ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 16. ECONOMIC REGULATION Part II. Public Utility Commission of Texas Chapter 23. Substantive Rules The Public Utility Commission of Texas adopts, with changes to the versions published in the September 19, 1995, October 6-10, 1995 versions of the Texas Register (20 TexReg 7440-7442, 20 TexReg 8112-8130 and 20 TexReg 8265-8296), amendments to Substantive Rules sec.23.3 (relating to Definitions), sec.23.6 (relating to Spanish Language Requirements), sec.23.11 (relating to General Reports), sec.23.12 (relating to Financial Records and Reports), sec.23.13 (relating to Statistical Reports), sec.23.17 (relating to Administration of IntraLATA Compensation and Interexchange Carrier Access Charge Revenues), sec.23.21 (relating to Cost of Service), sec.23.24 (relating to Form and Filing of Tariffs), sec.23.26 (relating to New and Experimental Services), sec.23.27 (relating to Rate-Setting Flexibility for Services Subject to Significant Competitive Challenges), sec.23.28 (relating to Promotional Rates for LEC Services), sec.23.31 (relating to Certification Criteria), sec.23. 33 (relating to Telephone Solicitation), sec.23.41 (relating to Customer Relations), sec.23.42 (relating to Refusal of Service), sec.23.44 (relating to New Construction), sec.23.45 (relating to Billing), sec.23.46 (relating to Discontinuance of Service), sec.23.48 (relating to Continuity of Service), sec.23.49 (relating to Telephone Extended Area Service and Expanded Toll-free Local Calling Areas), sec.23.52 (relating to Tel-Assistance and Lifeline Service), sec.23.55 (relating to Operator Services), sec.23.56 (relating to Statewide Dual-Party Relay Service), sec.23.58 (relating to Pay-per-call Information Services Call Blocking), sec.23.61 (relating to Telephone Utilities) , sec.23.69 (relating to Integrated Services Digital Network-ISDN), and sec.23. 91 (relating to Long Run Incremental Cost Methodology for LEC Services). This rulemaking project was initiated this summer, following enactment of House Bill 2128, the 1995 Texas Legislature's comprehensive telecommunications legislation. At its September 27, 1995 Open Meeting, the Commission voted to publish proposed rule changes in this rulemaking project, Number 14372, the review of the Commission's substantive rules for applicability to new telecommunications categories under the Public Utility Regulatory Act of 1995 (PURA '95 or the Act). Following an informal workshop on October 23, 1995, parties filed comments on the proposals with the Commission. A public hearing on these proposals was also held at the Commission on November 10, 1995. The amendments are occasioned by the recent telecommunications legislation, as well as a need to update certain definitions in the sections. The changes made in response to legislation include recognition of new certification categories, such as certificates of operating authority and service provider certificates of operating authority, for providers of telecommunications services, and clarifications as to the areas where the Commission's jurisdiction is restricted to dominant certificated telecommunications utilities. The following parties submitted written comments following publication of our proposed rule changes in this project: Southwestern Bell Telephone Company (SWB); Texas Exchange Carrier Association (TECA); Texas Telephone Association (TTA); Texas Statewide Telephone Cooperative, Inc. (TSTCI); MCI Telecommunications Corporation (MCI); AT&T Communications of the Southwest, Inc. (AT&T); Office of Public Utility Counsel (OPUC); and Consumers Union (CU). In addition, at the November 10, 1995 Public Hearing, Judy Poole of John Staurulakis, Inc. presented in writing a suggested change in sec.23.41. She and certain other parties attending the hearing also offered oral comments, which are summarized below to the extent they differ from their written comments. This rulemaking project was initiated to revise the Commission's telecommunications-related substantive rules in accordance with changes made in House Bill 2128, incorporated into the Public Utility Regulatory Act of 1995 (PURA '95). With minor exceptions, the intent of this project was not to change the content of the affected rules except as necessary to conform to the new legislation and this agency's reorganization (prompted in part by the new legislation). The one major policy decision we had to make was to which telecommunications utilities our rules should apply. Most notably, House Bill 2128 provided for local-exchange competition by authorizing the entry of companies holding either a certificate of operating authority (COA) or a service provider certificate of operating authority (SPCOA). In the absence of specific legislative direction otherwise, however, the Commission proposed to limit the application of existing substantive rules to dominant carriers or to the slightly narrower (conceptually) category of "dominant certificated telecommunications utilities" (DCTUs). Initially, both terms exactly coincide with "incumbent LECs," which are companies holding a certificate of convenience and necessity (CCN) on September 1, 1995. Many commenters disapprove of the Commission's proposed use of the term "DCTUs," either generally or as applied to specific substantive rules. SWB, TTA, CU, and OPUC express dissatisfaction with any use of the term; AT&T, in a late- filed clarification to its comments, states a preference for replacing "DCTUs" with "incumbent local exchange companies" (incumbent LECs) wherever the former is used in our proposed revisions. TTA and CU share this preference, but they, along with SWB and TSTCI, also believe that the application to DCTUs only of a number of rules, particularly those dealing with service quality and customer relations, is inappropriate. They argue for applying such rules to both incumbent LECs and new local-service providers. MCI is the only commenter that expressly supports the Commission's proposed use of the "DCTU" term; it believes that such use represents an appropriate matching of regulation to monopoly power. Despite the objections noted previously, the Commission considers using the "DCTU" term to be appropriate for many rules. It is slightly narrower than "dominant carrier" (to which we apply a number of rules), in that it would exclude any uncertificated telecommunications utility, such as a competitive- access provider, that is declared by the Commission to be a dominant carrier; such exclusion is desirable when a rule solely concerns local exchange telephone service. It is broader than "incumbent LECs," in that it would include any company receiving a CCN after September 1, 1995, as well as any holder of a COA or an SPCOA found to be a dominant carrier. Such inclusion is appropriate when market dominance is a key criterion for applying a rule. With regard to our decision to apply most of these rules to dominant carriers or DCTUs, we offer the following rationale. First, there is some question as to the Commission's authority to extend these rules to nondominant COA/SPCOA holders, in light of the limiting language of PURA '95 sec.3.051(s)(1) . On the other hand, sec.3.3531(e) and sec.3.2532(b) require consideration of a COA/SPCOA applicant's "ability to meet the Commission's quality of service requirements," and sec.3.258(a) requires all holders of a CCN or COA to "render continuous and adequate service" to their customers. Hence we have initiated a new project, Number 14960, in order to receive further comment on what if any service-quality rules and/or other consumer safeguards can and should be applied to nondominant certificated telecommunications utilities. In the meantime, consumers will have the assurance that the Commission's existing customer-protection rules still apply to dominant local-service providers; for competitive reasons, new entrants also will have at least some incentive to provide service in accordance with these rules. We have also tried to lessen any confusion associated with our