TITLE economic-regulation

Part II. Public Utility Commission of Texas

Chapter 23. Substantive Rules

Subchapter D. Certification

16 TAC §23.31

The Public Utility Commission of Texas adopts the repeal of §23.31 relating to Certification Criteria with no changes to the proposed text as published in the November 13, 1998 Texas Register (23 TexReg 11514). The repeal is necessary to avoid duplicative rule sections. The commission has adopted §25.101 of this title (relating to Certification Criteria) and §25.102 of this title (relating to Coastal Management Program) to replace §23.31 as it relates to electric service providers. The commission has adopted §26.101 of this title (relating to Certification Criteria) to replace §23.31 as it relates to telecommunications service providers. This repeal is adopted under Project Number 17709.

The commission received no comments on the proposed repeal.

This repeal is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction.

Cross-Index to Statutes: Public Utility Regulatory Act §14.002.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on March 5, 1999.

TRD-9901353

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: March 25, 1999

Proposal publication date: November 13, 1998

For further information, please call: (512) 936-7308

Subchapter H. Telephone

16 TAC §23.108

The Public Utility Commission of Texas adopts the repeal of §23.108 relating to Reclassification of Telecommunications Services by Incumbent Local Exchange Carriers (ILECs) with no changes to the proposed text as published in the October 30, 1998 Texas Register (23 TexReg 11017). The repeal is necessary to avoid duplicative rule sections. The commission has adopted §26.175 of this title (relating to Reclassification of Telecommunications Services for Electing Incumbent Exchange Companies (ILECs)) to replace 23.108. This repeal is adopted under Project Number 17709.

The commission received no comments on the proposed repeal.

This repeal is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction.

Cross-Index to Statutes: Public Utility Regulatory Act §14.002.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on March 8, 1999.

TRD-9901405

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: March 28, 1999

Proposal publication date: October 30, 1998

For further information, please call: (512) 936-7308

Chapter 25. Substantive Rules Applicable to Electric Service Providers

Subchapter E. Certification, Licensing, and Regulation

16 TAC §25.101, §25.102

The Public Utility Commission of Texas (commission) adopts new §25.101, relating to Certification Criteria, with changes to the proposed text as published in the October 16, 1998 issue of the Texas Register (23 TexReg 10593). The commission adopts new §25.102, relating to Coastal Management Program, with no changes to the proposed text as published in the October 16, 1998 issue of the Texas Register (23 TexReg 10593). The new sections will replace §23.31 of the title (relating to Certification Criteria) as it relates to electric service providers. New §25.101 will also replace §23.44(b) of the title (relating to New Construction) as it pertains to standards of construction. These new sections were adopted under Project Number 19761.

The commission recently adopted substantive changes to §23.67 of this title (relating to Open-access Comparable Transmission Service) and §23.70 of this title (relating to Terms and Conditions of Open-access Comparable Transmission Service) under Project Number 18703, Review of Transmission Access Rules, Substantive Rules §23.67, and §23.70. The commission is adopting substantive changes to §25.101 from corresponding §23.31(a) - (f) and (h) to bring the section concerning certification criteria into agreement with the recent changes to §23.67 and 23.70. In particular, under §25.101, as adopted, recommendations for transmission lines made by the Electric Reliability Council of Texas (ERCOT) Independent System Operator (ISO) will be given great weight by the commission in considering the need for such projects. Under the rule as adopted, certain transmission line applications will be processed on an expedited basis.

The Appropriations Act of 1997, HB 1, Article IX, Section 167 (Section 167) requires that each state agency review and consider for readoption each rule adopted by that agency pursuant to the Government Code, Chapter 2001 (Administrative Procedure Act). Such reviews shall include, at a minimum, an assessment by the agency as to whether the reason for adopting or readopting the rule continues to exist. The commission held three workshops to conduct a preliminary review of its rules. As a result of these workshops, the commission is reorganizing its current substantive rules located in 16 Texas Administrative Code (TAC) Chapter 23 to (1) satisfy the requirements of Section 167; (2) repeal rules no longer needed; (3) update existing rules to reflect changes in the industries regulated by the commission; (4) do clean-up amendments made necessary by changes in law and commission organizational structure and practices; (5) reorganize rules into new chapters to facilitate future amendments and provide room for expansion; and (6) reorganize the rules according to the industry to which they apply. Chapter 25 has been established for all commission substantive rules applicable to electric service providers. The corresponding sections in Chapter 23 are repealed as the new sections are adopted. The commission has adopted the repeal of §23.31. Section 23.44(b) will be proposed for repeal as soon as all subsections of §23.44 have been proposed for movement to the new chapters.

The commission requested specific comments on the Section 167 requirement as to whether the reason for adopting or readopting the rule continues to exist. The commission finds that the reason for adopting the rule continues to exist.

The commission received comments on the proposed new sections from Brazos Electric Power Cooperative (BEPC), Houston Lighting & Power Company (HL&P), Lower Colorado River Authority (LCRA), the Office of Public Utility Counsel (OPC), South Texas Electric Cooperative (STEC), Southwestern Public Service Company (SPS), and Texas Utilities Electric Company (TUEC). Central Power and Light Company, Southwestern Electric Power Company and West Texas Utilities Company filed their comments collectively (CSW Companies).

Reply comments were filed by the City of Garland and the City of Denton Municipal Utilities (Cities), Enron Capital & Trade Resources (ENRON) and TUEC. Limited reply comments were filed by the CSW Companies and the LCRA.

All of the commenters were generally supportive of new §25.101 and believed that it would significantly streamline the certification process for electric utilities and eliminate many of the shortcomings of the present rule. However, all of the commenters offered "slight modifications" to the proposed rule.

No comments were received on the recodification relating to coastal management matters in new §25.102.

To avoid confusion, all references to §25.101 in the summary of comments below are to the rule as proposed. However, based on the comments received, the commission has deleted subparagraphs in §25.101(c)(1), (2) and (5) and has renumbered the remaining subparagraphs accordingly.

Sections 25.101(b), 25.101(b)(1), 25.101(b)(2), 25.101(b)(3) - Grandfathered Facilities

No changes to the current language were proposed in these paragraphs. However BEPC recommended that the language should be changed to "grandfather" the service areas and facilities certificated by the commission between September 1, 1975 and the effective date of the new rule, making it clear that the certification and exemption requirements of the new rule apply on a going-forward basis and do not apply to those facilities certificated and constructed between September 1, 1975 and the effective date of the new rule.

The commission concludes that the suggestion by BEPC is unnecessary. If the commission granted a certificate of convenience and necessity (CCN) in the past, nothing in this rule would affect that grant, so there is no need to refer to such CCNs in the grandfather provisions of §25.101. The grandfather provision need refer only to facilities in operation or under construction on September 1, 1975.

Section 25.101(c) - Recommendation of ERCOT ISO

TUEC concurred that the ERCOT ISO's recommendation on proposed transmission facilities should be accorded great deference by the commission. TUEC recommended that the phrase "great weight" be replaced by "great deference." CSW Companies strongly supported the rule revision to give "great weight" to the ISO in the issue of determining transmission line need and proposed changing "the proposed line" to "any transmission facility" for clarity. Finally, Enron suggested that the ISO's determination of need should satisfy the establishment of need in a CCN filing.

OPC, on the other hand, argued that the proposed change not be adopted because it would impermissibly remove the discretion vested with the administrative law judge (ALJ) to weigh the evidence presented at a hearing in a certificate proceeding. OPC asserted that by assigning a heightened status to the ISO's recommendation under this rule, the commission would be improperly attempting to influence the ALJ's application of the law by dictating the weight to assign to particular evidence.

In reply comments LCRA took exception to OPC's comments on this portion of the rule and suggested that the commission was within its authority to implement standards in its substantive rules applicable in certification proceedings.

The commission concludes that the provision concerning the weight accorded to the recommendation of the ISO is not improper. The commission has the authority to adopt rules relating to procedures, and this rule is not contrary to any provision of PURA or the Administrative Procedure Act (APA). There are appropriate grounds for according great weight to the recommendation of the ISO, based on its day-to-day supervision of the transmission and independence of market participants.

The commission declines to adopt TUEC's proposed change to this subsection. The commission concludes that the term "great weight" is more appropriate than the phrase "great deference." The term "great deference" implies that the ISO's recommendation would be binding on the commission. This would conflict with the commission's statutory obligation to determine the need for all proposed transmission lines. For the same reason, the commission does not adopt Enron's suggestion that the ISO's recommendation of a transmission line is determinative on the issue of need.

Section 25.101(c)(1)(D) - Switching Stations Outside Certificated Area

TUEC correctly observed that this section has been expanded to include switching stations as well as substations outside the utility certificated area and further noted that §25.101(c)(2)(B) exempted both substations and switching stations. TUEC argued that such language would add a new and unnecessary factor for utilities to consider in siting substations and switching stations and that the consent requirement for switching stations would be particularly nonsensical in light of the function of such facilities.

The commission agrees that §25.101(c)(1)(D) and §25.101(c)(2)(C) are confusing. Because substations or switching stations are not constructed without a transmission line, these requirements are superfluous and should be deleted. The commission has deleted §25.101(c)(1)(D) which would have required a certificate or certificate amendment for any new electric substation or switching station outside the electric utility's service area To be consistent with the deletion of §25.101(c)(1)(D), the commission has also deleted §25.101(c)(2)(C) altogether and the phrase "within the electric utility's certificated area" from §25.101(c)(2)(B). These changes all reflect the fact that a CCN is not required for a new substation or switching station.

Section 25.101(c)(2)(D) - Additional Exemption Criteria

TUEC and LCRA suggested that the reporting of routine activities provided in §25.101(c)(2)(D)(ii) should be further streamlined by providing for exemption from certification of projects requiring the installation of additional circuit on existing structures. Based on similar reasoning, SPS commented that if no additional right-of-way is required, the installation of additional circuits on existing structures should be considered a routine activity.

The commission concludes that SPS's proposed revision to this subsection is more reasonable than TUEC's and adopts SPS's suggestion. Landowners are directly affected if additional right of way is required for the installation of circuits on an existing line. However, if no additional right of way is required, affected landowners should be much less concerned and thus an exemption for this type of activity is appropriate. Moreover, affected landowners will receive notice when a line is first proposed and thus will have an opportunity to make their views known at that time.

TUEC asserted that the criteria for rebuilding, upgrading and bundling conductors on existing structures is limited pursuant to a commission memorandum to $100,000. TUEC proposed that this expense limit be increased to $1,000,000 to reflect escalation of costs involved in such tasks.

The commission declines to adopt TUEC's proposal. The commission is unaware of the commission memorandum referenced by TUEC. Moreover, the expense limit referenced by TUEC is not included in a commission rule and the commission does not believe it is good policy to set a definite expense limitation as suggested by TUEC. For these reasons, the commission declines to adopt TUEC's proposed expense limitation language.

Section 25.101(c)(2)(D)(i),(ii),(iii),(iv) - Exemption Criteria - Consent

All of the commenters, with the exception of OPC, took exception to the word "consent" in the §25.101(c)(2)(D) and suggested that it be replaced by the word "notice." Both LCRA and BEPC offered specific, virtually identical notice language.

The commenters arguing against a consent requirement reasoned that a request of consent could cause unnecessary delay, especially if the party from whom consent was requested was not interested in providing such consent or was motivated for competitive reasons to withhold consent. These commenters concluded that resulting delays could be detrimental to the public interest by fostering conflict and manipulation between utilities while needed transmission improvements are delayed.

In reply comments Cities urged the commission to retain the consent requirement. Cities asserted that the consent requirement would insure participation of directly affected utilities. OPC also opposed deletion of the "consent" requirement.

The commission agrees that requiring consent from other utilities as set out in proposed §25.101(c)(2)(D)(i), (ii), (iii) and (iv) could be unnecessarily cumbersome. The commission concludes that the proposed revisions to §25.101(c)(2)(D)(i), (ii) and (iii) offered by BEPC are reasonable. BEPC's proposed language strikes a reasonable balance between utilities' need to construct projects expeditiously and the need for affected utilities to be notified of such changes. BEPC's language will eliminate the consent requirement for other utilities. The commission also adopts LCRA's proposed revision to §25.101(c)(2)(D)(iv) regarding notice because, unlike BEPC's language, it requires notice only to neighboring utilities, but requires consent from affected landowners.

Section 25.101(c)(2)(D)(i) - Exemption Criteria

CSW Companies asserted that the "two-span" limit has unduly restricted the permissible distance for the relocation of transmission facilities. CSW proposed that the "two-span" limitation be changed to "four-spans or 4,000 feet". CSW Companies claim this change would allow utilities greater flexibility in working with landowners and service recipients without filing a full certification proceeding.

The commission is not convinced that the two span limitation should be expanded as suggested by CSW. CSW offered no convincing evidence to support its request to expand the existing exemption to four spans. The commission believes the two-span limitation is reasonable and it is retained in the final version of §25.101.

Section 25.101(c)(2)(D)(ii) - Exemption Criteria - Modifications to Existing Facilities

CSW Companies argued that the exemption for modifications to existing facilities would be even more effective if the first sentence were modified to delete the phrase "on facilities that were originally designed and certificated for multiple-circuit capacity." LCRA suggested deleting the words "originally" and "and certificated" from this subsection.

