TITLE economic-regulation

Part I. Railroad Commission of Texas

Chapter 7. Gas Utilities Division

Subchapter B. Substantive Rules

16 TAC §7.70, §7.81

The Railroad Commission of Texas adopts amendments to §7.70, relating to general and definitions, with respect to minimum safety standards and regulations applicable to natural gas pipeline facilities and natural gas transportation within the state of Texas, and §7.81, relating to safety regulations adopted concerning the transportation of hazardous liquids within the state, with changes to the proposed text as published in the March 19, 1999 issue of the Texas Register (24 TexReg 1893). Section 7.81 is being adopted without changes and will not be republished. The only changes to the text previously published were non- substantive and do not change the rules as currently effective. A portion of the citation to the Code of Federal Regulations was inadvertently omitted from the proposed language and has been reinserted, and italics and commas have been added where appropriate. By these changes, the commission adopts by reference the new amendments issued by the United States Department of Transportation (USDOT) in 49 Code of Federal Regulations (C.F.R.) Parts 192, 193, 195, and 199, concerning natural gas, liquified natural gas, hazardous liquids pipelines, and drug testing requirements.

The new rules change the date stated in §7.70 and §7.81 to reflect the new date-January 15, 1999-on which the commission adopts by reference the federal regulations in 49 CFR Parts 192, 193, 195, and 199 in order to adopt recent amendments to those regulations.

USDOT's Amendment Number 199-16, published at 62 Federal Register (FR) 67293, limited the applicability of the Drug Testing Rules only to operators whose employees are located within the United States territory, including the Outer Continental Shelf. This amendment was based on a reevaluation of the complicated legal issues faced by USDOT in enforcing its drug testing rules on employees located outside of United States territory.

Amendment Number 192-82 (later corrected to Amendment Number 192-83 in 63 FR 20134) required operators of natural gas distribution systems to provide customers of new and replaced single residence service lines with information about excess flow valves (EFV's). The required notice must explain to these customers the availability of these valves meeting USDOT prescribed performance standards and related safety benefits and costs. If a customer requests installation, the rule requires the operator to install the EFV if the customer pays all costs associated with installation. EFV's restrict the flow of gas by closing automatically if a service line breaks, thus mitigating the consequences of service line failures.

Amendments Number 192-81, and Number 195-59, published in 63 FR 12659, confirmed the effective date of the federal direct final rule that excluded from USDOT safety regulations producer- operated gas and hazardous liquid pipelines located on the Outer Continental Shelf upstream from where operating responsibility transfers to a transporting operator. This rule was adopted by USDOT with an effective date of March 19, 1998.

Amendment Number 199-15, published in 63 FR 12998, required a face-to-face evaluation by substance abuse professionals for pipeline employees who have either received a positive drug test or have refused a drug test required by the Research and Special Projects Administration. In addition, the substance abuse professional can require a pipeline employee to complete a rehabilitation program before being eligible to return to duty.

Amendment Number. 199-16, published in 63 FR 14041, confirmed the USDOT effective date of the federal direct final rule that amends the "Scope and Compliance" section of the Drug Testing Rules to revise the applicability requirements with respect to any operator located outside the territory of the United States or its Outer Continental Shelf.

Amendment Number 195-62, published in 63 FR 36373, adopted an industry publication for pipeline leak detection, API 1130, "Computational Pipeline Monitoring," published by the American Petroleum Institute, as a referenced document. The industry standard requires that an operator of a hazardous liquids pipeline use API 1130 in conjunction with other information in designing, evaluating, operating, maintaining, and testing its leak detection system.

Amendments Number 192-85, Number 193-16, Number 194-3, and Number 195-63, published in 63 FR 37500, provide metric equivalents to pipeline safety regulations. The metric equivalents are provided for informational purposes only; operators are to continue using English units for purposes of compliance and enforcement.

Amendments Number 192-83, 193-15, 194-2, 195-61, 198-3, and 199-17, published in 63 FR 7721, were part of the annual effort by the Office of Pipeline Safety, USDOT, to improve safety by clarifying and updating the pipeline safety regulations. (Amendment Number 192-83 was later corrected to Number 192-84 in 63 FR 38757.) Revisions included updated references to voluntary specifications and standards incorporated by reference, and various clarifications and grammatical corrections. These updates reflected the most recent editions of each specification and standard incorporated by reference to enable pipeline operators to utilize current technology, materials, and practices. In addition, certain gender-specific terms have been replaced by gender-neutral terms.

The Research and Special Projects Administration incorporated by reference all or portions of nine updated documents containing practices, codes, standards, and specifications developed and published by technical organizations, including the American Society of Mechanical Engineers, American Society for Testing and Materials, Manufacturers Standardization Society of the Valve and Fittings Industry, and the National Fire Protection Association. The updated standards incorporated the latest technology and engineering practice. Adoption of these updated documents assures that pipeline operators will not be unnecessarily burdened with outdated materials.

The following sections were amended to clarify their meaning: 1. Prior to the federal amendments, §192.16(b)(5) stated that "The operator (if applicable), plumbers, and heating contractors can assist in locating, inspecting, and repairing the customer's buried piping." The final rule clarifies the reference by deleting the term "plumbers" and inserting the word "plumbing contractors." 2. Prior to the federal amendments, §195.56(a) described safety-related condition reports "under §191.55(a) . . .", which was inaccurate. Safety-related condition report requirements for Part 195 are contained in §195.55(a). The amendment corrects the rule citation. 3. As amended, the last line of §199.17(a) clarifies that "samples may be discarded following the end of the 365-day period." Also, this rule amendment revised the language containing the term "his representative," removing the specific references to gender.