use of the "DCTU" term by adding to our "DCTU" definition, in Substantive Rule 23.3, a sentence stating that, unless clearly indicated otherwise, the rules applicable to a DCTU apply to only those services for which the utility is dominant. (We also added a similar sentence to the "dominant carrier" definition.) To the extent not done so previously, we summarize and respond to the following parties' comments. We discuss more general remarks first, rule-specific ones second. SWB, which offered the most voluminous comments not limited to specific rules, appears to have three primary (and related) concerns about the proposed rule revisions. First, it believes the revisions largely fail to address the regulatory changes attendant to a LEC's election under Subtitle H of PURA '95. Second, it considers the widespread substitution of the term "DCTU" for "LEC" to be both inadequate and likely to generate confusion and interpretation problems. Third, depending in part on the interpretation of "dominant carrier" with respect to a COA holder's carriage of "1+" intraLATA toll calls, it believes the application of the Commission's service-quality standards and other consumer safeguards to DCTUs will improperly skew the competitive arena and disadvantage customers of new local-service providers. As for the first concern, SWB claims that "The new legislation states clearly that there must be significant overhaul of the Commission's regulations to recognize the changes in regulatory oversight for the [Subtitle-H-]electing companies," for "the old rules do not apply" to such LECs. (SWB cites the language in PURA '95 sec.3.352(c) that says, "An electing company's telecommunications services shall be regulated under this subtitle regardless of whether that company is a 'dominant carrier'...") However, "With painfully few exceptions, ...the proposed amendments make no distinction as to whether the requirements apply" to a Subtitle-H-electing LEC or to a LEC that remains under rate-of-return regulation. SWB asserts that "Incentive regulation requires a more comprehensive consideration" of which rules should be applied to electing LECs. At the Public Hearing, MCI and CU stated their disagreement with SWB's belief in the wholesale non-applicability of many existing substantive rules to electing LECs. The Commission also disagrees with SWB on this issue. PURA '95 sec.3.353(d) (1) specifies various provisions of the Act beyond Subtitle H, as well as "all Commission procedures and rules not inconsistent with this subtitle," that will govern the regulation of an electing company's basic network services. Thus we agree with CU that the language in sec.3.352(c) relates to rate regulation. In this connection we have reviewed the rules and are modifying certain ones, such as sec.23.21(b), to eliminate conflicts between the rules and PURA '95. Like TTA, CU, and OPUC, SWB fears that the "DCTU" term may lead to confusion. SWB notes that neither "DCTU," nor "certificated," nor "certificated telecommunications utility" is defined in PURA '95; it believes the important differences among holders of a CCN, a COA, and an SPCOA "will lead to conflict" in applying the "DCTU" term. As an example of the interpretation problems it expects to stem from the "DCTU" application, SWB cites the definition in PURA '95 sec.3.002(2)(C) of a dominant carrier with respect to "1+" intraLATA toll service. SWB infers that a COA holder might be considered dominant for such service if it elects to carry its own 1+ traffic, even though an incumbent LEC normally would also offer 1+ intraLATA toll service in the same area. Using this interpretation, SWB concludes that such a COA holder may be discouraged from carrying its own 1+ traffic, because of the threat of having to abide by all of the DCTU requirements in the substantive rules. The Commission believes such an interpretation of sec.3.002(2)(C) to be unwarranted. We subscribe to SWB's alternative interpretation, under which neither the COA holder nor the incumbent LEC would be considered dominant with respect to intraLATA toll in that area. But in this event, SWB argues, "the Commission is raising serious inequities for both the incumbent LECs who continue to be regulated by the Commission and the customers who elect to purchase their services from the new entrants to the marketplace." The incumbent LECs face regulatory burdens not faced by their competitors, while those "consumers who want to have reasonable assurances of quality services and regulatory oversight will continue to buy from the incumbent LECs," a situation not conducive to free and open competition. As noted earlier, several other parties share this view, and advocate wider application of some rules to cover new competitors. Again, we decline to so apply the existing rules, but will consider these issues in Project Number 14960. In SWB's view, replacing "LEC" with "DCTU" amounts to applying PURA '95 in a legally incorrect way, for (it asserts) the Commission's authority over (CCN- holding) LECs under the old PURA was not the same as its present authority over any holder of a CCN, COA, or SPCOA that is dominant under PURA '95. Thus the general use of the "DCTU" term assigns regulatory burdens on "newly created entities" (apparently including electing companies) not authorized by the Legislature. As examples, SWB cites sec.sec.23.17, 23.54, and 23. 69 as containing requirements that had to be met by the LECs under the old PURA. SWB believes fair competition calls specifically for fewer restrictions to be placed on LECs electing Subtitle-H regulation. Doing so, it contends, would allow consumers to dictate the levels of service and protections that will ultimately be provided. Should the Commission determine it must exercise its authority to protect consumers, it could do so as long a dominant carrier remains in the market. The upshot of SWB's general recommendations is that the Commission should reject the proposed rule changes to the extent they apply the "DCTU" term, and order further revisions to determine the applicability of specific rules to such statutorily defined entities as dominant carriers, LECs, incumbent LECs, telecommunications utilities, and, in particular, LECs electing incentive regulation. As will be seen later, the Commission agrees in a few cases to SWB's recommendations concerning the application of a rule to DCTUs and the need to exempt electing companies from a rule's provisions. As indicated earlier, however, we decline to make the sweeping changes SWB recommends. CU expresses concern that applying the "DCTU" term will invite incumbent LECs, especially those electing Subtitle-H regulation, to claim non-dominance for certain services and/or markets. Similarly, OPUC fears that using the term will lead to "unnecessary...gamesmanship." The Commission doubts that such fears will be realized. This concern should apply equally to the use of "dominant carrier," which already appears in a number of rules. Moreover, PURA '95 sec.3.002(2)(B) clearly specifies all incumbent LECs to be dominant as to local exchange telephone service. In addition, as indicated earlier, these substantive rules do not affect an electing LEC's rate regulation. Finally, incumbent LECs have competitive reasons to continue abiding by rules safeguarding consumers. TTA, which suggests using "incumbent LEC" instead of "DCTU," says the Commission could adapt its oversight to such a LEC's new status if it is found nondominant in some market(s); it also questions whether a new local-service provider could ever be declared a dominant carrier in light of "the PURA 95 requirement that a provider must have provided local exchange service prior to September 1, 1995." The Commission refers to its earlier responses on the DCTU definition and application, and observes that TTA's last point seems to result from misreading the "dominant carrier" definition in PURA '95 sec.3.002(2). Noting the volume of the proposed rule changes, AT&T suggests that the Commission staff incorporate