HBA-NLM, C.S.S.B. 86 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 86 By: Nelson State Affairs 5/1/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE There has been a marked increase in retail competition in the telecommunications services industry which has resulted in an 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. C.S.S.B. 86 provides an increase in consumer protection of telecommunications and electric services customers, and provides penalties. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Public Utility Commission in SECTION 3 (Sections 17.003, 17.004, 17.051, 17.052, and 17.102, Utilities Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 11.002, Utilities Code, by adding Subsection (c), as follows: (c) Provides legislative findings regarding significant changes that have occurred in the telecommunications and electric power industries, such as the need for minimum standards of service quality, customer service, and fair business practices, and the intent of granting the Public Utility Commission of Texas (commission) authority to make and enforce rules necessary to protect customers of telecommunications and electric services. SECTION 2. Amends Section 15.024(c), Utilities Code, to provide that this subsection does not apply to a violation of Chapter 17 (Customer Protection) or 55 (Regulation of Telecommunications Services). SECTION 3. Amends Subtitle A, Title 2, 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 legislative findings regarding the new developments in telecommunications services and the production and delivery of electricity. Provides that the purpose of this chapter is to establish retail customer protection standards and provide rulemaking authority to the commission to adopt and enforce rules to protect retail customers from fraudulent, unfair, misleading, deceptive, or anticompetitive practices. Prohibits anything in this section from being construed to abridge customer rights set forth in commission rules in effect at the time of the enactment of this chapter. Provides that this chapter does not limit in any way 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, for this chapter, "billing agent," "billing utility," "certificated telecommunications utility," "customer," "electric utility," "retail electric provider," "service provider," and "telecommunications utility." Sec. 17.003. CUSTOMER AWARENESS. (a) Requires the commission to promote public awareness of changes in the electric and telecommunications markets and provide customers with information about available options and their rights as customers. Requires the commission to compile a comparative customer service report yearly. Requires the commission to make and enforce rules to require a certificated telecommunications utility, a retail electric provider, or an electric utility to give clear, uniform, and understandable information to customers about rates, terms, services, customer rights, and other necessary information. Requires customer awareness efforts by the commission to be conducted in English, Spanish, and any other language as necessary. Sec. 17.004. CUSTOMER PROTECTION STANDARDS. Establishes that all buyers of telecommunications and electric services have specified entitlements. Authorizes the commission to adopt and enforce rules for minimum service standards on customer deposits, credit extensions, switching fees, levelized billing programs, and service termination, energy efficiency programs, an affordable rate package, and bill payment assistance for low-income customers, for a certificated telecommunications utility, a retail electric provider, and an electric utility. Authorizes the commission to waive language requirements for good cause. Requires the commission to request the comments of the OAG in developing the rules necessary to carry out this section and to coordinate its enforcement efforts with the OAG. Prohibits anything in this section from being construed to abridge customer rights set forth in commission rules in effect at the time of the enactment of this chapter. 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). Requires the governing body of a municipally owned utility to have the authority to adopt, implement, and enforce rules to accomplish objectives set out in Sections 17.004(a) and (b) and Section 17.102. Requires the governing body of a municipally owned utility or its designee to perform the dispute resolution function provided for by Section 17.157 for customers served within its certificated service area or otherwise served through its distribution facilities. Requires the provisions of this chapter to apply to electric customers served by a municipally owned utility outside its certificated service area or otherwise served through others' distribution facilities, after the legislature authorizes retail competition. Prohibits anything in this chapter to be deemed to apply to a wholesale customer of a municipally owned utility. SUBCHAPTER B. CERTIFICATION, REGISTRATION, AND REPORTING REQUIREMENTS Sec. 17.051. ADOPTION OF RULES. Requires the commission to adopt rules relating to certification, registration, and reporting requirements for a certificated telecommunications utility, a retail electric provider, an electric utility, 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 to be consistent with and no less effective than federal law, and prohibits the rules from requiring the disclosure of highly-sensitive competitive or trade secret information. Sec. 17.052. SCOPE OF RULES. Authorizes the