TITLE 16.ECONOMIC REGULATION

Part 2. PUBLIC UTILITY COMMISSION OF TEXAS

Chapter 25. SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS

Subchapter D. RECORDS, REPORTS, AND OTHER REQUIRED INFORMATION

16 TAC §§25.79, 25.80, 25.85

The Public Utility Commission of Texas (commission) proposes amendments to §25.79 relating to Equal Opportunity Reports and §25.80 relating to the Annual Report on Historically Underutilized Businesses; and proposes new §25.85 relating to Workforce Diversity Reports. The proposed new rule and amendments will implement the provisions of Senate Bill 7 (SB7), Act of May 21, 1999, 76th Legislature, Regular Session, chapter 405, 1999 Texas Session Law Service 2543, 2601 (Vernon)(codified as an amendment to the Public Utility Regulatory Act (PURA), Texas Utilities Code Annotated §39.909(c)), which require electric utilities to file an annual report to the commission and the legislature relating to the electric utility efforts to improve workforce diversity and contracting opportunities for small and historically underutilized businesses and will eliminate duplicative filing requirements. Project Number 22167 has been assigned to this proceeding.

Patricia Zacharie, Attorney, Legal Division, Office of Regulatory Affairs, has determined that for each year of the first five-year period the proposed sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Ms. Zacharie has determined that for each year of the first five years the proposed sections are in effect the public benefit anticipated as a result of enforcing the sections will be greater opportunities for minorities and small and historically underutilized businesses and a more diverse workforce in the State of Texas. There will be no effect on small businesses or micro-businesses as a result of enforcing these sections. There is an anticipated economic cost to persons who are required to comply with the sections as proposed, which cannot be quantified at this time.

Ms. Zacharie has also determined that for each year of the first five years the proposed sections are in effect there should be no affect on a local economy and therefore, no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission staff will conduct a public hearing on this rulemaking under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701, on Thursday, May 4, 2000, at 9:30 a.m.

Comments on the proposed amendments and new rule (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas 78711-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed sections. The commission will consider the costs and benefits in deciding whether to adopt these sections. The commission also invites specific comments regarding the following question: Is an exemption appropriate for electric utilities whose workforce is more than a certain percentage minority? All comments should refer to Project Number 22167.

When commenting on specific subsections of the proposed rule(s), parties are encouraged to describe "best practice" examples of regulatory policies, and their rationale, that have been proposed or implemented successfully in other states already undergoing electric industry restructuring, if the parties believe that Texas would benefit from application of the same polices. The commission is only interested in receiving "leading edge" examples which are specifically related and directly applicable to the Texas statute, rather than broad citations to other state restructuring efforts.

The amendments and new rule are proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998 and Supplement 2000) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, PURA §12.252, which grants the commission authority to adopt and enforce rules to require each utility subject to regulation to overcome the underuse of historically underutilized businesses; and §39.909, which grants the commission authority to adopt rules relating to workforce diversity reporting requirements for electric utilities.

Cross Reference to Statutes: Public Utility Regulatory Act §§12.252, 14.002 and 39.909.

§25.79.Equal Opportunity Reports.

(a)

(No change.)

(b)

Each electric utility that files any form with local, state or federal governmental agencies relating to equal employment opportunities for minority group members, (e.g., EEOC Form EEO-1, FCC Form 395, RUS Form 268, etc.) shall file copies of such completed form with the commission. If such form submitted by a multi- jurisdictional electric utility does not indicate Texas-specific numbers, the electric utility shall also prepare, and file with the commission a form indicating Texas-specific numbers , in the same format and based on the numbers contained in the form previously filed with local, state or federal governmental agencies[ , indicating Texas-specific numbers ]. Each electric utility shall also file copies of any other forms required to be filed with local, state or federal governmental agencies which contain the same or similar information, such as personnel data identifying numbers and occupations of minority group members employed by the electric utility, and employment goals relating to them [ thereto ], if any.

(c)

(No change.)

(d)

Any electric utility filing with the commission any documents described in subsections (b) and (c) of this section shall file three [ two ] copies of such documents with the commission's filing clerk under the project number assigned by the Public Utility Commission's Central Records Office for that year's filings. Utilities shall obtain the project number by contacting Central Records.

(e)

An electric utility that files a report with local, state or federal governmental agencies and that is required by this section to file such report with the commission must file the report by December 30 [ February 15 ] of the year it is filed with the local, state or federal agencies. [ If the report is filed with local, state or federal agencies after February 15, the electric utility shall file the report with the commission by February 15 of the next year. ]

[ (f)

On May 1 of each year, the commission shall submit a report concerning the filed reports to the Texas legislature. ]

§25.80.Annual Report on Historically Underutilized Businesses.

(a)

(No change.)

(b)

Every electric utility shall report its use of historically underutilized businesses (HUBs) to the commission on a form approved by the commission. An electric utility may submit the report on paper, or on paper and on a diskette (in [ Lotus 1-2- 3 (*.wk*) or ] Microsoft Excel (*utility name.xl*) [ (*.xl*) ] format).

[ (1)

Each electric cooperative utility shall on or before December 30 of each year submit to the commission a comprehensive annual report detailing its use of HUBs for the four quarters ending on September 30 of the year the report is filed, on the Small Utilities HUB Report form. ]

(1)

[ (2) ] Each [ Every ] electric utility [ other than those specified in paragraph (1) of this subsection ] shall on or before December 30 of each year submit to the commission a comprehensive annual report detailing its use of HUBs for the four quarters ending on September 30 of the year the report is filed, using [ on ] the Large Utilities HUB Report form.

(2)

[ (3) ] Each electric utility wishing to report indirect HUB procurements or HUB procurements made by the contractor of the utility may use the Supplemental HUB report form.

(3)

[ (4) ] Each electric utility shall submit a text description of how it [ the method by which it ] determined which of its vendors is a HUB.

(4)

[ (5) ] Each electric utility that [ which ] has more than 1,000 customers in a state other than Texas, or that [ which ] purchases more than 10% of its goods and services (other than fuel, purchased power, and wheeling) from vendors not located in Texas, shall separately report by total and category all electric utility purchases, all electric utility purchases from Texas vendors, and all electric utility purchases from Texas HUB vendors. A vendor is considered a Texas vendor if its physical location is geographically in Texas.

(5)

[ (6) ] Each electric utility shall also file any other documents it believes appropriate to convey an accurate impression of its use of HUBs.

(c) - (d)

(No change.)

§25.85.Workforce Diversity Report.

(a)

Purpose. This section establishes annual reporting requirements for electric utilities to report its efforts to improve workforce diversity and contracting opportunities for small and historically underutilized businesses.

(b)

Application. This section applies to all electric utilities, as defined in the Public Utility Regulatory Act (PURA) §31.002(6), doing business in the State of Texas.

(c)

Terminology. In this section, "small business" and "historically underutilized business" have the meanings assigned by Texas Government Code §481.191.

(d)

Annual report of workforce diversity. A "Report on Improving Workforce Diversity" shall be filed annually with the commission. The report shall be filed on or before December 30 of each year for the four prior quarters ending on September 30 of the year the report is filed.

(e)

Filing requirements. Three copies of the Workforce Diversity Report shall be filed with the commission's filing clerk under the project number assigned by the Public Utility Commission's Central Records Office for that year's filings. Electric utilities shall obtain the project number by contacting Central Records.

(f)

Contents of the report. The annual report filed with the commission pursuant to this section shall be filed using the Workforce Diversity form and shall contain at a minimum the following information:

(1)

An illustration of the diversity of the electric utility's workforce at the time of the report. If the electric utility is required to file an Equal Opportunity Report pursuant to §25.79 of this title (relating to Equal Opportunity Reports), a copy of that document may be attached to this report to satisfy the requirements of this paragraph.

(2)

A description of the specific progress made under the workforce diversity plan filed pursuant to PURA §39.909(b), including:

(A)

the specific initiatives, programs, and activities undertaken during the preceding year; and

(B)

an assessment of the success of each of those initiatives, programs, and activities.

(3)

An explanation of the electric utility's level of contracting with small and historically underutilized businesses.

(4)

The extent to which the electric utility has carried out its initiatives to facilitate opportunities for contracts or joint ventures with small and historically underutilized businesses.

(5)

A description of the initiatives, programs, and activities the electric utility will pursue during the next year to increase the diversity of its workforce and contracting opportunities for small and historically underutilized businesses.

(g)

This section may not be used to discriminate against any citizen on the basis of race, nationality, color, religion, sex, or marital status.

(h)

This section does not create a new cause of action, either public or private.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on March 24, 2000.

TRD-200002112

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: May 7, 2000

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


Chapter 26. SUBSTANTIVE RULES APPLICABLE TO TELECOMMUNICATIONS SERVICES PROVIDERS

Subchapter B. CUSTOMER SERVICE AND PROTECTION

16 TAC §26.25

(Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Public Utility Commission of Texas or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Public Utility Commission of Texas (commission) proposes the repeal of §26.25 relating to Issuance and Format of Bills. The commission is proposing a new §26.25 relating to Issuance and Format of Bills, to implement the mandates of the Public Utility Regulatory Act (PURA) §§55.012, 17.003(c), and 17.004(a)(8), and the Federal Communications Commission's (FCC) Truth-in-Billing Guidelines. Due to the extensive changes from the existing rule to the proposed rule, publishing an amendment to the existing rule is not practical. Project Number 22130 has been assigned to the proposed repeal of existing §26.25.

Rick Akin, Chief Policy Analyst, Office of Policy Development, has determined that for each year of the first five-year period this repeal is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the repeal.

Mr. Akin has determined that for each year of the first five years the repeal is in effect, the public benefit anticipated as a result of the repeal will be elimination of a rule that no longer meets the requirements of PURA. There will be no effect on small businesses or micro businesses as a result of repealing this section. There is no anticipated economic cost to persons as a result of repealing this section.

Mr. Akin has also determined that for each year of the first five years the repeal is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under the Administrative Procedure Act §2001.022.

Comments on the proposed repeal (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas 78711-3326, within 20 days after publication. All comments should refer to Project Number 22130.

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

Cross Reference to Statutes: Public Utility Regulatory Act §14.002.

§26.25. Issuance and Format of Bills.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on March 24, 2000.