The commission agrees in part with CSW's and LCRA's suggested modifications. The commission concludes that the words "designed and" are unnecessary and should be deleted. If facilities were originally certificated for multiple-circuit capacity, this is sufficient for the installation of additional circuits without the need for another CCN, provided that no additional right of way is required. The commission has modified this subsection to incorporate these changes.

Section 25.101(c)(2)(D)(v) - Exemption Criteria - public works

LCRA suggested revisions to the public works exemption to include all possible governmental requirements, to include consolidation of existing facilities and to clarify the definition of "close proximity". In their reply comments, Cities took exception to LCRA's suggestion and urged that the "governmental requirement" section not be unduly broadened.

CSW Companies asserted that a landowner that is in dispute with a governmental agency with regard to such activities as a highway relocation could attempt to utilize the commission certification/exemption process to delay the other governmental entity. CSW Companies provided a hypothetical example in which landowners are in dispute with the Texas Department of Transportation (TXDOT) regarding a new right-of-way for a highway relocation. If TXDOT had to use condemnation to obtain the right-of-way, this could impact the ability of the utility to obtain the consent from the landowners to relocate the line as a result of the highway relocation. The utility may also be forced to use condemnation to obtain the new right-of-way. The CSW Companies argued that such situations should not force the filing of a full blown CCN. CSW Companies suggested that this situation could be remedied by deleting the remainder of the sentence following the word "provided" in subsection (v) and substituting the following language: "...water quality. If the new facilities must be located at a distance greater than 500 feet from their present location on the property of existing landowner(s), then prior consent is required. For any new landowner(s) crossed by new facilities, prior consent is required."

The commission agrees that the term "close proximity" should be more clearly defined. However, the commission declines to adopt CSW Companies' proposed language. The commission agrees in part with CSW Companies' proposed change to this subsection, but concludes that the 500 foot limit is too great a distance. Such a limit would exempt virtually all relocation, alteration, or reconstuction of facilities from certification. The commission concludes that a 200 foot limit is a more appropriate substitute for the term "close proximity." This is the same distance limitation provided for notice to landowners in §25.101(c)(2)(D)(vi).

The commission also adopts LCRA's suggested revisions to this subsection except for the addition of the phrases "public works" and "any other public need or necessity". These phrases are overly broad and ill-defined.

Section 25.101(c)(2)(D)(vi) - Exemption Reporting

TUEC claimed that approximately 80% of projects qualifying for exemption do not occur with a planning horizon that allows for quarterly reporting and recommended deletion of the quarterly filing requirement. For similar reasons, CSW Companies also recommended elimination of the quarterly report requirement. TUEC also suggested that if the commission needed a consolidated accounting of a utility's activities the commission could replace the present 30 day advance filings for individual projects with a quarterly report filing that detailed all exempt work performed during the previous period.

The commission agrees that the quarterly report is unnecessary in light of the present requirement to report such activities no less than 30 days prior to commencement of construction. The commission has therefore deleted the quarterly report filing requirement. To the extent possible, utilities should attempt to combine their reporting of exempt projects into a single filing.

Section 25.101(c)(2)(D)(vii) - Exemption Criteria - Emergency Situations

Both SPS and TUEC recommended clarification of the new language and suggested that the proposed rule language be clarified to require a single report within 180 days following restoration of service. Both SPS and HL&P contended that the 30 day period would not allow sufficient time to account for the costs of all repairs made in an emergency.

CSW Companies recommend deleting the reporting requirement in those situations where no customer outages were experienced and that 120 days would be more appropriate to improve the quality and accuracy of data provided in the report.

HL&P contended that the two different time periods referenced in these sections are confusing and may work at cross purposes.

The commission agrees that some modifications to this subsection as proposed are appropriate. It is important for the commission to obtain cost information quickly, even if such information is an estimate. The commission is part of the state's Emergency Management Council and the governor depends on the council to provide cost estimates in the event of a disaster. The governor, in turn, uses this information to apply to the federal government for disaster assistance. Also in events such as the ice storms of 1997, the commission is expected to assess the damage to the electric system and report to the public. For all these reasons, the commission requires timely receipt of cost information in emergency situations. The 120 and 180 day time frames suggested by some of the commenters would not meet the commission's needs. The commission has retained the requirement to report emergency repairs with estimated cost information within 30 days. However, the commission has added language requiring utilities to update these reports as necessary to provide final cost information related to emergency repairs. Final reports detailing work performed and associated costs for emergency repairs must be filed within 90 days.

Section 25.101(c)(5)(A) and(B) - Expedited Approval.

TUEC strongly supported the concept of an 80 day approval period, but suggested that the proposed paragraph (B) lacked the certainty necessary to produce the desired result. TUEC recommended striking the word "may" and inserting the word "shall" in its place. CSW Companies made the same recommendation for both §25.101(c)(5)(A) and (B).

The commission agrees with these suggestions and has made the requested changes to §25.101(c)(5)(A) and (B).

LCRA supported the commission's proposal in §25.101(c)(5) to provide expedited approval for uncontested CCN applications, but was concerned about the provision in §25.101(c)(5)(B)(iii) that an ERCOT ISO recommendation would be necessary for uncontested transmission projects to be eligible for expedited approval. LCRA contended that this requirement would encourage utilities to force the ISO to review all transmission projects, which the ISO may not have the resources to do. LCRA urged the commission to remove §25.101(c)(5)(B)(iii) from this section. BEPC expressed similar concerns. CSW Companies proposed language that would permit transmission line work to proceed even if it not the type of project normally reviewed and considered by the ISO.

The Cities noted in their reply comments that the above comments highlight the need for the ISO to have adequate funding to properly perform the tasks that the commission proposed in this rule and in the rules concerning open access transmission service.

The commission agrees with the concerns of the commenters that ERCOT ISO approval of transmission lines should not be a prerequisite to commission approval in every instance. The commission concludes that the CSW Companies' language is the most reasonable proposal and has incorporated this language into the final rule.

OPC did not oppose the shortened process if the commission adopted OPC's proposed changes to eliminate the language about the ISO's recommendation, discussed in §25.101(c).

For reasons previously discussed, the commission declines to delete the requirement that the ISO's recommendation be given great weight by the commission on the issue of need.

CSW Companies noted that the commission has processed "service area exceptions" for years, and suggested that these type of applications should be processed within 45 days or sooner upon a showing of good cause.

The commission agrees with this suggestion, provided that affected customers, landowners and affected utilities have given prior consent to such changes. Prior consent (as opposed to notice) of affected utilities is appropriate when changes in service area boundaries are involved. It is the commission's experience that minor boundary changes are generally agreed to, so prior consent of affected utilities should not present a problem. Prior consent of affected customers and landowners for minor boundary changes is also appropriate. Generally, minor boundary changes are made at a customer's request, so their consent to the change will not present a problem. In those instances where the affected customer is not also the landowner, any landowners whose property is within the area affected by the boundary change should also give prior consent.

TUEC made several suggested changes to the commission's procedures that will be required by the expedited approval process. TUEC proposed that the 70 day intervention period be shortened to 20 days, or alternatively to 45 days as provided in Procedural Rule §22.104((b).

The commission agrees that in light of the other changes to the current CCN review process, the 70 day intervention deadline should be shortened. The commission concludes that a 45 day deadline is a reasonable compromise between the current 70 day intervention deadline and TUEC's proposed 20 day deadline. The commission in the near future will propose amendments to procedural rules §22.52 and §22.104 to provide for a 45 day intervention deadline for electric certification proceedings under §25.101(c)(5).

At pages 9-12 of their initial comments, TUEC also made several suggestions to streamline the staff determination of the sufficiency of CCN applications. These changes include expedited commission staff review of CCN applications, establishment of an "issues resolution period" for cases in which staff issues a negative recommendation, applicant-prepared orders including findings of fact and conclusions of law and an issues resolution period to resolve staff concerns, and development of standard preliminary and referral order procedures. These were not proposed changes to §25.101, but were suggestions that TUEC proposed be adopted as internal commission procedures.

The commission agrees in principle with TUEC's proposed suggestions and will revise its internal procedures accordingly.

Finally, the commission has also made minor wording changes in §25.101(c)(5)(A) & (B) for purposes of clarity.

Section 25.101(c)(5)(C) - Projects Deemed Critical to the Reliability of the ERCOT System

TUEC asserted that if "critical" projects can be fully processed within 180 days, it is logical that all applications could be processed within that time frame. TUEC acknowledged that some cases may be too complex to be processed by SOAH within 180 days and proposed that the commission's standard referral order include a provision that provides SOAH the opportunity to request additional time from the commission.

The commission declines to adopt TUEC's suggested changes to this subsection. The commission believes that CCN applications will, as a result of the amendments adopted herein, be processed much more quickly than in the past. Further streamlining is unnecessary at this time. However, after some experience with the new process, it may be appropriate to review this rule and make further refinements in the process.

HL&P proposed adding the phrase "for contested applications" at the beginning of the second sentence in this subsection. This addition would make clear that uncontested projects that are otherwise deemed critical to the reliability of the ERCOT system will be subject to the 80 day review period. HL&P further suggested that where the reliability of the ERCOT grid would be compromised without prompt action, a review period of 90 or 120 days would be appropriate.

For reasons discussed above in connection with TUEC's proposed modifications, the commission also declines to adopt the changes to this subsection recommended by HL&P.

SPS recommended amending these sections to include projects that are deemed critical to reliability by an independent regional planning group outside of ERCOT.

The commission agrees with SPS's suggestion and has added language to this subsection to reflect this change.

Other Comments.

Enron also suggested that the commission recognize that third party transmission owners may apply for and obtain a CCN.

Under current law, third party transmission owners may apply for and obtain a CCN. Therefore, Enron's request to add language to this effect to §25.101 is unnecessary.

The remainder of Enron's comments, not previously addressed herein, dealt with matters not directly related to the proposed rule and are therefore not addressed herein.

All comments, including any not specifically referenced herein, were fully considered by the commission. In adopting this section, the commission makes other minor modifications for the purpose of clarifying its intent.

These sections are adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, and specifically, PURA §34.003, which requires the commission to adopt an integrated resource planning process; §35.006, which requires the commission to adopt rules relating to wholesale transmission service, rates, and access; and §§37.051, 37.052, 37.053 37.056, and 37.057 which require the commission to review and approve certificates of convenience and necessity.

Cross-Index to Statutes: Public Utility Regulatory Act §§14.002, 34.003, 35.006, 37.051, 37.052, 37.053 37.056, and 37.057.

§25.101.Certification Criteria.

(a)

Definition. The term "generating unit", when used in this section, shall mean any electric generating facility. This section does not apply to any generating unit that is less than 10 megawatts and is built for experimental purposes only, and not for purposes of commercial operation.

(b)

Certificates of convenience and necessity for existing service areas and facilities. For purposes of granting these certificates for those facilities and areas in which an electric utility was providing service on September 1, 1975, or was actively engaged in the construction, installation, extension, improvement of, or addition to any facility actually used or to be used in providing electric utility service on September 1, 1975, unless found by the commission to be otherwise, the following provisions shall prevail for certification purposes:

(1)

The electrical generation facilities and service area boundary of an electric utility having such facilities in place or being actively engaged in the construction, installation, extension, improvement of, or addition to such facilities or the electric utility's system as of September 1, 1975, shall be limited, unless otherwise provided, to the facilities and real property on which the facilities were actually located, used, or dedicated as of September 1, 1975.

(2)

The transmission facilities and service area boundary of an electric utility having such facilities in place or being actively engaged in the construction, installation, extension, improvement of, or addition to such facilities or the electric utility's system as of September 1, 1975, shall be, unless otherwise provided, the facilities and a corridor extending 100 feet on either side of said transmission facilities in place, used or dedicated as of September 1, 1975.

(3)

The facilities and service area boundary for the following types of electric utilities providing distribution or collection service to any area, or actively engaged in the construction, installation, extension, improvement of, or addition to such facilities or the electric utility's system as of September 1, 1975, shall be limited, unless otherwise found by the commission, to the facilities and the area which lie within 200 feet of any point along a distribution line, which is specifically deemed to include service drop lines, for electrical utilities.

(c)

Certificates of convenience and necessity for new service areas and facilities. Except for certificates granted under subsection (b) of this section, the commission may grant an application and issue a certificate only if it finds that the certificate is necessary for the service, accommodation, convenience, or safety of the public. For transmission line certificate applications the commission shall give great weight to the recommendation of the Electric Reliability Council of Texas (ERCOT) Independent System Operator (ISO) in determining the need for a proposed transmission line. This subsection does not apply to a certificate of convenience and necessity for a new generating plant requested as part of the integrated resource planning process under §25.171 of this title (relating to Certificates of Convenience and Necessity for Generation Facilities).