Section 192.107(b)(2) and §193.2059(d)(l)(i) of the pipeline safety regulations contained minor grammatical errors and gender-specific language that are revised.

Amendments Number 192-84, Number. 193-15, Number 194-2, Number 195-61, Number 198-3, and Number 199-17, published in 63 FR 38757, removed an amendment in a direct final rule titled "Periodic Updates to the Pipeline Safety Regulations" found at 62 FR 7721, and restored the regulatory text that existed prior to the direct final rule. The final rule updated references to voluntary specifications and standards incorporated by reference, and made various other corrections. Section 192.614(c)(5) required operators to "Provide for temporary marking of buried pipelines in the area of excavation activity before, as far as practical, the activity begins." RSPA believed that this requirement could be confusing to the reader in terms of interpreting the meaning of "as far as practical." Therefore, RSPA proposed amending the paragraph to require temporary marking of buried pipelines before excavation activities begin "except in emergency situations." Based on a comment to this clarification, RSPA removed this change from the direct final rule. The comment was based on the interpretation of "as far as practical." RSPA did not mean to distort the language of the regulation, only to clarify that operators would not be responsible for marking in an emergency situation. However, based on feedback from the pipeline industry and other regulatory bodies within RSPA, it was determined that the original language better served the reader of the regulation. RSPA plans to issue an interpretation of the language in § 192.614 to clarify its meaning.

Amendments Number 192-84, Number193-15, Number 194-2, Number 195-61, Number 198-3, and Number 199-17, published in 63 FR 38758, made minor corrections to "Periodic Updates to Pipeline Safety Rules," published on February 17, 1998. The rule incorrectly listed the amendment numbers for Part 192 at the beginning of the rule. The correct amendment number is 192-84, as noted above. Also, in updating the American Society for Testing and Materials (ASTM) Designation 2513, the rule inadvertently removed the reference to the ASTM 2513-87 edition for § 192.63(a)(1). This amendment corrected this reference to reflect the appropriate standard, ASTM Designation D 2513 "Standard Specification of Thermoplastic Gas Pressure Pipe, Tubing, and Fittings." (D 2513-96a).

Amendment Number 195-64, published in 63 FR 46692, excluded from RSPA's safety standards for hazardous liquid pipelines low-stress pipelines regulated for safety by the US Coast Guard and low- stress pipelines less than one mile long that serve certain plants and transportation terminals without crossing an offshore area or a waterway currently used for commercial navigation. RSPA previously stayed enforcement of the standards against these pipelines to mitigate compliance difficulties that did not appear warranted by the safety risk. The rule change conformed the standards with this enforcement policy and eliminated duplicative and unnecessarily burdensome regulation.

No comments were received regarding the adoption of the amendments.

The amendments are adopted under Texas Utilities Code §121.201, which authorizes the commission to adopt rules and safety standards for the transportation of gas and for gas pipeline facilities, and under the Texas Natural Resources Code, §117.001, which authorizes the commission to regulate the pipeline transportation of hazardous liquids and carbon dioxide and facilities related thereto under, and to take any other requisite action in accordance with, the Pipeline Safety Act, 49 United States Code §60101.

Texas Utilities Code §121.201 and Texas Natural Resources Code §117.001 are affected by the adopted amendments.

§7.70. General and Definitions.

(a)

Minimum safety standards. All gas pipeline facilities and the transportation of gas within this state, except those facilities and that transportation of gas which are subject to exclusive federal jurisdiction under the Natural Gas Pipeline Safety Act, 49 United States Code Annotated, §60101 et. seq., shall be designed, constructed, maintained and operated in accordance with the Minimum Safety Standards for Natural Gas,49 Code of Federal Regulations (CFR) Part 192, and Liquified Natural Gas Facilities, 49 CFR Part 193, and the Control of Drug Use in Natural Gas, Liquified Natural Gas, and Hazardous Liquid Pipeline Operations, 49 CFR, Part 199, with amendments, effective January 15, 1999, and with the additional regulations set out in this section.

(b)-(k)

(No change.)

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 June 22, 1999.

TRD-9903731

Mary Ross McDonald

Deputy General Counsel, Office of General Counsel

Railroad Commission of Texas

Effective date: July 12, 1999

Proposal publication date: March 19, 1999

For further information, please call: (512) 463-7008


Chapter 15. Alternative Fuels Research and Education Division

Subchapter B. Propane Consumer Rebate Program

16 TAC §15.130, §15.145

The Railroad Commission of Texas adopts amendments to §15.130 and §15.145, relating to the Alternative Fuels Research and Education Division's propane consumer rebate program for propane-fueled appliances and equipment, without changes to the proposed text published in the May 14, 1999, issue of the Texas Register (24 TexReg 3673). The commission adopts these amendments (1) to increase the available options for verifying compliance with the rules of the program, and (2) to increase the number of verifications performed without increasing the overall cost of verification. This increased verification activity is justified by the doubling of funding for the consumer rebate program to more than $1 million a year under Texas Natural Resources Code §§113.2435(c)(5) and 113.246(b) as amended by Senate Bill 925, 75th Legislature, effective September 1, 1997, and implements the recommendations of the commission's internal auditor. The text of the amended rules will not be republished.