commission to have authority to make and enforce rules to accomplish enumerated tasks. Sec. 17.053. REPORTS. Authorizes the commission to require a telecommunications service provider, a retail electric provide, or an electric utility to submit reports to the commission concerning any matter over which the commission has authority. SUBCHAPTER C. CUSTOMER'S RIGHT TO CHOICE Sec. 17.101. POLICY. Provides that it is the policy of the state to protect customers from unauthorized switching of a selected telecommunications service provider, a retail electric provide, or an electric utility. Sec. 17.102. RULES RELATING TO CHOICE. Requires the commission to adopt and enforce rules that accomplish the enumerated measures of protection for the customers. SUBCHAPTER D. PROTECTION AGAINST UNAUTHORIZED CHARGES Sec. 17.151. REQUIREMENTS FOR SUBMITTING CHARGES. (a) Authorizes a service provider, retail electric provider, or billing agent to submit charges on a customer's bill if enumerated requirements are met. (b) Provides that customer consent must be verified by the service provider offering the product or service, and a record of the consent must be kept for at least 24 months. Sets forth the method of obtaining customer consent and verification. (c) Requires the contract required by this Subsection (a) to be maintained by the billing utility for a specified period of time, and must include the service provider's name, business address, and business telephone number. (d) Prohibits the use of any fraudulent, unfair, misleading, deceptive, or anticompetitive marketing practices, including the use of negative option marketing, sweepstakes, and contests, by any billing agent or service provider. (e) Provides that, unless verification is required by federal law or rules implementing federal law, this section 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. (f) Requires a service provider, if the service provider is notified by a billing utility that a customer has reported to the billing utility that a charge made by the service provider is unauthorized, to cease to charge the customer for the unauthorized product or service. (g) Provides that this section does not apply to certain message telecommunications services 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. (a) Requires the billing utility, if a customer's telephone or retail electric bill is charged for any product or service without proper customer consent or verification, upon its knowledge or notification of any unauthorized charge, to promptly, but in no event later than 45 days after such knowledge or notification of such charge: (1) notify the service provider to cease charging the customer for such unauthorized product or service; (2) remove any unauthorized charge from the customer's bill; (3) refund or credit to the customer all money that has been paid by the customer for any unauthorized charge; if the unauthorized charge is not adjusted within three billing cycles, interest shall be paid on the amount of the unauthorized charge; (4) upon the customer's request, provide the customer with all billing records under its control related to any unauthorized charge within 15 business days of the removal of the unauthorized charge from the customer's bill; and (5) maintain for at least 24 months a record of every customer who has experienced any unauthorized charge for a product or service on the customer's telephone or electric bill and who has notified the billing utility of the unauthorized charge. (b) Requires a record required by Subsection (a)(5) to contain specified information for each unauthorized charge. (c) Prohibits a billing utility from disconnecting or terminating telecommunications or electric service to any customer for nonpayment of an unauthorized charge, 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, or interrupting or terminating local exchange service if charges for local exchange service are paid, unless certain conditions are met. Requires the customer to remain obligated to pay any charges that are not in dispute, and this subsection does not apply to those undisputed charges. Sec. 17.153. RECORDS OF DISPUTED CHARGES. (a) Requires every service provider to maintain a record of every disputed charge for a product or service placed on a customer's bill. (b) Requires the record required under Subsection (a) to contain certain information for every disputed charge. (c) Requires the record required by Subsection (a) to be maintained for at least 24 months following the completion of all steps required by Section 17.152(a). Sec. 17.154. NOTICE. (a) Requires a billing utility to provide notice of a customer's rights under this section in the manner prescribed by the commission. (b) Specifies that a notice of a customer's rights must be provided by mail to each residential and retail business customer within 60 days of the effective date of this section or by inclusion in the next publication of the telephone directory following the effective date of this section. Requires each billing utility to send the notice to new customers at the time service is initiated or to any customer at that customer's request. Sec. 17.155. PROVIDING COPY OF RECORDS. Requires a billing utility to provide a copy of records maintained under the requirements of Sections 17.152, 17.153, and 17.154 to the commission staff upon request. Sec. 17.156. VIOLATIONS. (a) Provides that the commission has the authority to implement penalties and other enforcement actions under Chapter 15 (Judicial Review, Enforcement, and