(1)

The commission may issue a certificate as applied for, or refuse to issue it, or issue it for the construction of a portion of the contemplated system or facility or extension thereof, or for the partial exercise only of the right or privilege. The commission may amend or revoke any certificate issued under this section if it finds that the public convenience and necessity requires such amendment or revocation. A certificate, or certificate amendment, is required for the following:

(A)

a change in service area;

(B)

a new electric generating unit;

(C)

a new electric transmission line;

(D)

a qualifying facility which is making or plans to make retail sales of electricity to an end user, unless the end user is also the sole purchaser of the thermal output of the qualifying facility, or unless the qualifying facility generates less than 10 megawatts of electric power by renewable resources, biomass, or waste. As a requisite to certification, the commission shall find that the ratepayers of the electric utility in whose service area the purchasing end user is located will not be substantially adversely impacted as a result of such retail sales.

(2)

A certificate is not required for the following:

(A)

a contiguous extension of those facilities described in the Public Utility Regulatory Act §37.052;

(B)

a new electric high voltage switching station, or substation;

(C)

routine activities associated with transmission facilities that are conducted by electric utilities, including wholesale generation and transmission utilities, and as specifically noted following:

(i)

the alteration of an existing transmission line to provide service to a customer-owned substation or metering point, or to an electric utility-owned substation, where that electric utility- owned substation is located within two spans of the existing transmission line, provided that all utilities whose certificated service area is crossed are provided notice at least 30 days prior to the start of construction of the new facility, or the new facility is being constructed to serve a utility certificated in the area where the new facility is to be constructed and all landowners whose property is crossed by the transmission facilities constructed to connect the substation to the existing transmission line have given prior consent;

(ii)

the rebuilding, upgrading, bundling of conductors or reconductoring of an existing transmission facility; or the installation of an additional circuit(s) on facilities that were originally certificated for multiple-circuit capacity, provided no additional right of way is required. Activities described in this clause which occur in the certificated area of another electric utility require that utility to be provided notice at least 30 days prior to the start of construction of the new facility. However, if the rebuilding, upgrading, bundling of conductors or reconductoring is being done to serve a utility certificated in the area where those activities are to take place, then no such notice is required. However, within multiply-certificated areas, only notice, not consent, is required. For purposes of this section, "upgrading'' to a higher voltage shall be limited to 230 KV or less and "rebuilding'' work shall be limited to the replacement and/or respacing of structures along an existing route of the transmission line;

(iii)

the relocation of all or part of an existing transmission facility due to a request for relocation to be done at the expense of the requesting party and to be relocated solely on rights-of- way provided by the requesting party. Activities described in this clause which occur in the certificated area of another electric utility require that utility to be provided notice at least 30 days prior to the start of the relocation.

(iv)

the relocation or alteration of all or part of an existing transmission facility to avoid or eliminate existing encroachments, provided that all utilities whose certificated service area is crossed are provided notice at least 30 days prior to the start of the relocation or alternation and all landowners whose property is crossed by such relocation or alteration have given prior consent;

(v)

the relocation, alteration, or reconstruction of a transmission facility due to the requirements of any federal, state, county, or municipal governmental body or agency for purposes of highway transportation, airport construction, public safety, or air and water quality, provided that the relocation, alteration or reconstruction is responsive to the governmental request and is within 200 feet of the existing facilities and that any new landowner crossed by the relocation, alteration or reconstruction has given prior consent;

(vi)

nothing contained in clauses (i)-(v) of this subparagraph should be construed as a limitation of the commission's authority as set forth in the Public Utility Regulatory Act. Any activity described in clauses (i)-(v) of this subparagraph must be reported to the commission, on commission prescribed forms, not less than 30 days prior to the commencement of construction, and the commission may require additional facts or call a public hearing thereon to determine whether a certificate of convenience and necessity is required. For projects that require new or additional rights-of-way direct mail notice is required to landowners of adjacent property within 200 feet of the proposed project, the parks and recreation areas within 1,000 feet, and airports within 10,000 feet, of the proposed project.

(vii)

the repair or reconstruction of a transmission facility due to emergency situations shall proceed without delay or prior approval of the commission. Once emergency repairs have been performed and power has been restored, the affected utility shall file a report, within 30 days, describing the work performed and the associated costs. Final reports detailing associated costs must be filed within 90 days after completion of the repair or reconstruction.

(D)

the construction or upgrading of distribution facilities within the electric utility's service area.

(3)

The term construction and/or extension, as used in this section, shall not include the purchase or condemnation of real property for use as facility sites or right-of-way. However, prior acquisition of such sites or right-of- way shall not be deemed to entitle an electric utility to the grant of a certificate of convenience and necessity without showing that the proposed extension is necessary for the service, accommodation, convenience, or safety of the public.

(4)

The commission shall render a decision approving or denying an application for a certificate required under paragraph (1) of this subsection within one year of the date of filing of a complete application for such a certificate, unless good cause is shown for exceeding that period.

(5)

Expedited Approval:

(A)

Uncontested applications: Except for an application for a new transmission line, an application for a certificate under subsection (c)(1) of this section shall be approved administratively within 80 days from the date of filing a complete application if:

(i)

no motion to intervene has been filed or the application is uncontested; and

(ii)

the Office of Regulatory Affairs Staff has determined that the application meets all applicable statutory criteria and filing requirements, including, but not limited to, the provision of proper notice of the application.

(B)

Minor boundary or service area exceptions: In the case of minor boundary changes or service area exceptions, such applications shall be approved administratively within 45 days of the filing of the application and may be approved sooner if good cause is shown, provided that all utilities whose certificated service area is affected agree to the change and all customers within the affected area have given prior consent.

(C)

Uncontested transmission lines: An application for a certificate for a transmission line shall be approved administratively within 80 days from the date of filing a complete application if:

(i)

no motion to intervene has been filed or the application is uncontested;

(ii)

for those projects within ERCOT, the ERCOT ISO has recommended approval of the project if it is the type of transmission project which the ISO considers and approves; and

(iii)

the Office of Regulatory Affairs staff has determined that the application meets all applicable statutory criteria and filing requirements, including, but not limited to, the provision of proper notice of the application.

(D)

Projects deemed critical to the reliability of the ERCOT system: Applications for transmission lines which have been designated by the ERCOT ISO as critical to the reliability of the ERCOT system shall be considered by the commission on an expedited basis. The commission shall render a decision approving or denying an application for a certificate under this subsection within 180 days of the date of filing a complete application for such a certificate unless good cause is shown for extending that period. These procedures may be applied to transmission lines located in other reliability councils or administered by other independent system operators provided such councils have a process for designation of critical transmission lines.

(6)

Standards of construction. In determining standard practice, the commission will be guided by the provision of the American National Standards Institute, Incorporated, the National Electric Safety Code, and such other codes and standards that are generally accepted by the industry, except as modified by this commission or by municipal regulations within their jurisdiction. Each electric utility shall construct, install, operate, and maintain its plant, structures, equipment, and lines in accordance with these standards, and in such manner to best accommodate the public, and to prevent interference with service furnished by other public utilities insofar as practical.

(A)

The standards of construction shall apply to, but are not limited to, the construction of any new electric transmission facilities, rebuilding, upgrading, or relocation of existing electric transmission facilities.

(B)

For electric transmission line construction requiring the acquisition of new rights-of-way, electric utilities must include in the easement agreement, at a minimum, a provision prohibiting the new construction of habitable structures within the right-of-way. However, utilities may negotiate appropriate exceptions in instances where the electric utility is subject to a restrictive agreement being granted by a governmental agency or within the constraints of an industrial site. Any exception to this paragraph must meet all the applicable requirements of the National Electric Safety Code.

(C)

For the purposes of subparagraph (B) of this paragraph the term, "habitable structures" means those structures normally inhabited by humans on a daily, or regular basis including, but not limited to, single-family dwellings and related structures, apartment buildings, business structures, major additions to the aforementioned types of pre-existing structures, and mobile home parks. However, the phrase "new construction of habitable structures" under subparagraph (B) of this paragraph shall not include necessary repairs to existing structures, farm or livestock facilities, storage barns, hunting structures, small personal storage sheds, or similar structures.

(d)

Transferability of certificates. Any certificate granted under this section is not transferable without approval of the commission and shall continue in force until further order of the commission.

(e)

Exclusiveness of certificate. Any certificate granted under this section shall not be construed to vest exclusive service or property rights in and to the area certificated. The commission may grant, upon finding that the public convenience and necessity requires additional certification to another electric utility or utilities, additional certification to any other electric utility or utilities to all or any part of the area heretofore certificated under this section.

(f)

Certification forms. The commission shall adopt a form or forms that will facilitate the granting of certificates so that the granting of certificates, both contested and uncontested, will be expedited. Forms may be obtained from central records.

(g)

To the extent that any portion of Chapter 23 of this title (relating to Substantive Rules) may be inconsistent with this section, this section controls.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on March 5, 1999.

TRD-9901351

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: March 25, 1999

Proposal publication date: October 16, 1998

For further information, please call: (512) 936-7308

Chapter 26. Substantive Rules Applicable to Telecommunications Service Providers

The Public Utility Commission of Texas (commission) adopts an amendment to §26.5 relating to Definitions with changes to the proposed text as published in the October 30, 1998 Texas Register (23 TexReg 11018). The commission adopts new §26.175 relating to Reclassification of Telecommunications Services for Electing Incumbent Local Exchange Companies (ILECs) with no changes to the text as published in the October 30, 1998 Texas Register (23 TexReg 11018). Section 26.175 replaces §23.108 of this title (relating to Reclassification of Telecommunications Services for Electing Incumbent Local Exchange Carriers (ILECs)). Section 26.175 establishes standards for the reclassification of telecommunications services as directed by the Public Utility Regulatory Act (PURA), Texas Utilities Code Annotated §58.024 (Vernon 1998). The amendment to §26.5 incorporates the definitions that were found in §23.108. Section 23.108 is being repealed. Project Number 17709 is assigned to this proceeding.

The Appropriations Act of 1997, HB 1, Article IX, Section 167 (Section 167) requires that each state agency review and consider for readoption each rule adopted by that agency pursuant to the Government Code, Chapter 2001 (Administrative Procedure Act). Such reviews shall include, at a minimum, an assessment by the agency as to whether the reason for adopting or readopting the rule continues to exist. The commission held three workshops to conduct a preliminary review of its rules. As a result of these workshops, the commission is reorganizing its current substantive rules located in 16 Texas Administrative Code (TAC) Chapter 23 to (1) satisfy the requirements of Section 167; (2) repeal rules no longer needed; (3) update existing rules to reflect changes in the industries regulated by the commission; (4) do clean-up amendments made necessary by changes in law and commission organizational structure and practices; (5) reorganize rules into new chapters to facilitate future amendments and provide room for expansion; and (6) reorganize the rules according to the industry to which they apply. Chapter 26 has been established for all commission substantive rules applicable to telecommunications service providers.

The commission received comments on the proposed new section from AT&T Communications of the Southwest, Inc. (AT&T), MCI Telecommunications Corporation (MCI), and reply comments from Southwestern Bell Telephone Company (SWB).

The commission requested specific comments on the Section 167 requirement as to whether the reason for adopting or readopting the rule continues to exist. MCI commented that it supports §26.175 as published and believes that the rule incorporates the general competitive safeguards that are appropriate for evaluating an application by an incumbent local exchange carrier to reclassify telecommunications services. The commission finds that the reason for adopting the rule continues to exist.

AT&T suggested that §26.175(c)(1) and §26.175(f)(2)(A) be modified to include Public Utility Regulatory Act, Chapter 60, Subchapter I, as a result of the commission's decision in Docket Number 17775, Application of Southwestern Bell Telephone Company to Increase Ceiling Prices Pursuant to PURA95 §3.355. SWB filed reply comments referring the commission to PURA §58.024(c) that states "The commission may not reclassify a service until each competitive safeguard prescribed by Subchapters B-G, Chapter 60, is fully implemented." Based on SWB's reply comments AT&T withdrew its initial comments. The commission makes no changes to §26.175.

An error occurred in the publication of §26.5(52) as published October 30, 1998 at 23 TexReg 11020. The word "switchboard" was published as "switcHouse Billoard". A correction was published January 1, 1999 at 24 TexReg 220. The commission adopts §26.5 as corrected.

Subchapter A. General Provisions

16 TAC §26.5

This amendment is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, §58.024 which requires the commission to establish standards for the reclassification of telecommunications services.

Cross-Index to Statutes: Public Utility Regulatory Act §§14.002, 58.024, 58.051, 58.101 and 58.151.

§26.5.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1)-(11)

(No change.)

(12)

Basic network services (BNS) - Those services as defined in PURA §58.051, and any other service the commission subsequently categorizes as a basic network service.

(13)

Baud - Unit of signaling speed reflecting the number of discrete conditions or signal elements transmitted per second.

(14)

Bellcore - Bell Communications Research, Inc.

(15)

Bit Error Ratio (BER) - The ratio of the number of bits received in error to the total number of bits transmitted in a given time interval.

(16)

Bit Rate - The rate at which data bits are transmitted over a communications path, normally expressed in bits per second.

(17)

Bona fide request - A written request to an incumbent local exchange company (ILEC) from a certificated telecommunications utility or an enhanced service provider, requesting that the ILEC unbundle its network/services to the extent ordered by the Federal Communications Commission. A bona fide request indicates an intent to purchase the service subject to the purchaser being able to obtain acceptable rates, terms, and conditions.