Amended paragraph (5) in §15.130 and new subsection (b) in §15.145 add surveys and questionnaires conducted by telephone, mail or electronic media to the options available for verifying rebate applicants' and participating propane dealers' compliance with commission rules governing operation of the rebate program. In re-lettered §15.145(c), deleting "inspected and" clarifies that the commission will not pay rebates for installations that are found to be out of compliance by any means of verification, including but not limited to an on-site inspection. In re- lettered §15.145(d), deleting "inspected by the commission after payment of a rebate and" after "If an installation is" and adding "after payment of a rebate" after "found not to be in compliance" clarifies that the requirements of this section apply to installations that are found to be out of compliance by any means of verification, including but not limited to an on-site inspection.

The commission received no comments on the proposed amendments.

The amendments are adopted under Texas Natural Resources Code, §§113.2434(a) and 113.2435(b), which authorize the commission to adopt rules relating to the establishment of consumer rebate programs for purchasers of appliances and equipment fueled by LPG or other environmentally beneficial fuels for the purpose of achieving energy conservation and efficiency and improving air quality in this state. Texas Natural Resources Code, §113.243(c)(6), authorizes the commission to use money in the Alternative Fuels Research and Education Fund to pay the direct and indirect costs of such programs.

Texas Natural Resources Code, §§113.2435, 113.243(c)(6); 113.248, 113.249, and 113.250, are affected by the rules as amended.

Issued in Austin, Texas, on June 29, 1999.

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 June 29, 1999.

TRD-9903869

Mary Ross McDonald

Deputy General Counsel

Railroad Commission of Texas

Effective date: July 19, 1999

Proposal publication date: May 14, 1999

For further information, please call: (512) 463-7008


Part II. Public Utility Commission of Texas

Chapter 22. Practice and Procedure

The Public Utility Commission of Texas (commission) adopts amendments to §22.52 relating to Notice in Licensing Proceedings with changes and §22.104 relating to Motions to Intervene with no changes to the proposed text as published in the April 23, 1999 Texas Register (24 TexReg 3175). These amendments are adopted under Project Number 20580. The amendments are necessary to conform these sections to the expedited approval schedule in §25.101 of this title (relating to Certification Criteria), as recently adopted by the commission. Adopted §25.101 was published in the March 19, 1999 issue of the Texas Register (24 TexReg 1999).

Section 25.101 replaced existing §23.31 of this title (relating to Certification Criteria) as it relates to electric service providers. Section 25.101 was modified from §23.31 to bring the section concerning certification criteria into agreement with §§25.191 - 25.198 and 25.200- 25.204 of this title (relating to Open-Access Comparable Transmission Service for Electric Utilities in the Electric Reliability Council of Texas) recently adopted by the commission under Project Number 18703, Review of Transmission Access Rules, Substantive Rules §23.67 and §23.70. Section 25.101 as adopted gives great weight to recommendations for transmission lines made by the Electric Reliability Council of Texas (ERCOT) independent system operator (ISO) and allows for certain transmission line applications to be processed on an expedited basis. It is necessary to amend §22.52 and §22.104 to bring these sections into agreement with §25.101 to allow expedited processing of: (1) uncontested applications pursuant to §25.101(c)(5)(A); (2) minor boundary or service area exception applications pursuant to §25.101(c)(5)(B); (3) uncontested transmission line applications pursuant to §25.101(c)(5)(C); or projects deemed critical to the reliability of the Electric Reliability Counsel of Texas (ERCOT) system pursuant to §25.101(c)(5)(D).

The commission received comments on the proposed amendments from the Lower Colorado River Authority (LCRA) and the Office of Public Utility Counsel (OPC).

OPC comments that the preamble to the proposed amendments as published could be misleading, is too broad in application and does not justify reducing the time for intervention from 70 to 45 days for all licensing proceedings, contested and uncontested alike. OPC comments that the preamble states that the changes are necessary to allow expedited processing of uncontested applications, minor boundary changes, or projects critical to ERCOT reliability and that no rationale has been given for reducing the time for intervention by 35% for contested licensing proceedings. OPC states that decreasing the amount of time for interested parties to intervene in contested cases potentially affects due process rights and that the less time allowed, the less likely it is that affected parties will have an adequate opportunity to address matters that may significantly impact their lives. OPC submits that the proposed rules should not be adopted until an appropriate justification has been made for applying the shortened intervention period to contested licensing proceedings. OPC further states that the proposed changes are not necessary to bring the rules into compliance with the recent changes to Substantive Rule §25.101 of this title (relating to Certification Criteria). OPC states that there is no conflict between §25.101 and the existing §22.52 or §22.104.

The commission disagrees with OPC's comments and adopts the intervention deadline amendments as proposed. The commission acknowledges that these amendments will shorten the intervention period for contested cases. Through these amendments, the commission has attempted to balance the need for expedited processing of important transmission line project applications and the need for affected persons to receive adequate notice of any such proceeding. The commission believes that 45 days' notice is an adequate notice period. Affected persons will have over six weeks to decide whether to intervene in a certification proceeding. Additionally, the commission concurs with LCRA's comment (discussed below) that for projects affecting more than 25 persons, the notice period is effectively much longer than 45 days.