Penalties), if the commission finds that a billing utility has engaged in a violation of this subchapter. (b) Authorizes the commission to enforce the provisions of Chapter 15 against the service provider or billing agent as if it were regulated by the commission, if the commission finds that certain service providers or billing agents have engaged in violations of this subchapter or knowingly provided false information to the commission on matters subject to this subchapter. (c) Provides that neither the authority granted under this section nor any other provision of this subchapter shall be construed to grant the commission jurisdiction to regulate service providers or billing agents who are not otherwise subject to commission regulation, other than as specifically provided by this chapter. (d) Authorizes the commission to suspend, restrict, or revoke the registration or certificate of the telecommunications service provider, retail electric provider, or electric utility, if the commission finds that a billing utility or service provider repeatedly violates this subchapter. Prohibits the commission from revoking a certificate of convenience and necessity of an electric utility except as provided by Section 37.059 (Revocation or Amendment of Certificate) or a certificate of convenience and necessity of a telecommunications utility except as provided by Section 54.008 (Revocation or Amendment of Certificate). (e) Authorizes the commission to order the billing utility to terminate billing and collection services for that service provider or billing agent, if the commission finds that a service provider or billing agent has repeatedly violated any provision of this subchapter. (f) Provides that nothing in this subchapter shall be construed to preclude a billing utility from taking action on its own to terminate or restrict its billing and collection services. Sec. 17.157. DISPUTES. (a) Authorizes the commission to resolve disputes between a retail customer and a billing utility, service provider, telecommunications utility, retail electric provider, or electric utility. (b) Authorizes the commission to perform certain activities in exercising its authority under Subsection (a). (c) Requires the commission to adopt procedures for the 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 the commission 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 provide that the term "telecommunications provider" does not include certain entities for the purposes of Chapter 17 or 55. SECTION 5. Amends Section 3.312, Article 1446c-0 (Public Utility Regulatory Act of 1995), V.T.C.S., as added by Section 1, Chapter 919, Acts of the 75th Legislature, Regular Session, 1997, to codify it as Subchapter K, Chapter 55, Utilities Code, as follows: SUBCHAPTER K. SELECTION OF TELECOMMUNICATIONS UTILITIES Sec. 55.301. STATE POLICY. Sets forth the policy of the state. Sec. 55.302. COMMISSION RULES. Makes conforming and nonsubstantive changes. Sec. 55.303. New title: VERIFICATION OF CHANGE. Deletes the term "carrier-initiated" from title. Deletes existing Subsection (b) relating to a telecommunications utility authority to verify a carrier-initiated change order. Deletes Section 55.304 (Customer Initiated Change), relating to a telecommunications utility's requirement to maintain a record of nonpublic customer specific information, if a customer has changed its service. Sec. 55.304. UNAUTHORIZED CHANGE. Redesignated from Section 55.305. Provides that a customer is not liable for charges incurred during the first 30 days after the date of an unauthorized carrier change. Sec. 55.305. CORRECTIVE ACTION AND PENALTIES. Redesignated from Section 55.306. Sec. 55.306. REPEATED AND RECKLESS VIOLATION. Redesignated from Section 55.307. Authorizes the commission to deny the registration or certificate, including an amended certificate, of the telecommunications utility. Sec. 55.307. DECEPTIVE OR FRAUDULENT PRACTICE. Authorizes the commission to prohibit a utility from engaging in a deceptive or fraudulent practice. Authorizes the commission to define deceptive and fraudulent practices to which this section applies. SECTION 6. Emergency clause. Effective date: upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.S.B. 86 modifies the original in SECTION 2 (Section 15.024, Utilities Code), by reinstating text deleted by the original in Subsection (c). The substitute further modifies this subsection to provide that Subsection (c) does not apply to a violation of Chapter 17 or 55. C.S.S.B. 86 modifies the original in SECTION 3 (proposed Section 17.002, Utilities Code) by redefining "billing utility" and "retail electric provider." C.S.S.B. 86 modifies the original in SECTION 3 (proposed Section 17.004, Utilities Code) by including in the list of things to which all buyers of telecommunications and retail electric services are entitled, protection from discrimination on the basis of income level, or source of income and from unreasonable discrimination on the basis of geographic location; all consumer protections and disclosures established by the Fair Credit Reporting Act (15 U.S.C. Section 1681 et seq.) and the Truth in Lending Act (15 U.S.C. Section 1601 et seq.); and programs that offer eligible low-income customers energy efficiency programs designed to reduce uncollectible accounts. C.S.S.B. 86 modifies the original in SECTION 3 by removing proposed Section 17.006 (Limitations on Telephone Solicitation), Utilities Code. This section prohibited all service providers from making or causing to be made any