations in proportion to
  47-61  their purchases from or through the corporation.  (Sec. 46)
  47-62        Sec. 3.217.  DISCRIMINATION; RESTRICTION ON COMPETITION.  A
  47-63  telecommunications utility may not discriminate against any person
  47-64  or corporation that sells or leases equipment or performs services
  47-65  in competition with the telecommunications utility, nor may any
  47-66  telecommunications utility engage in any other practice that tends
  47-67  to restrict or impair such competition.  (Sec. 47)
  47-68        Sec. 3.218.  TELECOMMUNICATIONS UTILITY PROVIDING SERVICE TO
  47-69  THE STATE; DELINQUENT PAYMENT CHARGES.  A telecommunications
  47-70  utility providing any service to the state, including service to an
   48-1  agency in any branch of state government, may not charge a fee,
   48-2  penalty, interest, or other charge for delinquent payment of a bill
   48-3  for that service.  (Sec. 48A)
   48-4        SUBTITLE F.  CERTIFICATES OF CONVENIENCE AND NECESSITY
   48-5        Sec. 3.251.  CERTIFICATE REQUIRED.  (a)  A telecommunications
   48-6  utility may not in any way render service directly or indirectly to
   48-7  the public under any franchise or permit without first having
   48-8  obtained from the commission a certificate that the present or
   48-9  future public convenience and necessity require or will require
  48-10  such installation, operation, or extension.
  48-11        (b)  Except as otherwise provided in this subtitle, a
  48-12  telecommunications utility may not furnish, make available, render,
  48-13  or extend retail telecommunications utility service to any area to
  48-14  which retail utility service is being lawfully furnished by another
  48-15  telecommunications utility, without first having obtained a
  48-16  certificate of public convenience and necessity that includes the
  48-17  area in which the consuming facility is located.  (Sec. 50)
  48-18        Sec. 3.252.  EXCEPTIONS FOR EXTENSION OF SERVICE.  (a)  A
  48-19  telecommunications utility is not required to secure a certificate
  48-20  of public convenience and necessity for:
  48-21              (1)  an extension into territory contiguous to that
  48-22  already served by it and not receiving similar service from another
  48-23  telecommunications utility and not within the area of public
  48-24  convenience and necessity of another utility of the same kind;
  48-25              (2)  an extension within or to territory already served
  48-26  by it or to be served by it under a certificate of public
  48-27  convenience and necessity; or
  48-28              (3)  operation, extension, or service in progress on
  48-29  September 1, 1975.
  48-30        (b)  Any extensions allowed by Subsection (a) of this section
  48-31  shall be limited to devices for interconnection of existing
  48-32  facilities or devices used solely for transmitting
  48-33  telecommunications utility services from existing facilities to
  48-34  customers of retail utility service.  (Sec. 51)
  48-35        Sec. 3.253.  APPLICATION; MAPS; EVIDENCE OF CONSENT.  (a)  A
  48-36  telecommunications utility shall submit to the commission an
  48-37  application to obtain a certificate of public convenience and
  48-38  necessity or an amendment thereof.
  48-39        (b)  On or before 90 days after September 1, 1975, or at a
  48-40  later date on request in writing by a telecommunications utility
  48-41  when good cause is shown, or at such later dates as the commission
  48-42  may order, each telecommunications utility shall file with the
  48-43  commission a map or maps showing all its facilities and
  48-44  illustrating separately facilities for transmission and
  48-45  distribution of its services.
  48-46        (c)  Each applicant for a certificate shall file with the
  48-47  commission such evidence as is required by the commission to show
  48-48  that the applicant has received the required consent, franchise, or
  48-49  permit of the proper municipality or other public authority.  (Sec.
  48-50  52)
  48-51        Sec. 3.254.  NOTICE AND HEARING; ISSUANCE OR REFUSAL; FACTORS
  48-52  CONSIDERED.  (a)  When an application for a certificate of public
  48-53  convenience and necessity is filed, the commission shall give
  48-54  notice of such application to interested parties and, if requested,
  48-55  shall fix a time and place for a hearing and give notice of the
  48-56  hearing.  Any person interested in the application may intervene at
  48-57  the hearing.
  48-58        (b)  The commission may grant applications and issue
  48-59  certificates only if the commission finds that the certificate is
  48-60  necessary for the service, accommodation, convenience, or safety of
  48-61  the public.  The commission may issue the certificate as prayed
  48-62  for, or refuse to issue it, or issue it for the construction of a
  48-63  portion only of the contemplated system or facility or extension
  48-64  thereof, or for the partial exercise only of the right or
  48-65  privilege.
  48-66        (c)  Certificates of convenience and necessity shall be
  48-67  granted on a nondiscriminatory basis after consideration by the
  48-68  commission of the adequacy of existing service, the need for
  48-69  additional service, the effect of the granting of a certificate on
  48-70  the recipient of the certificate and on any telecommunications
   49-1  utility of the same kind already serving the proximate area, and on
   49-2  such factors as community values, recreational and park areas,
   49-3  historical and aesthetic values, environmental integrity, and the
   49-4  probable improvement of service or lowering of cost to consumers in
   49-5  such area resulting from the granting of such certificate.  (Sec.
   49-6  54 (part))
   49-7        Sec. 3.255.  AREA INCLUDED WITHIN CITY, TOWN OR VILLAGE.
   49-8  (a)  If an area has been or shall be included within the boundaries
   49-9  of a city, town, or village as the result of annexation,
  49-10  incorporation, or otherwise, all telecommunications utilities
  49-11  certified or entitled to certification under this Act to provide
  49-12  service or operate facilities in such area prior to the inclusion
  49-13  shall have the right to continue and extend service in its area of
  49-14  public convenience and necessity within the annexed or incorporated
  49-15  area, pursuant to the rights granted by its certificate and this
  49-16  Act.
  49-17        (b)  Notwithstanding any other provision of law, a
  49-18  telecommunications utility shall have the right to continue and
  49-19  extend service within its area of public convenience and necessity
  49-20  and to utilize the roads, streets, highways, alleys, and public
  49-21  property for the purpose of furnishing such retail utility service,
  49-22  subject to the authority of the governing body of a municipality to
  49-23  require any telecommunications utility, at its own expense, to
  49-24  relocate its facilities to permit the widening or straightening of
  49-25  streets by giving to the telecommunications utility 30 days' notice
  49-26  and specifying the new location for the facilities along the
  49-27  right-of-way of the street or streets.