LCRA supports the proposed amendments as published and states that a transmission utility must hold at least one public meeting, with adequate notice prior to the meeting date, before filing the application if more than 25 persons would be affected. Concerns expressed at the meeting must be addressed in the application. Thus, property owners effectively receive much more notice of certificate of convenience and necessity proceedings than the 45 days proposed in this rulemaking.

LCRA also comments that the Texas Legislature is poised to enact legislation that would eliminate the integrated resource planning (IRP) process. LCRA suggests that if such legislation is adopted the references in the proposed amendments to the IRP process should be withdrawn without the necessity of republishing the rule. The commission agrees with this comment. Subsection (b) of §22.52 concerning notice by applicants for new electric generating plants has been deleted and the remaining subsection has been renumbered accordingly. The reference to notice for new electric generating plants in subsection (a) has also been deleted.

In reply comments, LCRA takes issue with OPC's claim that reducing the notice from 70 to 45 days has not been justified and is overly broad. LCRA notes that as a result of recently enacted legislation, the only electric utility matters requiring licensing from the commission are service area boundary changes and transmission line CCNs. LCRA notes that PUC Substantive Rule §25.101(c)(5) provides for expedited approval for uncontested area boundary changes and uncontested transmission line CCNs recommended by the Electric Reliability Council of Texas, Independent System Operator (ISO). LCRA correctly observes that the commission has 80 days to process such applications. If the current 70-day intervention period were retained, the commission would have only ten days to process these applications, which is impractical and unworkable.

LCRA also notes that the 45 day intervention deadline is sufficient notice, particularly when compared to the 28 day notice required for electric rate increases under PUC Substantive Rule §22.51(a)(1) as well as the 30 day notice for rulemaking and ten day notice for hearings under the Texas Administrative Procedure Act. The commission agrees with LCRA's comments and declines to adopt the proposed changes to the rule recommended by OPC.

All comments, including any not specifically referenced herein, were fully considered by the commission.

Subchapter D. Notice

16 TAC §22.52

These amendments are adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 and §14.052 (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, including rules of practice and procedure.

Cross-Index to Statutes: Public Utility Regulatory Act §14.002 and §14.052

§22.52.Notice in Licensing Proceedings.

(a)

Notice in electric licensing proceedings. In all electric licensing proceedings except minor boundary changes, the applicant shall give notice in the following ways:

(1)

Applicant shall publish notice of the applicant's intent to secure a certificate of convenience and necessity in a newspaper having general circulation in the county or counties where a certificate of convenience and necessity is being requested, once each week for two consecutive weeks beginning with the week after the application is filed with the commission. This notice shall identify in general terms the type of facility if applicable, and the estimated expense associated with the project.

(A)

The notice shall also include the following statement in the first paragraph: "Persons with questions about this project should contact (name of utility contact) at (utility contact telephone number). Persons who wish to intervene in the proceeding or comment upon action sought, should contact the Public Utility Commission of Texas, at P. O. Box 13326, Austin, Texas 78711-3326, or call the Public Utility Commission's (commission) Office of Customer Protection at (512) 936-7120 or (888) 782-8477. Hearing- and speech-impaired individuals with text telephones (TTY) may contact the commission at (512) 936-7136. The deadline for intervention in the proceeding is (date 45 days after the date the application was filed with the commission) and a letter requesting intervention should be received by the commission by that date."

(B)-(D)

(No change.)

(2)

(No change.)

(3)

Applicant shall, upon filing an application, mail notice of its application to the owners of land, as stated on the current county tax roll(s), who would be directly affected by the requested certificate, including the preferred location and any alternative location of the proposed facility. For purposes of this paragraph, land is directly affected if an easement would be obtained over all or any portion of it, or if it contains a habitable structure that would be within 200 feet of the proposed facility.

(A)

The notice must contain all information required in paragraph (1) of this subsection and contain the following statement in the first paragraph of the notice printed in bold-face type: "Your land may be directly affected in this proceeding. If the preferred route or one of the alternative routes requested under the certificate is approved by the Public Utility Commission of Texas, the utility will have the right to build a facility which may directly affect your land. This proceeding will not determine the value of your land or the value of an easement if one is needed by the utility to build the facility. If you have questions about this project, you should contact (name of utility contact) at (utility contact telephone number). If you wish to participate in this proceeding by becoming a party or to comment upon action sought, you should contact the Public Utility Commission of Texas, at P.O. Box 13326, Austin, Texas 78711- 3326, or call the Public Utility Commission's (commission) Office of Customer Protection at (512) 936-7120 or (888) 782-8477. Hearing- and speech-impaired individuals with text telephones (TTY) may contact the commission at (512) 936-7136. If you wish to participate in this proceeding by becoming a party, the deadline for intervention in the proceeding is (date 45 days after the date the application was filed with the commission), and you must send a letter requesting intervention to the commission which is received by that date."

(B)-(C)

(No change.)

(D)

Proof of notice may be established by an affidavit affirming that the applicant sent notice by first-class mail to each of the persons listed as an owner of directly affected land on the current county tax roll(s). The proof of notice shall include a list of all landowners to whom notice was sent and a statement of whether any formal contact related to the proceeding between the utility and the landowner other than the notice has occurred. This proof of notice shall be filed with the commission no later than 20 days after the filing of the application.