TRD-200002167

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: May 7, 2000

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


Chapter 26. SUBSTANTIVE RULES APPLICABLE TO TELECOMMUNICATIONS SERVICE PROVIDERS

Subchapter B. CUSTOMER SERVICE AND PROTECTION

16 TAC §26.25

The Public Utility Commission of Texas proposes new §26.25 relating to Issuance and Format of Bills. The existing §26.25, relating to Issuance and Format of Bills, has been proposed for repeal. (Because of the extensive changes being proposed, publishing an amendment to the existing §26.25 is less practical than the alternative of repealing the existing section and publishing a new §26.25.) The proposed new section seeks to establish minimum telecommunication bill information standards and format guidelines, to clarify information disseminated to customers in order to reduce cramming and slamming complaints, and to streamline current bills. Proposed §26.25 establishes the minimum requirements for bill content and structure as they relate to the mandates set forth in the Public Utility Regulatory Act (PURA) §55.012, Telecommunications Billing; in PURA §17.003(c) and §17.004(a)(8); and in the Federal Communications Commission's (FCC's) Truth-in-Billing guidelines (including but not limited to identification of service provider(s), new service providers, information regarding "deniable and non-deniable" charges, understandable descriptions of charges, standardized labeling for charges resulting from federal regulatory actions, and provisions for customer complaints). Proposed §26.25 also states billing frequency, content, and record-retention standards. Project Number 22130 has been assigned to this proceeding.

Rick Akin, Chief Policy Analyst, Office of Policy Development, has determined that for each year of the first five-year period the proposed section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Mr. Akin has determined that for each year of the first five years the proposed section is in effect, the public benefit anticipated as a result of enforcing the section will be to decrease the confusion associated with the proliferation of charges on telephone bills for separate services and products and of related surcharges, fees, and taxes. This proposed section would require certificated telecommunications utilities (CTUs) to provide consumers with brief, clear, non-misleading language describing the content within telephone bills that will increase bill clarity for consumers and reduce instances of slamming and cramming. There will be no effect on small businesses or micro- businesses as a result of enforcing this section. There will be some anticipated economic cost to persons who are required to comply with the section as proposed. However, the anticipated economic cost is outweighed by the benefit to telecommunications customers in the State of Texas.

Mr. Akin has also determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act 2001.022.

The commission staff will conduct a public hearing on this rulemaking under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701, on Tuesday, May 2, 2000. The hearing will be held in the Commissioners' Hearing Room from 9:00 a.m. to noon.

Comments on the proposed new section (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas 78711-3326, within 20 days after publication. Reply comments may be submitted within 30 days after publication. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed section. The commission will consider the costs and benefits in deciding whether to adopt the section. All comments should refer to Project Number 22130.

The commission specifically invites comments on several matters. First, parties are invited to comment on the appropriateness of the proposed effective date, November 1, 2000, for billing changes in subsection (e)(1). Second, parties are invited to comment on whether and how the rule should accommodate billing over the Internet. For example, should all CTUs be required to give customers the option of receiving their bills via the United States mail or should CTUs be allowed to bill only over the Internet? For bills sent over the Internet, how should the first-page requirements of subsection (e)(1) be handled? Third, parties may comment on whether the footnote or asterisked reference required by subsection (e)(4) must state the actual amount of the fee or surcharge or if a listing of the name of the fee or surcharge will suffice.

Lastly, parties are encouraged to work collaboratively with the commission to develop consumer-research data (through focus groups or other suitable marketing- research methods) showing that these rules will result in greater understanding by customers of their bills and will help customers to identify unauthorized telecommunications charges.

This new section is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2000) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. PURA §17.003 and §17.004, which were added by Senate Bill 86, Act of May 30, 1999, 76th Legislature, Regular Session, chapter 1579, 1999 Texas Session Law Service 5421, 5423 (Vernon) (codified as an amendment to PURA, Texas Utilities Code Annotated §17.003 and §17.004), grant the commission the authority to require a CTU to adopt rules that present clear, uniform and understandable information to customers about rates, services, terms, customer rights, and other necessary information that the commission deems appropriate. In addition, PURA §55.012, Telecommunications Billing, added by Senate Bill 560, Act of May 30, 1999, 76th Legislature, Regular Session, chapter 1212, 1999 Texas Session Law Service 4210, 4219 (Vernon) (codified as an amendment to PURA, Texas Utilities Code Annotated §55.012), seeks to simplify and clarify bills issued by local exchange companies (LECs).

Cross Reference to Statutes: Public Utility Regulatory Act §§14.002, 17.003, 17.004, 55.002, and 55.012.

§26.25. Issuance and Format of Bills.

(a)

Application. The provisions of this section apply to all certificated telecommunications utilities (CTUs). The effective date for the changes required by subsection (e)(1) of this section is November 1, 2000.

(b)

Purpose. The purpose of this section is to specify a user-friendly, simplified format for residential customer bills that include charges for local exchange telephone service.

(c)

Frequency of bills. Bills of CTUs shall be issued monthly for any amount unless the bill covers service that is for less than one month, or unless the customer specifically requests a less frequent billing interval.

(d)

Billing information.

(1)

All customers shall be given an option of receiving their bill via the United States mail.

(2)

Customer billing sent through the United States mail shall be sent in an envelope or by any other method that ensures the confidentiality of the customer's telephone number and/or account number.

(3)

A CTU shall maintain monthly billing records for each of its accounts for at least two years after the date the bill is mailed. The billing records shall contain sufficient data to reconstruct a customer's billing for a given month. A copy of a customer's billing records may be obtained by the customer upon request.

(e)

Bill content requirements.

(1)

The initial page of each customer's bill for telecommunications products and services shall include the following information:

(A)

the total amount being charged for basic local telecommunications service, if any, including any charges for mandatory extended/expanded calling scope services and any applicable fees or surcharges authorized by a governmental entity;

(B)

the service description and total amount being charged for any optional services provided by the billing CTU, including charges for any optional extended/expanded calling scope services, and any applicable fees or surcharges authorized by a governmental entity;

(C)

the service description, service provider's name and total amount being charged for any services provided by parties other than the billing CTU, with a separate line for each different provider, and any applicable fees or surcharges authorized by a governmental entity;

(D)

the total amount being charged for taxes, including any taxes applicable to the charges described by subparagraphs (A) - (C) of this paragraph;

(E)

the grand total amount due for all services being billed and the payment due date;

(F)

the billing period or billing end date;

(G)

an identification of the total amount the customer must pay to maintain basic local telecommunications service, if applicable; and

(H)

a clear and conspicuous notification of any change in service provider, including notification to the customer that a new provider has begun providing service.

(2)

Charges must be accompanied by a brief, clear, non-misleading, plain-language description of the service being rendered. The description must be sufficiently clear in presentation and specific enough in content to enable customers to accurately assess the services for which they are being billed. Additionally, explanations shall be provided for any non-obvious abbreviations, symbols, or acronyms used to identify specific charges.

(3)

Charges for bundled-service packages which include basic local telecommunications service are not required to be separated pursuant to paragraph (1)(A) - (1)(C) of this subsection; however, a brief, clear, non- misleading, plain-language description of the services included in a bundled-service package is required to be provided either in the description or as a footnote.

(4)

Flat monthly fees or surcharges, including the 911 service fee, related to state and municipal regulatory actions shall be included in the amount for basic local telecommunications service described in paragraph (1) of this subsection; the Texas Universal Service Fund (TUSF) assessment shall be allocated to all telecommunications services (basic, optional, long distance, and other telecommunications services) on a proportionate basis. Each subtotal must indicate by an asterisk or footnote any such assessments included in the subtotal. Similarly, if federal law or regulation requires that a charge be separately stated, using standardized labels, that requirement may be satisfied by use of an asterisk or footnote reference.

(5)

Bills shall provide a toll-free number that a customer can call to resolve disputes and obtain information from the CTU. If the CTU is billing the customer for any services from another service provider, the bill shall identify the name of the service provider and provide a toll-free number that the customer can call to resolve disputes or obtain information from that service provider.

(6)

Each customer's bill shall include specific per-call detail for time-sensitive charges, itemized by service provider and by telephone or account number (if the customer's bill is for more than one such number). Each customer's bill shall include the rate and specific number of billing occurrences for per-use services, itemized by service provider and by telephone or account number.

(7)

If possible, the first page of the bill shall list each applicable telephone number or account number for which charges are being summarized on the bill. If such inclusion is not possible, the first page shall show the main telephone number or account number, and clearly reference a subsequent page where the customer's additional numbers are plainly identified.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on March 24, 2000.

TRD-200002166

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: May 7, 2000

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


16 TAC §26.34

The Public Utility Commission of Texas (commission) proposes new §26.34 relating to Telephone Prepaid Calling Services. The proposed new rule will implement the provisions of the Public Utility Regulatory Act (PURA) §55.253 (Vernon Supplement 2000), which permits the commission to prescribe standards regarding the information a prepaid calling services provider must disclose to customers in relation to the rates and terms of service for prepaid calling services offered in Texas. Project Number 21424, Prepaid Calling Services Disclosures , was assigned to this proceeding on September 22, 1999. An informal workshop with commission staff and interested parties was conducted on March 2, 2000. Copies of the proposed new rule may be obtained in the commission's Central Records and on the commission's web page at http://www.puc.state.tx.us/telecomm/projects/21016/21424.cfm.

Denise E. Taylor, Senior Enforcement Investigator, Office of Customer Protection, and Betsy Tyson, Information Specialist, Office of Customer Protection, have determined that for each year of the first five-year period the proposed section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering this section.

Ms. Taylor and Ms. Tyson have determined that for each year of the first five years the proposed section is in effect the public benefit anticipated as a result of enforcing the section will be greater protection of the public interest, a reduction in the number of public complaints concerning the use of prepaid calling services, and compliance by telecommunications utilities with the telephone prepaid calling services provisions of PURA. There will be no effect on small businesses or microbusinesses as a result of enforcing this section. There is an anticipated economic cost to persons who are required to comply with the section as proposed which cannot be quantified at this time.

Ms. Taylor and Ms. Tyson have also determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission staff will conduct a public hearing on this rulemaking under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701, on Friday, May 26, 2000, at 9:00 a.m. in Hearing Room Gee.