  49-28        (c)  This section may not be construed as limiting the power
  49-29  of cities, towns, and villages to incorporate or extend their
  49-30  boundaries by annexation.  (Sec. 55 (part))
  49-31        Sec. 3.256.  CONTRACTS VALID AND ENFORCEABLE.  Contracts
  49-32  between telecommunications utilities designating areas to be served
  49-33  and customers to be served by those utilities, when approved by the
  49-34  commission, shall be valid and enforceable and shall be
  49-35  incorporated into the appropriate areas of public convenience and
  49-36  necessity.  (Sec. 56)
  49-37        Sec. 3.257.  PRELIMINARY ORDER FOR CERTIFICATE.  If a
  49-38  telecommunications utility desires to exercise a right or privilege
  49-39  under a franchise or permit which it contemplates securing but
  49-40  which has not as yet been granted to it, such telecommunications
  49-41  utility may apply to the commission for an order preliminary to the
  49-42  issuance of the certificate.  The commission may thereupon make an
  49-43  order declaring that it will, on application, under such rules as
  49-44  it prescribes, issue the desired certificate on such terms and
  49-45  conditions as it designates, after the telecommunications utility
  49-46  has obtained the contemplated franchise or permit.  On presentation
  49-47  to the commission of evidence satisfactory to it that the franchise
  49-48  or permit has been secured by the telecommunications utility, the
  49-49  commission shall issue the certificate.  (Sec. 57)
  49-50        Sec. 3.258.  CONTINUOUS AND ADEQUATE SERVICE; DISCONTINUANCE,
  49-51  REDUCTION OR IMPAIRMENT OF SERVICE.  (a)  Except as provided by
  49-52  this section or Section 3.259 of this Act, the holder of any
  49-53  certificate of public convenience and necessity shall serve every
  49-54  consumer within its certified area and shall render continuous and
  49-55  adequate service within the area or areas.
  49-56        (b)  Unless the commission issues a certificate that neither
  49-57  the present or future convenience and necessity will be adversely
  49-58  affected, the holder of a certificate may not discontinue, reduce,
  49-59  or impair service to a certified service area or part thereof
  49-60  except for:
  49-61              (1)  nonpayment of charges;
  49-62              (2)  nonuse; or
  49-63              (3)  other similar reasons in the usual course of
  49-64  business.
  49-65        (c)  Any discontinuance, reduction, or impairment of service,
  49-66  whether with or without approval of the commission, shall be in
  49-67  conformity with and subject to such conditions, restrictions, and
  49-68  limitations as the commission shall prescribe.  (Sec. 58)
  49-69        Sec. 3.259.  CONDITIONS REQUIRING REFUSAL OF SERVICE.  The
  49-70  holder of a certificate of public convenience and necessity shall
   50-1  refuse to serve a customer within its certified area if the holder
   50-2  of the certificate is prohibited from providing the service under
   50-3  Section 212.012 or 232.0047, Local Government Code.  (Sec. 58A)
   50-4        Sec. 3.260.  SALE, ASSIGNMENT OR LEASE OF CERTIFICATE.  If
   50-5  the commission determines that a purchaser, assignee, or lessee is
   50-6  capable of rendering adequate service, a telecommunications utility
   50-7  may sell, assign, or lease a certificate of public convenience and
   50-8  necessity or any rights obtained under the certificate.  The sale,
   50-9  assignment, or lease shall be on the conditions prescribed by the
  50-10  commission.  (Sec. 59)
  50-11        Sec. 3.261.  INTERFERENCE WITH OTHER TELECOMMUNICATIONS
  50-12  UTILITY.  If a telecommunications utility in constructing or
  50-13  extending its lines, plant, or system interferes or attempts to
  50-14  interfere with the operation of a line, plant, or system of any
  50-15  other utility, the commission may issue an order prohibiting the
  50-16  construction or extension or prescribing terms and conditions for
  50-17  locating the lines, plants, or systems affected.  (Sec. 60)
  50-18        Sec. 3.262.  IMPROVEMENTS IN SERVICE; INTERCONNECTING
  50-19  SERVICE; EXTENDED AREA TOLL-FREE TELEPHONE SERVICE.  After notice
  50-20  and hearing, the commission may:
  50-21              (1)  order a telecommunications utility to provide
  50-22  specified improvements in its service in a defined area, if service
  50-23  in such area is inadequate or is substantially inferior to service
  50-24  in a comparable area and it is reasonable to require the company to
  50-25  provide such improved service;
  50-26              (2)  order two or more utilities to establish specified
  50-27  facilities for the interconnecting service; and
  50-28              (3)  order a telephone company or telephone companies
  50-29  to provide extended area toll-free service within a specified
  50-30  metropolitan area where there is a sufficient community of interest
  50-31  within the area and such service can reasonably be provided.  (Sec.
  50-32  61)
  50-33        Sec. 3.263.  REVOCATION OR AMENDMENT OF CERTIFICATE.
  50-34  (a)  The commission at any time after notice and hearing may revoke
  50-35  or amend any certificate of convenience and necessity if it finds
  50-36  that the certificate holder has never provided or is no longer
  50-37  providing service in the area, or part of the area, covered by the
  50-38  certificate.
  50-39        (b)  When the certificate of any telecommunications utility
  50-40  is revoked or amended, the commission may require one or more
  50-41  public utilities to provide service in the area in question.  (Sec.
  50-42  62)
  50-43              SUBTITLE G.  PROVISION OF TELEPHONE SERVICE
  50-44        Sec. 3.301.  DEDICATED LINE LONG DISTANCE SERVICE.  A
  50-45  telecommunications utility providing dedicated line long distance
  50-46  service (TEXAN) to the state on August 31, 1987, shall continue to
  50-47  have this type of service available to the state on a
  50-48  month-to-month contract basis until September 1, 1988.  The
  50-49  contract will become effective on September 1, 1987, and shall be
  50-50  under terms and conditions negotiated by the state and the utility
  50-51  in accordance with the amounts appropriated by the General
  50-52  Appropriations Act for this purpose.  The General Services
  50-53  Commission shall perform all actions necessary to insure that one
  50-54  or more contracts for telecommunications services as provided in
  50-55  Article 10 of the State Purchasing and General Services Act
  50-56  (Article 601b, Vernon's Texas Civil Statutes) (TEXAN II) are
  50-57  awarded pursuant to the requirements of the State Purchasing and
  50-58  General Services Act (Article 601b, Vernon's Texas Civil Statutes)
  50-59  by October 15, 1987, and that TEXAN II is operational not later
  50-60  than August 31, 1988.  Those funds appropriated by the General
  50-61  Appropriations Act for extending the existing TEXAN contract which
  50-62  are not expended in fiscal year 1988 shall be transferred to the
  50-63  General Services Commission for the sole purpose of offsetting the
  50-64  expenses associated with the administration of the TEXAN II
  50-65  network.  If, during the period of time this section is in effect,
  50-66  any supplemental or other telecommunications service is required by
  50-67  the state, it may be acquired from vendors other than the utility
  50-68  or utilities providing TEXAN or TEXAN II service.  (Sec. 87B)
  50-69        Sec. 3.302.  CALLER IDENTIFICATION SERVICES.  (a)  This
  50-70  section applies only to the provision of caller identification
   51-1  service.