(E)

Upon the filing of proof of notice as described in subparagraph (D) of this paragraph, the lack of actual notice to any individual landowner will not in and of itself support a finding that the requirements of this paragraph have not been satisfied. If, however, the utility finds that an owner of directly affected land has not received notice, it shall immediately provide notice in the same form described in subparagraphs (A) and (B) of this paragraph, except that the notice shall state that the person has fifteen days to intervene. The utility shall immediately notify the commission that such supplemental notice has been provided.

(4)-(5)

(No change.)

(6)

Upon entry of a final, appealable order by the commission approving an application, the utility shall provide notice to all owners of land who previously received direct notice. Proof of notice under this subsection shall be provided to the commission's Office of Regulatory Affairs.

(A)-(B)

(No change.)

(b)

Notice in telephone licensing proceedings. In all telephone licensing proceedings, except minor boundary changes, applications for a certificate of operating authority, or applications for a service provider certificate of operating authority, the applicant shall give notice in the following ways:

(1)

Applicants shall publish in a newspaper having general circulation in the county or counties where a certificate of convenience and necessity is being requested, once each week for two consecutive weeks, beginning the week after the application is filed, notice of the applicant's intent to secure a certificate of convenience and necessity. This notice shall identify in general terms the types of facilities, if applicable, the area for which the certificate is being requested, and the estimated expense associated with the project. Whenever possible, the notice should state the established intervention deadline. The notice shall also include the following statement: "Persons with questions about this project should contact (name of utility contact) at (utility contact telephone number). Persons who wish to intervene in the proceeding or comment upon action sought, should contact the Public Utility Commission at P.O. Box 13326, Austin, Texas 78711-3326, or call the Public Utility Commission's (commission) Office of Customer Protection at (512) 936-7120 or (888) 782-8477. Hearing- and speech-impaired individuals with text telephones (TTY) may contact the commission at (512) 936-7136. The deadline for intervention in the proceeding is (date 70 days after the date the application was filed with the commission) and you must send a letter requesting intervention to the commission which is received by that date." Proof of publication of notice shall be in the form of a publisher's affidavit which shall specify the newspaper(s) in which the notice was published; the county or counties in which the newspaper(s) is or are of general circulation; and the dates upon which the notice was published. Proof of publication shall be submitted to the commission as soon as available.

(2)

Applicant shall also mail notice of its application, which shall contain the information as set out in paragraph (1) of this subsection, to cities and to neighboring utilities providing the same service within five miles of the requested territory or facility. Applicant shall also provide notice to the county government of all counties in which any portion of the proposed facility or territory is located. The notice provided to county governments shall be identical to that provided to cities and to neighboring utilities. An affidavit attesting to the provision of notice to counties shall specify the dates of the provision of notice and the identity of the individual counties to which such notice was provided.

(3)

(No change.)

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 June 25, 1999.

TRD-9903783

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: July 15, 1999

Proposal publication date: April 23, 1999

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


Subchapter F. Parties

16 TAC §22.104

These amendments are adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 and §14.052 (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, including rules of practice and procedure.

Cross-Index to Statutes: Public Utility Regulatory Act §14.002 and §14.052

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 June 25, 1999.

TRD-9903784

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: July 15, 1999

Proposal publication date: April 23, 1999

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


Chapter 23. Substantive Rules

Subchapter C. Rates

16 TAC §23.22

The Public Utility Commission of Texas (commission) adopts the repeal of §23.22 relating to Energy Efficiency Plan with no changes to the proposed text as published in the April 16, 1999 Texas Register (24 TexReg 3002). This section required that electric utilities file an energy efficiency plan with the commission providing information on the utilities conservation programs. Project Number 17709 is assigned to this proceedings.

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. 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 comments on the proposed repeal from the Office of Public Utility Counsel (OPC) and Southwestern Public Service Company (SPS).

SPS supports the repeal of §23.22 for the reasons stated in the preamble for the proposed repeal.

The preamble proposed eliminating the energy efficiency plan (EEP) as unnecessary for two reasons: (1) the commission's integrated resource planning (IRP) rules in Chapter 25, Subchapter H of this title (relating to Electrical Planning) required the submission of the necessary information for the commission to meet the requirements of the Public Utility Regulatory Act (PURA) §34.003; and (2) the information necessary for the commission to meet the requirements of PURA §36.052(2) is filed as part of a utility's rate filing package.

OPC suggested that the commission postpone the repeal of §23.22 and reconsider the issue after the legislative session due to deregulation bills pending in the Texas Legislature which propose to eliminate the integrated resource planning process and do not require a final rate case. OPC stated that if the energy efficiency plan requirement is repealed and the IRP process is eliminated through legislation, the commission and intervenors could be denied access to the information provided by the EEP during the period of transition to competition.

Senate Bill 7, 76th Legislature, Regular Session (1999), repealing PURA Chapter 34, was passed by the Texas House of Representatives and the Texas Senate and is awaiting signature by the Governor. Senate Bill 7 establishes a goal for energy efficiency and requires the commission to adopt rules and procedures to ensure that the goal is achieved by January 1, 2004. Much of the information required by §23.22 is intended to be used in a rate setting context, and will not be needed by the commission because of the rate freeze imposed by Senate Bill 7. The commission will undertake a rulemaking addressing energy efficiency, as required by Senate Bill 7. To the extent the commission requires information in the interim, PURA §14.003 authorizes the commission to require a public utility to report information about the utility to the commission. The commission finds that the reasons for adopting §23.22 no longer exist and repeals the rule.