(18)

Business service - A telecommunications service provided a customer where the use is primarily of a business, professional, institutional or otherwise occupational nature.

(19)

Busy hour - The clock hour each day during which the greatest usage occurs.

(20)

Busy season - That period of the year during which the greatest volume of traffic is handled in a switching office.

(21)

Call aggregator - Any person or entity that owns or otherwise controls telephones intended to be utilized by the public, which control is evidenced by the authority to post notices on and/or unblock access at the telephone.

(22)

Call splashing - Call transferring (whether caller-requested or operator service provider-initiated) that results in a call being rated and/or billed from a point different from that where the call originated.

(23)

Call transferring - Handing off a call from one operator service provider (OSP) to another OSP.

(24)

Caller identification materials (caller ID materials) - Any advertisements, educational materials, training materials, audio and video marketing devices, and any information disseminated about caller ID services.

(25)

Caller identification service (caller ID service) - A service offered by a telecommunications provider that provides calling party information to a device capable of displaying the information.

(26)

Calling area - The area within which telecommunications service is furnished to customers under a specific schedule of exchange rates. A "local" calling area may include more than one exchange area.

(27)

Calling party information -

(A)

the telephone listing number and/or name of the customer from whose telephone instrument a telephone number is dialed; or

(B)

other information that may be used to identify the specific originating number or originating location of a wire or electronic communication transmitted by a telephone instrument.

(28)

Capitalization - Long-term debt plus total equity.

(29)

Carrier of choice - An option that allows an individual to choose an interexchange carrier for long distance calls made through Telecommunications Relay Service.

(30)

Carrier-initiated change - A change in the telecommunications utility serving a customer that was initiated by the telecommunications utility to which the customer is changed, whether the switch is made because a customer did or did not respond to direct mail solicitation, telemarketing, or other actions initiated by the carrier.

(31)

Central office - A switching unit in a telecommunications system which provides service to the general public, having the necessary equipment and operating arrangements for terminating and interconnecting customer lines and trunks or trunks only.

(32)

Census block group (CBG) - A United States Census Bureau geographic designation that generally contains between 250 and 550 housing units.

(33)

Certificated service area - The geographic area within which a company has been authorized to provide basic local telecommunications services pursuant to a certificate of convenience and necessity (CCN), a certificate of operating authority (COA), or a service provider certificate of operating authority (SPCOA) issued by the commission.

(34)

Certificated telecommunications utility - A telecommunications utility that has been granted either a certificate of convenience and necessity (CCN), a certificate of operating authority (COA), or a service provider certificate of operating authority (SPCOA).

(35)

Class of service or customer class - A description of utility service provided to a customer which denotes such characteristics as nature of use (business or residential) or type of rate (flat rate or message rate). Classes may be further subdivided into grades, denoting individual or multiparty line or denoting quality of service.

(36)

Commission - The Public Utility Commission of Texas.

(37)

Competitive exchange service - Any of the following services, when provided on an inter- or intrastate basis within an exchange area: central office based PBX- type services for systems of 75 stations or more; billing and collection services; (high speed private line services of 1.544 megabits or greater; customized services; private line and virtual private line services; resold or shared local exchange telephone services if permitted by tariff; dark fiber services; non-voice data transmission service when offered as a separate service and not as a component of basic local telecommunications service; dedicated or virtually dedicated access services; services for which a local exchange company has been granted authority to engage in pricing flexibility pursuant to §23.27 of this title (relating to Rate-Setting Flexibility); any service initially provided within an exchange after October 26, 1992, if first provided by an entity other than the incumbent local exchange company (companies) certificated to provide service within that exchange; and any other service the commission declares is not local exchange telephone service.

(38)

Competitive services (CS) - Those services as defined in PURA §58.151, and any other service the commission subsequently categorizes as a competitive service.

(39)

Completed call - a call that is answered by the called party.

(40)

Complex service - The provision of a circuit requiring special treatment, special equipment, or special engineering design, including but not limited to private lines, WATS, PBX trunks, rotary lines, and special assemblies.

(41)

Consumer good or service -

(A)

real property or tangible or intangible personal property that is normally used for personal, family, or household purposes, including personal property intended to be attached to or installed in any real property;

(B)

a cemetery lot;

(C)

a time-share estate; or

(D)

a service related to real or personal property.

(42)

Consumer telephone call - An unsolicited call made to a residential telephone number to:

(A)

solicit a sale of a consumer good or service;

(B)

solicit an extension of credit for a consumer good or service; or

(C)

obtain information that will or may be used to directly solicit a sale of a consumer good or service or to extend credit for the sale.

(43)

Cooperative - An incumbent local exchange company that is a cooperative corporation.

(44)

Cooperative corporation -

(A)

An electric cooperative corporation organized and operating under the Electric Cooperative Corporation Act, Texas Utilities Code Annotated, Chapter 161, or a predecessor statute to Chapter 161 and operating under that chapter; or

(B)

A telephone cooperative corporation organized under the Telephone Cooperative Act, Texas Utilities Code, Chapter 162, or a predecessor statute to Chapter 162 and operating under that chapter.

(45)

Corporate name - Has the meaning assigned by Texas Business Corporation Act, Article §2.05.

(46)

Corporation - A domestic or foreign corporation, joint-stock company, or association, and each lessee, assignee, trustee, receiver or other successor in interest of the corporation, company, or association, that has any of the powers or privileges of a corporation not possessed by an individual or partnership. The term does not include a municipal corporation, except as expressly provided by the Public Utility Regulatory Act.

(47)

Custom calling-type services - Call management services available from a central office switching system including, but not limited to, call forwarding, call waiting, caller ID, or automatic recall.

(48)

Customer access line - A unit of measurement representing a telecommunications circuit or, in the case of ISDN, a telecommunications channel designated for a particular customer. One customer access line shall be counted for each circuit which is capable of generating usage on the line side of the switched network or a private line circuit, regardless of the quantity or ownership of customer premises equipment connected to each circuit. In the case of multiparty lines, each party shall be counted as a separate customer access line.

(49)

Customer-initiated change - A change in the telecommunications utility serving a customer that is initiated by the customer and is not the result of direct mail solicitation, telemarketing, or other actions initiated by the carrier.

(50)

Customer premises equipment (CPE) - Telephone terminal equipment located at a customer's premises. This does not include overvoltage protection equipment, inside wiring, coin-operated (or pay) telephones, "company-official" equipment, mobile telephone equipment, "911" equipment, equipment necessary for provision of communications for national defense, or multiplexing equipment used to deliver multiple channels to the customer.

(51)

Customer proprietary network information (CPNI), customer-specific - Any information compiled about a customer by a telecommunications utility in the normal course of providing telephone service that identifies the customer by matching such information with the customer's name, address, or billing telephone number. This information includes, but is not limited to: line type(s), technical characteristics (e.g., rotary service), class of service, current telephone charges, long distance billing record, local service billing record, directory assistance charges, usage data, and calling patterns.

(52)

Customer trouble report - Any oral or written report from a customer or user of telecommunications service received by any telecommunications utility relating to a physical defect, difficulty, or dissatisfaction with the service provided by the telecommunications utility's facilities. Each telephone or PBX switchboard position reported in trouble shall be counted as a separate report when several items are reported by one customer at the same time, unless the group of troubles so reported is clearly related to a common cause.

(53)

dBrn - A unit used to express noise power relative to one Pico watt (-90 dBm).

(54)

dBrnC - Noise power in dBrn, measured with C-message weighting.

(55)

dBrnCO - Noise power in dBrnC referred to or measured at a zero transmission level point.

(56)

D-Channel - The integrated-services-digital-network out-of-band signaling channel.

(57)

Dedicated signaling transport - Transmission of out-of-band signaling information between an access customer's common channel signaling network and a certificated telecommunications utility's signaling transport point on facilities dedicated to the use of a single customer. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates.

(58)

Depreciation expenses - The charges based on the depreciation accrual rates designed to spread the cost recovery of the property over its economic life.

(59)

Direct-trunked transport - Transmission of traffic between the serving wire center and another certificated telecommunications utility's office, without intermediate switching. It is charged on a flat-rate basis. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates.

(60)

Disconnection of telephone service - The event after which a customer's telephone number is deleted from the central office switch and databases.

(61)

Discretionary services (DS) - Those services as defined in the Public Utility Regulatory Act §58.101, and any other service the commission subsequently categorizes as a discretionary service.

(62)

Distance learning- Instruction, learning, and training that is transmitted from one site to one or more sites by telecommunications services that are used by an educational institution predominantly for such instruction, learning, or training-- including: video, data, voice, and electronic information.

(63)

Distribution lines - Those lines from which the end user may be provided direct service.

(64)

Dominant carrier- A provider of a communication service provided wholly or partly over a telephone system who the commission determines has sufficient market power in a telecommunications market to control prices for that service in that market in a manner adverse to the public interest. The term includes a provider who provided local exchange telephone service within certificated exchange areas on September 1, 1995, as to that service and as to any other service for which a competitive alternative is not available in a particular geographic market. In addition with respect to:

(A)

intraLATA long distance message telecommunications service originated by dialing the access code "1-plus," the term includes a provider of local exchange telephone service in a certificated exchange area for whom the use of that access code for the origination of "1-plus" intraLATA calls in the exchange area is exclusive; and

(B)

interexchange services, the term does not include an interexchange carrier that is not a certificated local exchange company.

(65)

Dominant certificated telecommunications utility (DCTU) - A certificated telecommunications utility that is also a dominant carrier. Unless clearly indicated otherwise, the rules applicable to a DCTU apply specifically to only those services for which the DCTU is dominant.

(66)

Dual-party relay service - A service using oral and printed translations, by either a person or an automated device, between hearing- or speech-impaired individuals who use telecommunications devices for the deaf, computers, or similar automated devices, and others who do not have such equipment.

(67)

Educational institution - Accredited primary or secondary schools owned or operated by state and local government entities or by private entities; institutions of higher education as defined by the Education Code, §61.003(13); the Texas Education Agency, its successors and assigns; regional education service centers established and operated pursuant to the Education Code, Chapter 8; and the Texas Higher Education Coordinating Board, its successors and assigns.

(68)

Electing local exchange company (LEC) - A certificated telecommunications utility electing to be regulated under the terms of the Public Utility Regulatory Act, Chapter 58.

(69)

Electric utility -

(A)

A person or river authority that owns or operates for compensation in this state equipment or facilities to produce, generate, transmit, distribute, sell, or furnish electricity in this state. The term includes a lessee, trustee, or receiver of an electric utility and a recreational vehicle park owner who does not comply with Texas Utilities Code, Chapter 184, Subchapter C, with regard to the metered sale of electricity at the recreational vehicle park. The term does not include:

(i)

a municipal corporation;

(ii)

a qualifying facility;

(iii)

an exempt wholesale generator;

(iv)

a power marketer;

(v)

a corporation described by Public Utility Regulatory Act §32.053 to the extent the corporation sells electricity exclusively at wholesale and not to the ultimate consumer; or

(vi)

a person not otherwise an electric utility who:

(I)

furnishes an electric service or commodity only to itself, its employees, or its tenants as an incident of employment or tenancy, if that service or commodity is not resold to or used by others;

(II)

owns or operates in this state equipment or facilities to produce, generate, transmit, distribute, sell or furnish electric energy to an electric utility, if the equipment or facilities are used primarily to produce and generate electric energy for consumption by that person; or

(III)

owns or operates in this state a recreational vehicle park that provides metered electric service in accordance with Texas Utilities Code, Chapter 184, Subchapter C.

(B)

With respect to transmission service and ancillary service, the term includes municipally owned utilities and river authorities that are not otherwise subject to the commission's ratesetting authority.

(70)

Element - Unbundled network elements, including: interconnection, physical- collocation, and virtual-collocation elements.

(71)

Eligible telecommunications provider (ETP) service area - The geographic area, determined by the commission, containing high cost rural areas which are eligible for Texas Universal Service Funds support under §23.133 or §23.134 of this title (relating to Texas High Cost Universal Service Plan (THCUSP) and Small and Rural Incumbent Local Exchange Company (ILEC) Universal Service Plan).

(72)

Embedded customer premises equipment - All customer premises equipment owned by a telecommunications utility, including inventory, which was tariffed or subject to the separations process of January 1, 1983.

(73)

End user choice - A system that allows the automatic routing of interexchange, operator-assisted calls to the billed party's chosen carrier without the use of access codes.

(74)

Enhanced service provider - A company that offers computer-based services over transmission facilities to provide the customer with value-added telephone services.

(75)

Entrance facilities - The transmission path between the access customer's (such as an interexchange carrier's) point of demarcation and the serving wire center.

(76)

Equal access -Access which is equal in type, quality and price to Feature Group C, and which has unbundled rates. From an end user's perspective, equal access is characterized by the availability of "1-plus" dialing with the end user's carrier of choice.

(77)

Equipment distribution program (EDP) - Program to assist individuals who are deaf or hard of hearing or who have an impairment of speech to purchase specialized telecommunications devices for telephone service access, authorized by 1997 Texas General Laws Chapter 149, to be jointly administered by the commission and the Texas Commission for the Deaf and Hard of Hearing.