   51-2        (b)  A person may not offer a caller identification service
   51-3  unless the person obtains written authorization from the
   51-4  commission.
   51-5        (c)  The commission shall require that a provider of caller
   51-6  identification service offer per-call blocking at no charge to each
   51-7  telephone subscriber in the specific area in which the service is
   51-8  offered.
   51-9        (d)  The commission shall require that a provider offer
  51-10  per-line blocking at no charge to a particular customer if the
  51-11  commission receives from the customer written certification that
  51-12  the customer has a compelling need for per-line blocking.  If a
  51-13  customer later removes the per-line block, the provider may assess
  51-14  a service order charge relating to administrative costs in an
  51-15  amount approved by the commission to reinstate the per-line block.
  51-16  The commission may prescribe and assess fees and assessments from
  51-17  providers of caller identification service in an amount sufficient
  51-18  to cover the additional expenses incurred by the commission in
  51-19  implementing the customer certification provisions of this
  51-20  subsection.  Reports, records, and information received under this
  51-21  subsection by the commission or by a provider of caller
  51-22  identification service are confidential and may be used only for
  51-23  the purposes of administering this subsection.
  51-24        (e)  The commission may only prescribe in relation to
  51-25  blocking the requirements prescribed by Subsections (c) and (d) of
  51-26  this section.
  51-27        (f)  A person may not use a caller identification service to
  51-28  compile and sell specific local call information without the
  51-29  affirmative consent and approval of the originating telephone
  51-30  customer.  This subsection does not prohibit the provider from:
  51-31              (1)  verifying network performance or from testing the
  51-32  provision of caller identification service;
  51-33              (2)  compiling, using, and disclosing aggregate caller
  51-34  identification information; or
  51-35              (3)  complying with applicable law or legal process.
  51-36        (g)  This section does not apply to:
  51-37              (1)  an identification service that is used within the
  51-38  same limited system, including a central office based PBX-type
  51-39  system;
  51-40              (2)  information that is used on a public agency's
  51-41  emergency telephone line or on a line that receives the primary
  51-42  emergency telephone number (9-1-1);
  51-43              (3)  information passed between telecommunications
  51-44  utilities, enhanced service providers, or other entities that is
  51-45  necessary for the set-up, processing, transmission, or billing of
  51-46  telecommunications or related services;
  51-47              (4)  information provided in compliance with applicable
  51-48  law or legal process; or
  51-49              (5)  an identification service provided in connection
  51-50  with a "700," "800," or "900" access code telecommunications
  51-51  service.
  51-52        (h)  In this section:
  51-53              (1)  "Caller identification information" means:
  51-54                    (A)  the telephone listing number and/or name of
  51-55  the customer from whose telephone instrument a telephone number is
  51-56  dialed; or
  51-57                    (B)  other information that may be used to
  51-58  identify the specific originating number or originating location of
  51-59  a wire or electronic communication transmitted by a telephone
  51-60  instrument.
  51-61              (2)  "Caller identification service" means a service
  51-62  offered by a telecommunications utility that provides caller
  51-63  identification information to a device capable of displaying the
  51-64  information.
  51-65              (3)  "Per-call blocking" means a telecommunications
  51-66  service that prevents the transmission of caller identification
  51-67  information to a called party on an individual call if the calling
  51-68  party acts affirmatively to prevent the transmission of the caller
  51-69  identification information.
  51-70              (4)  "Per-line blocking" means a telecommunications
   52-1  service that prevents the transmission of caller identification
   52-2  information to a called party on every call unless the calling
   52-3  party acts affirmatively to release the caller identification
   52-4  information.  (Sec. 87C)
   52-5        Sec. 3.303.  INTEREXCHANGE SERVICES; LOCAL EXCHANGE
   52-6  COMPANIES' RATES.  Local exchange companies' rates for
   52-7  interexchange telecommunications services must be statewide average
   52-8  rates unless the commission on application and hearing orders
   52-9  otherwise.  Nothing in this section limits a local exchange
  52-10  company's ability to enter into contracts for high speed private
  52-11  line services of 1.544 megabits or greater under the provisions of
  52-12  Section 3.051 of this Act.  (Sec. 93)
  52-13        Sec. 3.304.  EXPANSION OF TOLL-FREE CALLING AREAS; CRITERIA.
  52-14  (a)  To address telephone calling needs between nearby telephone
  52-15  exchanges, the commission shall initiate a rulemaking proceeding to
  52-16  approve rules to provide for an expedited hearing to allow the
  52-17  expanding of toll-free calling areas according to the following
  52-18  criteria:
  52-19              (1)  Toll-free calling boundaries may only be expanded
  52-20  under this section after the filing of a petition signed by the
  52-21  lesser of five percent of the subscribers or 100 subscribers within
  52-22  an exchange.  If such a petition is filed with the commission, the
  52-23  commission shall order the local exchange company to provide for
  52-24  the balloting of its subscribers within the petitioning exchange
  52-25  and, if there is an affirmative vote of at least 70 percent of
  52-26  those responding, the commission shall consider the request.
  52-27              (2)  The commission shall provide for the expansion of
  52-28  toll-free calling areas for each local exchange customer in the
  52-29  petitioning exchange if the petitioning exchange serves not more
  52-30  than 10,000 lines and if:
  52-31                    (A)  the petitioning exchange is located within
  52-32  22 miles of the exchange requested for toll-free calling service;
  52-33  or
  52-34                    (B)  the petitioning exchange shares a community
  52-35  of interest with the exchange requested for toll-free calling
  52-36  service.  For purposes of this paragraph, "community of interest"
  52-37  includes areas that have a relationship because of schools,
  52-38  hospitals, local governments, business centers, and other
  52-39  relationships the unavailability of which would cause a hardship to
  52-40  the residents of the area but need not include an area where the
  52-41  affected central offices are more than 50 miles apart.
  52-42              (3)(A)  The local exchange company shall recover all of
  52-43  its costs incurred and all loss of revenue from any expansion of
  52-44  toll-free calling areas under this section through a request other
  52-45  than a revenue requirement showing by:
  52-46                          (i)  a monthly fee for toll-free calling
  52-47  service of not more than $3.50 per line for residential customers
  52-48  nor more than $7 per line for business customers, to be collected
  52-49  from all such residential or business customers in the petitioning
  52-50  exchange and only until the local exchange company's next general
  52-51  rate case;
  52-52                          (ii)  a monthly fee for toll-free calling
  52-53  service for all of the local exchange company's local exchange
  52-54  service customers in the state in addition to the company's current
  52-55  local exchange rates; or
  52-56                          (iii)  both (i) and (ii).