telephone solicitation to any customer who has given notice to the commission of the customer's objection to receiving telephone solicitations. The section required the commission to establish and provide for the operation of a database to compile a list of customers who object to receiving telephone solicitations, and authorized such database to be operated by the commission or any other entity under contract with the commission. In addition, this section required each customer to be charged a fee not to exceed $5 for inclusion in the database. C.S.S.B. 86 modifies the original in SECTION 3 (proposed Section 17.052, Utilities Code) by authorizing, rather than requiring, the commission to have authority to make and enforce rules to accomplish enumerated tasks, except that the commission may not revoke a certificate of convenience and necessity of an electric utility except as provided by Section 54.008, Utilities Code (Revocation or Amendment of Certificate). The substitute makes nonsubstantive changes. C.S.S.B. 86 modifies the original in SECTION 3 (proposed Section 17.102, Utilities Code) by removing the provision the required the commission to adopt and enforce rules that required a telecommunications service provider, a retail electric provider, or an electric utility to maintain records of nonpublic customer-specific information that may be used to establish that the customer authorized a change in service for 24 months. C.S.S.B. 86 modifies the original in SECTION 3 (proposed Section 17.151, Utilities Code) by setting forth the method of obtaining customer consent and verification. The substitute expands the provision that requires the contract required by this section to be maintained by the billing utility for a specified period of time, by specifying that the contract must include the service provider's name, business address, and business telephone number. In addition, the substitute provides that, unless verification is required by federal law or rules implementing federal law, this section 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. The substitute adds a new Subsection (g) to provide that this section does not apply to certain message telecommunications services 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. C.S.S.B. 86 modifies the original in SECTION 3 (proposed Section 17.152(a)(4), Utilities Code) by requiring the billing utility to promptly, but in no event later than 45 days after such knowledge or notification of such charge, upon the customer's request, provide the customer with all billing records under its control related to any unauthorized charge within 15, rather than 10, business days of the removal of the unauthorized charge from the customer's bill. C.S.S.B. 86 modifies the original in SECTION 3 (proposed Section 17.152(c), Utilities Code) by adding a new Subdivision (3) to prohibit a billing utility from interrupting or terminating local exchange service if charges for local exchange service are paid, unless certain conditions are met. C.S.S.B. 86 modifies the original in SECTION 3 (proposed Section 17.156, Utilities Code) by including an exception to the commission's prohibition against revoking a certificate of convenience and necessity of a telecommunications utility except as provided by Section 54.008. C.S.S.B. 86 modifies the original in SECTION 3 by adding Section 17.158 (Consistency with Federal Law), Utilities Code. This section requires rules adopted by the commission under this subchapter to be consistent with and not more burdensome than applicable federal laws and rules. C.S.S.B. 86 redesignates SECTION 4 (emergency clause) of the original to SECTION 6 in the substitute. The substitute adds new SECTIONS 4 and 5, as follows: SECTION 4. Amends Section 51.002(10), Utilities Code, to provide that the term "telecommunications provider" does not include certain entities for the purposes of Chapter 17 or 55. SECTION 5. Amends Section 3.312, Article 1446c-0 (Public Utility Regulatory Act of 1995), V.T.C.S., as added by Section 1, Chapter 919, Acts of the 75th Legislature, Regular Session, 1997, to codify it as Subchapter K, Chapter 55, Utilities Code, as follows: SUBCHAPTER K. SELECTION OF TELECOMMUNICATIONS UTILITIES Sec. 55.301. STATE POLICY. Sets forth the policy of the state. Sec. 55.302. COMMISSION RULES. Makes conforming and nonsubstantive changes. Sec. 55.303. New title: VERIFICATION OF CHANGE. Deletes the term "carrier-initiated" from title. Deletes existing Subsection (b) relating to a telecommunications utility authority to verify a carrier-initiated change order. Deletes Section 55.304 (Customer Initiated Change), relating to a telecommunications utility's requirement to maintain a record of nonpublic customer specific information, if a customer has changed its service. Sec. 55.304. UNAUTHORIZED CHANGE. Redesignated from Section 55.305. Provides that a customer is not liable for charges incurred during the first 30 days after the date of an unauthorized carrier change. Sec. 55.305. CORRECTIVE ACTION AND PENALTIES. Redesignated from Section 55.306. Sec. 55.306. REPEATED AND RECKLESS VIOLATION. Redesignated from Section 55.307. Authorizes the commission to deny the registration or certificate, including an amended certificate, of the telecommunications utility. Sec. 55.307. DECEPTIVE OR FRAUDULENT PRACTICE. Authorizes the commission to prohibit a utility from engaging in a deceptive or fraudulent practice. Authorizes the commission to define deceptive and fraudulent practices to which this section applies.