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, 34.003 and 36.052.

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 June 25, 1999.

TRD-9903785

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: July 15, 1999

Proposal publication date: April 16, 1999

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


Subchapter H. Telephone

16 TAC §23.99

The Public Utility Commission of Texas adopts the repeal of §23.99 relating to Unbundling with no changes to the proposed text as published in the January 8, 1999 Texas Register (24 TexReg 229). The repeal is necessary to avoid duplicative rule sections. The commission has adopted §26.276 of this title (relating to Unbundling) to replace §23.99. 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 June 25, 1999.

TRD-9903789

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: July 15, 1999

Proposal publication date: January 8, 1999

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


Chapter 26. Substantive Rules Applicable to Telecommunications Service Providers

Subchapter L. Wholesale Market Provisions

16 TAC §26.276

The Public Utility Commission of Texas (commission) adopts new §26.276 relating to Unbundling with changes to the proposed text as published in the January 8, 1999 Texas Register (24 TexReg 230). New §26.276 replaces §23.99 of this title (relating to Unbundling). Section 26.276 requires incumbent local exchange companies (ILECs) to unbundle their network to the extent ordered by the Federal Communications Commission (FCC) as required by the Public Utility Regulatory Act (PURA) §60.021. This section is adopted under Project Number 17709.

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 Section 167 requirement or the proposed rule. The commission finds that the reason for adopting the rule continues to exist. Non-substantive changes were made for clarification. Subsections (b)(3) and (f)(4) as published have been deleted as they no longer apply due to the passage of time. In subsection (e) the language "discretionary services, or competitive services" has been replaced with "or non-basic services" to reflect changes to terminology that occurred during the 76th Legislative Session (1999).

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, PURA §60.021 which requires at a minimum, an incumbent local exchange company shall unbundle its network to the extent ordered by the Federal Communications Commission.

Cross-Index to Statutes: Public Utility Regulatory Act §14.002 and §60.021.

§26.276.Unbundling.

(a)

Purpose. The purpose of this section is to implement Public Utility Regulatory Act (PURA) §60.021, which requires an incumbent local exchange company (ILEC), at a minimum, to unbundle its network to the extent ordered by the Federal Communications Commission (FCC).

(b)

Application.

(1)

The provisions of this section apply, as of its effective date, to each ILEC that serves one million or more access lines.

(2)

The provisions of this section apply upon a bona fide request to each ILEC that serves fewer than one million access lines.

(c)

Unbundling requirements.

(1)

Unbundling pursuant to current FCC requirements. Each ILEC that is subject to this section shall unbundle as specified in subparagraphs (A) and (B) of this paragraph. An ILEC with interstate tariffs in effect shall unbundle its network/services under the same terms and conditions, except for price, as it unbundles its interstate services, unless ordered otherwise by the commission. The ILEC shall also not impose a charge or rate element that is not included in its interstate tariffs for these unbundled rate elements. Nothing herein precludes the commission from requiring further unbundling of local exchange company services, including the services unbundled pursuant to this paragraph.

(A)

The ILEC's network shall be unbundled to the extent ordered by the FCC in compliance with its open network architecture requirements; and

(B)

Signaling for tandem switching shall be unbundled to the extent ordered by the FCC in compliance with CC Docket Number 91-141, Third Report and Order, In the Matter of Expanded Interconnection with Local Telephone Company Facilities, Transport Phase II.

(2)

Unbundling pursuant to future FCC requirements. An ILEC shall unbundle its network/services as defined in the term "unbundling" in §26.5 of this title (relating to Definitions) for intrastate services to the extent ordered, in the future, by the FCC for interstate services. An ILEC with interstate tariffs in effect shall unbundle these services under the same terms and conditions, except for price, as it unbundles its interstate services, unless ordered otherwise by the commission. The ILEC shall also not impose a charge or rate element that is not included in its interstate tariffs for unbundling. Nothing herein precludes the commission from requiring further unbundling of local exchange company services, including the services unbundled pursuant to this paragraph.

(d)

Costing and pricing of services in compliance with this section.

(1)

Cost standard. Services unbundled in compliance with this section shall be subject to the following cost standard.

(A)

The cost standard for unbundled services shall be the long run incremental costs (LRIC) of providing the service.

(B)

Any ILEC subject to §23.91 of this title (relating to Long Run Incremental Cost Methodology for Dominant Certificated Telecommunications Utility Services) shall file LRIC studies pursuant to that rule for unbundled components specified in subsection (c)(1) of this section.

(C)

For any ILEC that is subject to §23.91 of this title, the cost standard for unbundled services required under subsection (c)(2) of this section shall be the long run incremental costs pursuant to §23.91 of this title.

(D)

The long run incremental cost standard shall not apply if the ILEC proposes rates that are the same as the rates in effect for the carrier's interstate provision of the same or equivalent unbundled service or if the ILEC adopts rates of another ILEC pursuant to paragraph (2)(B) of this subsection.