appropriate recommended changes of commenters into a new draft for further review and comment by parties before submitting the draft for consideration and adoption. AT&T believes this approach would provide the added benefit of allowing staff to consider further the net benefits of applying substantive rules to new competitors. The Commission rejects this general approach, but again refers to new Project Number 14960, on nondominant certificated telecommunications utilities. TSTCI states its concern that this project is "somewhat premature" because a number of outstanding policy issues remain to be resolved in other rulemakings; it disagrees with the staff's characterization of this project as something of a "clean-up" proceeding. The Commission disagrees with TSTCI's judgment that this project is premature. We believe that this project can be concluded before other specific policy questions are resolved; some projects will not be completed until 1997 or later. As noted earlier, CU recommends replacing "DCTU" with "incumbent LEC," which the Legislature typically used in House Bill 2128. CU suggests the additional possibility of redefining "DCTU" to refer only to a COA holder or SPCOA holder found dominant under PURA '95 sec.3.2572(d), then using the term where appropriate in the substantive rules. The Commission considers such a redefinition to be unnecessary, because such a redefinition would make no substantive change to the entities covered. CU contends strongly that the Commission must impose consumer protections and service-quality standards on new local-service providers. Citing the same provisions in PURA '95 sec.3.2531(e) and sec.3.2532(b) that TTA did, CU says it would make no sense to ignore a new competitor's continued compliance with the standards mentioned in the Act. Moreover, it argues, doing so would be contrary to the policy intent of House Bill 2128 to promote fair competition, which requires that new competitors bear certain public-interest responsibilities. CU offers as examples of such consumer safeguards those contained in sec.sec.23. 6, 23.41, 23.42, 23.44-23.46, 23.58, and 23.61. Its overall conclusion, though, is that except where specifically prohibited by PURA '95, all substantive rules should apply to incumbent LECs (including electing LECs), COA holders, and SPCOA holders. The Commission again refers to its earlier remarks on these matters; they will be considered afresh in Project Number 14960. Comments and Commission responses regarding specific rules follow. Section 23.3, Definitions TSTCI says that "base rate" seems to confuse the definition of a rate-and- billing issue with a service issue. The Commission disagrees and sees no need to change the definition. TSTCI also says that the extended area service (EAS) definition should apply to all LECs, not just to DCTUs. The Commission declines to make this change, as we intend to apply the EAS rule to DCTUs. (Nondominant LECs are not prohibited from establishing similar arrangements, either on their own or with other carriers, including DCTUs.) Finally, TSTCI recommends that the second sentence in the local-calling-area definition be modified to read, "A local calling area may include more or less than one defined exchange area." The Commission declines to make such a change in this project. This language involves significant competitive issues; any change to the present wording should be made in another context, in which these issues are addressed. Section 23.11, General Reports, and sec.23.12, Financial Records While acknowledging Commission efforts in other rulemakings, such as P-14359, to lessen burdensome reporting requirements for small LECs, TSTCI believes that much of the information still required in these sections is unnecessary and/or duplicate information required in other reports. Accordingly, TSTCI requests that the Commission apply a "needs test" to remaining requirements on incumbent LECs. "If the information in the remaining reports is necessary from the incumbent LECs, then would it not also be useful and necessary from the new entrants?" The Commission declines to make further changes in this project. With respect to TSTCI's question, we refer to our ongoing proceeding to explore the legal and policy questions raised by TSTCI and others in Project Number 14359. Citing language in PURA '95 sec.1.407, CU says sec.23.11(j), on equal- opportunity reports, should apply to all local-service providers, not just dominant carriers. This subsection was not opened in this project; a separate rulemaking, Project Number 14437, on "historically underutilized companies" is being undertaken pursuant to sec.1.407. Section 23.13, Statistical Reports TSTCI supports the change proposed in subsection (d), on access-line reports. Section 23.17, Administration of IntraLATA Compensation and ICAC Revenues Consistent with its belief that a COA holder carrying its own 1+ intraLATA toll calls may be considered a dominant carrier even if an incumbent LEC is operating in the same area, SWB fears that such COA holders could be allowed to enter the toll pool. Such an outcome, which could help subsidize the local-service provision of these new competitors, SWB considers inappropriate, as the pool was established to help make local service more affordable in high-cost rural areas by transferring to them some of the revenues made in lower-cost urban areas. Therefore, SWB says, this rule should apply to incumbent LECs only, not DCTUs. TECA likewise strongly recommends substituting "incumbent LEC" for "DCTU" throughout the rule; it fears using the new term could result in confusion and/or the inappropriate inclusion of new entities in the toll pool. In contrast, CU questions limiting sec.23.17's applicability to DCTUs, as other carriers may also provide intraLATA services. The Commission agrees with SWB and TECA that opening the toll pool to new entrants, even those that may be declared dominant carriers, would be inappropriate in this project. The toll pool was established by the incumbent LECs well before the advent of local competition, and the pool's future is uncertain. Especially in light of the carrier-of-last-resort obligations imposed on CCN holders, but not COA holders, by PURA '95 sec.3.258(a), any allowance of entry by new competitors should be decided in a context in which the toll pool's future is considered. However, to allow for the possibility of a transfer of an existing CCN from an incumbent LEC to another company, we will apply sec.23.17 to CCN-holding LECs, rather than incumbent LECs. As the Interexchange Carrier Access Charge (ICAC) has been phased out, TECA recommends eliminating all references to the ICAC. The Commission accepts this recommendation. TECA believes that a recommended change in subsection (e)(2)(C)(iii) unwisely eliminates Commission discretion with respect to the setting for hearing of proposed new procedures. Specifically, in order not to mandate a hearing regardless of relevant circumstances, TECA recommends retaining "may" instead of using "shall" in the language dealing with cases in which a party requests a hearing. Upon reflection, the Commission agrees with this recommendation. When this rule was enacted, the Commission at that time presumably believed the flexibility provided by the "may" language was desirable. We see no good reason to change this policy. CU opposes what it perceives to be the elimination, in subsection (e)(2)(C) (iv), of the Commission's requirement to make a final determination on any proposed changes to procedures for distributing toll-pool revenues. To protect the public interest, CU believes that the Commission should continue to provide oversight of the industry-run toll pool. The Commission disagrees with CU's judgment as to the cited provision. We believe that the public interest and the proper administration of the toll pool are protected by the ability to request a hearing. Section 23.21, Cost of Service AT&T says sec.23.21(d)(2)(B)(iii) authorizes one level of cash working capital for