(78)

Equipment distribution program (EDP) voucher - a voucher issued by Texas Commission for the Deaf and Hard of Hearing under the equipment distribution program, in accordance with its rules, that an eligible individual may use to acquire eligible specialized telecommunications devices from a vendor of such equipment.

(79)

Exchange area - The geographic territory delineated as an exchange area by official commission boundary maps. An exchange area usually embraces a city or town and its environs. There is usually a uniform set of charges for telecommunications service within the exchange area. An exchange area may be served by more than one central office and/or one certificated telephone utility. An exchange area may also be referred to as an exchange.

(80)

Expenses - Costs incurred in the provision of services that are expensed, rather than capitalized, in accordance with the Uniform System of Accounts applicable to the carrier.

(81)

Experimental service - A new service that is proposed to be offered on a temporary basis for a specified period not to exceed one year from the date the service is first provided to any customer.

(82)

Extended area service (EAS) - A telephone switching and trunking arrangement which provides for optional calling service by dominant certificated telecommunications utilities within a local access and transport area and between two contiguous exchanges or between an exchange and a contiguous metropolitan exchange local calling area. For purposes of this definition, a metropolitan exchange local calling area shall include all exchanges having local or mandatory EAS calling throughout all portions of any of the following exchanges: Austin metropolitan exchange, Corpus Christi metropolitan exchange, Dallas metropolitan exchange, Fort Worth metropolitan exchange, Houston metropolitan exchange, San Antonio metropolitan exchange, or Waco metropolitan exchange. EAS is provided at rate increments in addition to local exchange rates, rather than at toll message charges.

(83)

Extended local calling service (ELCS) - Service provided pursuant to §23.49(c) of this title (relating to Telephone Extended Area Service and Expanded Toll-free Local Calling Areas).

(84)

Facilities - All the plant and equipment of a public utility, including all tangible and intangible real and personal property without limitation, and any and all means and instrumentalities in any manner owned, operated, leased, licensed, used, controlled, furnished, or supplied for, by, or in connection with the business of any public utility, including any construction work in progress allowed by the commission.

(85)

Facilities-based provider - A telecommunications provider that provides telecommunications services using facilities that it owns or leases or a combination of facilities that it owns and leases, including unbundled network elements.

(86)

Foreign exchange (FX) - exchange service furnished by means of a circuit connecting a customer's station to a primary serving office of another exchange.

(87)

Foreign serving office (FSO) - Exchange service furnished by means of a circuit connecting a customer's station to a serving office of the same exchange but outside of the serving office area in which the station is located.

(88)

Forward-looking common costs - Economic costs efficiently incurred in providing a group of elements or services that cannot be attributed directly to individual elements or services.

(89)

Forward-looking economic cost - The sum of the total element long-run incremental cost of an element and a reasonable allocation of its forward-looking common costs.

(90)

Forward-looking economic cost per unit - The forward-looking economic cost of the element as defined in this section, divided by a reasonable projection of the sum of the total number of units of the element that the dominant certificated telephone utility (DCTU) is likely to provide to requesting telecommunications carriers and the total number of units of the element that the DCTU is likely to use in offering its own services, during a reasonable time period.

(91)

Geographic scope - The geographic area in which the holder of a Certificate of Operating Authority or of a Service Provider Certificate of Operating Authority is authorized to provide service.

(92)

Grade of service - The number of customers a line is designated to serve.

(93)

Hearing - Any proceeding at which evidence is taken on the merits of the matters at issue, not including prehearing conferences.

(94)

Hearing carryover - A technology that allows an individual who is speech- impaired to hear the other party in a telephone conversation and to use specialized telecommunications devices to send communications through the telecommunications relay service operator.

(95)

High cost area - A geographic area for which the costs established using a forward- looking economic cost methodology exceed the benchmark levels established by the commission.

(96)

High cost assistance (HCA) - A program administered by the commission in accordance with the provisions of §23.133 of this title (relating to Texas High Cost Universal Service Plan (THCUSP).

(97)

Identity - The name, address, telephone number, and/or facsimile number of a person, whether natural, partnership, municipal corporation, cooperative corporation, corporation, association, governmental subdivision, or state agency and the relationship of the person to the entity being represented.

(98)

Impulse noise - Any momentary occurrence of the noise on a channel significantly exceeding the normal noise peaks. It is evaluated by counting the number of occurrences that exceed a threshold. This noise degrades voice and data transmission.

(99)

Incumbent local exchange company (ILEC) - A local exchange company that had a certificate of convenience and necessity on September 1, 1995.

(100)

Information sharing program - Instruction, learning, and training that is transmitted from one site to one or more sites by telecommunications services that are used by a library predominantly for such instruction, learning, or training, including video, data, voice, and electronic information.

(101)

Integrated services digital network (ISDN) - a digital network architecture that provides a wide variety of communications services, a standard set of user- network messages, and integrated access to the network. Access methods to the ISDN are the Basic Rate Interface (BRI) and the Primary Rate Interface (PRI).

(102)

Interactive multimedia communications - Real-time, two-way, interactive voice, video, and data communications conducted over networks that link geographically dispersed locations. This definition includes interactive communications within or between buildings on the same campus or library site.

(103)

Intercept service - A service arrangement provided by the local exchange carrier whereby calls placed to a disconnected or discontinued telephone number are intercepted and the calling party is informed by an operator or by a recording that the called telephone number has been disconnected, discontinued, changed to another number, or otherwise is not in service.

(104)

Interconnection - Generally means: The point in a network where a customer's transmission facilities interface with the dominant carrier's network under the provisions of this section. More particularily it means: The termination of local traffic (including basic telecommunications service as delineated in §24.32 of this title (Relating to Universal Service) or integrated services digital network (ISDN) as defined in this section and/or extended area service/extended local calling service traffic of a certificated telephone utility (CTU) using the local access lines of another CTU, as described in section §23.97(d)(4)(A)(i) of this title (relating to Interconnection). Interconnection shall include non- discriminatory access to signaling systems, databases, facilities and information as required to ensure interoperability of networks and efficient, timely provision of services to customers without permitting access to network proprietary information or customer proprietary network information, as defined in §23.57 of this title (relating to Telecommunications Privacy), unless otherwise permitted in §23.97 of this title.

(105)

Interconnector - A customer that interfaces with the dominant carrier's network under the provisions of §23.92 of this title (relating to Expanded Interconnection).

(106)

Interexchange carrier (IXC) - A carrier providing any means of transporting intrastate telecommunications messages between local exchanges, but not solely within local exchanges, in the State of Texas. The term may include a certificated telecommunications utility (CTU) or CTU affiliate to the extent that it is providing such service. An entity is not an IXC solely because of:

(A)

the furnishing, or furnishing and maintenance of a private system;

(B)

the manufacture, distribution, installation, or maintenance of customer premises equipment;

(C)

the provision of services authorized under the FCC's Public Mobile Radio Service and Rural Radio Service rules; or

(D)

the provision of shared tenant service.

(107)

Interoffice trunks - Those communications circuits which connect central offices.

(108)

IntraLATA equal access - The ability of a caller to complete a toll call in a local access and transport area (LATA) using his or her provider of choice by dialing "1" or "0" plus an area code and telephone number.

(109)

Intrastate - Refers to communications which both originate and terminate within Texas state boundaries.

(110)

Least cost technology - The technology, or mix of technologies, that would be chosen in the long run as the most economically efficient choice. The choice of least cost technologies, however, shall:

(A)

be restricted to technologies that are currently available on the market and for which vendor prices can be obtained;

(B)

be consistent with the level of output necessary to satisfy current demand levels for all services using the basic network function in question; and

(C)

be consistent with overall network design and topology requirements.

(111)

License - The whole or part of any commission permit, certificate, approval, registration, or similar form of permission required by law.

(112)

Licensing - The commission process respecting the granting, denial, renewal, revocation, suspension, annulment, withdrawal, or amendment of a license.

(113)

Lifeline Service - A program certified by the Federal Communications Commission to provide for the reduction or waiver of the federal subscriber line charge for residential consumers.

(114)

Line - A circuit or channel extending from a central office to the customer's location to provide telecommunications service. One line may serve one customer, or all customers served by a multiparty line.

(115)

Local access and transport area (LATA) - A geographic area established for the provision and administration of communications service. It encompasses one or more designated exchanges, which are grouped to serve common social, economic and other purposes. For purposes of these rules, market areas, as used and defined in the Modified Final Judgment and the GTE Final Judgment, are encompassed in the term local access and transport area.

(116)

Local call - A call within the certificated telephone utility's toll-free calling area including calls which are made toll-free through a mandatory extended area service (EAS) or expanded local calling (ELC) proceeding.

(117)

Local calling area - The area within which telecommunications service is furnished to customers under a specific schedule of exchange rates. A local calling area may include more than one exchange area.

(118)

Local exchange company (LEC) - A telecommunications utility that has been granted either a certificate of convenience and necessity or a certificate of operating authority to provide local exchange telephone service, basic local telecommunications service, or switched access service within the state. A local exchange company is also referred to as a local exchange carrier.

(119)

Local exchange telephone service or local exchange service - A telecommunications service provided within an exchange to establish connections between customer premises within the exchange, including connections between a customer premises and a long distance provider serving the exchange. The term includes tone dialing service, service connection charges, and directory assistance services offered in connection with basic local telecommunications service and interconnection with other service providers. The term does not include the following services, whether offered on an intraexchange or interexchange basis:

(A)

central office based PBX-type services for systems of 75 stations or more;

(B)

billing and collection services;

(C)

high-speed private line services of 1.544 megabits or greater;

(D)

customized services;

(E)

private line or virtual private line services;

(F)

resold or shared local exchange telephone services if permitted by tariff;

(G)

dark fiber services;

(H)

non-voice data transmission service offered as a separate service and not as a component of basic local telecommunications service;

(I)

dedicated or virtually dedicated access services;

(J)

a competitive exchange service; or

(K)

any other service the commission determines is not a "local exchange telephone service."

(120)

Local message - A completed call between customer access lines located within the same local calling area.

(121)

Local message charge - The charge that applies for a completed telephone call that is made when the calling customer access line and the customer access line to which the connection is established are both within the same local calling area, and a local message charge is applicable.

(122)

Local service charge - The charge for furnishing facilities to enable a customer to send or receive telecommunications within the local calling area. This local calling area may include more than one exchange area.

(123)

Local telecommunications traffic -

(A)

Telecommunications traffic between a dominant certificated telecommunications utility (DCTU) and a telecommunications carrier other than a commercial mobile radio service (CMRS) provider that originates and terminates within the mandatory single or multi-exchange local calling area of a DCTU including the mandatory extended area service (EAS) areas served by the DCTU; or

(B)

Telecommunications traffic between a DCTU and a CMRS provider that, at the beginning of the call, originates and terminates within the same major trading area.

(124)

Long distance telecommunications service - That part of the total communication service rendered by a telecommunications utility which is furnished between customers in different local calling areas in accordance with the rates and regulations specified in the utility's tariff.

(125)

Long run - A time period long enough to be consistent with the assumption that the company is in the planning stage and all of its inputs are variable and avoidable.

(126)

Long run incremental cost (LRIC) - The change in total costs of the company of producing an increment of output in the long run when the company uses least cost technology. The LRIC should exclude any costs that, in the long run, are not brought into existence as a direct result of the increment of output.

(127)

Mandatory minimum standards - The standards established by the Federal Communications Commission, outlining basic mandatory telecommunication relay services.

(128)

Meet point billing - An access billing arrangement for services to access customers when local transport is jointly provided by more than one certificated telecommunications utility. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates.

(129)

Message - A completed customer telephone call.

(130)

Message rate service - A form of local exchange service under which all originated local messages are measured and charged for in accordance with the utility's tariff.

(131)

Minor change - A change, including the restructuring of rates of existing services, that decreases the rates or revenues of the small local exchange company (SLEC) or that, together with any other rate or proposed or approved tariff changes in the 12 months preceding the date on which the proposed change will take effect, results in an increase of the SLEC's total regulated intrastate gross annual revenues by not more than 5.0%. Further, with regard to a change to a basic local access line rate, a minor change may not, together with any other change to that rate that went into effect during the 12 months preceding the proposed effective date of the proposed change, result in an increase of more than 10%.

(132)

Municipality - A city, incorporated village, or town, existing, created, or organized under the general, home rule, or special laws of the state.

(133)

National integrated services digital network (ISDN) - the standards and services promulgated for integrated services digital network by Bellcore.

(134)

Negotiating party - A certificated telecommunications utility (CTU) or other entity with which a requesting CTU seeks to interconnect in order to complete all telephone calls made by or placed to a customer of the requesting CTU.

(135)

New service - Any service not offered on a tariffed basis prior to the date of the application relating to such service and specifically excludes basic local telecommunications service including local measured service. If a proposed service could serve as an alternative or replacement for a service offered prior to the date of the new-service application and does not provide significant improvements (other than price) over, or significant additional services not available under, a service offered prior to the date of such application, it shall not be considered a new service.

(136)

Non-discriminatory - Type of treatment that is not less favorable than that an interconnecting certificated telecommunications utility (CTU) provides to itself or its affiliates or other CTUs.

