LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
74th Regular Session
March 20, 1995
TO: Honorable Curtis Seidlits, Chair IN RE: House Bill No. 2128
Committee on State Affairs By: Seidlits
House of Representatives
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on House Bill No.
2128 (Relating to the regulation of utilities and to the
continuation of the Public Utility Commission of Texas.) this
office has determined the following:
The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.
Fiscal implications of the bill are calculated from agency grand
total amounts included in the General Appropriations Bill
(Seventy-fourth Regular Session), as introduced: Public Utility
Commission (PUC), approximately $10 million each year of the
1996-1997 biennium; Office of the Public Utility Counsel (OPUC),
approximately $1.3 million each year of the biennium. The
General Appropriations Bill would provide for 211.5 PUC employees
and 21 OPUC employees each year.
Bill provisions relating to Articles I - III, XII - XV and XVIII
of the Public Utility Regulatory Act (the Act) and bill Section 2
provisions would have no significant fiscal impacts for the state
and no fiscal impacts for units of local government.
Article IV of the Act would be amended to provide for a new
system of incentive regulation for local exchange carriers who
elect regulation under the new system as an alternative to rate
of return regulation. Three service baskets would define
variable levels of rate regulation by the PUC. The PUC would
perform a review of electing companies and report to the
Legislature by January 1, 1999. Local exchange carriers electing
incentive regulation would make infrastructure commitments for
six-year implementation schedules and file annual progress
reports with the PUC. Article IV provisions would require
extensive rule adoption proceedings, administrative cases for
rate adjustments and compliance monitoring. The PUC estimates
additional costs of $185,640 for fiscal year 1996, including 3
additional employees, and $236,040 for 1997, including 4
additional employees.
Article V of the Act would be amended by the bill to provide
incentives for deployment of infrastructure by local exchange
companies who do not elect incentive regulation. These
provisions would require rule adoption proceedings and compliance
monitoring. Estimated PUC costs are included in the estimates
for Article IV costs due to the relatedness of Articles IV and V.
Article VI of the Act would be amended to permit a public utility
to pass through municipal fees. No significant additional state
costs are anticipated.
Article VII of the Act would be amended to require the PUC, upon
application by a utility, to fix depreciation rates that promote
technology and infrastructure deployment. For associated rule
adoption proceedings, the PUC estimates additional costs of
$23,800 for fiscal year 1996, including a part-time position.
Similar costs would recur only during 1998.
Article VIII amendments would establish provision relating to
electronic publishing, including prohibiting local exchange
companies (LECs) or affiliates from providing electronic
publishing through the basic telephone service of the LEC or LEC
affiliate under certain circumstances. These amendments would
require PUC adoption of a rule and compliance monitoring. The
amended provisions would expire June 30, 2000. Estimated PUC
costs would be $19,700 for fiscal year 1996 and $12,900 each year
thereafter through 2000.
Article IX amendments to the Act for proceedings before the
regulatory authority would make several major changes, including
establishing partial deregulation for small local exchange
companies and telephone cooperatives. Section 47B provisions
would assign exclusive jurisdiction to the PUC to implement
competitive safeguards that would require: hearings for
unbundling local exchange company networks; filings of loop
resale tariffs; and rules adoption for service price imputation,
telephone number portability, competitively neutral number
assignment, and expanded interconnection of networks. Estimated
PUC costs would be $305,100 for fiscal year 1996, including 4
additional employees, and $193,500 for 1997, including 3.5
additional employees. Estimated costs would decrease to $70,300
in 2000, including 1 additional employee.
Article X amendments would establish certificates of operating
authority (COA) and special provider certificates of operating
authority (SPCOA) as alternative requisites to certificates of
public convenience and necessity (CCN) for authority to provide
local exchange service in Texas. Other provisions would allow
the PUC to grant price deregulation of specific services in
particular areas, investigate complaints and resolve disputes,
and to regulate pay telephone rates and compliance.
Implementation of Article X provisions would result in additional
workload relating to certification hearings, compliance
monitoring, dispute resolution, and adoption of rules relating to
pay phones. Estimated PUC costs would be $239,600 for fiscal
year 1996, including 4 additional employees, and $396,900 for
1997 including 7 additional positions. Thereafter, annual costs
would continue to fluctuate below the level for 1997.
Articles XI and XVI would be amended to impose a deadline for PUC
processing of sale, transfer, and merger filings and to allow
commercial radio mobile service providers to offer caller
identification services. Estimated PUC costs for implementing
these provisions would be $14,100 for fiscal year 1996 and
$12,900 each year thereafter.