(2)

Pricing standard. Services unbundled in compliance with this section shall be subject to the following pricing standard.

(A)

Any ILEC may propose rates, without cost justification, that are at parity with the rates in effect for the carrier's interstate provision of the same or equivalent unbundled service. The ILEC shall amend its intrastate rates, terms and conditions to be consistent with subsequent revisions in its interstate tariffs providing for unbundling pursuant to filing requirements established in subsection (f)(4) of this section.

(B)

In addition to the provision in subparagraph (A) of this paragraph, ILECs that are not subject to §23.91 of this title may adopt the rates of another ILEC that are developed pursuant to the requirements of this section.

(C)

If an ILEC proposes rates that are not at parity with the rates in effect for the carrier's interstate provision of the same or equivalent unbundled service or does not adopt the rates of another ILEC pursuant to subparagraph (B) of this paragraph, the following requirements shall apply to any service approved under this section:

(i)

Unless waived or modified by the presiding officer, the service shall be offered in every exchange served by the ILEC, except exchanges in which the ILEC's facilities do not have the technical capability to provide the service.

(ii)

If the sum of the rates of the new unbundled components is equal to the price of the original bundled service and if the ratio of the rate of each unbundled component to its LRIC is the same for each unbundled component, there shall be a rebuttable presumption that the rate of an unbundled component is reasonable.

(iii)

The proposed rates and terms of the service shall not be unreasonably preferential, prejudicial, or discriminatory, subsidized directly or indirectly by regulated monopoly services, or predatory or anticompetitive.

(D)

Rates based upon the new LRIC cost studies required under paragraph (1)(B) of this subsection shall be subject to the pricing rulemaking referred to in §23.91(p) of this title to the same extent as any other service offered by an ILEC subject to the pricing rule.

(e)

Basket assignment. An ILEC electing incentive regulation under PURA Chapter 58 shall, in its compliance tariff filed pursuant to subsection (f) of this section, include a proposal and rationale for designating the unbundled components as basic services or non-basic services.

(f)

Filing requirements.

(1)

Initial filing to implement subsection (c)(1) of this section in effect for ILECs serving one million or more access lines. An ILEC serving one million or more access lines shall file initial tariff amendments to implement the provisions of subsection (c)(1) of this section not later than 60 days from the effective date of this section. The proposed effective date of such filings shall be not later than 30 days after the filing date, unless suspended. Tariff revisions filed pursuant to this subsection shall not be combined in a single application with any other tariff revision.

(2)

Filings to comply with subsection (c)(2) of this section for ILECs serving one million or more access lines. An ILEC serving one million or more access lines shall file tariff amendments to implement the provisions of subsection (c)(2) of this section, within 60 days of the effective date of its interstate tariff providing for unbundling. The proposed effective date of such filings shall be not later than 30 days after the filing date, unless suspended. Tariff revisions filed pursuant to this subsection shall not be combined in a single application with any other tariff revision.

(3)

Filings to implement subsections (c)(1) and (2) of this section for ILECs serving fewer than one million access lines. If an ILEC serving fewer than one million access lines receives a bona fide request, it shall unbundle its network/services pursuant to the bona fide request within 90 days from the date of receipt of the bona fide request or shall have the burden of demonstrating the reasons for not unbundling pursuant to the bona fide request.

(4)

Filings to comply with subsection (d)(2)(A) of this section. An ILEC proposing rates pursuant to subsection (d)(2)(A) shall file tariff amendments to implement the revisions in its interstate tariffs providing for unbundling, within 30 days of the effective date of its interstate tariff providing for unbundling. The proposed effective date of such filings shall be not later than 30 days after the filing date, unless suspended. Tariff revisions filed pursuant to this subsection shall not be combined in a single application with any other tariff revision.

(g)

Requirements for notice and contents of application in compliance with this section.

(1)

Notice of Application. The presiding officer may require notice to be provided to the public as required by Chapter 22, Subchapter D of this title (relating to Notice). The notice shall include, at a minimum, a description of the service, the proposed rates and other terms of the service, the types of customers likely to be affected if the service is approved, the probable effect on ILEC's revenues if the service is approved, the proposed effective date for the service, and the following language: "Persons who wish to comment on this application should notify the commission by (specified date, ten days before the proposed effective date). Requests for further information should be mailed to the Public Utility Commission of Texas, PO Box 13326, Austin, Texas 78711-3326, or you may call the Public Utility Commission's Office of Customer Protection at (512) 936- 7120 or toll free at (888) 782-8477. Hearing- and speech-impaired individuals with text telephones (TTY) may contact the commission at (512) 936-7136 or may reach the commission's toll free number by calling Relay Texas at (800) 735- 2988."