Comments on the proposed new rule (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, PO Box 13326, Austin, Texas 78711-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed section. The commission will consider the costs and benefits in deciding whether to adopt the section. All comments should refer to Project Number 21424.

This rule is proposed under Senate Bill 1020, Act of May 26, 1999, 76th Legislature, Regular Session, chapter 410, 1999 Texas Session Law Service, 2636 (Vernon) (codified as an amendment to the Public Utility Regulatory Act (PURA)), Senate Bill 86, Act of May 26, 1999, 76th Legislature, Regular Session, chapter 1579, §3, 1999 Texas Session Law Service, 5421, 5424 (Vernon), (codified as an amendment to PURA §§17.051-17.053), Senate Bill 560, Act of May 26, 1999, 76th Legislature, Regular Session, chapter 1212, §55, 1999 Texas Session Law Service, 4237 (Vernon) (codified as an amendment to PURA §§64.051- 64.053), and PURA, §§14.002, 15.023, 17.004, 17.051, 17.052, 55.253, 64.051, and 64.052. Section 14.002 provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. Section 15.023 grants the commission authority to impose an administrative penalty against an entity for violation of a rule adopted under PURA. Section 17.004 grants the commission authority to adopt and enforce rules as necessary or appropriate to establish adequate customer protection standards. Sections 17.051 and 64.051 direct the commission to adopt registration requirements for all telecommunications utilities that are not dominant carriers. Sections 17.052 and 64.052 allow the commission to require registration as a condition of doing business in Texas as well as to establish customer service and protection rules. Section 55.253 grants the commission all necessary jurisdiction to adopt rules regarding the information a prepaid calling services provider shall disclose to customers in relation to the rates and terms of service for prepaid calling services offered in Texas.

Cross Reference to Statutes: Public Utility Regulatory Act §§14.002, 15.023, 17.004, 17.051, 17.052, 55.253, 64.051, and 64.052.

§26.34. Telephone Prepaid Calling Services.

(a)

Purpose. The provisions of this section are intended to prescribe standards for the information a prepaid calling services provider shall disclose to customers about the rates and terms of service for prepaid calling services offered in this state.

(b)

Application. This section applies to any "telecommunications utility" as that term is defined in §26.5 of this title (relating to Definitions). This section does not apply to a credit calling card in which a customer pays for a service after use and receives a monthly bill for such use.

(c)

Liability. The prepaid calling services company shall be responsible for ensuring, either through its contracts with its network provider, distributors and marketing agents or other means, that:

(1)

end-user purchased prepaid calling services remain usable in accordance with the requirements of this section; and

(2)

compliance requirements of all disclosure provisions of this section are met.

(d)

Definitions. The following terms used in this section shall have the following meanings, unless the context indicates otherwise:

(1)

Access telephone number -- The number that allows a prepaid calling services customer to access the services of a telecommunications utility to place telephone calls.

(2)

Billing increment -- A unit of time used to charge customers for prepaid calling services.

(3)

Personal identification number (PIN) -- A number assigned as an authorization code that ensures system security for a prepaid calling services customer and allows the prepaid calling services company to track minutes used.

(4)

Prepaid calling services account -- An amount of money paid by a customer in advance to a prepaid calling services company so that the customer can access the services of a telecommunications utility to place telephone calls. When the customer makes completed telephone calls, the value of the account decreases at a predetermined rate.

(5)

Prepaid calling card -- A card or any other device purchased to establish a prepaid calling services account.

(6)

Prepaid calling services -- Any telecommunications transaction in which:

(A)

a customer pays in advance for telecommunications services;

(B)

the customer's prepaid calling services account is depleted at a predetermined rate as the customer uses the service; and

(C)

the customer must use a PIN and an access telephone number to use the telecommunications services.

(7)

Prepaid calling services company -- A company that provides prepaid calling or other telecommunications services to the public using its own telecommunications network or resold telecommunications services, or distributors who purchase PINs or telecommunications services to resell to the end-user customer.

(8)

Recharge -- A transaction in which the value of the prepaid calling services account is renewed. The customer must be informed verbally or electronically of the new rates at the time of recharge.

(e)

Billing requirements for prepaid calling services.

(1)

Billing increments shall be defined and disclosed in the prepaid calling services company's published tariffs or price list on file with the commission and on any display at the point of sale as well as on any prepaid calling card, or on any prepaid calling card packaging.

(2)

A prepaid calling services account may be decreased only during the actual time a circuit is open. Station busy signals and unanswered calls shall not be considered open circuits and shall not be charged against the account.

(3)

Prepaid calling services companies may not reduce the value of a prepaid calling services account by more than the company's published tariffs or price list on file with the commission plus any surcharges, fees and taxes disclosed at the time of purchase.

(4)

The prepaid calling services account may be recharged by the customer at a rate different from the original rate or the last recharge rate as long as the new rate and any surcharges conform with the company's published tariff or price list on file with the commission at the time of recharge. The customer must be informed of the rates at the time of recharge.

(5)

Upon verbal or written request, prepaid calling services companies must be capable of providing customers the following call detail data information at no charge:

(A)

Dialing and signaling information that identifies the inbound access telephone number called or the access identifier;

(B)

The number of the originating telephone;

(C)

The date and time the call originated;

(D)

The date and time the call terminated;

(E)

The called telephone number; and

(F)

The PIN and/or account number associated with the call.

(6)

Prepaid calling services companies shall maintain call detail data records for at least two years.

(f)

Written disclosure requirements for all prepaid calling services.

(1)

Information required on prepaid calling cards. Cards must be issued with all information entirely in the language in which the card is marketed. At a minimum, a card must contain the following information printed in an eight point font:

(A)

The value of the card, including charges for all services, surcharges, fees, and taxes, if applicable, expressed in minutes. If a charge cannot be expressed in minutes, such as a per-call charge, it must be printed on the same line or next line as the value of the card in minutes;

(B)

The prepaid calling services company's name as registered with the commission. A "doing business as" name may only be used if officially filed with the commission. The language shall clearly indicate that the company is providing the prepaid calling services;

(C)

The toll-free number as required by subsection (i) of this section;

(D)

The maximum cost per minute shall be shown for local, intrastate, and interstate calls. International call prices shall be provided to the customer through a toll-free number printed on the card;

(E)

Instructions on using the card correctly;

(F)

Expiration date, if the card cannot be used after a date certain. If an expiration date is not disclosed on the card, it will be considered active indefinitely; and

(G)

The words "VOID" or "SAMPLE" or sequential numbers, such as "999999999" on both sides of the card if the card was produced as a "non-active" card so that it is obvious to the customer that the card is not useable. If the card is not so labeled, the card is considered active and the issuing company shall honor it.

(2)

Information required at a point of sale. The following information shall be legibly printed on or in any packaging in a minimum eight point font and displayed visibly in a prominent area at the point of sale so that the customer may make an informed decision before purchase:

(A)

The value of the card, including charges for all services, surcharges, fees, and taxes, if applicable, expressed in minutes. If a charge cannot be expressed in minutes, such as a per-call charge, it must be printed on the same line or next line as the value of the card in minutes;

(B)

The company's name as registered with the commission. A "doing business as" name may only be used if officially filed with the commission. The language shall clearly indicate that the company is providing the prepaid calling card services;

(C)

The toll-free number as required by subsection (i) of this section;

(D)

The billing increment expressed in minutes or fractions of minutes and maximum charge per billing increment for prepaid calling card services for local, intrastate, interstate, and international calls will be provided to the customer through a toll-free number printed on the card;

(E)

The expiration policy, if the card cannot be used after a date certain. If an expiration date is not disclosed at the time of purchase, the prepaid calling services will be considered active until the prepaid calling services account is completely depleted;

(F)

The recharge policy, if applicable. If an expiration date is not disclosed at the time prepaid calling services are recharged, the services will be considered active until the prepaid calling services account is completely depleted;

(G)

A statement that if a customer is unable to resolve a complaint with the company that the customer has the right to contact the state regulatory agency which has jurisdiction within the state where the prepaid calling services were purchased; and

(H)

A statement that:

(i)

Notifies a customer of the customer's extent of liability for lost or stolen cards, if there is liability; and

(ii)

Warns a customer to safeguard the card against loss or theft.

(3)

If a customer asks a prepaid calling services company how to file a complaint, the company must provide the following contact information: Public Utility Commission of Texas, Office of Customer Protection, PO Box 13326, Austin, Texas 78711-3326; phone: (512) 936-7120 or in Texas (toll-free) 1-888-782-8477; fax: (512) 936-7003; e-mail address: customer@puc.state.tx.us; Internet address: www.puc.state.tx.us; TTY: (512) 936-7136; and Relay Texas (toll-free): 1-800-735-2989.

(g)

Verbal disclosure requirements for prepaid calling services. Prepaid calling services companies shall provide an announcement:

(1)

At the beginning of each call indicating the time remaining on the prepaid calling services account or prepaid calling card; and

(2)

When the prepaid account or card balance is about to be completely depleted. This announcement must be made at least one minute before the time expires.

(h)

Registration requirements for prepaid calling services companies. All prepaid calling services companies shall register with the commission in accordance with §26.107 of this title (relating to Registration of Nondominant Telecommunications Carriers).

(i)

Business and technical assistance requirements for prepaid calling services companies. A prepaid calling services company shall provide a toll-free number with a live operator to answer incoming calls 24 hours a day, seven days a week or electronically voice record customer requests or complaints. A combination of live operators or recorders may be used. If a recorder is used, the prepaid calling services company shall attempt to contact each customer no later than the next business day following the date of the recording. Personnel must be sufficient in number and expertise to resolve customer inquiries. If an immediate resolution is not possible, the prepaid calling services company shall resolve the inquiry by calling the customer or, if the customer so requests, in writing within ten working days of the original request.

(j)

Requirements for refund of unused balances. If a prepaid calling services company fails to provide services at the rates disclosed at the time of initial purchase or at the time an account is recharged, or fails to meet technical standards, the prepaid calling services company shall either refund the customer for any unused prepaid calling services or provide equivalent services.

(k)

Requirements when a prepaid calling services company terminates operations in this state.