telephone utilities and another one for DCTUs. Recognizing the Commission's lack of statutory authority to impose any such requirements on nondominant companies, the Commission should revise clause (iii) to delete the reference to telephone utilities. The Commission agrees with AT&T; this was an oversight. We are deleting the phrase "and telephone" in clause (iii)(I). TTA says that, to be consistent with the language in PURA '95 sec.3.151 directing the Commission to fix depreciation rates that promote the deployment of new technology and infrastructure, subsection (c)(1)(B) should be amended to allow depreciation to be computed using a method other than "straight-line. " The Commission views this proposal to be a substantive change. Hence we defer its consideration to Project Number 14423, dealing with depreciation rates. TTA also says that changing the 50,000 access-line maximum to a 31,000 maximum in subsection (d)(2)(B)(iii) is unwise. In TTA's view, companies between these levels face resource limitations similar to those facing companies with under 31,000 lines; hence the former should continue to be allowed to calculate a cash-working-capital allowance by methods other than a lead-lag study. Moreover, such a substantive change is beyond the purported scope of this rulemaking. The Commission disagrees with TTA's judgment. We believe that the Legislature, in House Bill 2128, established a maximum of 31,000 access lines for a company to be eligible for treatment as a Small LEC. Thus we are following legislative guidance in our adoption of the 31,000-line standard. CU objects to the provisions in subsection (e) that raise customer-refund triggers from $5,000 to $10,000 on a company basis and from $.50 to $1.00 per customer or access line. Such increases serve to delay customer refunds. Although CU's point is correct, the Commission believes that the money involved is sufficiently minimal for it to be outweighed by the decrease in administrative costs to the companies. Such cost reductions should tend to diminish slightly any upward pressure on rates. Although no commenter specifically requested this change, the Commission has decided to apply subsection (e), on tax adjustments pursuant to House Bill 11, to incumbent LECs, rather than DCTUs. We are making this change because it is only incumbent LECs that must calculate the adjustments required by House Bill 11, which was enacted in 1991. Section 23.24, Form and Filing of Tariffs Though this section is proposed to apply to DCTUs only, TSTCI thinks the Commission has the authority to require each nondominant carrier to maintain on file a current copy of its tariff, with rates, charges, rules, and regulations. Such tariffs will assist both the customers of new entrants and the Commission in executing its oversight responsibilities, as in such areas as answering complaints and promoting non-discrimination among consumers. The Commission declines to require nondominant carriers to file formal tariffs in compliance with sec.23.24. Section 23.61(j) does, however, require such carriers to maintain current price lists and service descriptions on file with the Commission. In this rulemaking we are specifically requiring nondominant certificated telecommunications utilities to comply with such provisions. Section 23.26, New and Experimental Services AT&T asserts that the inclusion in sec.23.26(b)(1) of the January 1, 1988 date (in the definition of a new service) is a confusing holdover and should be eliminated. AT&T suggests the following definition: (1) new service means any service proposed after the effective date of this section and not offered on a tariffed basis prior to the date of the application relating to such service and specifically excludes basic local telecommunications service including local measured service. The Commission accepts AT&T's recommendation, but modifies AT&T's suggested language. TSTCI appreciates the proposed changes, but recommends reexamining the remaining reporting requirements on small LECs. (TSTCI elaborated in its comments in P-14359.) The Commission notes that a mechanism for a streamlined procedure for new and experimental services specifically for small LECs has been adopted in Project Number 14359. Further change is not necessary. Finally, SWB notes that sec.23.26(l), regarding subsequent reviews of new services, conflicts with PURA '95 sec.3.352(d). Thus, requiring a review of ISDN services originally approved under sec.23.26 would now conflict with sec.3. 352(d). Because sec.23.26(l) speaks of modifying rates, the Commission agrees to insert the following language at the beginning of this subsection: "Except as prohibited by Subtitle H or Subtitle I of the Public Utility Act of 1995,"... Section 23.27, Rate-Setting Flexibility for Services Subject to Significant Competitive Challenges TTA again comments that the change from 50,000 lines to 31,000 lines in subsection (b)(6) is inappropriate. It asserts that LECs with access-line counts between these points are similar in exchange size and density to LECs with under 31,000 lines. Furthermore, there is no statutory directive for such a substantive change. For the reason stated in connection with sec.23.21(d)(2)(B)(iii), the Commission declines to reverse this change. After noting the application in sec.23.27 to incumbent LECs (rather than DCTUs), TSTCI points out an inconsistency: though the text indicates that the definition of an incumbent LEC has been moved from sec.23.61 to sec.23.3, the definition actually remains in the former, as published. The Commission agrees on the second point; the definition should have been moved to sec.23.3. As for the first observation, the Commission thinks that the specific application to incumbent LECs of PURA '95 sec.3.051(e)(1), which is the basis for sec.23.27, authorizes the same application of the rule. SWB says that the Commission must review sec.23.27, as it currently assumes that the incumbent LEC is rate-of-return regulated and takes no account of new competitors. The Commission disagrees that such a general review is warranted, especially in this project. This rule does not deal with competition in local exchange telephone service, as such service is defined in PURA '95. Moreover, companies electing regulation under Subtitle H are afforded the pricing flexibility granted therein. Section 23.28, Promotional Rates TSTCI appreciates many of the proposed changes, but thinks a separate Promotional Rates provision for small LECs would be more appropriate. (It refers to the comments in P-14359.) The Commission notes that a mechanism for a streamlined procedure for promotional rates specifically for small LECs has been adopted in Project Number 14359. Further change is not necessary. Section 23.31, Certification As AT&T observes, PURA sec.3.252(a)(4) says that certificates are not required for interexchange-service provision, but sec.23.31(c)(1)(E) requires certification for the construction of a new IXC trunk group. AT&T thus recommends deleting this holdover provision. The Commission agrees with AT&T and accepts its recommendation. The Commission also agrees with AT&T that the reference in sec.23.31(c)(2)(A) should be to PURA sec.3.252, not sec.3.251. Section 23.31(g) says, "The Commission may grant, upon finding that the public convenience and necessity requires additional certification to another utility or utilities, additional certification to any other utility or utilities to all or any part of the area heretofore certificated under this section." In AT&T's view, this language could be read to apply not just to CCN holders, but to COA/SPCOA holders also, though no such public-interest finding is required for COAs or SPCOAs in the self-sufficient sec.3.2531 and sec.3.2532 of PURA '95. AT&T thus recommends changing the sentence to read as follows: The Commission shall grant, upon finding that the factors described in the applicable provisions in subsections (c), (d), or (e) have been met, additional certification to any other utility or