  52-57                    (B)  A local exchange company may not recover
  52-58  regulatory case expenses under this section by surcharging
  52-59  petitioning exchange subscribers.
  52-60        (b)(1)  The commission and a local exchange company are not
  52-61  required to comply with this section with regard to a petitioning
  52-62  exchange or petitioned exchange if:
  52-63                    (A)  the commission determines that there has
  52-64  been a good and sufficient showing of a geographic or technological
  52-65  infeasibility to serve the area;
  52-66                    (B)  the local exchange company has less than
  52-67  10,000 lines;
  52-68                    (C)  the petitioning or petitioned exchange is
  52-69  served by a cooperative;
  52-70                    (D)  extended area service or extended
   53-1  metropolitan service is currently available between the petitioning
   53-2  and petitioned exchanges; or
   53-3                    (E)  the petitioning or petitioned exchange is a
   53-4  metropolitan exchange.
   53-5              (2)  The commission may expand the toll-free calling
   53-6  area into an exchange not within a metropolitan exchange but within
   53-7  the local calling area contiguous to a metropolitan exchange that
   53-8  the commission determines to have a community of interest
   53-9  relationship with the petitioning exchange.  For the purposes of
  53-10  this section, metropolitan exchange, local calling area of a
  53-11  metropolitan exchange, and exchange have the meanings and
  53-12  boundaries as defined and approved by the commission on September
  53-13  1, 1993.  However, under no circumstances shall a petitioning or
  53-14  petitioned exchange be split in the provision of a toll-free
  53-15  calling area.
  53-16        (c)  The commission may, in order to promote the wide
  53-17  dispersion of pay telephones, either exempt such telephones from
  53-18  the provisions of this section or change the rates to be charged
  53-19  from such telephones in an amount sufficient to promote this goal.
  53-20  (Sec. 93A)
  53-21        Sec. 3.305.  PAY TELEPHONES; NUMBERS AND NOTICES DISPLAYED.
  53-22  (a)  A pay telephone service provider may not display the telephone
  53-23  number of a pay telephone that cannot receive a telephone call.
  53-24        (b)  A pay telephone service provider shall place in a
  53-25  conspicuous location on each pay telephone that cannot receive
  53-26  telephone calls a notice stating in letters one-fourth inch high:
  53-27  "THIS TELEPHONE CANNOT RECEIVE TELEPHONE CALLS."
  53-28        (c)  A pay telephone service provider that violates a
  53-29  provision of this section or a rule or order adopted by the
  53-30  commission under this section is subject to a civil penalty as
  53-31  provided by Section 1.322 of this Act, unless such provider, within
  53-32  14 days of receiving written notice of a violation, takes
  53-33  corrective action to comply with the provisions of this section.
  53-34        (d)  The commission has jurisdiction over all pay telephone
  53-35  service providers to the extent necessary to enforce this section
  53-36  regardless of whether a pay telephone service provider is a
  53-37  telecommunications utility regulated under this Act.
  53-38        (e)  The commission may adopt rules and establish procedures
  53-39  to enforce this section.  (Sec. 93A)
  53-40        Sec. 3.306.  HOTELS OR MOTELS; CHARGES FOR TELEPHONE CALLS.
  53-41  The amount a hotel or motel charges for a local telephone call, a
  53-42  credit card telephone call, a collect telephone call, or any other
  53-43  local telephone call for which assistance from the hotel or motel
  53-44  operator is not required may not exceed 50 cents.  (Sec. 93B)
  53-45        Sec. 3.307.  "1-900" SERVICE.  (a)  A telecommunications
  53-46  utility that transports or provides a "1-900" service under a
  53-47  contract authorized by Article 42.131 or 42.18, Code of Criminal
  53-48  Procedure, and its subsequent amendments that is used by a
  53-49  defendant under the supervision of a community supervision and
  53-50  corrections department or the pardons and paroles division of the
  53-51  Texas Department of Criminal Justice to pay a fee or cost or to
  53-52  comply with telephone reporting requirements may adjust or
  53-53  authorize the adjustment of an end-user's bill for those fees or
  53-54  costs or charges for reporting only with the consent of the
  53-55  contracting community supervision and corrections department or the
  53-56  contracting pardons and paroles division of the Texas Department of
  53-57  Criminal Justice.
  53-58        (b)  This section applies only to an intrastate "1-900"
  53-59  service.  (Sec. 93C)
  53-60      SUBTITLE H.  TELECOMMUNICATIONS SERVICE ASSISTANCE PROGRAM;
  53-61                        UNIVERSAL SERVICE FUND
  53-62        Sec. 3.351.  TEL-ASSISTANCE SERVICE.  The commission shall
  53-63  adopt and enforce rules requiring each local exchange company to
  53-64  establish a telecommunications service assistance program to be
  53-65  called "tel-assistance service."  This service is established to
  53-66  provide eligible consumers with a reduction in costs of
  53-67  telecommunications services.  (Sec. 94)
  53-68        Sec. 3.352.  ELIGIBILITY FOR TEL-ASSISTANCE SERVICE; BURDEN
  53-69  OF PROOF; BILLING.  (a)  To be eligible for tel-assistance service,
  53-70  an applicant must be a head of household, 65 years of age or older,
   54-1  and disabled as determined by the Texas Department of Human
   54-2  Services and must have a household income at or below the poverty
   54-3  level as determined by the United States Office of Management and
   54-4  Budget and reported annually in the Federal Register.  The
   54-5  department, in accordance with this subtitle and rules adopted by
   54-6  the department for the program, shall develop procedures for taking
   54-7  applications for certification of eligibility and for determining
   54-8  program eligibility.  The burden of proving eligibility for
   54-9  tel-assistance service is on the consumer applying for the service.
  54-10        (b)  Each six months the department shall provide a list or
  54-11  lists of the names, addresses, and, if applicable, telephone
  54-12  numbers of all persons eligible for tel-assistance service to each
  54-13  local exchange company.  The local exchange company shall determine
  54-14  from the list those consumers to whom the company provides service
  54-15  and within 60 days after receiving the list shall begin
  54-16  tel-assistance billing for eligible consumers.  This billing shall
  54-17  continue until the local exchange company is notified by the
  54-18  department that a consumer is no longer eligible to receive
  54-19  tel-assistance service.  (Sec. 95)
  54-20        Sec. 3.353.  TEL-ASSISTANCE SERVICES; BILLING; RATES.
  54-21  (a)  The local exchange company shall provide tel-assistance
  54-22  service to all eligible consumers within its certificated area in
  54-23  the form of a reduction on each eligible consumer's telephone bill.
