By:  Shapiro                                          S.B. No. 1665

         Line and page numbers may not match official copy.

         Bill not drafted by TLC or Senate E&E.

                                A BILL TO BE ENTITLED

                                       AN ACT

 1-1     relating to the expansion of toll-free calling areas.

 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-3           SECTION 1.  Subtitle G.  Title III, of the Public Utility

 1-4     Regulatory Act of 1995, (Article 1446c-0, Vernon's Texas Civil

 1-5     Statutes) is amended by revising section 3.304(a) and (b) to read

 1-6     as follows:

 1-7           Sec. 3.304.  Expansion of Toll-Free Calling Areas; Criteria.

 1-8     (a)  To address telephone calling needs between nearby telephone

 1-9     exchanges, the Commission shall initiate a rulemaking proceeding to

1-10     approve rules to provide for an expedited hearing to allow the

1-11     expanding of toll-free calling areas according to the following

1-12     criteria:

1-13                 (1)  Toll-free calling boundaries may only be expanded

1-14     under this section after the filing of a petition signed by the

1-15     lesser of five percent of the subscribers or 100 subscribers within

1-16     an exchange.  If such a petition is filed with the Commission, the

1-17     Commission shall order the incumbent local exchange company to

1-18     provide for the balloting of its subscribers within the petitioning

1-19     exchange and, if there is an affirmative vote of at least 70

1-20     percent of those responding, the Commission shall consider the

1-21     request.

 2-1                 (2)  The Commission shall provide for the expansion of

 2-2     toll-free calling areas for each incumbent local exchange customer

 2-3     in the petitioning exchange if the petitioning exchange serves not

 2-4     more than 10,000 lines and if:

 2-5                       (A)  the central switching office of the

 2-6     petitioning exchange is located within 22 miles utilizing vertical

 2-7     and horizontal geographic coordinates of the central switching

 2-8     office of the exchange requested for toll-free calling service; or

 2-9                       (B)  the petitioning exchange shall demonstrate

2-10     in its petition that it shares a community of interest with the

2-11     exchange requested for toll-free calling service.  For purposes of

2-12     this paragraph, "community of interest" includes areas that have a

2-13     relationship because of schools, hospitals, local governments,

2-14     business centers, and other relationships the unavailability of

2-15     which would cause a hardship to the residents of the area but shall

2-16     not include an area where the affected central offices are more

2-17     than 50 miles apart.

2-18                 (3)  The Commission shall permit only one-way toll-free

2-19     calling areas under this section for petitions filed on or after

2-20     April 15, 1997.

2-21                 [(3)] (4)(A)  The incumbent local exchange company

2-22     shall recover all of its costs incurred and all loss of revenue

2-23     from any expansion of toll-free calling areas under this section

2-24     through a request other than a revenue requirement showing by:

2-25                                        (i)  a monthly fee for toll-free

 3-1     calling service of not more than $3.50 per line for residential

 3-2     customers nor more than $7 per line for business customers for up

 3-3     to five exchanges, together with an additional monthly fee of $1.50

 3-4     per line for each exchange in excess of five, whether obtained in

 3-5     one or more petitions, to be collected from all such residential or

 3-6     business customers in the petitioning exchange and only until the

 3-7     incumbent local exchange company's next general rate case;

 3-8                             (ii)  a monthly [fee] surcharge for toll-free

 3-9     calling service for all of the incumbent local exchange company's

3-10     local exchange service customers in the state in addition to the

3-11     company's current local exchange rates; or

3-12                             (iii)  both (i) and (ii).

3-13                             (iv)  The monthly fees allowed by

3-14     subsection (a)(4)(A)(i) shall be a charge to customers, including

3-15     customers of petitioning exchanges, in addition to the customer

3-16     surcharge allowed by subsection (a)(4)(A)(ii) or subsection

3-17     (a)(4)(C).  The surcharge to each customer permitted under either

3-18     subsection (a)(4)(A)(ii) or subsection (a)(4)(C) is not limited or

3-19     reduced by any monthly fee assessed the customer under subsection

3-20     (a)(4)(A)(i).