(1)

When a prepaid calling services company expects to terminate operations in this state for any reason, the company shall at least 30 days prior to the termination of operations:

(A)

Notify the commission in writing:

(i)

That operations will be ending;

(ii)

Of the date of the termination of operations; and

(iii)

That the company certifies that the actions required by this subsection have been completed;

(B)

Notify each customer at the address on file with the company, if applicable, that operations will be ending the date of the termination of operations, and explain how customers may receive a refund or equivalent services for any unused services;

(C)

Announce the termination of operations at the beginning of each call, including the date of termination and a toll-free number to call for more information; and

(D)

Provide to customers via its toll-free customer service number the procedure for obtaining refunds and continue to provide this information for at least 60 days after the date the company terminates operations.

(2)

Within 24 hours after ceasing operations, the prepaid calling services company shall deliver to the commission a list of names, if known, and account numbers of all customers with unused balances. For each customer, the list shall include the following:

(A)

The identification number used by the company for billing and debit purposes; and,

(B)

The unused time, stated in minutes, as applicable, and the unused dollar amount of the prepaid calling services account.

(l)

Date of compliance for prepaid calling card services companies. All prepaid calling services offered for sale in the state of Texas and all prepaid calling services companies shall be in compliance with this rule within 90 days of the effective date of this rule.

(m)

Compliance and enforcement.

(1)

Administrative penalties. If the commission finds that a prepaid calling services company has violated any provision of this section, the commission shall order the company to take corrective action, as necessary, and the company may be subject to administrative penalties and other enforcement actions pursuant to the Public Utility Regulatory Act, Chapter 15.

(2)

Enforcement. The commission shall coordinate its enforcement efforts against a prepaid calling services company for fraudulent, unfair, misleading, deceptive, or anticompetitive business practices with the Office of the Attorney General in order to ensure consistent treatment of specific alleged violations.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on March 24, 2000.

TRD-200002164

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: May 7, 2000

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


Subchapter D. RECORDS, REPORTS, AND OTHER REQUIRED INFORMATION

16 TAC §§26.79, 26.80, 26.85

The Public Utility Commission of Texas (commission) proposes amendments to §26.79 relating to Equal Opportunity Reports and §26.80 relating to the Annual Report on Historically Underutilized Businesses; and proposes new §26.85 relating to Workforce Diversity Reports. The proposed new rule and amendments will implement the provisions of Senate Bill 560 (SB560), Act of May 30, 1999, 76th Legislature, Regular Session, chapter 1212, 1999 Texas Session Law Service 4210, 4215 (Vernon) (codified as an amendment to the Public Utility Regulatory Act (PURA), Texas Utilities Code Annotated §52.256(b)), which require telecommunication utilities to file an annual report to the commission and the legislature relating to the telecommunications utility efforts to improve workforce diversity and contracting opportunities for small and historically underutilized businesses and will eliminate duplicative filing requirements. Project Number 22166 has been assigned to this proceeding.

Patricia Zacharie, Staff Attorney, Legal Division, Office of Regulatory Affairs, has determined that for each year of the first five-year period the proposed sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Ms. Zacharie has determined that for each year of the first five years the proposed sections are in effect the public benefit anticipated as a result of enforcing the sections will be greater opportunities for minorities and small and historically underutilized businesses and a more diverse workforce in the State of Texas. There will be no effect on small businesses or micro-businesses as a result of enforcing these sections. There is an anticipated economic cost to persons who are required to comply with the sections as proposed, which cannot be quantified at this time.

Ms. Zacharie has also determined that for each year of the first five years the proposed sections are in effect there should be no affect on a local economy and therefore, no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission staff will conduct a public hearing on this rulemaking under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701, on Thursday, May 4, 2000, at 9:30 a.m.

Comments on the proposed amendments and new rule (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas 78711-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed sections. The commission will consider the costs and benefits in deciding whether to adopt these sections. The commission also invites specific comments regarding the following question: Is an exemption appropriate for (1) utilities that have fewer than a certain number of employees, (2) utilities that do not do any contracting in Texas, (3) resellers only, (4) utilities whose workforce is more than a certain percentage minority or, (5) utilities that were not formed before January 1, 2000? All comments should refer to Project Number 22166.

The amendments and new rule are proposed under Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998 and Supp. 2000) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and, specifically, PURA §12.252, which grants the commission authority to adopt and enforce rules to require each utility subject to regulation to overcome the underuse of historically underutilized businesses; and §52.256, which grants the commission authority to adopt rules relating to workforce diversity reporting requirements for telecommunications utilities.

Cross Reference to Statutes: Public Utility Regulatory Act §§12.252, 14.002, and 52.256.

§26.79.Equal Opportunity Reports.

(a)

(No change.)

(b)

Each utility that files any form with local, state or federal governmental agencies relating to equal employment opportunities for minority group members, (e.g., EEOC Form EEO-1, FCC Form 395, RUS Form 268, etc.) shall file copies of such completed form with the commission. If such form submitted by a multi- jurisdictional utility does not indicate Texas-specific numbers, the utility shall also prepare, and file with the commission a form indicating Texas-specific numbers , in the same format and based on the numbers contained in the form previously filed with local, state or federal governmental agencies[ , indicating Texas-specific numbers ]. Each utility shall also file copies of any other forms required to be filed with local, state or federal governmental agencies which contain the same or similar information, such as personnel data identifying numbers and occupations of minority group members employed by the utility, and employment goals relating to them [ thereto ], if any.

(c)

(No change.)

(d)

Any utility filing with the commission any documents described in subsections (b) and (c) of this section shall file three [ two ] copies of such documents with the commission's filing clerk under the project number assigned by the Public Utility Commission's Central Records Office for that year's filings. Utilities shall obtain the project number by contacting Central Records.

(e)

A utility that files a report with local, state or federal governmental agencies and that is required by this section to file such report with the commission must file the report by December 30 [ February 15 ] of the year it is filed with the local, state or federal agencies. [ If the report is filed with local, state or federal agencies after February 15, the utility shall file the report with the commission by February 15 of the next year. ]

[ (f)

On May 1 of each year, the commission shall submit a report concerning the filed reports to the Texas legislature. ]

§26.80.Annual Report on Historically Underutilized Businesses.

(a)

(No change.)

(b)

Every utility shall report its use of historically underutilized businesses (HUBs) to the commission on a form approved by the commission. A utility may submit the report on paper, or on paper and on a diskette (in [ Lotus 1-2-3 (*.wk*) or ] Microsoft Excel (*utility name.xl*) [ (*.xl*) ] format).

(1)

Each small local exchange company and telephone cooperative utility shall on or before December 30 of each year submit to the commission a comprehensive annual report detailing its use of HUBs for the four quarters ending on September 30 of the year the report is filed, using [ on ] the Small Utilities HUB Report form.

(2)

Every utility other than those specified in paragraph (1) of this subsection, shall on or before December 30 of each year submit to the commission a comprehensive annual report detailing its use of HUBs for the four prior quarters ending on September 30 of the year the report is filed, using [ on ] the Large Utilities HUB Report form.

(3)

Each utility wishing to report indirect HUB procurements or HUB procurements made by a contractor of the utility may use the Supplemental HUB report form.

(4)

Each utility shall submit a text description of how it [ the method by which it ]determined which of its vendors is a HUB.

(5)

Each utility that [ which ] has more than 1,000 customers in a state other than Texas, or that [ which ] purchases more than 10% of its goods and services from vendors not located in Texas, shall separately report by total and category all utility purchases, all utility purchases from Texas vendors, and all utility purchases from Texas HUB vendors. A vendor is considered a Texas vendor if its physical location is geographically in Texas.

(6)

Each utility shall also file any other documents it believes appropriate to convey an accurate impression of its use of HUBs.

(c) - (d)

(No change.)

§26.85.Workforce Diversity Report.

(a)

Purpose. This section establishes annual reporting requirements for telecommunications utilities to report its efforts to improve workforce diversity and contracting opportunities for small and historically underutilized businesses.

(b)

Application. This section applies to all telecommunications utilities, as defined in the Public Utility Regulatory Act §51.002(11), doing business in the State of Texas.

(c)

Terminology. In this section, "small business" and "historically underutilized business" have the meanings assigned by the Texas Government Code §481.191.

(d)

Annual report of workforce diversity. A "Report on Improving Workforce Diversity" shall be filed annually with the commission. The report shall be filed on or before December 30 of each year for the four prior quarters ending on September 30 of the year the report is filed.

(e)

Filing requirements. Three copies of the Workforce Diversity Report shall be filed with the commission's filing clerk under the project number assigned by the Public Utility Commission's Central Records Office for that year's filings. Telecommunications utilities shall obtain the project number by contacting Central Records.

(f)

Contents of the report. The annual report filed with the commission pursuant to this section shall be filed using the Workforce Diversity form and shall contain at a minimum the following information:

(1)

An illustration of the diversity of the telecommunications utility's workforce in the State of Texas at the time of the report. If the telecommunications utility is required to file an Equal Opportunity Report pursuant to §26.79 of this title (relating to Equal Opportunity Reports), a copy of that document may be attached to this report to satisfy the requirements of this paragraph.

(2)

A description of the specific progress made under the workforce diversity plan filed pursuant to PURA §52.256(b), including

(A)

the specific initiatives, programs, and activities undertaken during the preceding year; and

(B)

an assessment of the success of each of those initiatives, programs, and activities.

(3)

An explanation of the telecommunications utility's level of contracting with small and historically underutilized businesses in the State of Texas.

(4)

The extent to which the telecommunications utility has carried out its initiatives to facilitate opportunities for contracts or joint ventures with small and historically underutilized businesses.

(5)

A description of the initiatives, programs, and activities the telecommunications utility will pursue during the next year to increase the diversity of its workforce and contracting opportunities for small and historically underutilized businesses in the State of Texas.

(g)

This section may not be used to discriminate against any citizen on the basis of race, nationality, color, religion, sex, or marital status.

(h)

This section does not create a new cause of action, either public or private.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on March 24, 2000.