  54-24  The reduction shall apply only to the following types of service:
  54-25              (1)  residential flat rate basic local exchange
  54-26  service;
  54-27              (2)  residential local exchange access service; and
  54-28              (3)  residential local area calling usage, except that
  54-29  the reduction for local area calling usage shall be limited to an
  54-30  amount such that together with the reduction for local exchange
  54-31  access service the rate does not exceed the comparable reduced flat
  54-32  rate for the service.
  54-33        (b)  No other local voice service may be provided to the
  54-34  dwelling place of a tel-assistance consumer, nor may single or
  54-35  party line optional extended area service, optional extended area
  54-36  calling service, foreign zone, or foreign exchange service be
  54-37  provided to a tel-assistance consumer.  Nothing in this section
  54-38  shall prohibit a person otherwise eligible to receive
  54-39  tel-assistance service from obtaining and using telecommunications
  54-40  equipment designed to aid such person in utilizing
  54-41  telecommunications services.
  54-42        (c)  The reduction allowed by the telecommunications service
  54-43  assistance program shall be 65 percent of the applicable tariff
  54-44  rate for the service provided.  (Sec. 96)
  54-45        Sec. 3.354.  STATEWIDE TELECOMMUNICATIONS RELAY ACCESS
  54-46  SERVICE FOR HEARING-IMPAIRED AND SPEECH-IMPAIRED.  (a)  The
  54-47  commission shall adopt and enforce rules establishing a statewide
  54-48  telecommunications relay access service for the hearing-impaired
  54-49  and speech-impaired using specialized communications equipment such
  54-50  as telecommunications devices for the deaf (TDD) and operator
  54-51  translations.  The purpose of this section is to provide for the
  54-52  uniform and coordinated provision of the service on a statewide
  54-53  basis by one telecommunications carrier.
  54-54        (b)  Commission rules relating to a statewide
  54-55  telecommunications relay access service for the hearing-impaired
  54-56  and speech-impaired shall provide that:
  54-57              (1)  the service shall provide the hearing-impaired and
  54-58  speech-impaired with access to the telecommunications network in
  54-59  Texas equal to that provided other customers;
  54-60              (2)  the service shall consist of the following:
  54-61                    (A)  switching and transmission of the call;
  54-62                    (B)  verbal and print translations by either live
  54-63  or automated means between hearing-impaired and speech-impaired
  54-64  individuals who use TDD equipment or similar automated devices and
  54-65  others who do not have such equipment; and
  54-66                    (C)  other service enhancements proposed by the
  54-67  carrier and approved by the commission;
  54-68              (3)  the calling or called party shall bear no charge
  54-69  for calls originating and terminating within the same local calling
  54-70  area;
   55-1              (4)  the calling or called party shall bear one-half of
   55-2  the total charges established by contract with the commission for
   55-3  intrastate interexchange calls;
   55-4              (5)  as specified in its contract with the commission,
   55-5  charges related to providing the service which are not borne by a
   55-6  calling or called party pursuant to Subdivisions (3) and (4) of
   55-7  this subsection shall be funded from the universal service fund;
   55-8              (6)  local exchange companies may not impose
   55-9  interexchange carrier access charges on calls which make use of
  55-10  this service and which originate and terminate in the same local
  55-11  calling area;
  55-12              (7)  local exchange companies shall provide billing and
  55-13  collection services in support of this service at just and
  55-14  reasonable rates; and
  55-15              (8)  if the commission orders a local exchange company
  55-16  to provide for a trial telecommunications relay access service for
  55-17  the hearing-impaired or speech-impaired, all pertinent costs and
  55-18  design information from this trial shall be available to the
  55-19  general public.
  55-20        (c)  The commission shall allow telecommunications utilities
  55-21  to recover their universal service fund assessment related to this
  55-22  service through a surcharge which the utility may add to its
  55-23  customers' bills.  The commission shall specify how the amount of
  55-24  the surcharge is to be determined by each utility.  If a utility
  55-25  chooses to impose the surcharge, the bill shall list the surcharge
  55-26  as the "universal service fund surcharge."
  55-27        (d)  The commission shall set the appropriate assessments for
  55-28  the funding of the service by all telecommunications utilities.  In
  55-29  setting the appropriate assessments, the commission shall consider
  55-30  the aggregate calling pattern of the users of the service and all
  55-31  other factors found appropriate and in the public interest by the
  55-32  commission.  The commission shall review the assessments annually
  55-33  and adjust the assessments as found appropriate hereunder.
  55-34        (e)  The commission shall select the telecommunications
  55-35  carrier which will provide the statewide telecommunications relay
  55-36  access service for the hearing-impaired and speech-impaired.  In
  55-37  awarding the contract for this service, the commission shall make a
  55-38  written award of the contract to the offerer whose proposal is the
  55-39  most advantageous to the state, considering price, the interests of
  55-40  the hearing-impaired and speech-impaired community in having access
  55-41  to a high quality and technologically advanced telecommunications
  55-42  system, and all other factors listed in the commission's request
  55-43  for proposals.  The commission shall consider each proposal in a
  55-44  manner that does not disclose the contents of the proposal to
  55-45  competing offerers.  The commission's evaluation of the proposals
  55-46  shall include:
  55-47              (1)  charges for the service;
  55-48              (2)  service enhancements proposed by the offerers;
  55-49              (3)  technological sophistication of the network
  55-50  proposed by the offerers; and
  55-51              (4)  the proposed commencement date for the service.
  55-52        (f)  The telecommunications carrier providing the service
  55-53  shall be compensated for providing such service at rates, terms,
  55-54  and conditions established in its contract with the commission.
  55-55  This compensation may include a return on the investment required
  55-56  to provide the service and compensation for unbillable and
  55-57  uncollectible calls placed through the service, provided that
  55-58  compensation for unbillable and uncollectible calls shall be
  55-59  subject to a reasonable limitation as determined by the commission.
  55-60        (g)  The advisory committee to assist the commission in
  55-61  administering this section is composed of the following persons
  55-62  appointed by the commission:
  55-63              (1)  two deaf persons recommended by the Texas
  55-64  Association of the Deaf;
  55-65              (2)  one hearing-impaired person recommended by
  55-66  Self-Help for the Hard of Hearing;
  55-67              (3)  one hearing-impaired person recommended by the
  55-68  American Association of Retired Persons;
  55-69              (4)  one deaf and blind person recommended by the Texas
  55-70  Deaf/Blind Association;
   56-1              (5)  one speech-impaired person and one speech-impaired
   56-2  and hearing-impaired person recommended by the Coalition of Texans
   56-3  with Disabilities;
   56-4              (6)  two representatives of telecommunications
   56-5  utilities, one representing a nonlocal exchange utility and one
   56-6  representing a local exchange company, chosen from a list of
   56-7  candidates provided by the Texas Telephone Association;
   56-8              (7)  two persons, at least one of whom is deaf, with
   56-9  experience in providing relay services recommended by the Texas
  56-10  Commission for the Deaf; and
  56-11              (8)  two public members recommended by organizations
  56-12  representing consumers of telecommunications services.
