SRC-SLL, PNG S.B. 86 76(R)BILL ANALYSIS Senate Research CenterS.B. 86 By: Nelson Electricity Utility Restructuring 8/5/1999 Enrolled DIGEST Currently, in Texas, there has been a marked increase in retail competition in the telecommunications services industry with a resulting increase in reported incidences of unfair or fraudulent business practices. There is additional concern that similar occurrences may result if the electric industry is restructured to allow retail competition as well. Ultimately, the inability of customers to make choices with confidence in any retail market because of the prevalence of unfair or fraudulent business practices reduces the degree of participation and, consequently, the competitiveness of that market. This bill provides greater consumer protections in the telecommunications and electric services industries. PURPOSE As enrolled, S.B. 86 provides an increase in protection of telecommunications and electric services customers, and provides penalties. RULEMAKING AUTHORITY Rulemaking authority is granted to the Public Utility Commission in SECTIONS 3 and 5 (Sections 17.003(c), 17.004(b) and (f), 17.051(a), 17.052, 17.102, and 55.012(c), Utilities Code), to the governing body of a municipally owned utility in SECTION 3 (Section 17.005, Utilities Code) and to an electric cooperative in SECTION 3 (Section 17.006, Utilities Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 11.002, Utilities Code, by adding Subsection (c) to establish the purpose of this title that significant changes have occurred in the telecommunications and electric power industries since the Public Utility Regulatory Act was adopted, requiring the need for an increase in consumer protection. SECTION 2. Amends Section 15.024(c), Utilities Code, to provide that this subsection does not apply to a violation of Chapter 17 or 55. SECTION 3. Amends Title 2A, Utilities Code, by adding Chapter 17, as follows: CHAPTER 17. CUSTOMER PROTECTION SUBCHAPTER A. GENERAL PROVISIONS Sec. 17.001. CUSTOMER PROTECTION POLICY. Sets forth the findings of the legislature regarding new developments in telecommunications services and the production and delivery of electricity. Sets forth the purpose of this chapter which is to provide retail customer safeguards and provide rulemaking authority to the Public Utility Commission (PUC) to adopt and enforce rules providing retail customer safeguards, including safeguards against unfair, fraudulent, misleading, or anticompetitive practices. Provides that nothing in this section shall be construed to abridge customer rights set forth in commission rules in effect at the time of enactment of this chapter. Provides that this chapter does not limit the constitutional, statutory, and common law authority of the Office of the Attorney General (OAG). Provides that nothing in this chapter authorizes a customer to receive retail electric service from a person other than a certificated retail electric utility. Sec. 17.002. DEFINITIONS. Defines "billing agent," "billing utility," "certificated telecommunications utility," "customer," "electric utility," "retail electric provider," "service provider," and "telecommunications utility." Sec. 17.003. CUSTOMER AWARENESS. Requires the PUC to promote public awareness of electric and telecommunications market changes and provide information to customers about available options and their rights as customers. Requires the PUC to compile a comparative customer service report yearly. Grants rulemaking authority to the PUC to require a certificated telecommunications utility, a retail electric provider, or an electric utility to provide clear, uniform and understandable information to customers about rates, terms, services, customer rights, and other necessary information. Requires customer service awareness efforts to be conducted in English, Spanish, and any other language necessary. Sec. 17.004. CUSTOMER PROTECTION STANDARDS. Establishes that all buyers of telecommunications and electric services have certain entitlements. Grants rulemaking authority to the PUC to adopt and enforce rules for minimum service standards on customer deposits, credit extensions, switching fees, levelized billing programs, and service termination and energy efficiency programs, an affordable rate package, and bill payment assistance for certificated telecommunications utilities, retail electric providers, and electric utilities. Authorizes the commission to waive language requirements for a good cause. Requires the commission to request the comments of the OAG in developing the rules necessary to carry out this section. Requires the commission to coordinate its enforcement efforts with the OAG. Provides that nothing in this section shall be construed to abridge customer rights set forth in commission rules or to abridge the rights of low-income customers to receive benefits through pending or operating programs in effect at the time of the enactment of this chapter. Requires PUC to adopt rules to provide automatic enrollment of eligible utility customers for lifeline telephone service and reduced electric rates available to low-income households. Requires each state agency, on the request of PUC, to assist in the adoption and implementation of those rules. Requires the rules adopted under Subsection (b), notwithstanding any other provision of this title, to provide full, concurrent reimbursement for the costs of any programs provided under Subsection (a)(11) and for reimbursement for the difference between any affordable rate package provided under Subsection (a)(11) and any rates otherwise applicable. Sec. 17.005. PROTECTIONS FOR CUSTOMERS OF MUNICIPALLY OWNED UTILITIES. Prohibits a municipally owned utility from being deemed a "service provider" or "billing agent" for purposes of Sections 17.156(b) and 17.156(e). Grants rulemaking authority to the governing body of a municipally owned utility to adopt, implement, and enforce rules to accomplish objectives set out in Sections 17.004(a) and (b) and Section 17.102, as