utilities to all or any part of the area heretofore certificated under this section. The Commission declines to accept this change. We believe that the new subsections in sec.23.31 dealing with COAs and SPCOAs are sufficiently clear that the application AT&T fears will not be made. We therefore will retain the existing language, which allows the Commission to exercise its judgment in granting CCNs. Section 23.33, Telephone Solicitation, and sec.23.57, Telecommunications Privacy TSTCI says that the staff's refusal in P-14359 to reduce the reporting requirements on small LECs was based on the view that no distinction should be made between urban and rural customers with respect to education/notification of privacy issues. Extending this rationale, one can argue that no distinction on privacy issues should be made between customers of DCTUs and those of COAs or SPCOAs. TSTCI also notes an apparent conflict between the notice requirements in sec.23.33 and the associated ones in sec.23.57: whereas sec.23.33 will apply to all LECs, the CPNI-related notice-requirement revisions proposed to sec.23.57 in P-14466 will apply to DCTUs only. The Commission's application to all LECs in sec.23.33 is in accordance with the language used in PURA '95 sec.3.660. There is no similar application language in PURA '95 relating to sec.23.57. To eliminate any inconsistency, however, we will substitute "any" for "the" in the existing phrase, "the CPNI notice required by sec.23.57(e) of this title." With respect to TSTCI's general point on privacy issues, the Commission refers to our earlier remarks concerning new Project Number 14960. MCI asserts that the Commission must amend sec.23.33(c), which MCI believes is in violation of PURA '95 sec.3.660. The latter requires that a LEC use one of two ways to inform its customers of their right to request not to be called by solicitors: (1) inserting an annual notice in the customer's billing statement or (2) publishing the notice in the consumer-information pages of its local directory. In contrast, sec.23.33(c) requires both types of notice. The Commission declines to require only one type of notice. This issue was considered in the recently completed Project Number 13467, in which the Commission concluded that the language in sec.3.660 is permissive, not restrictive. In other words, sec.3.660 establishes the minimum requirement for the LEC; the Commission may impose a stricter requirement. Sections 23.41, 23.42, 23.46, and 23.48 TSTCI reiterates its position on the Commission's authority over new entrants on customer-service issues, and again says that information important to incumbent-LEC customers should be important to new-entrant customers. Again, such arguments will be considered in Project Number 14960. Judy Poole, representing John Staurulakis, Inc., recommends a change to sec.23.41 (b)(5) to harmonize sec.23.6 and sec.23.41. This revision, in the sentence beginning with "This information shall be provided in English and Spanish," would substitute "required under the provisions of sec.23.6 of this title (relating to Spanish Language Requirements.)" for the remainder of the sentence. The Commission declines to make this change. Section 23.6, which is county- specific, was adopted with knowledge of the provision Ms. Poole suggests striking, yet it says nothing to suggest overriding the language in sec.23.6(b)(5), which deals with the pamphlet or package entitled, "Your Rights as a Customer." In some cases the latter language requires consumer-notification not required by sec.23.6. The Commission considers this information important for protecting consumers. Consequently, we will retain the existing language. Section 23.49, Telephone Extended Area Service (EAS) and Expanded Toll-free Local Calling Areas TTA says that subsection (b)(8), on joint filings, should be amended to reflect the new PURA '95 sec.3.262(a)(4), as well as the statement in the new sec.3.262(b) that, if more than one political subdivision is affected by a proposed optional calling plan under sec.3.262(a)(4), the agreement of each subdivision is not required. Concerning sec.3.262(a)(4), the Commission is addressing this subject in pending contested cases. We believe that there has not been sufficient notice to parties to make TTA's recommended change without publication. The Commission does accept TTA's recommendation to include the statement from PURA '95 sec.3.262(b) in subsection (b)(8). Section 23.55, Operator Services. AT&T comments on seven provisions. First, it says that, to be consistent with sec.23.57, the definition of automatic number identification (ANI) in sec.23.55(a)(9) should be changed to the following: Automatic Number Identification (ANI)-The automatic transmission by the local switching system of the originating billing telephone number to an interexchange carrier or other communications carrier in the normal course of telephone operations. The Commission accepts this recommendation. AT&T says that subsection (c)(4) should apply not just to IXCs and DCTUs, but also to other local-service providers. Thus "DCTU" should be replaced by "local- service provider," "LEC or SPCOA holder," or "certificated telecommunications utility." The Commission believes such a replacement would be improper. In accordance with subsection (c)(4), all nondominant certificated telecommunications utilities other than IXCs must enter into contracts with call aggregator in order to provide operator service. Because PURA sec.3.051(s)(2) prohibits the Commission from imposing obligations on COA/SPCOA holders greater than those on CCN holders, AT&T contends that DCTUs should not be exempted from the requirements concerning payphone notice-cards in subsection (d)(1)(C). MCI says that this exemption should apply to all local- service providers or to none. PURA sec.3.052(c) and (d) require that an operator-service provider (OSP) allow an end user to access a "local exchange company" operator-in other words, an operator of a company with a CCN or COA. To comply with these provisions while avoiding undue advantages to DCTUs, we will use the following exception language in sec.23.55(d)(1)(C): "...except, local exchange carriers meeting the requirements of subsection (k)(3) of this section are exempt from this subparagraph if the local exchange carrier is the OSP for which instructions are posted pursuant to subparagraph (B) of this paragraph." Regarding subsection (d)(1)(F), AT&T claims that changing the payphone notice- card reference from the "local exchange carrier" to the actual name of a LEC meeting the requirements of subsection (k)(3) will provide no substantive benefit to consumers, but will cause providers to incur substantial costs. Hence this change should not be made. In order to avoid causing providers to incur such signage costs, the Commission will use the old "local exchange carrier operator" language in subsection (d)(1)(F). However, we will add the following language at the end of the subparagraph: "(The local exchange carrier referred to in this subparagraph must serve the area and meet the requirements of subsection (k)(3) of this section.)" Again citing PURA sec.3.051(s)(2), AT&T says that subsection (h) should not exempt DCTUs from the customer-complaint process. An examination of the requirements in subsection (h) indicates that they are essentially the same as those applying to DCTUs in sec.23.41(c) and subsection (d)(1)(B) and (D) of this rule, taken together. We therefore will remove the DCTU exemption from subsection (h), as it is not substantive. Continuing its comments on sec.23.55, AT&T says that if the proposals of itself and others are accepted in Project Number 14559, the purchase of call screening from the LEC may no longer be necessary, as call aggregators may choose to self- provide call screening. Therefore, subsection (i)(1)(C) (which prohibits non- presubscribed IXCs from billing the call aggregator or presubscribed IXC where the aggregator has subscribed to LEC call screening capabilities) should add