  56-13        (h)  The commission shall appoint advisory committee members
  56-14  based on recommended lists of candidates submitted in accordance
  56-15  with Subdivision (6) of Subsection (g) of this section.  The
  56-16  advisory committee shall monitor the establishment, administration,
  56-17  and promotion of the statewide telecommunications relay access
  56-18  service and advise the commission in pursuing a service which meets
  56-19  the needs of the hearing-impaired and speech-impaired in
  56-20  communicating with other users of telecommunications services.  The
  56-21  terms of office of each member of the advisory committee shall be
  56-22  two years.  A member whose term has expired shall continue to serve
  56-23  until a qualified replacement is appointed. The members of the
  56-24  advisory committee shall serve without compensation but shall be
  56-25  entitled to reimbursement at rates established for state employees
  56-26  for travel and per diem incurred in the performance of their
  56-27  official duties.  The commission shall reimburse members of the
  56-28  advisory committee in accordance with this subsection and shall
  56-29  provide clerical and staff support to the advisory committee,
  56-30  including a secretary to record the committee meetings.  The
  56-31  commission's costs associated with the advisory committee shall be
  56-32  reimbursed from the universal service fund.  (Sec. 96A)
  56-33        Sec. 3.355.  DISTANCE LEARNING ACTIVITIES BY EDUCATIONAL
  56-34  INSTITUTIONS; REDUCED RATES.  (a)  The commission by rule shall
  56-35  require a dominant carrier to file a tariff containing a reduced
  56-36  rate for a telecommunications service the commission finds is
  56-37  directly related to a distance learning activity that is or could
  56-38  be conducted by an educational institution in this state.
  56-39        (b)  The commission rules shall specify:
  56-40              (1)  the telecommunications services that qualify under
  56-41  this section;
  56-42              (2)  the process by which an educational institution
  56-43  qualifies for a reduced rate;
  56-44              (3)  the date by which a dominant carrier shall file a
  56-45  tariff;
  56-46              (4)  guidelines and criteria by which the services and
  56-47  reduced rates shall further the goals stated in Subsection (d) of
  56-48  this section; and
  56-49              (5)  any other requirements, terms, and conditions that
  56-50  the commission determines to be in the public interest.
  56-51        (c)  A tariff filing by a dominant carrier under this
  56-52  section:
  56-53              (1)  shall concern only the implementation of this
  56-54  section;
  56-55              (2)  is not a rate change under Section 3.211 of this
  56-56  Act; and
  56-57              (3)  does not affect any of the carrier's other rates
  56-58  or services.
  56-59        (d)  The services and reduced rates shall be designed to:
  56-60              (1)  encourage the development and offering of distance
  56-61  learning activities by educational institutions;
  56-62              (2)  meet the distance learning needs identified by the
  56-63  educational community; and
  56-64              (3)  recover the long-run incremental costs of
  56-65  providing the services, to the extent those costs can be
  56-66  identified, so as to avoid subsidizing educational institutions.
  56-67        (e)  The commission is not required to determine the long-run
  56-68  incremental cost of providing a service before approving a reduced
  56-69  rate for the service.  Until cost determination rules are developed
  56-70  and the rates established under this section are changed as
   57-1  necessary to ensure proper cost recovery, the reduced rates
   57-2  established by the commission shall be equal to 75 percent of the
   57-3  otherwise applicable rate.  After the commission develops cost
   57-4  determination rules for telecommunications services generally, it
   57-5  shall ensure that a reduced rate approved under this section
   57-6  recovers service-specific long-run incremental costs and avoids
   57-7  subsidization.
   57-8        (f)  An educational institution or dominant carrier may at
   57-9  any time request the commission to:
  57-10              (1)  provide for a reduced rate for a service directly
  57-11  related to a distance learning activity that is not covered by
  57-12  commission rules;
  57-13              (2)  change a rate;
  57-14              (3)  amend a tariff; or
  57-15              (4)  amend a commission rule.
  57-16        (g)  If the commission determines that a change requested
  57-17  under Subsection (f) is appropriate, it shall make the requested
  57-18  change.
  57-19        (h)  In this section:
  57-20              (1)  "Distance learning" means instruction, learning,
  57-21  and training that is transmitted from one site to one or more sites
  57-22  by telecommunications services that are used by an educational
  57-23  institution predominantly for such instruction, learning, or
  57-24  training, including video, data, voice, and electronic information.
  57-25              (2)  "Educational institution" means and includes:
  57-26                    (A)  accredited primary or secondary schools
  57-27  owned or operated by state and local governmental entities or
  57-28  private entities;
  57-29                    (B)  institutions of higher education as defined
  57-30  by Section 61.003, Education Code;
  57-31                    (C)  private institutions of higher education
  57-32  accredited by a recognized accrediting agency as defined by Section
  57-33  61.003(13), Education Code;
  57-34                    (D)  the Central Education Agency, its successors
  57-35  and assigns;
  57-36                    (E)  regional education service centers
  57-37  established and operated pursuant to Sections 11.32 and 11.33,
  57-38  Education Code; and
  57-39                    (F)  the Texas Higher Education Coordinating
  57-40  Board, its successors and assigns.  (Sec. 96B)
  57-41        Sec. 3.356.  RECOVERY OF LOST REVENUES.  A local exchange
  57-42  company is entitled to recover the lost revenue, if any, resulting
  57-43  solely from the provision of tel-assistance service from the
  57-44  universal service fund, the establishment of which is provided for
  57-45  by this Act.  (Sec. 97)
  57-46        Sec. 3.357.  UNIVERSAL SERVICE FUND.  (a)  The commission
  57-47  shall adopt and enforce rules requiring local exchange companies to
  57-48  establish a universal service fund to assist local exchange
  57-49  companies in providing basic local exchange service at reasonable
  57-50  rates in high cost rural areas, to reimburse local exchange
  57-51  companies for revenues lost as a result of providing tel-assistance
  57-52  service under this Act, to reimburse the telecommunications carrier
  57-53  providing the statewide telecommunications relay access service for
  57-54  the hearing-impaired and speech-impaired as authorized in Section
  57-55  3.354 of this Act, and to reimburse the Texas Department of Human
  57-56  Services and the commission for costs incurred in implementing the
  57-57  provisions of this subtitle.