Article XVII of the Act would be amended to create a
Telecommunications Infrastructure Fund and a nine-member board to
administer the fund. The board would serve without pay but would
be reimbursed for related expenses and would be authorized to
employ necessary personnel and enter into contracts with state
agencies and private entities as necessary. The Fund would be
financed with an assessment of $75 million per year from all
telecommunications providers based on total annual intrastate
receipts. Although the bill would provide for the Comptroller to
assess and collect the amounts, the bill does not specify an
assessment rate or collection guidelines regarding, for example,
whether refunds would be due when collections exceed $75 million.
The Fund would be a dedicated fund within the State Treasury.
Funds appropriated to the board would be used to award grants and
loans to school districts, institutions of higher education, and
public libraries recommended by the Texas Education Agency or the
Texas Higher Education Coordinating Board.
Other provisions under XVII of the Act would delegate additional
authority to the PUC relating to the Universal Service Fund and
would establish the Regulatory Transition Fund (RTF),
administered by the PUC, to promote universal local exchange
service where no competition exists. Estimated PUC costs for
rule adoption proceedings necessary to implement these provisions
and additional resources to administer the RTF would be $74,500
for fiscal year 1996, including 1 additional employee and
$184,700 for 1997, including 3 additional employees. Costs would
decline to $126,400 in fiscal year 2000, including 2 additional
employees.
Article XIX of the Act would be amended to require the PUC to
develop regulations requiring local exchange companies to share
infrastructure and technology. No costs would be anticipated for
fiscal year 1996, but additional resources of $38,800, including
1 employee, would be needed for 1997. For each year thereafter,
the PUC estimates that additional costs of $10,300 would occur
relating to complaint resolution functions.
Article XX of the Act would establish new requirements for
broadcaster safeguards relating to the use of specific Customer
Proprietary Network Information. The PUC anticipates that rule
adoption proceedings in this area would require significant
additional resources of $44,500 for fiscal year 1996 and $42,000
for 1997, declining to $38,700 for 2000, including one
additional employee each year.
The PUC estimates that the magnitude of changes to the Public
Utility Regulatory Act would result in significant additional
costs for several categories of staffing not directly
attributable to any single article. Such costs would include an
additional supervisor in the Telephone Division and clerical
staff. A large number of filings resulting from new rule
adoption proceedings would require additional staff for the
Central Records Division and the Public Information Section would
need additional staff to respond to public and media inquiries
relating to regulatory changes.
The Office of Public Utility Counsel also projects needs for
significant additional resources to participate adequately in
rule adoption proceedings and other regulatory changes caused by
amendments to the Act. The agency estimates total costs of
$411,300 for fiscal year 1996, and $392,900 for each year
thereafter. Six additional employees and expert witness fees of
$75,000 are included in cost estimates for each year.
Overall, analysis of fiscal impacts for the PUC and the OPUC that
would result from the bill's provisions to amend the Public
Utility Regulatory Act do not include estimates of potential
savings related to reduced functions. Such information is
anticipated for subsequent fiscal notes for House Bill 2128.
Revenue impacts could result from the bill's provisions, but
cannot be estimated accurately at this time. Revisions to
Article I definitions for "public utility" in combination with
other provisions of the bill could reduce collections if fewer
utilities are subject to the utility gross receipts tax. In
addition, access line fee revenue [Sections 18(i) and 43B(h)] is
based on cost reimbursement that may decline significantly if
relevant functions are reduced as a result of provisions for
incentive regulation in Articles IV and V. Access line fee
revenue decreases could result in estimated general revenue
losses each year of $676,000.
The probable fiscal implication of implementing the provisions of
the bill during each of the first five years following passage
is estimated as follows:
Fiscal Probable Cost Out Probable Revenue Probable Revenue
Year of General Gain/(Loss) from Gain to Telecom.
Revenue Fund 001 General Revenue Infrastructure
Fund 001 Fund
1996 $1,560,353 ($676,000) $75,000,000
1997 1,713,073 (676,000) 75,000,000
1998 1,603,456 (676,000) 75,000,000
1999 1,714,436 (676,000) 75,000,000
2000 1,545,499 (676,000) 75,000,000
Fiscal Change in
Year Number of State
Employees from
FY 1995
1996 26.5
1997 31.0
1998 30.0
1999 32.0
2000 28.0
Similar annual fiscal implications would continue as long as the
provisions of the bill are in effect.
No significant fiscal implication to units of local government is
anticipated.
Source: Comptroller of Public Accounts, Public Utility
Commission, Natural Resources Conservation Commission
LBB Staff: JK, RM, DF