(2)

Contents of application for an ILEC serving one million or more access lines that is required to comply with subsection (f)(1), (2), and (4) of this section. An ILEC shall request approval of an unbundled service by filing an application that complies with the requirements of this section. In addition to copies required by other commission rules, one copy of the application shall be delivered to the commission's Office of Regulatory Affairs, Legal Division, and one copy to the Office of Public Utility Counsel. The application shall contain the following information:

(A)

a description of the proposed service and the rates, terms and conditions, under which the service is proposed to be offered and a demonstration that the proposed rates, terms and conditions are in conformity with the requirements in subsections (c), (d), and (e) of this section, as applicable;

(B)

a statement detailing the type of notice, if any, the ILEC has provided or intends to provide to the public regarding the application and a brief statement explaining why the ILEC's notice proposal is reasonable;

(C)

a copy of the text of the notice, if any;

(D)

a long run incremental cost study supporting the proposed rates, if the rates are not at parity with the carrier's interstate rates;

(E)

detailed documentation showing that the proposed service is priced above the long run incremental cost of such service, including all workpapers and supporting documentation relating to computations or assumptions contained in the application, if the rates are not at parity with the carrier's interstate rates;

(F)

projection of revenues, demand, and expenses demonstrating that in the second year after the service is first offered, the proposed rates will generate sufficient annual revenues to recover the annual long run incremental costs of providing the service, as well as a contribution for joint and/or common costs, if the rates are not at parity with the carrier's interstate rates;

(G)

explanation that the proposed rates and terms of the service are not unreasonably preferential, prejudicial, or discriminatory, subsidized directly or indirectly by regulated monopoly services, or predatory or anticompetitive;

(H)

the information required by §§26.121 of this title (relating to Privacy Issues), 26.122 of this title (relating to Customer Proprietary Network Information, and 26.123 of this title (relating to Caller Identification Services); and

(I)

any other information which the ILEC wants considered in connection with the commission's review of its application.

(3)

Contents of application for an ILEC serving fewer than one million access lines that is required to comply with subsection (f)(3) and (4) of this section. An ILEC shall file with the commission an application complying with the requirements of this section. In addition to copies required by other commission rules, one copy of the application shall be delivered to the commission's Office of Regulatory Affairs, Legal Division, and one copy shall be delivered to the Office of Public Utility Counsel. The application shall contain the following:

(A)

contents of application required by paragraph (2)(A), (B), (C), (H), and (I) of this subsection;

(B)

contents of application required by paragraph (2)(D), (E), (F), and (G) of this subsection, if the rates are not at parity with the carrier's interstate rates or the rates of another ILEC;

(C)

a description of the proposed service(s) and the rates, terms, and conditions under which the service(s) are proposed to be offered and an affidavit from the general manager or an officer of the ILEC approving the proposed service;

(D)

a notarized affidavit from a representative of the ILEC affirming that the rates are just and reasonable and are not unreasonably preferential, prejudicial, or discriminatory; subsidized directly or indirectly by regulated monopoly services; or predatory, or anticompetitive; and

(E)

projections of the amount of revenues that will be generated by the proposed service.

(h)

Commission processing of application.

(1)

Administrative review. An application considered under this section may be reviewed administratively unless the ILEC requests the application be docketed or the presiding officer, for good cause, determines at any point during the review that the application should be docketed.

(A)

The operation of the proposed rate schedule may be suspended for 35 days after the effective date of the application. The effective date shall be according to the requirements in subsection (f) of this section.

(B)

The application shall be examined for sufficiency. If the presiding officer concludes that material deficiencies exist in the application, the applicant shall be notified within ten working days of the filing date of the specific deficiency in its application, and the earliest possible effective date of the application shall be no less than 30 days after the filing of a sufficient application with substantially complete information as required by the presiding officer. Thereafter, any time deadlines shall be determined from the 30th day after the filing of the sufficient application and information or from the effective date if the presiding officer extends that date.

(C)

While the application is being administratively reviewed, the commission staff and the staff of the Office of the Public Utility Counsel may submit requests for information to the ILEC. Six copies of all answers to such requests for information shall be filed with Central Records and one copy shall be provided to the Office of Public Utility Counsel within ten days after receipt of the request by the ILEC.

(D)

No later than 20 days after the filing date of the sufficient application, interested persons may provide to the commission staff written comments or recommendations concerning the application. The commission staff shall and the Office of Public Utility Counsel may file with the presiding officer written comments or recommendations concerning the application.

(E)

No later than 35 days after the effective date of the application, the presiding officer shall issue an order approving, denying, or docketing the ILEC's application.

(2)

Approval or denial of application. The application shall be approved by the presiding officer if the proposed tariff meets the requirements in this section. If, based on the administrative review, the presiding officer determines, that one or more of the requirements not waived have not been met, the presiding officer shall docket the application.

(3)

Standards for docketing. The application may be docketed pursuant to §22.33(b) of this title (relating to Tariff Filings).

(4)

Review of the application after docketing. If the application is docketed, the operation of the proposed rate schedule shall be automatically suspended to a date 120 days after the applicant has filed all of its direct testimony and exhibits, or 155 days after the effective date, whichever is later. Affected persons may move to intervene in the docket, and the presiding officer may schedule a hearing on the merits. The application shall be processed in accordance with the commission's rules applicable to docketed cases.

(5)

Interim rates. For good cause, interim rates may be approved after docketing. If the service requires substantial initial investment by customers before they may receive the service, interim rates shall be approved only if the ILEC shows, in addition to good cause, that it will notify each customer prior to purchasing the service that the customer's investment may be at risk due to the interim nature of the service.

(i)

Commission processing of waivers. Any request for modification or waiver of the requirements of this section shall include a complete statement of the ILEC's arguments and factual support for that request. The presiding officer shall rule on the request expeditiously.

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 June 25, 1999.

TRD-9903790

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: July 15, 1999

Proposal publication date: January 8, 1999

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