the following language: or has otherwise provided the necessary call screening to ensure that appropriate originating line screening is transmitted with each call. The Commission accepts this recommendation. AT&T additionally says that though the grant of authority over "OSPs" in subsection (n) may cover nondominant CTUs, the reference to "local exchange carrier" should not be changed to "DCTU," as such a change would cloud the Commission's authority over complaints. MCI likewise says these enforcement provisions should apply to all local-service providers, as the Commission may need to investigate and resolve violations involving such matters as access- dialing arrangements and line screening in connection with new local competitors. The Commission believes there is no need to rescind our substitution of "DCTU" for "local exchange carrier" in subsection (n). The authority provided therein covers all necessary entities in OSPs, IXCs, and DCTUs. For example, if a nondominant LEC used by an OSP to provide access to emergency services were to fail to meet any of the standards enumerated in subsection (g)(2)(A-F), the OSP, not the subcontracting LEC, would be subject to the enforcement provisions of subsection (n). Section 23.56, Statewide Dual-Party Relay Service SWB notes the following inconsistency: in accordance with PURA '95, the rule properly applies to all LECs; yet the reliance in sec.23.56(l) on the reports received pursuant to sec.23.13(d) would provide the Commission with sufficient information to levy assessments on DCTUs only, assuming that COA holders carrying 1+ traffic are not dominant carriers. The Commission recognizes this inconsistency. Fortunately, it presents no practical problem for determining next year's dual-party LEC-assessment percentages, which will be based on LEC access-line counts as of December 31, 1995. The general Universal Service Fund rulemaking, which the Commission expects to undertake in 1996, will address this issue. Section 23.58, Pay-per-call Information Services Call Blocking TSTCI reiterates its position on the Commission's authority over new entrants on customer-service issues, and says that if a customer's ability to block 900/976 calls is important for an incumbent LEC's customers, it should be equally important for a new entrant's customers. Again, such arguments will be considered in Project Number 14960. Section 23.61, Telecommunications Utilities AT&T says the base-rate-area definition in subsection (a)(2) should be changed to refer to incumbent LECs rather than LECs. The Commission will change the reference to DCTUs. Additionally, AT&T says the definition of Tier-1 LECs in subsection (a)(47) should refer to incumbent LECs only. The Commission declines to make this change to a term that was defined by the Federal Communications Commission. There actually is no need for any greater limitation: the "Tier-1 LEC" term is used in only sec.sec.23.26-23.28 and sec.23.91, which apply to only DCTUs or, in the case of sec.23.27, incumbent LECs. (The Commission is moving the "Tier-1 LEC" definition to sec.23.3, where it is more appropriate.) AT&T also states that subsection (b), on directories, should be deleted, as the Commission has proposed the new sec.23.96 on directory listings. Though this subsection should be deleted at some point, the Commission is unable to do so now, for it was not opened in this project. MCI comments at much greater length on subsection (b). Instead of applying to all LECs, in MCI's view this subsection should apply to DCTUs only. DCTUs for now should be required to provide complete directories, including listings for customers of competitors, for both its own customers and competitors' customers; they also should bear the related costs by themselves. In addition, MCI asserts that DCTUs should be required to provide competitors with non-discriminatory access to all databases for operation-support-systems resources used by the DCTUs for their own retail or administrative services. Examples are directory-assistance and line-information databases. Again, the Commission notes that subsection (b) was not opened in this project. Furthermore, the Commission's rulemaking on directories, Project Number 14557, was a more appropriate forum for MCI's comments. AT&T believes that the information-filing requirements in subsection (j) should distinguish between IXCs and other nondominant carriers. In keeping with PURA sec.3.051(d), IXCs should be required to file "tariffs or lists governing the terms of providing...services"; other nondominant carriers should be required to file their "prices." The Commission declines to change these requirements. The distinctions AT&T makes appear to be of minor significance. Moreover, changing the requirements would require republication. Again citing the prohibition in PURA sec.3.051(s)(2), AT&T contends that the Commission should determine specifically what tariff-notification obligations incumbent LECs electing Subtitle-H regulation have for Basket-III services before it determines what tariff-related obligations to apply to new local competitors. The Commission sees no reason to delay the application of subsections (i) and (j) to nondominant certificated utilities. Electing companies are expected to notify the Commission of tariff changes for Basket-III services. In the first of its three comments on sec.23.61, TTA observes that the directive in PURA '95 sec.3.2531 and sec.3.2532 that the PUC consider a COA/SPCOA applicant's "ability to meet the Commission's quality of service requirements" suggests that a COA/SPCOA holder should be required to meet such requirements, though these need not be the same ones facing incumbent LECs. It believes a separate rulemaking perhaps should be initiated to establish service- quality standards for new entrants; a different set of standards may apply to COA holders and SPCOA holders. The Commission's recently initiated Project Number 14960 will consider these matters. TTA also notes that nothing in subsection (h) reflects the new language on depreciation in PURA '95. This topic will be addressed in Project Number 14423, in which a proposal should be published early in 1996. Subsection (i) says, "An uncertificated nondominant carrier failing to file either the letter or the updates required by this subsection during the 12-month period ending June 30 may no longer be considered to be registered with the Commission." TTA says that the "may" should be clarified to specify whether it means that the Commission has the authority to pronounce the carrier not registered, or that the Commission may consider the issue in some proceeding. The quoted provision means that the Commission does have the authority to deem the carrier not registered. The Commission believes no further clarification is necessary. TSTCI asserts that the inclusion in sec.23.61(a) of the definition of Least Cost Technology is mistaken, as it involves not a service issue, but a costing issue; hence it should be in sec.23.91 only. The Commission agrees with this point, and is removing the definition from sec.23.61. It remains in sec.23.91. For reasons given earlier, TSTCI questions replacing "LEC" and "dominant carrier" with "DCTU" throughout this rule. It also claims some unchanged subsections still refer to LECs, thus causing inconsistencies. The Commission refers to its earlier remarks pertaining to Project Number 14960. Concerning remaining references to LECs, the Commission is aware of none, other than in subsection (a), and these should involve no inconsistencies with other provisions of this rule. CU asserts that limiting subsection (e)(1) to DCTUs is directly contrary to PURA '95 sec.3.1555, which requires each holder of a CCN or COA to provide all customers with single-party service by December 31, 2000. The Commission disputes this assertion. Subsection (e)(1)(A) requires DCTUs to provide single-party service by January 1, 1997. The Commission is free to apply this more rigorous requirement to DCTUs. The directives of