TRD-200002113

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: May 7, 2000

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


Subchapter E. CERTIFICATION, LICENSING AND REGISTRATION

16 TAC §§26.109, 26.111, 26.114

The Public Utility Commission of Texas (commission) proposes amendments to §26.109 relating to Standards for Granting of Certificates of Operating Authority (COAs) and §26.111 relating to Standards for Granting Service Provider Certificates of Operating Authority (SPCOAs); and new §26.114, relating to Suspension or Revocation of Certificates of Operating Authority (COAs) and Service Provider of Certificates of Operating Authority (SPCOAs). The proposed amendments and proposed new section will implement the provisions of the Public Utility Regulatory Act (PURA) §§17.051-17.053 and §§64.051-64.053 (Vernon Supplement 2000), which direct the commission to adopt registration requirements for all telecommunications utilities that are not dominant carriers, allow the commission to require registration as a condition of doing business in the state of Texas as well as to establish customer service and protection rules, suspend or revoke certificates or registrations for repeated violations of this chapter or commission rules, and require telecommunications service providers to submit reports concerning any matter over which the commission has authority. Project Number 21456, Amendments to Substantive Rules §§26.107, 26.109, 26.111 and 26.113 Regarding Certification, Registration, and Reporting Requirements in Relation to SB 560 and Miscellaneous Revisions , was assigned to this proceeding on September 29, 1999.

A strawman of the proposed amendments and proposed new section, the revised Application or Amendment of A Service Provider Certificate of Operating Authority or a Certificate of Operating Authority, and a proposed Annual Information Reporting Requirements for a Service Provider Certificate of Operating Authority or a Certificate of Operating Authority were filed in Central Records on February 18, 2000, and posted to the commission's web page on February 22, 2000. Interested parties filed comments with the commission on February 28, 2000, on the strawman, application, and the annual information reporting form. Copies of the proposed amendments, proposed new section, revised application, and proposed annual information reporting form may be obtained in the commission's Central Records and on the commission's web page at http://www.puc.state.tx.us/telecomm/projects/21016/21456.cfm. The revised application and proposed annual information reporting form will not be published in the Texas Register.

Tamarian Stevens, Network Analysis II, Telecommunications Industry Analysis, Office of Regulatory Affairs and Denise E. Taylor, Senior Enforcement Investigator, Office of Customer Protection, have determined that for each year of the first five-year period the proposed sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections.

Mrs. Stevens and Ms. Taylor have determined that for each year of the first five years the proposed sections are in effect the public benefit anticipated as a result of enforcing the sections will be greater protection of the public interest, a more uniform process of certifying and registering telecommunications utilities in the state of Texas, a reduction in the number of public complaints against telecommunications utilities concerning the provision of service and quality of service, and an increase in compliance by telecommunications utilities with the certification, registration, and reporting requirements of PURA. There will be no effect on small businesses or micro-businesses as a result of enforcing these sections. There is an anticipated economic cost to persons who are required to comply with these sections as proposed which cannot be quantified at this time.

Ms. Stevens and Ms. Taylor have also determined that for each year of the first five years the proposed sections are in effect there should be no affect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission staff will conduct a public hearing on this rulemaking under Government Code §2001.029 at the commission's offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701, on Wednesday, May 31, 2000, at 9:00 a.m. in Hearing Room Gee.

Comments on the proposed amendments, proposed new section, revised application, and revised annual information reporting form (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, PO Box 13326, Austin, Texas 78711-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed sections. The commission will consider the costs and benefits in deciding whether to adopt these sections. All comments should refer to Project Number 21456.

The amendments and new section are proposed under Senate Bill 86, Act of May 26, 1999, 76th Legislature, Regular Session, chapter 1579, §3, 1999 Texas Session Law Service, 5424 (Vernon) (codified as an amendment to the Public Utility Regulatory Act (PURA, Texas Utilities Code Annotated §§17.051 - 17.053); Senate Bill 560, Act of May 26, 1999, 76th Legislature, Regular Session, chapter 1212, §55, 1999 Texas Session Law Service, 4237 (Vernon) (codified as an amendment to PURA, Texas Utilities Code Annotated §§64.051 - 64.053); and PURA §§14.002, 15.023, 17.004, 17.051, 17.052, 17.053, 54.008, 64.051, 64.052, and 64.053. Section 14.002 provides the commission with the authority to make and enforce rules reasonably required in the exercise of its power and jurisdiction. Section 15.023 grants the commission authority to impose an administrative penalty against an entity for violation of a rule adopted under PURA. Section 17.004 grants the commission authority to adopt and enforce rules as necessary or appropriate to establish customer protection standards. Sections 17.051 and 64.051 direct the commission to adopt registration requirements for all telecommunications utilities that are not dominant carriers. Sections 17.052 and 64.052 allow the commission to require registration as a condition of doing business in Texas, establish customer service and protection rules, and suspend or revoke certificates or registrations for repeated violations of this chapter or commission rules. Sections 17.053 and 64.053 allow the commission to require a telecommunications service provider to submit reports to the commission concerning any matter over which it has authority under this chapter. Section 54.008 grants the commission the authority to revoke or amend a certificate of operating authority or a service provider certificate of operating authority after notice and hearing if the commission finds that the certificate holder has never provided or is no longer providing service in all or any part of the certificated area.

Cross Reference to Statutes: Public Utility Regulatory Act §§14.002, 15.023, 17.051, 17.052, 17.053, 54.008, 64.051, 64.052, and 64.053.

§26.109.Standards for Granting of Certificates of Operating Authority (COAs).

(a)

Scope and purpose. This section applies to the certification of persons and entities to provide [ basic local exchange telephone service, ]basic local telecommunications service, and switched access service as holders of certificates of operating authority established in the Public Utility Regulatory Act (PURA), Chapter 54, Subchapter C. Through this section, the commission strives to protect the public interest against entities that are not qualified to provide [ basic local exchange telephone service, ]basic local telecommunications service, and switched access service. The commission's overall goal is to encourage the development of a competitive marketplace for local exchange telecommunications services, free of unreasonable barriers to entry, that will provide consumers with the best services at the lowest cost.

(b)

Automatic disqualification. This section contains reasons an applicant would be prohibited from acquiring a COA. An applicant is automatically disqualified from obtaining a COA:

(1)

if the applicant is a municipality; or

(2)

if the applicant has not created a proper separation of business between an affiliate and a holder of a certificate of convenience and necessity as required by PURA §54.102.

(c)

[ (b) ] Standards for granting certification to COA applicants.

(1)

The commission shall consider the factors listed in subparagraphs (A) - (F) [ (A) -(E) ] of this paragraph in deciding whether to grant a COA to an applicant proposing to serve an exchange[ of an incumbent local exchange company (ILEC) ].

(A)

Whether the applicant has satisfactorily provided all of the information required in the Application for a Certificate of Operating Authority.

(B)

Whether the applicant is financially qualified to be a facilities-based local service provider. To prove financial qualification as a facilities-based utility, an applicant shall provide evidence sufficient to establish that:

(i)

Applicant possesses the greater of $100,000 cash or cash equivalent or sufficient cash or cash equivalent to meet start-up expenses, working capital requirements and capital expenditures, liquid and readily available to meet the applicant's start-up expenses, working capital requirements and capital expenditures for the first two years of its Texas operations; or

(ii)

Applicant is an established business entity and is able to demonstrate evidence of profitability in existing operations for two years preceding the date of application by submitting a balance sheet and income statement audited or reviewed by a certified public accountant establishing all of the following:

(I)

A long-term debt to capitalization ratio of less than 60%;

(II)

A return-on-assets ratio of at least 10%; and,

(III)

The greater of $50,000 cash or cash equivalent or sufficient cash or cash equivalent to meet start-up expenses, working capital requirements and capital expenditures, liquid and readily available to meet the applicant's start-up expenses, working capital requirements and capital expenditures for a minimum of the first two years of its Texas operations.

(C)

Whether the applicant is technically qualified. The commission shall determine whether an applicant possesses sufficient technical qualifications to be awarded a COA based upon a review of the following information.

(i)

Prior experience by the applicant or one or more of the applicant's principals or employees in the telecommunications industry or a related industry.

[ (ii)

Any complaint history at the Public Utility Commission of Texas regarding the applicant, applicant's telecommunications affiliates, predecessors in interest, shareholders, and principals. ]

(ii)

[ (iii) ] Any complaint and/or compliance history regarding the applicant, applicant's telecommunications or public utility affiliates, predecessors in interest, shareholders, and principals at the Public Utility Commission of Texas, the Office of the Attorney General, the Attorney General in other states, and any other relevant regulatory agency [ with Public Utility Commissions or Public Service Commissions in other states where the applicant is doing business ]. If available, relevant [ Relevant ] information shall include, but not be limited to, the type of complaint, status of complaint, resolution of complaint and the number of customers in each state where complaints occur.

[ (iv)

Any complaint history regarding the applicant, applicant's telecommunications affiliates, predecessors in interest, shareholders, and principals on file with the Office of the Texas Attorney General and the Attorney General in other states where the applicant is doing business. ]

(iii)

[ (v) ] If available, an affirmation that [ The compliance record of ]the applicant, applicant's telecommunications or public utility affiliates, predecessors in interest, shareholders, and principals are in good standing at the Texas Comptroller's Office , active in the Texas Secretary of State files, and current in its Texas Universal Service Fund assessment.

(iv)

A summary of any history of bankruptcy, dissolution, merger or acquisition of the applicant or any predecessors in interest it the two calendar years immediately preceding the application.

(v)

A statement indicating whether the applicant is currently under investigation, either in this state or in another state or jurisdiction for violation of any deceptive trade or consumer protection law or regulation, and whether the applicant has been fined, sanctioned or otherwise penalized either in this state or in another state or jurisdiction for violation of any consumer protection law or regulation.

[ (vi)

The compliance record of the applicant, applicant's telecommunications affiliates, predecessors in interest, shareholders, and principals at the Public Utility Commission of Texas. ]

(D)

Whether the applicant is able to meet the commission's quality of service standards. Quality of service standards shall include, but not be limited to, 911 compliance and [ , ] local number portability capability[ and Y2K compliance of all telecommunications equipment ].

(E)

The applicant will be required to meet the customer protection rules and disclosure requirements applicable to certificate holders set forth in Chapter 26, Subchapter B of this title (relating to Customer Service and Protection).

(F)

[ (E) ] Whether certification of the applicant is in the public interest.

(2)

If, after considering the factors in this subsection, the commission finds it to be in the public interest to do so, the commission may limit the geographic scope of the COA.

(3)

If the applicant is an affiliate of a certificate of convenience and necessity (CCN) holder, the applicant must show that the affiliated CCN holder is in compliance with federal law and Federal Communications Commission rules governing affiliates and structural separation. The applicant shall file an affidavit from the affiliated CCN holder attesting to this compliance, and provide reference to the Federal Cost Allocation Manual (CAM) filed with the commission.

