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 * * * * *