(137)

Non-dominant certificated telecommunications utility (NCTU) - A certificated telecommunications utility (CTU) that is not a dominant certificated telecommunications utility (DCTU) and has been granted a certificate of convenience and necessity (CCN) (after September 1, 1995, in an area already certificated to a DCTU), a certificate of operating authority (COA), or a service provider certificate of operating authority (SPCOA) to provide local exchange service.

(138)

Nondominant carrier -

(A)

An interexchange telecommunications carrier (including a reseller of interexchange telecommunications services).

(B)

Any of the following that is not a dominant carrier:

(i)

a specialized communications common carrier;

(ii)

any other reseller of communications;

(iii)

any other communications carrier that conveys, transmits, or receives communications in whole or in part over a telephone system; or

(iv)

a provider of operator services that is not also a subscriber.

(139)

Open network architecture - The overall design of an incumbent local exchange company's (ILEC's) network facilities and services to permit all users of the network, including the enhanced services operations of an ILEC and its competitors, to interconnect to specific basic network functions on an unbundled and non-discriminatory basis.

(140)

Operator service - Any service using live operator or automated operator functions for the handling of telephone service, such as local collect, toll calling via collect, third number billing, credit card, and calling card services. The transmission of "1-800" and "1-888" numbers, where the called party has arranged to be billed, is not operator service.

(141)

Operator service provider (OSP) - Any person or entity that provides operator services by using either live or automated operator functions. When more than one entity is involved in processing an operator service call, the party setting the rates shall be considered to be the OSP. However, subscribers to customer-owned pay telephone service shall not be deemed to be OSPs.

(142)

Originating line screening (OLS) - A two digit code passed by the local switching system with the automatic number identification (ANI) at the beginning of a call that provides information about the originating line.

(143)

Out-of-service trouble report - An initial customer trouble report in which there is complete interruption of incoming or outgoing local exchange service. On multiple line services a failure of one central office line or a failure in common equipment affecting all lines is considered out of service. If an extension line failure does not result in the complete inability to receive or initiate calls, the report is not considered to be out of service.

(144)

Partial deregulation - The ability of a cooperative to offer new services on an optional basis and/or change its rates and tariffs under the provisions of the Public Utility Regulatory Act, §§53.351 - 53.359.

(145)

Pay-per-call-information services - Services that allow a caller to dial a specified 1-900-XXX-XXXX or 976-XXXX number. Such services routinely deliver, for a predetermined (sometimes time-sensitive) fee, a pre-recorded or live message or interactive program. Usually a telecommunications utility will transport the call and bill the end-user on behalf of the information provider.

(146)

Pay telephone access service (PTAS) - A service offered by a certificated telecommunications utility which provides a two-way, or optionally, a one-way originating-only business access line composed of the serving central office line equipment, all outside plant facilities needed to connect the serving central office with the customer premises, and the network interface; this service is sold to pay telephone service providers.

(147)

Pay telephone service (PTS) - A telecommunications service utilizing any coin, coinless, credit card reader, or cordless instrument that can be used by members of the general public, or business patrons, employees, and/or visitors of the premise's owner, provided that the end user pays for local or toll calls from such instrument on a per call basis. Pay per call telephone service provided to inmates of confinement facilities is PTS. For purposes of this section, coinless telephones provided in guest rooms by a hotel/motel are not pay telephones. A telephone that is primarily used by business patrons, employees, and/or visitors of the premise's owner is not a pay telephone if all local calls and "1-800" and "1-888" type calls from such telephone are free to the end user.

(148)

Per-call blocking - A telecommunications service provided by a telecommunications provider that prevents the transmission of calling party information to a called party on a call-by-call basis.

(149)

Per-line blocking - A telecommunications service provided by a telecommunications utility that prevents the transmission of calling party information to a called party on every call, unless the calling party acts affirmatively to release calling party information.

(150)

Percent interstate usage (PIU) - An access customer-specific ratio or ratios determined by dividing interstate access minutes by total access minutes. The specific ratio shall be determined by the certificated telecommunications utility (CTU) unless the CTU's network is incapable of determining the jurisdiction of the access minutes. A PIU establishes the jurisdiction of switched access usage for determining rates charged to switched access customers and affects the allocation of switched access revenue and costs by CTUs between the interstate and intrastate jurisdictions. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates.

(151)

Person - Any natural person, partnership, municipal corporation, cooperative corporation, corporation, association, governmental subdivision, or public or private organization of any character other than an agency.

(152)

Pleading - A written document submitted by a party, or a person seeking to participate in a proceeding, setting forth allegations of fact, claims, requests for relief, legal argument, and/or other matters relating to a proceeding.

(153)

Prepaid local telephone service (PLTS) - Prepaid local telephone service means:

(A)

voice grade dial tone residential service consisting of flat rate service or local measured service, if chosen by the customer and offered by the dominant certificated telecommunications utility (DCTU);

(B)

if applicable, mandatory services, including extended area service, extended metropolitan service, or expanded local calling service;

(C)

tone dialing service;

(D)

access to 911 service;

(E)

access to dual party relay service;

(F)

the ability to report service problems seven days a week;

(G)

access to business office;

(H)

primary directory listing;

(I)

toll blocking service; and

(J)

non-published service and non-listed service at the customer's option.

(154)

Premises - A tract of land or real estate including buildings and other appurtenances thereon.

(155)

Pricing flexibility - Discounts and other forms of pricing flexibility may not be preferential, prejudicial, or discriminatory. Pricing flexibility includes:

(A)

customer specific contracts;

(B)

volume, term, and discount pricing;

(C)

zone density pricing;

(D)

packaging of services; and

(E)

other promotional pricing flexibility.

(156)

Primary interexchange carrier (PIC) - The provider chosen by a customer to carry that customer's toll calls.

(157)

Primary interexchange carrier (PIC) freeze indicator - An indicator that the end user has directed the certificated telecommunications utility to make no changes in the end user's PIC.

(158)

Primary rate interface (PRI) integrated services digital network (ISDN) - One of the access methods to ISDN, the 1.544-Mbps PRI comprises either twenty- three 64 Kbps B-channels and one 64 Kbps D-channel (23B+D) or twenty-four 64 Kbps B-channels (24B) when the associated call signaling is provided by another PRI in the group.

(159)

Primary service - The initial provision of voice grade access between the customer's premises and the switched telecommunications network. This includes the initial connection to a new customer or the move of an existing customer to a new premises but does not include complex services.

(160)

Print translations - The temporary storage of a message in an operator's screen during the actual process of relaying a conversation.

(161)

Privacy issue - An issue that arises when a telecommunications provider proposes to offer a new telecommunications service or feature that would result in a change in the outflow of information about a customer. The term privacy issue is to be construed broadly. It includes, but is not limited to, changes in the following:

(A)

the type of information about a customer that is released;

(B)

the customers about whom information is released;

(C)

the entity or entities to whom the information about a customer is released;

(D)

the technology used to convey the information;

(E)

the time at which the information is conveyed; and

(F)

any other change in the collection, use, storage, or release of information.

(162)

Private line - A transmission path that is dedicated to a customer and that is not connected to a switching facility of a telecommunications utility, except that a dedicated transmission path between switching facilities of interexchange carriers shall be considered a private line.

(163)

Proceeding - A hearing, investigation, inquiry, or other procedure for finding facts or making a decision. The term includes a denial of relief or dismissal of a complaint. It may be rulemaking or nonrulemaking; rate setting or non-rate setting.

(164)

Promotional rate - A temporary tariff, fare, toll, rental or other compensation charged by a certificated telecommunications utility (DCTU) to new or new and existing customers and designed to induce customers to test a service. A promotional rate shall incorporate a reduction or a waiver of some rate element in the tariffed rates of the service, or a reduction or waiver of the service's installation charge and/or service connection charges, and shall not incorporate any charge for discontinuance of the service by the customer. Such rates may not be offered for basic local telecommunications service, including local measured service.

(165)

Provider of pay telephone service - The entity that purchases pay telephone access service (PTAS) from a certificated telecommunications utility (CTU) and registers with the Public Utility Commission as a provider of pay telephone service (PTS) to end users.

(166)

Public utility or utility - A person or river authority that owns or operates for compensation in this state equipment or facilities to convey, transmit, or receive communications over a telephone system as a dominant carrier. The term includes a lessee, trustee, or receiver of any of those entities, or a combination of those entities. The term does not include a municipal corporation. A person is not a public utility solely because the person:

(A)

furnishes or furnishes and maintains a private system;

(B)

manufactures, distributes, installs, or maintains customer premise communications equipment and accessories; or

(C)

furnishes a telecommunications service or commodity only to itself, its employees, or its tenants as an incident of employment or tenancy, if that service or commodity is not resold to or used by others.

(167)

Public Utility Regulatory Act (PURA) - The enabling statute for the Public Utility Commission of Texas, located in the Texas Utilities Code Annotated, §§11.001 - 63.063, (Vernon 1998).

(168)

Qualifying low-income consumer - A consumer that participates in one of the following programs: Medicaid, food stamps, Supplemental Security Income, federal public housing assistance, or Low-Income Home Energy Assistance Program.

(169)

Qualifying services -

(A)

residential flat rate basic local exchange service;

(B)

residential local exchange access service; and

(C)

residential local area calling usage.

(170)

Rate - Includes:

(A)

any compensation, tariff, charge, fare, toll, rental, or classification that is directly or indirectly demanded, observed, charged, or collected by a public utility for a service, product, or commodity, described in the definition of utility in the Public Utility Regulatory Act §§ 31.002 or 51.002; and

(B)

a rule, practice, or contract affecting the compensation, tariff, charge, fare, toll, rental, or classification.

(171)

Reciprocal compensation - An arrangement between two carriers in which each of the two carriers receives compensation from the other carrier for the transport and termination on each carrier's network facilities of local telecommunications traffic that originates on the network facilities of the other carrier.

(172)

Reclassification area - The geographic area within the electing ILEC's territory, consisting of one or more exchange areas, for which it seeks reclassification of a service.

(173)

Redirect the call - A procedure used by operator service providers (OSPs) that transmits a signal back to the originating telephone instrument that causes the instrument to disconnect the OSP's connection and to redial the digits originally dialed by the caller directly to the local exchange carrier's network.

(174)

Regulatory authority - In accordance with the context where it is found, either the commission or the governing body of a municipality.

(175)

Relay Texas Advisory Committee (RTAC) - The committee authorized by the Public Utility Regulatory Act, §56.110 and 1997 Texas General Laws Chapter 149.

(176)

Relay Texas - The name by which telecommunications relay service in Texas is known.

(177)

Relay Texas administrator - The individual employed by the commission to oversee the administration of statewide telecommunications relay service.

(178)

Repeated trouble report - A customer trouble report regarding a specific line or circuit occurring within 30 days or one calendar month of a previously cleared trouble report on the same line or circuit.

(179)

Residual charge - The per-minute charge designed to account for historical contribution to joint and common costs made by switched transport services.

(180)

Retail service - A telecommunications service is considered a retail service when it is provided to residential or business end users and the use of the service is other than resale. Each tariffed or contract offering which a customer may purchase to the exclusion of other offerings shall be considered a service. For example: the various mileage bands for standard toll services are rate elements, not services; however, individual optional calling plans that can be purchased individually and which are offered as alternatives to each other are services, not rate elements.

(181)

Return-on-assets - After-tax net operating income divided by total assets.

(182)

Reversal of partial deregulation - The ability of a minimum of 10% of the members of a partially deregulated cooperative to request, in writing, that a vote be conducted to determine whether members prefer to reverse partial deregulation. Ten percent shall be calculated based upon the total number of members of record as of the calendar month preceding receipt of the request from members for reversal of partial deregulation.

(183)

Rule - A statement of general applicability that implements, interprets, or prescribes law or policy, or describes the procedure or practice requirements of the commission. The term includes the amendment or repeal of a prior rule but does not include statements concerning only the internal management or organization of the commission and not affecting private rights or procedures.

(184)

Rulemaking proceeding - A proceeding conducted pursuant to the Administrative Procedure Act, Texas Government Code, §§2001.021 - 2001.037 to adopt, amend, or repeal a commission rule.

(185)

Rural incumbent local exchange company (ILEC) - An ILEC that qualifies as a "rural telephone company" as defined in 47 United States Code §3(37) and/or 47 United States Code §251(f)(2).

(186)

Separation - The division of plant, revenues, expenses, taxes, and reserves applicable to exchange or local service if these items are used in common to provide public utility service to both local exchange telephone service and other service, such as interstate or intrastate toll service.

(187)

Service - Has its broadest and most inclusive meaning. The term includes any act performed, anything supplied, and any facilities used or supplied by a public utility in the performance of the utility's duties under the Public Utility Regulatory Act to its patrons, employees, other public utilities, and the public. The term also includes the interchange or facilities between two or more public utilities. The term does not include the printing, distribution, or sale of advertising in a telephone directory.

(188)

Service connection charge - A charge designed to recover the costs of non- recurring activities associated with connection of local exchange telephone service.

(189)

Service provider certificate of operating authority (SPCOA) reseller - A holder of a service provider certificate of operating authority that uses only resold telecommunications services provided by an incumbent local exchange company (ILEC) or by a certificate of operating authority (COA) holder or by a service provider certificate of operating authority (SPCOA) holder.