(d)

[ (c) ] Financial instruments that will meet the cash requirements established in this section.

(1)

Applicants for COAs shall be permitted to use any of the financial instruments set out in subparagraphs (A)-(F) of this paragraph to satisfy the cash requirements established in this rule to prove financial qualification.

(A)

Cash or cash equivalent, including cashier's check or sight draft.

(B)

A certificate of deposit with a bank or other financial institution.

(C)

A letter of credit issued by a bank or other financial institution, irrevocable for a period of at least 12 months beyond certification of the applicant by the commission.

(D)

A line of credit or other loan, issued by a bank or other financial institution, irrevocable for a period of at least 12 months beyond certification of the applicant by the commission and payable on an interest-only basis for the same period.

(E)

A loan issued by a subsidiary or affiliate of applicant, or a corporation holding controlling interest in the applicant, irrevocable for a period of at least 12 months beyond certification of the applicant by the commission, and payable on an interest-only basis for the same period.

(F)

A guaranty issued by a shareholder or principal of applicant, a subsidiary or affiliate of applicant, or a corporation holding controlling interest in the applicant, irrevocable for a period of at least 12 months beyond the certification of the applicant by the commission.

(2)

To the extent that the applicant relies upon a loan or guaranty provided in paragraph (1)(E) or (F) of this subsection, the applicant shall provide evidence sufficient to establish that the lender or guarantor possesses sufficient cash or cash equivalent to fund the loan or guaranty.

(3)

All cash and instruments listed in paragraph (1) (A) - (F) of this subsection shall be unencumbered by pledges as collateral and shall be subject to verification and review by the commission prior to certification of the applicant and for a period of 12 months beyond the date of certification of the applicant by the commission. Failure to comply with this requirement may void an applicant's certification or result in such other action as the commission deems in the public interest, including, but not limited to, assessment of reasonable penalties and all other available remedies under the Public Utility Regulatory Act.

(e)

[ (d) ] Name on certificates.

(1)

All [ basic local exchange telephone service, ]basic local telecommunications service, and switched access service provided under a COA shall be provided in the name under which certification was granted by the commission. The commission shall grant the certificate in only one name.

(A)

If the applicant is a corporation, the commission shall issue the certificate in the corporate or assumed name of the applicant.

(B)

If the applicant is an unincorporated business entity or an individual, the commission shall issue the certificate in the assumed name of the entity or the individual.

(C)

The commission [ Commission staff ] shall review the requested name to determine if the name is deceptive, misleading, vague, inappropriate, or duplicative of an existing certificated telecommunications utility. If the staff determines that the requested name is deceptive, misleading, vague, inappropriate, or duplicative, it shall notify the applicant and the applicant shall modify the name to alleviate the staff's concerns. If the name is not adequately modified, the application may be denied.

(2)

The holder of a COA may request commission approval to change the name on the certificate by filing an application to amend its certificate with the commission.

(f)

Non-use of certificates. Applicants will use their COA certificates expeditiously.

(1)

COA certificate holders that have not been used on an on-going basis for a period of 12 months must provide a sworn affidavit to the commission attesting that:

(A)

They still expect to use their certificate within the next 12 months; and ,

(B)

They continue to possess the technical and financial resources necessary to provide the level of service proposed in their initial application.

(2)

A COA certificate holder not providing service within 48 months of the certificate being granted by the commission, may have its certificate suspended or revoked, as defined by §26.114 of this title (relating to Suspension or Revocation of Certificates of Operating Authority (COAs) and Service Provider Certificates of Operating Authority (SPCOAs)), after due process or undergo certification re-qualification.

(A)

Certification re-qualification shall consist of a filing certifying that the certificate holder continues to possess the technical and financial resources necessary to provide the level of service proposed when the certificate was approved.

(B)

Any certification re-qualification must be filed at the commission before the expiration of the 48-month period.

(g)

[ (e) ] Reporting requirements.

(1)

All COA holders shall file an annual report with the commission [ updated information set forth in paragraph (2) of this subsection on an annual basis, ] by June 30 of each year using the commission-prescribed form Annual Information Reporting Requirements for a Service Provider Certificate of Operating Authority and/or a Certificate of Operating Authority. This form may be obtained from the commission's Central Records and the commission's website.

(2)

If the certificate holder has any change during the year in the information requested in Section One of the annual report form, then the certificate holder shall file an updated form correcting the information in Section One within 30 days of the change. [ Annual reportable information shall consist of, but not be limited to the following: ]

[ (A)

Changes in addresses, telephone numbers, authorized contacts and other information for contacting COA holders in Project Number 19421, Notification of Changes in Address, Contact Representative, and/or Telephone Numbers, Pursuant to P.U.C. Substantive Rule. ]

[ (B)

A description of the type(s) of communications services being provided and the exchanges in which the services are being provided. ]

(3)

The completed annual report form shall be filed in the commission's Central Records in a project number designated annually by the Filing Clerk.

(4)

A certificate holder shall also file annual reports as required by §26.89 of this title (relating to Information Regarding Rates and Services of Nondominant Carriers).

(h)

Compliance enforcement.

(1)

Administrative penalties. If the commission finds that a certificate holder has violated any provision of this section, the commission shall order the certificate holder to take corrective action, as necessary, and the certificate holder may be subject to administrative penalties and other enforcement actions pursuant to PURA, Chapter 15.

(2)

Revocation or suspension. If the commission finds that a certificate holder is repeatedly in violation of PURA or commission rules, the commission may suspend or revoke a COA certificate pursuant to PURA Chapter 17.

(3)

Enforcement. The commission shall coordinate its enforcement efforts of fraudulent, misleading, deceptive, and anticompetitive business practices with the Office of the Attorney General in order to ensure consistent treatment of specific alleged violations.

§26.111.Standards for Granting of Service Provider Certificates of Operating Authority (SPCOAs).

(a)

Scope and purpose. This section applies to the certification of persons and entities to provide[ basic local exchange telephone service, ] basic local telecommunications service, and switched access service as holders of service provider certificates of operating authority, established in the Public Utility Regulatory Act (PURA), Chapter 54, Subchapter D. Through this section, the commission strives to protect the public interest against entities that are not qualified to provide[ basic local exchange telephone service, ] basic local telecommunications service, and switched access service. The commission's overall goal is to encourage the development of a competitive marketplace for local exchange telecommunications services, free of unreasonable barriers to entry, that will provide consumers with the best services at the lowest cost.

(b)

Automatic disqualification. This section contains the reasons that an applicant would be prohibited from acquiring a SPCOA. An applicant is disqualified from obtaining a SPCOA:

(1)

if the applicant is a municipality;

(2)

if the applicant has not created the proper separation of business between an affiliate and a holder of a certificate of convenience and necessity as required by PURA §54.102; or

(3)

if the applicant, together with its affiliates, has more than 6.0% of the total intrastate switched access minutes of use as measured for the most recent 12-month period.

(c)

[ (b) ] Standards for granting certification to SPCOA applicants.

(1)

The commission may condition or limit the scope of a SPCOA's service in at least the following ways:

(A)

Facility-based;

(B)

Resale-only;

(C)

Data-only;

(D)

Geographic scope;

(E)

Some combination of the above, as appropriate.

(2)

The commission shall consider the [ following ]factors listed in subparagraphs (A) -(H) of this paragraph in deciding whether and how to condition or limit a SPCOA to an applicant proposing to serve an exchange :

(A)

Whether the applicant has satisfactorily provided all of the information required in the application for a SPCOA.

(B)

Whether the applicant is financially qualified as a facilities-based SPCOA. To prove financial qualifications as a facilities-based SPCOA, the applicant shall meet the standards set forth in §26.109(c)(1)(B) [ §26.109(b)(1)(B) ] of this title (relating to Standards for Granting Certificates of Operating Authority).

(C)

Whether the applicant is financially qualified as a resale-only SPCOA. To prove financial qualifications as a resale-only SPCOA, an applicant shall provide evidence sufficient to establish that:

(i)

Applicant possesses the greater of $25,000 cash or cash equivalent or sufficient cash or cash equivalent to meet start-up expenses, working capital requirements and capital expenditures, liquid and readily available to meet the applicant's start-up expenses, working capital requirements and capital expenditures for the first year of its Texas operations; or

(ii)

Applicant is an established business entity and is able to demonstrate evidence of profitability in existing operations for two years preceding the date of application by submitting a balance sheet and income statement audited or reviewed by a certified public accountant establishing all of the following:

(I)

A long-term debt to capitalization ratio of less than 60%;

(II)

A return-on-assets ratio of at least 10%; and,

(III)

The greater of $10,000 cash or cash equivalent or sufficient cash or cash equivalent to meet start-up expenses, working capital requirements and capital expenditures, liquid and readily available to meet the applicant's start-up expenses, working capital requirements and capital expenditures for the first year of its Texas operations.

(D)

Whether the applicant is technically qualified. The commission shall determine whether an applicant possesses sufficient technical qualifications to be awarded a facilities-based SPCOA certification or whether applicant should be restricted to a resale-only SPCOA certification, based upon a review of the following information.

(i)

Prior experience by the applicant or one or more of the applicant's principals or employees in the telecommunications industry or a related industry.

(ii)

Any complaint and/or compliance history regarding the applicant, applicant's telecommunications or public utility affiliates, predecessors in interest, shareholders, and principals on file at the Public Utility Commission of Texas , the Office of the Texas Attorney General, the Attorney General in other states, and any other relevant regulatory agency [ , the Texas Attorney General, or with the Public Utility Commissions, Public Service Commissions, or Attorneys General in other states where the applicant is doing business ]. If available, relevant [ Relevant ] information shall include, but not be limited to, the type of complaint, status of complaint, resolution of complaint, and the number of customers in each state where complaints have occurred.

(iii)

If available, an affirmation that [ The compliance record of ]the applicant, applicant's telecommunications or public utility affiliates, predecessors in interest, shareholders, and principals are in good standing at the Texas Comptroller's Office , active in the Texas Secretary of State files, and current in its Texas Universal Service Fund assessment .