to the municipally owned utility within its certificated service area. Requires the governing body of a municipally owned utility or its designate to perform the dispute resolution function provided for by Section 17.157 for disputes arising from services provided by the municipally owned utility to electric customers served within its certificated service area. Provides that, with respect to electric customers served by a municipally owned utility outside its certificated service area or otherwise served through others' distribution facilities, after retail competition begins as authorized by the legislature, the provisions of this chapter as administered by PUC apply. Provides that nothing in this chapter shall be deemed to apply to a wholesale customer of a municipally owned utility. Sec. 17.006. PROTECTIONS FOR CUSTOMERS OF ELECTRIC COOPERATIVES. Prohibits an electric cooperative from being deemed to be a "service provider" or a "billing agent" for purposes of Sections 17.156(b) and (e). Requires the electric cooperative to adopt, implement, and enforce rules that have the effect of accomplishing the objectives set out in Sections 17.004(a) and (b) and 17.102. Requires the board of directors of the electric cooperative or its designee to perform the dispute resolution function provided for by Section 17.157 for electric customers served by the electric cooperative within its certificated service ares. Provides that, with respect to electric customers served by an electric cooperative outside its certificated service area or otherwise served through others' distribution facilities, after the legislature authorizes retail competition, the provisions of this chapter as administered by PUC shall apply. Provides that nothing in this chapter shall be deemed to apply to a wholesale customer of an electric cooperative. SUBCHAPTER B. CERTIFICATION, REGISTRATION, AND REPORTING REQUIREMENTS Sec. 17.051. ADOPTION OF RULES. Grants rulemaking authority to the PUC regarding certification, registration, and reporting requirements for certificated telecommunications utilities, retail electric providers, electric utilities, telecommunications utilities that are not dominant carriers, pay telephone providers, qualifying facilities that are selling capacity into the wholesale or retail market, exempt wholesale generators, and power marketers. Requires the rules adopted under Subsection (a) to be consistent with and no less effective than federal law and may not require the disclosure of highly-sensitive competitive or trade secret information. Sec. 17.052. SCOPE OF RULES. Sets forth requirements for the creation and enforcement of the PUC's rules. Sec. 17.053. REPORTS. Authorizes the PUC to require telecommunications service providers, retail electric providers, or electric utilities to submit reports to the PUC concerning any matter over which PUC has authority. SUBCHAPTER C. CUSTOMER'S RIGHT TO CHOICE Sec. 17.101. POLICY. Establishes a state policy to protect customers from unauthorized switching of a selected telecommunications service provider, retail electric provider, or electric utility. Sec. 17.102. RULES RELATING TO CHOICE. Grants rulemaking authority to the PUC to ensure customers are protected from unauthorized switching of a selected telecommunications service provider, retail electric provider, or electric utility. SUBCHAPTER D. PROTECTION AGAINST UNAUTHORIZED CHARGES Sec. 17.151. REQUIREMENTS FOR SUBMITTING CHARGES. Authorizes a service provider, retail electric provider, or billing agent to submit charges on a customer's bill if certain requirements are met. Requires customer consent to be verified by the service provider offering the product or service and a record kept of the authorization for a certain time period. Sets forth the method of obtaining customer and consent. Requires the contract required by Subsection (a)(3)(B) to include the service provider's name, business address, and business telephone number and to be maintained by the billing utility for a certain period of time. Prohibits the use of any fraudulent, unfair, misleading, deceptive, or anticompetitive marketing practices, including the use of negative option marketing, sweepstakes, and contests, by a service provider offering a product or service to be charged on a customer's telephone or electric bill and any billing agent for the service provider. Provides that, unless verification is required by federal law or rules implementing federal law, Subsection (b) does not apply to customer-initiated transactions with a certificated telecommunications provider or an electric utility for which the service provider has the appropriate documentation. Requires a service provider to cease charging a customer for an unauthorized product or service if the service provider is notified by a billing utility that a customer has reported an unauthorized charge. Provides that this section does not apply to certain message telecommunications service charges or collect calls and charges for video services if the service provider has the necessary call detail record to establish the billing for the call or service. Sec. 17.152. RESPONSIBILITIES OF A BILLING UTILITY. Requires a billing utility, upon its knowledge or notification of an unauthorized charge on a customer's bill, to promptly take certain actions by a certain date. Requires certain information to be contained in every report of an unauthorized charge to a customer's bill. Prohibits a billing utility from disconnecting or terminating service to any customer for nonpayment of an unauthorized charge, or from filing an unfavorable credit report against a customer who has not paid charges the customer has alleged were unauthorized unless the dispute regarding the unauthorized charge is ultimately resolved against the customer. Requires the customer to remain obligated to pay any charges that are not in dispute, and provides that this subsection does not apply to those undisputed charges. Sec. 17.153. RECORDS OF DISPUTED CHARGES. Requires