sec.3.1555 are applicable to all CCN and COA holders regardless of market dominance; this rule does nothing to reinterpret the statutory requirements. As to whether any substantive rules should apply to nondominant certificated utilities, the Commission again refers to Project Number 14960. Section 23.69, ISDN TSTCI supports the proposed change. SWB claims that because it fails to refer to subsection (f)(2)(A), concerning rates and terms of ISDN-based services, the repricing waiver for Subtitle-H- electing LECs in sec.23.69(h)(1)(E) is inadequate. To alleviate concerns regarding existing ISDN-based services, the waiver in subsection (h) (1)(E) should include subsection (f)(2)(A). CU complains that the waiver for Subtitle-H electing LECs in subsection (h) (1)(E) of the repricing requirements in subsection (f) will "kill the development of ISDN throughout the state by making it unaffordable." Judy Poole, of John Staurulakis, Inc., states her understanding that the repricing waiver in subsection (h)(1)(E) does not prevent small LECs from taking advantage of subsection (f)(3), which allows any small LEC to price its ISDN services at plus or minus 25% of the rates approved by the Commission for a Class A DCTU complying with sec.23.69. The Commission now believes that the issues raised are more appropriately addressed in Docket Number 15024, SWB's application to comply with sec.23.69, and Docket Number 15042, GTE's application to comply with sec.23.69. Therefore, the changes to this section in the proposed amendment are not adopted. Hence the Commission does not need to address the three preceding comments. TSTCI cites subsection (d) as an example of a provision that conflicts with legislation, which uses "LEC," not "DCTU." It again says this provision should apply to new entrants also. Apparently TSTCI is referring to PURA '95 sec.3.1555(a)(5), which requires LECs to offer digital switching capability on customer request in all exchanges by December 31, 2000. The Commission nevertheless is free to apply the more rigorous requirements in subsection (d) to DCTUs. As to whether any related rules should apply to nondominant certificated utilities, the Commission again refers to Project Number 14960. Section 23.91, LRIC Methodology for DCTUs TSTCI supports the proposed change. General 16 TAC sec.23.3, sec.23.6 The amendments are adopted under the Public Utility Regulatory Act of 1995, sec.1.101, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure. Cross Index to Statutes: Public Utility Regulatory Act of 1995, 74th Legislature, Regular Session 1995. sec.23.3. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Act-The Public Utility Regulatory Act of 1995. Affected person -Any public utility affected by any action of the regulatory authority, any person, partnership, cooperative corporation, corporation, or any combination thereof, whose utility service or rates are affected by any proceeding before the regulatory authority, or any person, partnership, cooperative corporation, corporation, or any combination thereof, that is a competitor of a public utility with respect to any service performed by the utility or that desires to enter into competition. Affiliated interest -The definition of affiliated interest is that definition given in the Public Utility Regulatory Act of 1995, sec.1.003(2). Agency-Any state board, commission, department, or officer having statewide jurisdiction (other than an agency wholly financed by federal funds, the legislature, the courts, the Industrial Accident Board, and institutions for higher education) which makes rules or determines contested cases. Allocations-For all utilities, the division of plant, revenues, expenses, taxes, and reserves between states, between municipalities, or between municipalities and unincorporated areas, where such items are used for providing public utility service in a state or municipality or for a municipality and unincorporated areas. Applicant-Any person, partnership, cooperative corporation, corporation, or any combination thereof requesting affirmative service or action from the utility. Base rate-The portion of a consumer's utility bill which is attributable to a set level of expenses fixed during rate proceedings. This would include a cost factor specifically identified as fuel expense. Basic local telecommunications service-Flat rate residential and business local exchange telephone service, including primary directory listings; tone dialing service; access to operator services; access to directory assistance services; access to 911 service where provided by a local authority or dual party relay service; the ability to report service problems seven days a week; lifeline and tel-assistance services; and any other service the commission, after a hearing, determines should be included in basic local telecommunications service. Bulletin-The commission's unofficial reporter, published once monthly. Final orders of significant interest are printed in full with headnotes, while less significant material appears as memorandum citations. Business service -A telecommunications service provided a customer where the use is primarily of a business, professional, institutional or otherwise occupational nature. Central office -A switching unit in a telecommunications system which provides service to the general public, having the necessary equipment and operating arrangements for terminating and interconnecting customer lines and trunks or trunks only. Certificated telecommunications utility-A telecommunications utility that has been granted either a certificate of convenience and necessity (CCN), a certificate of operating authority (COA), or a service provider certificate of operating authority (SPCOA). Class of service or customer class-A description of utility service provided to a customer which denotes such characteristics as nature of use (business or resident) or type of rate (flat rate or message rate). Classes may be further subdivided into grades, denoting individual or multipary line or denoting quality of service. Qualified businesses as defined by the Texas Enterprise Zone Act, Texas Government Code, Title 10, Chapter 2303 may be considered to be a separate customer class of electric utilities. Commission-The Public Utility Commission of Texas. Competitive exchange service-Any of the following services, when provided on an inter-or intrastate basis within an exchange area: central office based PBX-type services for systems of 75 stations or more; billing and collection services; (high speed private line services of 1. 544 megabits or greater; customized services; private line and virtual private line services; resold or shared local exchange telephone services if permitted by tariff; dark fiber services; non-voice data transmission service when offered as a separate service and not as a component of basic local telecommunications service; dedicated or virtually dedicated access services; services for which a local exchange carrier has been granted authority to engage in pricing flexibility pursuant to sec.23.27 of this title (relating Rate-Setting Flexibility); any service initially provided within an exchange after October 26, 1992, if first provided by an entity other than the incumbent local exchange company (companies) certificated to provide service within that exchange; and any other service the commission declares is not local exchange telephone service. Contested proceeding or case-A proceeding including, but not restricted to, rate making and licensing, in which the legal rights, duties, or privileges of a party are to be determined by the commission after an opportunity for adjudicative hearing. Cooperative corporation -Any telephone or electric cooperative corporation organized and operating under the Telephone Cooperative Act (Texas Civil Statutes, Article 1528c) or the Electric Cooperative Corporation Act (Texas Civil Statutes, Article 1528b). Corporation-Any corporation, joint-stock company, or association, domestic or foreign, and its