(iv)

A summary of any history of bankruptcy, dissolution, merger or acquisition of the applicant or any predecessors in interest it the two calendar years immediately preceding the application. [ The compliance record of the applicant, applicant's telecommunications affiliates, predecessors in interest, shareholders, and principals at the Public Utility Commission of Texas. ]

(v)

A statement indicating whether the applicant is currently under investigation, either in this state or in another state or jurisdiction for violation of any deceptive trade or consumer protection law or regulation, and whether the applicant has been fined, sanctioned or otherwise penalized either in this state or in another state or jurisdiction for violation of any consumer protection law or regulation.

(E)

Whether the applicant is able to meet the commission's quality of service standards. The quality of service standards shall include, but not be limited to, 911 compliance, local number portability capability[ and Y2K compliance of all telecommunications equipment ].

(F)

The applicant will be required to meet the customer protection rules and disclosure requirements applicable to certificate holders set forth in Chapter 26, Subchapter B of this title (relating to Customer Service and Protection).

(G)

[ (F) ] Whether certification of the applicant is in the public interest.

[ (G)

Whether the applicant, together with affiliates, had in excess of 6.0% of the total intrastate switched access minutes of use as measured by the most recent 12 month period preceding the fling of the application for which data is available. ]

(H)

Whether the applicant has limited its operation to data-only services. If the applicant is limited to data-only services, the applicant will be eligible for a data-only SPCOA, and the applicant shall be waived from 911 and local number portability compliance as related to switched voice services. If the applicant intends to add voice services at a future date, the applicant must first file an amendment, subject to approval of the commission, which shows that the applicant is in compliance with all of the commission's quality of service standards.

(3)

If, after considering the factors in this subsection, the commission finds it to be in the public interest to do so, the commission may limit the geographic scope of the SPCOA.

(4)

If the applicant is an affiliate of a certificate of convenience and necessity (CCN) holder, the applicant must show that the affiliated CCN holder is in compliance with federal law and Federal Communications Commission rules governing affiliates and structural separation. The applicant shall file an affidavit from the affiliated CCN holder attesting to this compliance, and provide reference to the Federal Cost Allocation Manual (CAM) filed with the commission.

(d)

[ (c) ] Financial instruments that will meet the cash requirements established in this section.

(1)

Applicants for SPCOAs shall be permitted to use any of the financial instruments set out in subparagraphs (A)-(F) of this paragraph to satisfy the cash requirements established in this rule to prove financial qualification.

(A)

Cash or cash equivalent, including cashier's check or sight draft.

(B)

A certificate of deposit with a bank or other financial institution.

(C)

A letter of credit issued by a bank or other financial institution, irrevocable for a period of at least 12 months beyond certification of the applicant by the commission.

(D)

A line of credit or other loan, issued by a bank or other financial institution, irrevocable for a period of at least 12 months beyond certification of the applicant by the commission and payable on an interest-only basis for the same period.

(E)

A loan issued by a subsidiary or affiliate of applicant, or a corporation holding controlling interest in the applicant, irrevocable for a period of at least 12 months beyond certification of the applicant by the commission, and payable on an interest-only basis for the same period.

(F)

A guaranty issued by a shareholder or principal of applicant, a subsidiary or affiliate of applicant, or a corporation holding controlling interest in the applicant, irrevocable for a period of at least 12 months beyond the certification of the applicant by the commission.

(2)

To the extent that the applicant relies upon a loan or guaranty provided in paragraph (1)(E) or (F) of this subsection, the applicant shall provide evidence sufficient to establish that the lender or guarantor possesses sufficient cash or cash equivalent to fund the loan or guaranty.

(3)

All cash and instruments listed in paragraph (1) (A) - (F) of this subsection shall be unencumbered by pledges as collateral and shall be subject to verification and review by the commission prior to certification of the applicant and for a period of 12 months beyond the date of certification of the applicant by the commission. Failure to comply with this requirement may void an applicant's certification or result in such other action as the commission deems in the public interest, including, but not limited to, assessment of reasonable penalties and all other available remedies under the Public Utility Regulatory Act.

(e)

[ (d) ] Name on certificates.

(1)

All [ basic local exchange telephone service, ]basic local telecommunications service, and switched access service provided under an SPCOA shall be provided in the name under which certification was granted by the commission. The commission shall grant the certificate in only one name.

(A)

If the applicant is a corporation, the commission shall issue the certificate in the corporate or assumed name of the applicant.

(B)

If the applicant is an unincorporated business entity or an individual, the commission shall issue the certificate in the assumed name of the entity or the individual.

(C)

The commission [ Commission staff ] shall review the requested name to determine if the name is deceptive, misleading, vague, inappropriate, or duplicative of an existing certificated telecommunications utility. If the staff determines that the requested name is deceptive, misleading, vague, inappropriate, or duplicative, it shall notify the applicant and the applicant shall modify the name to alleviate the staff's concerns. If the name is not adequately modified, the application may be denied.

(2)

The holder of an SPCOA may request commission approval to change the name on the certificate by filing an application to amend its certificate with the commission

(f)

Non-use of certificates. Applicants will use their SPCOA certificates expeditiously.

(1)

SPCOA certificate holders that have not been used on an on-going basis for a period of 12 months must provide a sworn affidavit to the commission attesting that:

(A)

They still expect to use their certificate within the next 12 months; and

(B)

They continue to possess the technical and financial resources necessary to provide the level of service proposed in their initial application.

(2)

A SPCOA certificate holder not providing service within 48 months of the certificate being granted by the commission, may have its certificate suspended or revoked, as defined by §26.114 of this title (relating to Suspension or Revocation of Certificates of Operating Authority (COAs) and Service Provider Certificates of Operating Authority (SPCOAs)), after due process, or undergo certification re-qualification.

(A)

Certification re-qualification shall consist of a filing certifying that the SPCOA holder continues to possess the technical and financial resources necessary to provide the level of service proposed when the certificate was approved.

(B)

Any certification re-qualification must be filed at the commission before the expiration of the 48-month period.

(g)

[ (e) ] Reporting requirements.

(1)

All certificate [ SPCOA ]holders shall file an annual report with the commission [ updated information set forth in paragraph (2) of this subsection on an annual basis, ] by June 30 of each year using the commission-prescribed form, Annual Information Reporting Requirements for a Service Provider Certificate of Operating Authority and/or a Certificate of Operating Authority. This form may be obtained from the commission's Central Records and the commission's website.

(2)

If the SPCOA holder has any change during the year in the information requested in Section One of the annual report form, then the SPCOA holder shall file an updated form correcting the information in Section One within 30 days of the change. [ Annual reportable information shall consist of, but not be limited to the following: ]

[ (A)

Changes in addresses, telephone numbers, authorized contacts and other information for contacting SPCOA holders. in Project Number 19421, Notification of Changes in Address, Contact Representative, and/or Telephone Numbers, Pursuant to P.U.C. Substantive Rule. ]

[ (B)

A description of the type(s) of communications services being provided and the exchanges in which the services are being provided. ]

(3)

The completed annual report form shall be filed in the commission's Central Records in a project number designated annually by the Filing Clerk.

(4)

An SPCOA holder shall also file annual reports required by §26.89 of this title (relating to Information Regarding Rates and Services of Nondominant Carriers).

(h)

Compliance and enforcement.

(1)

Administrative penalties. If the commission finds that a SPCOA holder has violated any provision of this section, the commission shall order the SPCOA holder to take corrective action, as necessary, and the SPCOA holder may be subject to administrative penalties and other enforcement actions pursuant to PURA, Chapter 15.

(2)

Revocation or suspension. If the commission finds that a certificate holder is repeatedly in violation of PURA or commission rules, the commission may suspend or revoke a COA certificate pursuant to PURA Chapter 17.

(3)

Enforcement. The commission shall coordinate its enforcement efforts of fraudulent, misleading, deceptive, and anticompetitive business practices with the Office of the Attorney General in order to ensure consistent treatment of specific alleged violations.

§26.114.Suspension or Revocation of Certificates of Operating Authority (COAs) and Service Provider Certificates of Operating Authority (SPCOAs).

(a)

Scope and purpose. This section addresses the suspension or revocation of COAs and SPCOAs. A COA or a SPCOA may be suspended or revoked by the commission.

(b)

Definitions. The following words and terms when used in this section shall have the following meanings unless the context indicates otherwise:

(1)

Revocation - The cessation of all telecommunications business operations in the state of Texas pursuant commission order.

(2)

Suspension - The cessation of all telecommunications business operations in the state of Texas associated with adding new customers.

(c)

Suspension and revocation.

(1)

The commission may initiate an investigation for suspension or revocation of a COA or SPCOA. Grounds for initiating an investigation that may result in the suspension or revocation may include, but not be limited to the following:

(A)

Nonuse of approved certificate for a period of 24 months, without re- qualification prior to the expiration of the 24-month period;

(B)

Complaints reported to the commission, the Attorney General, or other governmental agencies;

(C)

Intentionally providing false information to the commission;

(D)

Failing to maintain continuous and reliable service pursuant to §26.51 of this title (relating to Continuity of Service);

(E)

Bankruptcy, insolvency, failure to meet financial obligations on a timely basis, or the inability to obtain the financial resources needed to provide adequate service;

(F)

Repeated violation of the Public Utility Regulatory Act (PURA) or any commission rule or order applicable to the certificate holder;

(G)

Violation of any state or federal law applicable to the certificate holder;

(H)

Suspension or revocation of a telecommunications certification or registration by any other state or federal authority;

(I)

Conviction of a felony crime by the owner, partner, and/or key company personnel;

(J)

Failure to meet reporting requirements pursuant to §26.109 of this title (relating to Standards for Granting of Certificates of Operating Authority (COAs)) and §26.111 of this title (relating to Standards for Granting of Service Provider Certificates of Operating Authority (SPCOAs));

(K)

Other actions as established by the commission in docketed proceedings; or

(L)

Failure to meet reporting requirements pursuant to §26.465 of this title (relating to Methodology for Counting Access Lines and Reporting Requirements for Certificated Telecommunications Providers) and §26.467 of this title (relating to Rates, Allocation, Compensation, Adjustments and Reporting).

(2)

Any certificate holder whose certificate is revoked or suspended by the commission shall comply with the standards for relinquishment in §26.113 of this title (relating to Amendment of Certificate of Operating Authority (COA) or Service Provider Certificate of Operating Authority (SPCOA)).