(190)

Service restoral charge - A charge applied by the DCTU to restore service to a customer's telephone line after it has been suspended by the DCTU.

(191)

Serving wire center (SWC) - The certificated telecommunications utility designated central office which serves the access customer's point of demarcation. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates.

(192)

Signaling for tandem switching - The carrier identification code (CIC) and the OZZ code or equivalent information needed to perform tandem switching functions. The CIC identifies the interexchange carrier and the OZZ digits identify the call type and thus the interexchange carrier trunk to which traffic should be routed.

(193)

Small certificated telecommunications utility (CTU) - A CTU with fewer than 2.0% of the nation's subscriber lines installed in the aggregate nationwide.

(194)

Small local exchange company (SLEC) - Any incumbent certificated telecommunications utility as of September 1, 1995, that has fewer than 31,000 access lines in service in this state, including the access lines of all affiliated incumbent local exchange companies within the state, or a telephone cooperative organized pursuant to the Telephone Cooperative Act, Texas Utilities Code Annotated, Chapter 162.

(195)

Small incumbent local exchange company (Small ILEC) - An incumbent local exchange company that is a cooperative corporation or has, together with all affiliated incumbent local exchange companies, fewer than 31,000 access lines in service in Texas.

(196)

Spanish speaking person - a person who speaks any dialect of the Spanish language exclusively or as their primary language.

(197)

Special access - A transmission path connecting customer designated premises to each other either directly or through a hub or hubs where bridging, multiplexing or network reconfiguration service functions are performed and includes all exchange access not requiring switching performed by the dominant carrier's end office switches.

(198)

Stand-alone costs - The stand-alone costs of an element or service are defined as the forward-looking costs that an efficient entrant would incur in providing only that element or service.

(199)

Station - A telephone instrument or other terminal device.

(200)

Study area - An incumbent local exchange company's (ILEC's) existing service area in a given state.

(201)

Supplemental services - Telecommunications features or services offered by a certificated telecommunications utility for which analogous services or products may be available to the customer from a source other than a dominant certificated telecommunications utility. Supplemental services shall not be construed to include optional extended area calling plans that a dominant certificated telecommunications utility may offer pursuant to §23.49 of this title (relating to Telephone Extended Area Service (EAS) and Expanded Toll-free Local Calling Area), or pursuant to a final order of the commission in a proceeding pursuant to the Public Utility Regulatory Act, Chapter 53. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates.

(202)

Suspension of service - That period during which the customer's telephone line does not have dial tone but the customer's telephone number is not deleted from the central office switch and databases.

(203)

Switched access - Access service that is provided by certificated telecommunications utilities (CTUs) to access customers and that requires the use of CTU network switching or common line facilities generally, but not necessarily, for the origination or termination of interexchange calls. Switched access includes all forms of transport provided by the CTU over which switched access traffic is delivered. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates.

(204)

Switched access demand - Switched access minutes of use, or other appropriate measure where not billed on a minute of use basis, for each switched access rate element, normalized for out of period billings. For the purposes of this section, switched access demand shall include minutes of use billed for the local switching rate element.

(205)

Switched access minutes - The measured or assumed duration of time that a certificated telecommunications utility's network facilities are used by access customers. Access minutes are measured for the purpose of calculating access charges applicable to access customers. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates.

(206)

Switched transport - Transmission between a certificated telecommunications utility's central office (including tandem-switching offices) and an interexchange carrier's point of presence.

(207)

Tandem-switched transport - Transmission of traffic between the serving wire center and another certificated telecommunications utility office that is switched at a tandem switch and charged on a usage basis. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates.

(208)

Tariff - The schedule of a utility containing all rates, tolls, and charges stated separately by type or kind of service and the customer class, and the rules and regulations of the utility stated separately by type or kind of service and the customer class.

(209)

Tel-assistance service - A program providing eligible consumers with a 65% reduction in the applicable tariff rate for qualifying services.

(210)

Texas Universal Service Fund (TUSF) - The fund authorized by the Public Utility Regulatory Act, §56.021 and 1997 Texas General Laws Chapter 149.

(211)

Telecommunications relay service (TRS) - A service using oral and print translations by either live or automated means between individuals who are hearing-impaired or speech-impaired who use specialized telecommunications devices and others who do not have such devices. Unless specified in the text, this term shall refer to intrastate telecommunications relay service only.

(212)

Telecommunications relay service (TRS) carrier - The telecommunications carrier selected by the commission to provide statewide telecommunications relay service.

(213)

Telecommunications utility -

(A)

a public utility;

(B)

an interexchange telecommunications carrier, including a reseller of interexchange telecommunications services;

(C)

a specialized communications common carrier;

(D)

a reseller of communications;

(E)

a communications carrier who conveys, transmits, or receives communications wholly or partly over a telephone system;

(F)

a provider of operator services as defined by §55.081, unless the provider is a subscriber to customer-owned pay telephone service; and

(G)

a separated affiliate or an electronic publishing joint venture as defined in the Public Utility Regulatory Act, Chapter 63.

(214)

Telephones intended to be utilized by the public - Telephones that are accessible to the public, including, but not limited to, pay telephones, telephones in guest rooms and common areas of hotels, motels, or other lodging locations, and telephones in hospital patient rooms.

(215)

Telephone solicitation - An unsolicited telephone call.

(216)

Telephone solicitor - A person who makes or causes to be made a consumer telephone call, including a call made by an automatic dialing/announcing device.

(217)

Test year - The most recent 12 months, beginning on the first day of a calendar or fiscal year quarter, for which operating data for a public utility are available.

(218)

Tier 1 local exchange company - A local exchange company with annual regulated operating revenues exceeding $100 million.

(219)

Title IV-D Agency - The office of the attorney general for the state of Texas.

(220)

Toll blocking - A service provided by telecommunications carriers that lets consumers elect not to allow the completion of outgoing toll calls from their telecommunications channel.

(221)

Toll control - A service provided by telecommunications carriers that allows consumers to specify a certain amount of toll usage that may be incurred on their telecommunications channel per month or per billing cycle.

(222)

Toll limitation - Denotes both toll blocking and toll control.

(223)

Total element long-run incremental cost (TELRIC) - The forward-looking cost over the long run of the total quantity of the facilities and functions that are directly attributable to, or reasonably identifiable as incremental to, such element, calculated taking as a given the certificated telecommunications utility's (CTU's) provision of other elements. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates.

(224)

Transport - The transmission and/or any necessary tandem and/or switching of local telecommunications traffic from the interconnection point between the two carriers to the terminating carrier's end office switch that directly serves the called party, or equivalent facility provided by a carrier other than a dominant certificated telecommunications utility.

(225)

Trunk - A circuit facility connecting two switching systems.

(226)

Two-primary interexchange carrier (Two-PIC) equal access - A method that allows a telephone subscriber to select one carrier for all 1+ and 0+ interLATA calls and the same or a different carrier for all 1+ and 0+ intraLATA calls.

(227)

Unbundling - The disaggregation of the ILEC's network/service to make available the individual network functions or features or rate elements used in providing an existing service.

(228)

Unit cost - A cost per unit of output calculated by dividing the total long run incremental cost of production by the total number of units.

(229)

Usage sensitive blocking - Blocking of a customer's access to services which are charged on a usage sensitive basis for completed calls. Such calls shall include, but not be limited to, call return, call trace, and auto redial.

(230)

Virtual private line - Circuits or bandwidths, between fixed locations, that are available on demand and that can be dynamically allocated.

(231)

Voice carryover - A technology that allows an individual who is hearing-impaired to speak directly to the other party in a telephone conversation and to use specialized telecommunications devices to receive communications through the telecommunications relay service operator.

(232)

Volume insensitive costs - The costs of providing a basic network function (BNF) that do not vary with the volume of output of the services that use the BNF.

(233)

Volume sensitive costs - The costs of providing a basic network function (BNF) that vary with the volume of output of the services that use the BNF.

(234)

Wholesale service - A telecommunications service is considered a wholesale service when it is provided to a telecommunications utility and the use of the service is to provide a retail service to residence or business end-user customers.

(235)

Working capital requirements - The additional capital required to fund the increased level of accounts receivable necessary to provide telecommunications service.

(236)

"0-" call - A call made by the caller dialing the digit "0" and no other digits within five seconds. A "0-" call may be made after a digit (or digits) to access the local network is (are) dialed.

(237)

"0+" call - A call made by the caller dialing the digit "0" followed by the terminating telephone number. On some automated call equipment, a digit or digits may be dialed between the "0" and the terminating telephone number.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on March 8, 1999.

TRD-9901403

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: March 28, 1999

Proposal publication date: October 30, 1998

For further information, please call: (512) 936-7308

Subchapter I. Alternative Regulation

16 TAC §26.175

This new section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, §58.024 which requires the commission to establish standards for the reclassification of telecommunications services.

Cross-Index to Statutes: Public Utility Regulatory Act §§14.002, 58.024, 58.051, 58.101 and 58.151.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on March 8, 1999.

TRD-9901404

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: March 28, 1999

Proposal publication date: October 30, 1998

For further information, please call: (512) 936-7308

Subchapter D. Records, Reports and Other Required Information

16 TAC §26.84

The Public Utility Commission of Texas adopts new §26.84 relating to Annual Reporting of Affiliate Transactions of DCTUs. The section is adopted with changes to the proposed text as published in the September 11, 1998, issue of the Texas Register (23 TexReg 9222). This section is adopted under Project Number 18811, Rulemaking to Address Affiliate Activities for Telecommunications Utilities.

Project Number 18811 was established on February 13, 1998, when the telecommunications portion of the rulemaking in Project Number 17549, Rulemaking to Address Affiliate Activities, was severed into this project. In Project Number 18811, new §§26.84 and 26.241-26.243 were proposed for publication at the July 22, 1998 open meeting. At that open meeting, the commission indefinitely postponed action on the proposed §§26.241-26.243 and requested a revision of §26.84. A revised new §26.84 was published in the Texas Register (23 TexReg 9222) on September 11, 1998, and is the rule presently under consideration.

A workshop was held on September 28, 1998, to consider draft report forms to be used by utilities to meet the requirements of §26.84. Some parties filed comments on the reporting format within their comments on the rule language. As stated in the preamble of the rule proposal, comments on the form and substance of the reports are being considered separately from the comments on the rule itself. Prior to adoption of the reporting form, the commission will consider comments on the proposed report form pursuant to §22.80, relating to Commission Prescribed Forms.

New §26.84 replaces the rule provision formerly located at §23.11(c) of this title, relating to General Reports, and requires that telecommunication utilities report to the commission annually on affiliate activities.

The following parties filed initial comments on the rule language: GTE Southwest Incorporated (GTE); Texas Statewide Telephone Cooperative, Inc. (TSTCI); and Texas Telephone Association (TTA). Only GTE filed reply comments. A public hearing was held on this matter on October 14, 1998, at which none of the parties in attendance offered any comments.

Proposed §26.84(c) requires that dominant certificated telecommunications utilities (DCTUs) file a "Report of Affiliate Activities" annually with the commission, using forms approved and provided by the commission. GTE questioned the need for the DCTUs to file such a report. GTE commented that the commission already receives sufficient information to evaluate affiliate transactions under §23.12(e), Cost Allocation Manual (CAM), which includes a provision that describes transactions with affiliates. Included in GTE's CAM are descriptions of services provided to non-regulated affiliates by GTE and those provided to GTE by non-regulated affiliates. GTE states that its CAM is annually audited by an independent auditor and claims that this audit assures the commission that there is no price discrimination against competitors of non-regulated affiliates.

In the event electing companies are once again subject to rate of return regulation, GTE acknowledged that the commission may need more detailed information than that contained within the CAM. However, it recommends that the commission seek the information of the nature requested in the proposed "Report of Affiliate Activities" on an "as-needed" basis.

The commission believes that, contrary to GTE's assertion, there is a need for DCTUs to file an annual report on affiliate transactions. Specifically, §26.84(c) requires DCTUs to provide information on affiliate transactions in a form that would be more comprehensible and hence useful to the commission for review while eliminating the need for DCTUs to produce voluminous and detailed information.

The commission also rejects GTE's claim that CAM reports are sufficient to monitor affiliate transactions. While a CAM outlines the processes on how costs for regulated and nonregulated activities are allocated, reports on affiliate activities delineate what transactions have actually taken place and whether these transactions followed the procedures outlined in the CAM. Such reports, along with the contracts and service agreements filed by DCTUs, give confirmation to the commission that the appropriate PURA and FCC rules are followed. Having ready access to such information, as opposed to requesting them on an as-needed-basis, will allow the commission to better perform its regulatory obligations under PURA. Therefore, even for DCTUs electing into incentive regulation, the commission requires reports on affiliate activities from the DCTUs in addition to the CAM.

Former §23.11(c) required utilities to file contracts or arrangements between a utility and its affiliates with the commission on request. Under former §23.11(c), utilities had to file details regarding the names of each affiliated interest, an organizational chart, the contract amount of each cash and non-cash transaction between the DCTU and each affiliated interest, information on the nature of such a transaction, and a brief description of each good and service involved in the transaction. Proposed §26.84(d) states that a DCTU shall reduce to writing and file with the commission copies of any contracts or agreements it has with its affiliate(s).