3-21                       (B)  For petitions filed after April 15, 1997,

3-22     the petitioned and petitioning incumbent local exchange companies

3-23     shall recover all costs incurred and all loss of revenue from the

3-24     granting of a petition for toll-free calling areas through a

3-25     monthly fee assessed to residential and business local exchange

 4-1     customers in the petitioning exchange.  Such fee shall not be

 4-2     limited to $3.50 per line for residential customers or $7.00 per

 4-3     line for business customers.

 4-4                       (C)  For surcharges allowed by subsection

 4-5     (a)(4)(A)(ii) relating to petitions filed prior to April 15, 1997:

 4-6                             (i)  the surcharge rate shall be

 4-7     recalculated and will be administratively approved to allow the

 4-8     company's previously approved total expanded local calling service

 4-9     surcharge amount to be collected from only the company's customers

4-10     in the expanded local calling service petitioning and petitioned

4-11     exchanges;

4-12                             (ii)  for those companies having fewer than

4-13     1,000,000 access lines, the surcharge rate, at the company's

4-14     initiative, shall be recalculated and will be administratively

4-15     approved to allow the approved total expanded local calling service

4-16     surcharge amount to be collected either from only the company's

4-17     customers in the expanded local calling service petitioning and

4-18     petitioned exchanges, or from all of the company's local exchange

4-19     service customers, at its option.

4-20                             (iii)  Any surcharge amount relating to

4-21     petitions filed prior to April 15, 1997, but which surcharge has

4-22     not been approved by the Commission as of April 15, 1997, shall be

4-23     calculated consistent with the provisions of subsections

4-24     (a)(2)(C)(i) or (a)(2)(C)(ii).

4-25                       (D)  If two years after the imposition of a fee

 5-1     or surcharge allowed by subsections (a)(4)(A) - (C), a local

 5-2     exchange company has not had a general rate case, then the company

 5-3     may include all of the fees and surcharges allowed by subsections

 5-4     (a)(4)(A) - (C) in the company's regular charge for local exchange

 5-5     service in the exchange(s) to which the monthly fee and/or

 5-6     surcharge applies and changes to the company's tariffs shall be

 5-7     approved on a revenue neutral basis by the Commission upon

 5-8     application by a company under this subsection.

 5-9                       [(B)] (E)  An incumbent local exchange company may

5-10     not recover regulatory case expenses under this section by

5-11     surcharging petitioning exchange subscribers.

5-12                       (F)  A proceeding under this section is not a

5-13     ratemaking proceeding before the Commission or in a court.

5-14           (b)(1)  The Commission and an incumbent local exchange

5-15     company are not required to comply with this section with regard to

5-16     a petitioning exchange or petitioned exchange if:

5-17                       (A)  the Commission determines that there has

5-18     been a good and sufficient showing of a geographic or technological

5-19     infeasibility to serve the area;

5-20                       (B)  the incumbent local exchange company has

5-21     less than 10,000 lines;

5-22                       (C)  the petitioning or petitioned exchange is

5-23     served by a cooperative;

5-24                       (D)  extended area service or extended

5-25     metropolitan service is currently available between the petitioning

 6-1     and petitioned exchanges; or

 6-2                       (E)  the petitioning or petitioned exchange is a

 6-3     metropolitan exchange.

 6-4                 (2)  The Commission may expand the toll-free calling

 6-5     area into an exchange not within a metropolitan exchange but within

 6-6     the local calling area contiguous to a metropolitan exchange that

 6-7     the Commission determines to have a community of interest

 6-8     relationship with the petitioning exchange.  For the purposes of

 6-9     this section, metropolitan exchange, local calling area of a

6-10     metropolitan exchange, and exchange have the meanings and

6-11     boundaries as defined and approved by the Commission on September

6-12     1, 1993.  However, under no circumstances shall a petitioning or

6-13     petitioned exchange be split in the provision of a toll-free

6-14     calling area.

6-15           (c)  The Commission may, in order to promote the wide

6-16     dispersion of pay telephones, either exempt such telephones from

6-17     the provisions of this section or change the rates to be charged

6-18     from such telephones in an amount sufficient to promote this goal.

6-19     (Sec. 93A)

6-20           SECTION 2.  This Act takes effect September 1, 1997.

6-21           SECTION 3.  The importance of this legislation and the

6-22     crowded condition of the calendars in both houses create an

6-23     emergency and an imperative public necessity that the

6-24     constitutional rule requiring bills to be read on three several

6-25     days in each house be suspended, and this rule is hereby suspended.