  57-58        (b)  The universal service fund shall be funded by a
  57-59  statewide uniform charge, at rates and on services determined by
  57-60  the commission, payable by all telecommunications utilities that
  57-61  have access to the customer base.  In establishing the uniform
  57-62  level of the charge and the services to which it will apply, the
  57-63  commission may not make or grant an unreasonable preference or
  57-64  advantage to a telecommunications utility or subject a
  57-65  telecommunications utility to unreasonable prejudice or
  57-66  disadvantage.  The charge shall be paid in accordance with
  57-67  procedures approved by the commission.
  57-68        (c)  The commission shall:
  57-69              (1)  establish, in a manner that assures reasonable
  57-70  rates for basic local exchange service, eligibility criteria it
   58-1  finds necessary for participation in the universal service fund;
   58-2              (2)  determine which local exchange companies meet the
   58-3  eligibility criteria;
   58-4              (3)  determine the amount of and approve a procedure
   58-5  for reimbursement to local exchange companies of revenue lost in
   58-6  providing tel-assistance service under this Act;
   58-7              (4)  prescribe and collect fees from the universal
   58-8  service fund necessary to recover the costs the Texas Department of
   58-9  Human Services and the commission incurred in implementing and
  58-10  administrating the provisions of this subtitle; and
  58-11              (5)  approve procedures for the collection and
  58-12  disbursal of the revenues of the universal service fund.
  58-13        (d)  The commission shall adopt rules for the implementation
  58-14  and administration of the universal service fund.
  58-15        (e)  The commission may do all things necessary and
  58-16  convenient to implement and administer the universal service fund.
  58-17  (Sec. 98)
  58-18        Sec. 3.358.  INTERACTIVE MULTIMEDIA COMMUNICATIONS.  (a)  The
  58-19  commission shall permit a local exchange company that provides
  58-20  interactive multimedia communications services to establish rates
  58-21  at levels necessary, using sound ratemaking principles, to recover
  58-22  costs associated with providing the services.  Unless determined by
  58-23  the commission to be in the public interest, a local exchange
  58-24  company may not establish rates under this subsection that are less
  58-25  than the local exchange company's long run incremental costs of
  58-26  providing the interactive multimedia communications services.
  58-27        (b)  In this section, "interactive multimedia communications"
  58-28  has the meaning assigned by Section 14.0451(a), Education Code, as
  58-29  added by Chapter 868, Acts of the 73rd Legislature, Regular
  58-30  Session, 1993.  (Sec. 98A)
  58-31        Sec. 3.359.  SEVERABILITY.  If this subtitle conflicts with
  58-32  another provision of this Act, this subtitle prevails.  (Sec. 99)
  58-33            SUBTITLE I.  AUTOMATIC DIAL ANNOUNCING DEVICES
  58-34        Sec. 3.401.  DEFINITIONS.  In this subtitle:
  58-35              (1)  "Automated dial announcing device" or "ADAD" means
  58-36  automated equipment used for telephone solicitation or collection
  58-37  that is capable:
  58-38                    (A)  of storing telephone numbers to be called or
  58-39  has a random or sequential number generator capable of producing
  58-40  numbers to be called; and
  58-41                    (B)  alone or in conjunction with other
  58-42  equipment, of conveying a prerecorded or synthesized voice message
  58-43  to the number called without the use of a live operator.
  58-44              (2)  "LEC" means a local exchange company, as that term
  58-45  is defined by Section 3.001 of this Act.  (Sec. 111)
  58-46        Sec. 3.402.  EXEMPTIONS.  This subtitle does not apply to the
  58-47  use of an ADAD to make a telephone call:
  58-48              (1)  relating to an emergency or a public service under
  58-49  a program developed or approved by the emergency management
  58-50  coordinator of the county in which the call was received; or
  58-51              (2)  made by a public or private primary or secondary
  58-52  school system to locate or account for a truant student.  (Sec.
  58-53  112)
  58-54        Sec. 3.403.  REQUIREMENTS FOR OPERATION OF ADAD.  (a)  A
  58-55  person may not operate an ADAD to make a telephone call if the
  58-56  device plays a recorded message when a connection is completed to a
  58-57  telephone number unless:
  58-58              (1)  the person has obtained a permit from the
  58-59  commission and given written notice specifying the type of device
  58-60  to each telecommunications utility over whose system the device is
  58-61  to be used;
  58-62              (2)  the device is not used for random number dialing
  58-63  or to dial numbers determined by successively increasing or
  58-64  decreasing integers;
  58-65              (3)  the message states during the first 30 seconds of
  58-66  the call the nature of the call, the identity of the person,
  58-67  company, or organization making the call, and the telephone number
  58-68  from which the call was made;
  58-69              (4)  the device disconnects from the called person's
  58-70  line not later than 30 seconds after the call is terminated by
   59-1  either party or, if the device cannot disconnect within that
   59-2  period, a live operator introduces the call and receives the oral
   59-3  consent of the called person before beginning a prerecorded or
   59-4  synthesized voice message; and
   59-5              (5)  for calls terminating in this state, the device is
   59-6  not used to make a call:
   59-7                    (A)  before noon or after 9 p.m. on a Sunday or
   59-8  before 9 a.m. or after 9 p.m. on a weekday or a Saturday, if the
   59-9  device is used for solicitation; or
  59-10                    (B)  at an hour at which collection calls would
  59-11  be prohibited under the federal Fair Debt Collection Practices Act
  59-12  (15 U.S.C. Section 1692 et seq.), if the device is used for
  59-13  collection purposes.
  59-14        (b)  In addition to the requirements prescribed by Subsection
  59-15  (a) of this section, if during the call a cross-promotion or
  59-16  reference to a pay-per-call information service is made, the call
  59-17  shall include:
  59-18              (1)  a statement that a charge will be incurred by a
  59-19  caller who makes a call to a pay-per-call information services
  59-20  telephone number;
  59-21              (2)  the amount of the flat-rate or cost-per-minute
  59-22  charge that will be incurred or the amount of both if both charges
  59-23  will be incurred; and
  59-24              (3)  the estimated amount of time required to receive
  59-25  the entire information offered by the service during a call.
  59-26        (c)  In this section, "pay-per-call information service"
  59-27  means a service that allows a caller to dial a specified "900" or
  59-28  "976" number to call a service that routinely delivers, for a
  59-29  predetermined and sometimes time-sensitive fee, a prerecorded or
  59-30  live message or interactive program.  (Sec. 113)
  59-31        Sec. 3.404.  INVESTIGATION OF COMPLAINTS; VIOLATIONS;
  59-32  DISCONNECTION OF SERVICE.  (a)  The commission shall investigate
  59-33  complaints relating to the use of an ADAD and enforce this
  59-34  subtitle.