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on March 27, 2000.

TRD-200002201

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: May 7, 2000

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


Subchapter J. COSTS, RATES AND TARIFFS

16 TAC §26.223

The Public Utility Commission of Texas proposes new §26.223 relating to Prohibition of Excessive COA/SPCOA Usage Sensitive Intrastate Switched Access Rates. The purpose of the new section is to implement the Public Utility Regulatory Act (PURA) §52.155, which addresses the usage sensitive intrastate switched access rates that can be charged by holders of certificates of operating authority (COA) and service provider certificate of operating authority (SPCOA) holders. Project Number 21174 has been assigned to this proceeding.

Ms. Melanie Malone, Senior Economic Analyst, and Mr. Stephen Journeay, Director of the Office of Policy Development, have determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering this section.

Ms. Malone and Mr. Journeay also have determined that for each year of the first five years the section is in effect, the public benefit anticipated as a result of enforcing this section will be to prevent excessive usage sensitive switched access rates.

There is no anticipated economic cost to persons who are required to comply with the section as proposed.

For each year of the first five years the section is in effect, there will be no effect on small businesses or micro-businesses as a result of enforcing the proposed section.

Ms. Malone and Mr. Journeay have further determined that for each year of the first five years the proposed section is in effect there shall be no effect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act §2001.022.

Comments on the proposed rule (15 copies) may be submitted to Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas, 78701-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. All comments should refer to Project Number 21174. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the section. The commission will consider the costs and benefits in deciding whether to adopt the section.

The commission staff will conduct a public hearing on this rulemaking under Texas Government Code §2001.029 at the Commission's Offices, located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701, on Monday, May 22, 2000 in the Commissioners' Hearing Room from 1:00 p.m. to 5:00 p.m.

This section is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2000) (PURA), which provides the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, PURA §52.155 which grants the commission all jurisdiction necessary to enforce the prohibition of excessive access charges.

Cross Reference to Statutes: Public Utility Regulatory Act §14.002 and §52.155.

§26.223.Prohibition of Excessive COA/SPCOA Usage Sensitive Intrastate Switched Access Rates.

(a)

Purpose. The purpose of this section is to implement Public Utility Regulatory Act (PURA) §52.155, which addresses the usage sensitive intrastate switched access rates that can be charged by a telecommunications utility that holds a certificate of operating authority (COA) or a service provider certificate of operating authority (SPCOA) (COA/SPCOA).

(b)

Applicability. This section applies to usage sensitive intrastate switched access rates of COA/SPCOA holders, including but not limited to, originating and terminating carrier common line (CCL), originating and terminating local switching (LS), originating and terminating switched transport (TR), originating and terminating tandem switching (TS), originating and terminating tandem switched transport (TST), and originating and terminating residual interconnection charge (RIC).

(c)

Requirements for COA/SPCOA usage sensitive intrastate switched access rates. A telecommunications utility that holds a COA or a SPCOA may not charge a higher amount for any originating or terminating usage sensitive intrastate switched access rate element than the prevailing rates charged by the holder of the certificate of convenience and necessity (CCN) in whose territory the call originated or terminated unless:

(1)

the commission specifically approves the higher rate; or

(2)

subject to commission review, the telecommunications utility establishes statewide average composite originating and terminating usage sensitive intrastate switched access rates based on a reasonable approximation of traffic originating and terminating between all holders of certificates of convenience and necessity in this state.

(d)

Statewide average composite rates. The commission shall establish weighted statewide average composite usage sensitive intrastate switched access rates within 60 days of the effective date of this section. Weighted statewide average composite usage sensitive intrastate switched access rates will be developed based upon the submission of CCN holders' compliance filings pursuant to subsection (f) of this section.

(1)

Methodology. The commission shall employ the following methodology for development of the weighted statewide average composite usage sensitive intrastate switched access rates for each rate element in subsection (b) of this section:

(A)

Each CCN holder's individual rate elements' rates will be multiplied by the total actual minutes of use (MOUs) for that rate element, producing a total revenue for each rate element for each CCN holder.

(B)

Revenues for each CCN holder's rate element will be added to create a statewide total revenue for that rate element.

(C)

The actual MOUs for each CCN holder's rate element will be added to create a statewide total actual MOUs for that rate element.

(D)

The statewide total revenue for that rate element will be divided by the statewide total actual MOUs for that rate element, producing a weighted statewide average composite usage sensitive intrastate switched access rate for that switched access rate element.

(2)

Recalculation.

(A)

The commission shall re-calculate the weighted statewide average composite usage sensitive intrastate switched access rates biennially based upon the submissions of the CCN holders, as required in subsection (f) of this section. The re-calculated rates will become effective November 1 of that year.

(B)

Any certificated telecommunications utility may file a petition requesting that the commission re-calculate the weighted statewide average composite usage sensitive intrastate switched access rates at any time, but no sooner than six months from the effective date of this section or most recent re-calculation. The commission shall initiate re-calculation if it concludes that the petition has provided just cause for re-calculation.

(C)

As provided in subsection (f) of this section, the commission may also require compliance submissions by CCN holders for re-calculation of the weighted statewide average composite usage sensitive intrastate switched access rates as appropriate because of significant changes in usage sensitive intrastate switched access rates or in response to the request of affected parties, as specified in subparagraph (B) of this paragraph.

(e)

Approval of higher rates.

(1)

A COA/SPCOA holder seeking approval of usage sensitive intrastate switched access rates higher than those charged by the CCN holder in the COA/SPCOA's territory may do so by filing an application with the commission subject to the procedures outlined in Procedural Rule §22.33 of this title (relating to Tariff Filings). The COA/SPCOA's application must provide, at a minimum, the following information:

(A)

Cost justification for each rate element.

(B)

Rationale for implementation of the higher rate for each rate element.

(2)

A COA/SPCOA holder's application must address all of the applicable switched access rate elements in subsection (b) of this section.

(3)

The commission shall publish notice of the application in the Texas Register.

(f)

Requirement for CCN holders compliance submissions.

(1)

Within 30 days from the effective date of this section, all CCN holders must provide the following intrastate data to the commission as a compliance filing:

(A)

The current tariffed rate for originating and terminating CCL.

(B)

The current tariffed rate for originating and terminating LS.

(C)

The current tariffed rate for originating and terminating RIC.

(D)

The current tariffed rate for originating and terminating TR.

(E)

The current tariffed rate for originating and terminating TS.

(F)

The current average per minute rate for originating and terminating TST.

(G)

The current originating and terminating tariffed rate(s) for any other usage sensitive intrastate switched access rate element(s).

(H)

The total actual originating and terminating MOUs for the most recent 12 month period for each rate element in subparagraphs (A) - (G) of this paragraph.

(2)

Biennially all CCN holders must provide the following intrastate data to the commission as a compliance filing by June 1 of the year:

(A)

The current tariffed rate for originating and terminating CCL.

(B)

The current tariffed rate for originating and terminating LS.

(C)

The current tariffed rate for originating and terminating RIC.

(D)

The current tariffed rate for originating and terminating TR.

(E)

The current tariffed rate for originating and terminating TS.

(F)

The current average per minute rate for originating and terminating TST.

(G)

The current originating and terminating tariffed rate(s) for any other usage sensitive intrastate switched access rate element(s).

(H)

The total actual originating and terminating MOUs for the most recent 12 month period for each rate element in subparagraphs (A) - (G) of this paragraph.

(g)

Requirements of COA/SPCOA holders compliance submissions.

(1)

Within 90 days of the effective date of this section, each COA/SPCOA holder shall either:

(A)

file an application under subsection (e) of this section;

(B)

file compliance tariffs/price lists effective 125 days from the effective date of this section containing originating and terminating usage sensitive intrastate switched access rates that do not exceed the prevailing rates charged by the CCN holder in each territory in which the COA/SPCOA holder operates;

(C)

file compliance tariffs/price sheets with originating and terminating usage sensitive intrastate switched access rates that equal the weighted statewide average composite usage sensitive switched access rates established by the commission effective 125 days from the effective date of this section; or

(D)

file a letter with the commission demonstrating that no rate revisions are necessary in order to comply with this section.

(2)

If the commission subsequently recalculates the weighted statewide average composite usage sensitive switched access rates, no later than 30 days after the commission recalculates the weighted statewide average composite usage sensitive switched access rates, COA/SPCOA holders shall either:

(A)

file an application under subsection (e) of this section;

(B)

file compliance tariffs/price lists effective 45 days from the filing date of the compliance tariffs/price lists containing originating and terminating usage sensitive intrastate switched access rates that do not exceed the prevailing rates charged by the CCN holder in each territory in which the COA/SPCOA holder operates;

(C)

file compliance tariffs/price sheets with originating and terminating usage sensitive intrastate switched access rates that equal the recalculated weighted statewide average composite usage sensitive switched access rates established by the commission effective 45 days from the filing date of the compliance tariffs/price sheets; or

(D)

file a letter with the commission demonstrating that no rate revisions are necessary in order to comply with this section.

(3)

If a COA/SPCOA holder establishes usage sensitive intrastate switched access rates pursuant to paragraphs (1)(B) or (2)(B) of this subsection and the underlying CCN holder(s) whose rates were the basis for the COA/SPCOA holder's usage sensitive intrastate switched access rates are modified, no later than 30 days after said CCN holder's rates are modified, the COA/SPCOA holder shall either:

(A)

file an application under subsection (e) of this section;

(B)

file compliance tariffs/price lists effective 45 days from the filing date of the compliance tariffs/price lists containing originating and terminating usage sensitive intrastate switched access rates that do not exceed the prevailing rates charged by the CCN holder in each territory in which the COA/SPCOA holder operates;

(C)

file compliance tariffs/price sheets with originating and terminating usage sensitive intrastate switched access rates that equal the most recent commission established weighted statewide average composite usage sensitive switched access rates established by the commission effective 45 days from the filing date of the compliance tariffs/price sheets; or

(D)

file a letter with the commission demonstrating that no rate revisions are necessary in order to comply with this section.

(h)

Texas Register notice. Notice shall be published in the Texas Register at the time of a CCN holder's application with the commission to revise its usage sensitive intrastate switched access rates or when the commission re-calculates the weighted statewide average composite usage sensitive intrastate switched access rates.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on March 24, 2000.

TRD-200002111

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: May 7, 2000

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