LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
74th Regular Session
May 11, 1995
TO: Honorable David Sibley, Chair IN RE: Committee Substitute
Committee on Economic Development forHouse Bill
Senate No. 2128
Austin, Texas By: Seidlits
FROM: John Keel, Director
In response to your request for a Fiscal Note on House Bill No.
2128 (Relating to the regulation of telecommunications utilities,
to the provision of telecommunications and related services, 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.
The fiscal implications of the bill are calculated from agency
grand total amounts included in the General Appropriations Bill
(Seventy-fourth Regular Session), as introduced: approximately
$10 million each year of the 1996-1997 biennium for the Public
Utility Commission (PUC) and approximately $1.3 each year for the
Office of Public Utility Counsel (OPUC). The General
Appropriations Bill would provide for 211.5 PUC employees and 21
OPUC employees each year of the biennium.
Section 16 would require analyses of transactions with affiliated
interests. Additional staff would be needed to identify the
relevant markets for price comparisons and determine the
appropriate expense to include in cost of service. Additional
costs of $25,982 would be needed during fiscal year 1996 and
$23,832, including one half-time position in each year
thereafter.
Sections 17-19 of the bill would amend the Public Utility
Regulatory Act to establish a system of regulatory flexibility
and partial deregulation for small local exchange companies and
telephone cooperatives. Additional resources of $117,614,
including 2 employees, would be needed in fiscal year 1996 and
$36,230, including one half-time position, in each subsequent
year.
Sections 21-38 of the bill would require regulatory changes,
including alternatives to certificates of public convenience and
necessity for authority to provide local exchange services in
Texas. Approximately 200 interexchange carriers would be
eligible to apply for special certification. Other provisions
would allow the PUC to grant price deregulation of specific
services in particular areas, investigate complaints, resolve
disputes and regulate pay telephone rates and compliance.
Implementation of these 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 $528,249 for fiscal
year 1996, including 8.5 additional employees, and $644,710 for
1997, including 11 additional positions. Thereafter, annual
costs are expected to decline except in fiscal year 1999 when the
second of two large cases would require additional staff and
financial resources.
Section 41 would require the PUC to create the Caller ID Consumer
Education Panel. Additional resources of $58,134, including one
position, during fiscal year 1996 and $41,793, including one
position would be needed during fiscal years 1997-1998 for the
new responsibility. In 1999, the amount would decrease to
$31,660.
Sections 43 and 44 would amend current law relating to toll-free
calling areas and charges for extended area service. The agency
would anticipate one major case resulting from these provisions
during fiscal year 1996, requiring additional resources of
$81,856, including one full-time position, and $12,896 in each
subsequent year for program maintenance.
Section 45 would require private for-profit publishers of
residential telephone directories to include a listing of state
agencies, state public services and elected state officials for
the corresponding area in which the directory is distributed.
The PUC would be required to provide the listings to the
publisher. Cost estimates are based on an assumption that the
agency could utilize related experience and products of the
General Services Commission. Costs associated with
implementation of these provisions are estimated to be $42,891
including one employee in fiscal year 1996, and $21,445,
including one half-time employee in each year thereafter.
Section 48, Subtitle H, would 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," or categories, 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, 2001 regarding consumer benefits,
impact of competition, infrastructure investments and quality of
service. Local exchange carriers electing incentive regulation
would make infrastructure commitments for six-year implementation
schedules and file annual progress reports with the PUC.
Subtitle H provisions would require policy rule adoption
proceedings, administrative hearings for rate adjustments, and
compliance monitoring. The PUC estimates additional costs of
$196,902 for fiscal year 1996, including 3.5 additional
employees, and $235,280 for 1997, including 4 additional
employees. Costs would increase in each subsequent year to
$413,477 in 2000, including 7.5 additional employees
Section 48, Subtitle J, 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 policy rules adoption for service
price imputation, telephone number portability, competitively
neutral number assignment, and expanded interconnection networks.
Estimated additional PUC costs would be $235,931, including 4
additional employees, in fiscal year 1996 and $186,154 in 1997,
including 3 positions. Costs would decline to $33,872 in 2000.
Section 48, Subtitle K, would establish new requirements for
broadcaster safeguards relating to the use of specific Customer
Proprietary Network Information. The PUC anticipates that rule
adoption proceedings would require additional resources of
$44,537 during fiscal year 1996 and $42,029 during 1997,
declining to $38,689 in 2000, including one additional employee
each year.
Section 48, Subtitle L, would establish provisions 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. Adoption of new policy
rules and compliance monitoring would require additional
resources of $10,502 during the first fiscal year and $12,892 in
each subsequent year.
Section 48, Subtitle N, contains provisions delegating additional
authority to the PUC relating to the Universal Service Fund,
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
would be $28,814 for fiscal year 1996, including one half-time
position, and $34,630 for 1997-1999, including one position.
Costs would decline to $10,317 in fiscal year 2000.
Section 48, Subtitle N, would also create the 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 annual assessment of $75 million from all telecommunications
providers based on total annual intrastate receipts. 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.
Changes to the Public Utility Regulatory Act would result in
significant additional program support costs related to all
sections of the bill. Such costs would include an additional
supervisor and clerical staff for the Telephone Division and
additional staff for both the Central Records Division and the
Public Information Section. The agency estimates additional
costs of $242,066 during fiscal year 1996, including 6 employees,
and $202,590 in 1997, including 5.5 employees.
The Office of Public Utility Counsel also projects needs for
significant additional resources to participate in rule adoption
proceedings and other regulatory changes to current law. The
agency estimates total costs of $324,969 for fiscal year 1996 and
$310,707 each year thereafter. Five additional employees and
expert witness fees of $50,000 are included in cost estimates for
each year.
Sections 49 and 50 provide for rural and urban scholarship funds
from local exchange company unclaimed property. Total amounts
for each fund would not exceed $400,000 annually and could be
significantly less depending upon the level of company
participation in each program. In addition, the total amount
contributed to urban scholarship funds would not exceed the total
for the rural program. Corresponding losses from general revenue
are anticipated.
Revenue impacts in addition to those previously discussed cannot
be estimated at this time. Revisions to 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 is
based on cost reimbursement that may decline significantly if
relevant functions are reduced as a result of provisions for
incentive regulation in Section 46. Access line fee revenue
decreases could result in estimated general losses each year of
$676,000.
Cost to the General Revenue Fund and the change in number of
State Employees do not reflect amendments contained in the Senate
Committee substitute
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
Revenue Fund 001 General Revenue Telecommunications
Fund 001 Infrastructure
Fund
1996 $2,029,444 ($676,000) $150,000,000
1997 1,899,615 (676,000) 150,000,000
1998 1,630,904 (676,000) 150,000,000
1999 1,752,164 (676,000) 150,000,000
2000 1,558,626 (676,000) 150,000,000
Fiscal Change in
Year Number of State
Employees from
FY 1995
1996 36.0
1997 35.5
1998 31.0
1999 33.0
2000 29.5
Similar annual fiscal implications would continue as long as the
provisions of the bill are in effect.
The fiscal implication to units of local government cannot be
determined.
Source: Public Utility Commission, Office of the Public Utility
Counsel
LBB Staff: JK, RM, DF