  59-35        (b)  If the commission or a court determines that a person
  59-36  has violated this subtitle, the commission or court shall require a
  59-37  telecommunications utility to disconnect service to the person.
  59-38  The telecommunications utility may reconnect service to the person
  59-39  only on a determination by the commission that the person will
  59-40  comply with this subtitle.  The utility shall give notice to the
  59-41  person using the device of its intent to disconnect service not
  59-42  later than the third day before the date of the disconnection,
  59-43  except that if the device is causing network congestion or
  59-44  blockage, the notice may be given on the day before the date of
  59-45  disconnection.
  59-46        (c)  A telecommunications utility may, without an order by
  59-47  the commission or a court, disconnect or refuse to connect service
  59-48  to a person using or intending to use an ADAD if the utility
  59-49  determines that the device would cause or is causing network harm.
  59-50  (Sec. 114)
  59-51        Sec. 3.405.  APPLICATION FOR PERMIT TO OPERATE ADAD.  (a)  An
  59-52  application for a permit to use one or more ADADs must be made
  59-53  using the form prescribed by the commission and must be accompanied
  59-54  by a fee in a reasonable amount computed to cover the enforcement
  59-55  cost to the commission, but not to exceed $500, as determined by
  59-56  the commission.  A permit is valid for one year after its effective
  59-57  date.  Subject to Subsection (c) of this section, a permit may be
  59-58  renewed annually by making the filing required by this section and
  59-59  paying a filing fee of not more than $100, as determined by the
  59-60  commission.  The proceeds of the fees shall be deposited to the
  59-61  credit of the General Revenue Fund.
  59-62        (b)  Each application for the issuance or renewal of a permit
  59-63  under this section must contain the telephone number of each ADAD
  59-64  that will be used and the physical address from which the ADAD will
  59-65  operate.  If the telephone number of an ADAD or the physical
  59-66  address from which the ADAD operates changes, the owner or operator
  59-67  of the ADAD shall notify the commission by certified mail of each
  59-68  new number or address not later than the 48th hour before the hour
  59-69  at which the ADAD will begin operating with the new telephone
  59-70  number or at the new address.  If the owner or operator of an ADAD
   60-1  fails to notify the commission as required by this subsection
   60-2  within the period prescribed by this subsection, the permit is
   60-3  automatically invalid.
   60-4        (c)  In determining if a permit should be issued or renewed,
   60-5  the commission shall consider the compliance record of the owner or
   60-6  operator of the ADAD.  The commission may deny an application for
   60-7  the issuance or renewal of a permit because of the applicant's
   60-8  compliance record.
   60-9        (d)  The commission shall provide to an LEC on request a copy
  60-10  of a permit issued under this section and of any changes relating
  60-11  to the permit.
  60-12        (e)  An LEC that receives a complaint relating to the use of
  60-13  an ADAD shall send the complaint to the commission.  The commission
  60-14  by rule shall prescribe the procedures and requirements for sending
  60-15  a complaint to the commission.  (Sec. 115)
  60-16        Sec. 3.406.  VIOLATIONS; PENALTIES.  (a)  A person who owns
  60-17  or operates an ADAD and who operates the ADAD without a valid
  60-18  permit or with an expired permit or who operates the ADAD in
  60-19  violation of this subtitle or a commission rule or order is subject
  60-20  to an administrative penalty of not more than $1,000 for each day
  60-21  or portion of a day during which the ADAD was operating in
  60-22  violation of this section.
  60-23        (b)  The administrative penalty authorized by this section is
  60-24  civil in nature and is cumulative of any other penalty provided by
  60-25  law.
  60-26        (c)  The commission by rule shall prescribe the procedures
  60-27  for assessing an administrative penalty under this section.  The
  60-28  procedures shall require proper notice and hearing in accordance
  60-29  with Chapter 2001, Government Code.
  60-30        (d)  A person may appeal the final order of the commission
  60-31  under Chapter 2001, Government Code, using the substantial evidence
  60-32  rule on appeal.
  60-33        (e)  The proceeds of administrative penalties collected under
  60-34  this section shall be deposited to the credit of the General
  60-35  Revenue Fund.  (Sec. 116)
  60-36        Sec. 3.407.  REVOCATION OF PERMIT; OFFENSES.  (a)  The
  60-37  commission may revoke a permit issued under this subtitle for
  60-38  failure to comply with this subtitle.
  60-39        (b)  A person commits an offense if the person owns or
  60-40  operates an ADAD that the person knows is operating in violation of
  60-41  this subtitle.  An offense under this subsection is a Class A
  60-42  misdemeanor.  (Sec. 117)
  60-43        Sec. 3.408.  RULE-MAKING AUTHORITY.  The commission may adopt
  60-44  any rules necessary to carry out its powers and duties under this
  60-45  subtitle.  (Sec. 118)
  60-46        Sec. 3.409.  COMPLIANCE WITH CONSUMERS' REQUESTS NOT TO BE
  60-47  CALLED.  Every telephone solicitor operating in this state who
  60-48  makes consumer telephone calls subject to Section 37.02 of the
  60-49  Business & Commerce Code shall implement in-house systems and
  60-50  procedures so that every effort is made not to call consumers who
  60-51  ask not to be called again.  The commission is granted all
  60-52  necessary power and authority to enforce the provisions of this
  60-53  section.  (Sec. 119)
  60-54        Sec. 3.410.  NOTICE TO CONSUMER OF PROVISIONS OF CHAPTER 37
  60-55  OF THE BUSINESS & COMMERCE CODE AND SEC. 3.409.  The commission by
  60-56  rule shall require that a local exchange company or telephone
  60-57  cooperative inform its customers of the provisions of Chapter 37 of
  60-58  the Business & Commerce Code and Section 3.409 of this Act by:
  60-59              (1)  inserting the notice annually in the billing
  60-60  statement mailed to a customer; or
  60-61              (2)  publishing the notice in the consumer information
  60-62  pages of its local telephone directory.  (Sec. 120)
  60-63        SECTION 2.  (a)  The Public Utility Regulatory Act (Article
  60-64  1446c, Vernon's Texas Civil Statutes) is repealed.
  60-65        (b)  A reference in law to the "Public Utility Regulatory
  60-66  Act" means the "Public Utility Regulatory Act of 1995."
  60-67        SECTION 3.  The importance of this legislation and the
  60-68  crowded condition of the calendars in both houses create an
  60-69  emergency and an imperative public necessity that the
  60-70  constitutional rule requiring bills to be read on three several
   61-1  days in each house be suspended, and this rule is hereby suspended,
   61-2  and that this Act take effect and be in force from and after its
   61-3  passage, and it is so enacted.
   61-4                               * * * * *