Comments filed by parties on proposed §26.84(d) refer to both contracts and agreements. A service agreement is a type of contract that pertains to the provision of corporate support services. Corporate support services are generally administrative in nature and relate to the operation of companies in any corporate family, regardless of whether a company in the corporate family is involved in the provision of telecommunications, or telecommunications-related products or services. The commission will amend §26.5, relating to Definitions, to include the definition of service agreement at a later date. Henceforth, all references to the term 'contracts' in the discussion of the comments in this preamble should be presumed to include service agreements unless indicated otherwise.

TTA objects to filing contracts with the commission, arguing that the information requested may be irrelevant, and if required, should be provided to the commission on an as-needed basis. TTA states that it is not necessary to examine the contract to determine the basis for the affiliate's charges to the DCTU for goods or services, or vice versa, because the FCC's rules require that these transactions occur at specified rates.

TSTCI believes that the spirit of §23.11(c) should be maintained and that copies of contracts/agreements should be provided only upon commission request to minimize the flow of paper absent a specific regulatory concern. TSTCI suggests revising proposed §26.84(d) as follows: A DCTU shall reduce to writing and file with the commission, upon commission request, copies of any contracts or agreements it has with its affiliates. The requirements of this subsection are not satisfied by the filing of an earnings report.

GTE commented that, in general, the rule placed additional regulatory burden on the DCTUs and should be rejected in its entirety. It concurs with TSTCI that the commission should incorporate only the language of former §23.11(c) in its new rule because procedures are already in place to report such information. GTE requested that the rule language be revised to require DCTUs to file with the commission only service agreements pursuant to which activity has occurred during the preceding year. It also recommended that the contracts be filed on an annual basis only, concurrent with the reporting of any affiliate activities required in proposed §26.84(c).

The commission disagrees with the parties that filing of contracts between DCTUs and their affiliates is burdensome, is irrelevant to the commission, or should be requested on an as-needed basis. The commission rejects TTA's assertion that FCC pricing rules for affiliate transactions eliminate the need for commission review of contracts. The commission finds that it is necessary to review the contracts to ensure that the transactions are consistent with the FCC pricing rules. Furthermore, PURA §14.003(5)(A) gives the commission explicit authority to require the filing of "a contract or arrangement between a public utility and an affiliate," and PURA §14.003(6) gives the commission authority to require that contracts or arrangements be reduced to writing, if they are not already in writing, and filed with the commission. The commission believes that it is necessary and appropriate to require contracts with affiliates to be in writing and filed on a regular basis in order to safeguard against possible anti-competitive or discriminatory behavior. The actual filing of the contract with the commission is a routine task with which all utilities are intimately familiar because of their regular interaction with the commission. The commission concludes that contracts must be filed on an annual basis so that the commission has ready access to the information in the contract in order to perform its obligations under PURA. However, to simplify subsequent filing of contracts, after the initial contract has been filed, the commission will allow DCTUs to file an affidavit if a contract remains unchanged, regardless of whether any activity has occurred in the preceding year pursuant to the contract. Also, an amendment sheet(s) in lieu of the contract may be filed with the commission if only minor changes have been made to the underlying contract. Subsection 26.84 (d) has been revised accordingly. In addition, to address GTE's concerns regarding concurrent filing of annual reports and contracts, the commission adds language in subsection (d) to require contracts to be filed by June 1 of each year concurrent with the filing of the annual report of affiliate activities.

GTE and TTA raised concerns about the burdens placed upon DCTUs by the rule with respect to the filing of transactions that are incidental in nature and/or are materially insignificant. GTE and TTA propose that the contracts be filed only upon request because there are instances where the transactions at issue are not material and would not need to be reduced to writing. GTE stated that compliance with this rule would be particularly burdensome in those instances where GTE has no "umbrella" agreement with affiliates such as a general purchase agreement, which covers each and every one-time transaction. GTE asserted that although one-time transactions may not be significant enough to warrant inclusion in contracts, DCTUs would be required under the proposed rule to reduce such transactions to writing. TTA believes that to avoid the burden of including insignificant contracts, the rule should be revised so that contracts are filed after determination of the materiality of the transaction. For example, if an affiliate of a Texas DCTU that provides local exchange service in another state purchases a piece of used equipment from the Texas DCTU, the transaction is a one-time event, incidental in nature, and probably would not be reflected in a written contract or purchase order. According to GTE, the commission's proposed reporting requirement would require DCTUs to execute a written agreement for each such transaction regardless of the significance and materiality of the transaction.

The commission believes that GTE and TTA have raised valid concerns regarding the need to file with the commission contracts for transactions that are materially insignificant. The rule language in subsection (d) has been revised to addresses parties' concerns. Pursuant to the new language, DCTUs shall reduce to writing and file with the commission each contract, other than a service agreement, a DCTU has with its affiliate with a cumulative value of $100,000 or more. In addition, DCTUs shall reduce to writing and file with the commission each one-time transaction, if not already covered in the contract, of $100,000 or more. The commission clarifies that there are no materiality thresholds for the reporting requirements of subsection (c) or for service agreements a DCTU has with its affiliate(s), which must be filed with the commission pursuant to subsection (d)(1).

To minimize the flow of paper, GTE suggests that initially the DCTUs should be required to file only the basic agreement and provide the attachments or exhibits to the agreement at a later date if deemed necessary by the commission.

The commission will allow DCTUs to file a basic agreement provided such an agreement includes the rates, terms, and conditions of affiliate transactions along with the list of all services provided. Furthermore, attachments, exhibits, and other materials that support the basic agreement must also be filed concurrently with the basic agreement.

TSTCI, GTE and TTA commented that information provided to the commission pursuant to subsections (c) and (d) of this rule contain sensitive information which must be kept confidential for competitive reasons. Consequently, they strongly urged that the commission implement procedures to protect such information from public disclosure.

The commission recognizes that information filed pursuant to this rule may contain sensitive information and may have to be kept confidential for competitive reasons. To address parties' concerns regarding the handling of proprietary or confidential information, the commission adds subsection (e). All information filed with the commission, pursuant to this section, will be presumed to be public information. A DCTU shall have the burden of establishing that information filed pursuant to this section is confidential and must cite the specific provision of the Texas Open Records Act applicable to its assertion. The information claimed by a DCTU to be confidential will be treated as such until the commission, the Attorney General, or a court of competent jurisdiction makes a determination that the information is not entitled to confidential treatment.

In adopting this section, the commission makes other minor modifications for the purposes of clarifying its intent. All comments, including those not specifically referenced herein, were fully considered by the commission.

This new section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated (Vernon 1998) (PURA) §§14.001, 14.002, 14.003, and 14.151. Section 14.001 grants the commission the general power to regulate and supervise the business of each utility within its jurisdiction. Section 14.002 provides the commission authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. Section 14.003 grants the commission authority to require submission of information by the utility regarding its affiliate activities. Section 14.151 grants the commission authority to prescribe the manner of accounting for all business transacted by the utility.

Cross Reference to Statutes: PURA §§14.001, 14.002, 14.003, 14.151.

§26.84.Annual Reporting of Affiliate Transactions of DCTUs.

(a)

Purpose. This section establishes annual reporting requirements for transactions between dominant certificated telecommunications utilities (DCTUs) and their affiliates.

(b)

Application. This section applies to all DCTUs, as defined in §26.5 of this title (relating to Definitions), operating in the State of Texas, and to affiliates, as defined in Public Utility Regulatory Act (PURA) §11.003(2), to the extent specified herein.

(c)

Annual report of affiliate activities. A "Report of Affiliate Activities" shall be filed annually with the commission. Using forms approved and provided by the commission, a DCTU shall report activities between itself and its affiliate(s). The report shall be filed by June 1, and shall encompass the time period from January 1 through December 31 of the immediately preceding year.

(d)

Filing of Contracts.

(1)

A DCTU shall reduce to writing and file with the commission copies of all services agreements it has with its affiliate(s).

(2)

A DCTU shall reduce to writing and file with the commission a copy of each contract, other than a service agreement, it has with its affiliate(s) with a cumulative value of $100,000 or more.

(3)

Each one-time transaction of $100,000 or more between a DCTU and its affiliate(s), if not already covered in a service agreement or contract, shall be reduced to writing and filed with the commission.

(4)

The requirements of this subsection are not satisfied by the filing of an earnings report. All contracts or service agreements shall be filed by June 1 of each year as attachments to the Report of Affiliate Activities required by subsection (c) of this section. In subsequent years, if no changes have been made to the underlying contract or service agreement, an affidavit may be filed with identification information and the date on which the most recent version was filed, in lieu of refiling the entire contract or service agreement. If no significant changes have been made to the contract or service agreement, an amendment sheet may be filed referencing the contract or service agreement previously filed and identifying the changes that have occurred, in lieu of refiling the entire contract or service agreement.

(e)

Proprietary or confidential information

(1)

Information filed pursuant to this section is presumed to be public information. A DCTU shall have the burden of establishing that information filed pursuant to this section is proprietary or confidential.

(2)

The DCTU shall file with the commission the information required by this section regardless of whether this information is confidential. For information that the DCTU alleges is confidential and/or proprietary under law, the DCTU shall file a complete list of the information that the DCTU alleges is confidential. For each document or portion thereof claimed to be confidential, the DCTU shall cite the specific provision of Chapter 552 of the Texas Government Code, commonly known as the "Texas Open Records Act," upon which the DCTU relies to assert that the information is exempt from public disclosure. The commission will treat as confidential the specific information identified by the DCTU as confidential until such time as a determination is made by the commission, the Attorney General, or a court of competent jurisdiction that the information is not entitled to confidential treatment.

(3)

If a request is received by the commission for information that is claimed to be confidential, the provisions of the Texas Open Records Act shall apply. The commission shall notify the party claiming the information to be confidential of any request for such information.

(4)

The commission may determine, upon its own motion and before a request is received, upon notice and opportunity for hearing by the party claiming confidentiality, that information claimed to be confidential is not entitled to exemption from the Texas Open Records Act.

(5)

For information that the DCTU does not claim confidential treatment, such information will be treated as public information. A claim of confidentiality by a DCTU does not bind the commission to find that any information is proprietary and/or confidential under law, or alter the burden of proof on that issue.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on March 4, 1999.

TRD-9901337

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: March 24, 1999

Proposal publication date: September 11, 1998

For further information, please call: (512) 936-7308

Subchapter E. Certification, Licensing and Registration

16 TAC §26.101

The Public Utility Commission of Texas (commission) adopts new §26.101 relating to Certification Criteria with no changes to the proposed text as published in the November 13, 1998 Texas Register (23 TexReg 11526). Project Number 19871 is assigned to this proceeding. New §26.101 replaces §23.31 of this title (relating to Certification Criteria) as it relates to telecommunications service providers. This section is necessary to establish criteria for certificates of convenience and necessity. The section reflects the requirements of the Public Utility Regulatory Act (PURA) §54.001 which requires a person to obtain a certificate of convenience and necessity, certificate of operating authority, or service provider certificate of operating authority to provide local exchange telephone service, basic local telecommunications service, or switched access service, and PURA Chapter 54, Subchapter B, which sets out the requirements for a certificate of convenience and necessity, and grants the commission the authority to grant or deny the certificate.

The Appropriations Act of 1997, HB 1, Article IX, Section 167 (Section 167) requires that each state agency review and consider for readoption each rule adopted by that agency pursuant to the Government Code, Chapter 2001 (Administrative Procedure Act). Such reviews shall include, at a minimum, an assessment by the agency as to whether the reason for adopting or readopting the rule continues to exist. The commission held three workshops to conduct a preliminary review of its rules. As a result of these workshops, the commission is reorganizing its current substantive rules located in 16 Texas Administrative Code (TAC) Chapter 23 to (1) satisfy the requirements of Section 167; (2) repeal rules no longer needed; (3) update existing rules to reflect changes in the industries regulated by the commission; (4) do clean-up amendments made necessary by changes in law and commission organizational structure and practices; (5) reorganize rules into new chapters to facilitate future amendments and provide room for expansion; and (6) reorganize the rules according to the industry to which they apply. Chapter 26 has been established for all commission substantive rules applicable to telecommunications service providers.

The commission requested specific comments on the Section 167 requirement as to whether the reason for adopting or readopting the rule continues to exist. The commission received no comments on the proposed rule. The commission finds that the reason for adopting the rule continues to exist.

This section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, §54.001, which requires a person to obtain a certificate of convenience and necessity, certificate of operating authority, or service provider certificate of operating authority to provide local exchange telephone service, basic local telecommunications service, or switched access service; §54.002, which sets out exceptions to certificate requirements for service extensions; §54.003, which sets out exceptions to certificate requirements for certain services; and Chapter 54, Subchapter B, which sets out the requirements for a certificate of convenience and necessity, and grants the commission the authority to grant or deny the certificate.

Cross-Index to Statutes: Public Utility Regulatory Act §§14.002, 54.001, 54.002, 54.003, and Chapter 54, Subchapter B.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on March 5, 1999.

TRD-9901352

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: March 25, 1999

Proposal publication date: November 13, 1998

For further information, please call: (512) 936-7308