every service provider to maintain a record of every disputed charge placed on a customer's bill. Requires certain information to be contained in the record of a disputed charge to a customer's bill. Requires the record to be kept for at least 24 months following the completion of all steps required by Section 17.152(a). Sec. 17.154. NOTICE. Requires a billing utility to provide notice of a customer's right in a manner prescribed by the PUC. Requires the notice to be provided by mail to each residential and business customer within 60 days of the effective date of this section or by inclusion in the publication of the telephone directory next following the effective date of this section. Requires each billing utility to send the notice to new customers at the initiation of service or to any customer upon their request. Sec. 17.155. PROVIDING COPY OF RECORDS. Requires a billing utility to provide a copy of records to PUC staff upon request. Requires a service provider to provide a copy of records to PUC on request. Sec. 17.156. VIOLATIONS. Authorizes the PUC to implement penalties and other enforcement actions under Chapter 15 for a violation of this subchapter by a billing utility. Authorizes the PUC to enforce the provisions of Chapter 15 for any violation of this subchapter or for the knowing provision of false information to the PUC against service provider or billing agent as if it was regulated by the PUC. Establishes that jurisdiction to regulate entities not otherwise subject to PUC regulation is not authorized other than as specifically provided by this chapter. Authorizes the PUC to deny a telecommunications service provider, retail electric provider, or electric utility the right to provide service in this state if the billing utility repeatedly violates this subchapter, except that PUC may not revoke a certificate of convenience and necessity of an electric utility except as provided by Section 37.059 or a certificate of convenience and necessity of a telecommunications utility except as provided by Section 54.008. Authorizes the PUC to order a billing utility to terminate billing and collection services with a repeat violator of this subchapter. Establishes that a billing utility may terminate or restrict its billing and collection services on its own to provide customer safeguards. Sec. 17.157. DISPUTES. Authorizes the PUC to resolve disputes between a retail customer and a billing utility, service provider, telecommunications utility, retail electric provider, or electric utility. Authorizes the PUC to take certain actions in resolving disputes. Requires the PUC to adopt procedures for resolution of disputes in a timely manner which in no event shall exceed 60 days. Sec. 17.158. CONSISTENCY WITH FEDERAL LAW. Requires rules adopted by PUC under this subchapter to be consistent with and not more burdensome than applicable federal laws and rules. SECTION 4. Amends Section 51.002(10), Utilities Code, to redefine "telecommunications provider." SECTION 5. Amends Chapter 55A, Utilities Code, by adding Section 55.012, as follows: Sec. 55.012. LIMITATIONS ON DISCONTINUANCE OF BASIC LOCAL TELECOMMUNICATIONS SERVICE. Prohibits a provider of basic local telecommunications service from discontinuing that service because of nonpayment by a residential customer of charges for long distance service. Requires payment to first be allocated to basic local telecommunications service. Sets forth provisions regarding allocating of payments if local telecommunications service and other services are bundled. Requires PUC to adopt and implement rules, not later than January 1, 2000, to prevent customer abuse of protections afforded by this section. Sets forth provisions to be included in the rules adopted. Provides that, notwithstanding any other provision of this title, PUC has all jurisdiction necessary to establish a maximum price that an incumbent local exchange company may charge a long distance service provider to initiate the toll blocking capability required to be offered under the rules adopted under Subsection (c). Requires the maximum price to be observed by all providers of basic local telecommunications service in the incumbent local exchange company's certificated service area. Provides that, notwithstanding Sections 52.102 and 52.152, PUC has all jurisdiction necessary to enforce this section. SECTION 6. Codifies and amends Section 3.312, Article 1446c-0, V.T.C.S. (Public Utility Regulatory Act of 1995), as Chapter 55K, Utilities Code, as follows: SUBCHAPTER K. SELECTION OF TELECOMMUNICATIONS UTILITIES Sec. 55.301. STATE POLICY. Makes no change. Sec. 55.302. COMMISSION RULES. Deletes a provision regarding a rule requiring telecommunications utilities to maintain records relating to a customer initiated charge. Makes conforming and nonsubstantive changes. Sec. 55.303. New heading: VERIFICATION OF CHANGE. Deletes provisions regarding verification by a telecommunications utility of a carrier initiated change. Deletes existing Section 55.304, regarding customer initiated change. Sec. 55.304. UNAUTHORIZED CHANGE. Provides that a customer is not liable for charges incurred during the first 30 days after the date of an unauthorized carrier change. Makes a conforming change. Sec. 55.305. CORRECTIVE ACTION AND PENALTIES. Makes a conforming change. Sec. 55.306. REPEATED AND RECKLESS VIOLATION. Authorizes PUC, upon a finding that a telecommunications utility has repeatedly and recklessly violated PUC's telecommunications utility selection rules, to deny the registration or certificate, including an amended certificate, of the telecommunications utility, among other actions. Sec. 55.307. DECEPTIVE OR FRAUDULENT PRACTICE. Authorizes PUC to prohibit a utility from engaging in a deceptive or fraudulent practice, including a marketing practice, involving the selection of a customer's telecommunications utility. Authorizes PUC to define deceptive and fraudulent practices to which this section applies. SECTION 7. Emergency clause. Effective date: upon passage.