lessees, assignees, trustees, receivers, or other successors in interest, having any of the powers or privileges of corporations not possessed by individuals or partnerships, but shall not include municipal corporations unless expressly provided otherwise in the Public Utility Regulatory Act of 1995. Customer-Any person, firm, partnership, corporation, municipality, cooperative, organization, governmental agency, etc., provided with services by any utility. Customer access line-A unit of measurement representing a telecommunications circuit or, in the case of ISDN, a telecommunications channel designated for a particular customer. One customer access line shall be counted for each circuit which is capable of generating usage on the line side of the switched network or a private line circuit, regardless of the quantity or ownership of customer premises equipment connected to each circuit. In the case of multiparty lines, each party shall be counted as a separate customer access line. Dominant carrier -A provider of any particular communication service which is provided in whole or in part over a telephone system who as to such service has sufficient market power in a telecommunications market as determined by the commission to enable such provider to control prices in a manner adverse to the public interest for such service in such market. Any provider of local exchange telephone service within a certificated exchange area on September 1, 1995, as to such service and as to any other service for which a competitive alternative is not available in a particular geographic market. Any provider of local exchange telephone service within a certificated exchange area as to intraLATA long distance message telecommunications service originated by dialing the access code "1+" so long as the use of that code for the origination of "1+" intraLATA calls within its certificated exchange area is exclusive to that provider. This term does not include an interexchange carrier that is not a certificated local exchange carrier, with respect to interexchange services. Unless clearly indicated otherwise, in this chapter the rules applicable to a dominant carrier apply specifically to only those services for which the utility is dominant. Dominant certificated telecommunications utility (DCTU) -A certificated telecommunications utility that is also a dominant carrier. Unless clearly indicated otherwise, in this chapter the rules applicable to a DCTU apply specifically to only those services for which the DCTU is dominant. Exchange Area-The geographic territory delineated as an exchange area by official commission boundary maps. An exchange area usually embraces a city or town and its environs. There is usually a uniform set of charges for telecommunications service within the exchange area. An exchange area may be served by more than one central office. An exchange area may also be referred to as an exchange. Economy energy -Energy produced and supplied from a more economical source by one utility substituted for that being produced or capable of being produced from a less economical source by another utility and scheduled on an availability basis. Energy Efficiency -Management of energy resources through efficacy in the utilization of electrical energy through: end-user conservation (a single device, measure, or practice, or a grouping thereof, to save kwh or kw and that can be measured at the customer meter); utility-controlled options such as optimization of existing and planned generation, transmission, and distribution facilities through direct load management (reduction in peak demand on an electric utility system by direct control of electric devices), cogeneration (reduction in additions to electric utility planned generation expansion as a result of using firm and reliable capacity from an industrial company), peak shaving (reduction in peak demand on an electric utility system by the storage of energy produced during an off-peak period and then utilizing it to serve loads during the peak period), small power production (reduction in additions to electric utility planned generation additions by the installation of dependable, long-life generating plants utilizing direct conversion of renewable resources of electric energy), power plant productivity improvement (reduction in additions to electric utility planned generation expansion as a result of improvements in the productivity of existing or new generating units), and power plant efficiency improvement (reduction in the utilization of natural resources in their conversion to electrical energy as a result of improvements in the efficiency of existing and new generating units); and optimal conversion of renewable resources to electrical energy. Extended area service (EAS)-A telephone switching and trunking arrangement which provides for optional calling service by dominant certificated telecommunications utilities within a local access and transport area (LATA) and between two contiguous exchanges or between an exchange and a contiguous metropolitan exchange local calling area. For purposes of this definition, a metropolitan exchange local calling area shall include all exchanges having local or mandatory EAS calling throughout all portions of any of the following exchanges: Austin metropolitan exchange, Corpus Christi metropolitan exchange, Dallas metropolitan exchange, Fort Worth metropolitan exchange, Houston metropolitan exchange, San Antonio metropolitan exchange, or Waco metropolitan exchange. EAS is provided at rate increments in addition to local exchange rates, rather than at toll message charges. Facilities-All the plant and equipment of a public utility, including all tangible and intangible real and personal property without limitation, and any and all means and instrumentalities in any manner owned, operated, leased, licensed, used, controlled, furnished, or supplied for, by, or in connection with the business of any public utility, including any construction work in progress allowed by the commission. Hearing-Any proceeding at which evidence is taken on the merits of the matters at issue, not including prehearing conferences. Incumbent local exchange company-A local exchange company that has a certificate of convenience and necessity on September 1, 1995. License-The whole or part of any commission permit, certificate, approval, registration, or similar form of permission required by law. Licensing-The commission process respecting the granting, denial, renewal, revocation, suspension, annulment, withdrawal, or amendment of a license. Line-A circuit or channel extending from a central office to the customer's location to provide telecommunications service. One line may serve one customer, or all customers served by a multiparty line. Local access and transport area (LATA) -A geographic area established for the provision and administration of communications service. It encompasses one or more designated exchanges, which are grouped to serve common social, economic and other purposes. For purposes of these rules, market areas, as used and defined in the Modified Final Judgment and the GTE Final Judgment, are encompassed in the term local access and transport area. Local calling area-The area within which telecommunications service is furnished to customers under a specific schedule of exchange rates. A local calling area may include more than one exchange area. Local exchange company-A telecommunications utility that has been granted either a certificate of convenience and necessity or a certificate of operating authority to provide local exchange telephone service, basic local telecommunications service, or switched access service within the state. A local exchange company is also referred to as a local exchange carrier. Local exchange telephone service-Telecommunications service provided within an exchange to establish connections between customer premises within the exchange, including connections between a customer premises and a long distance provider serving the exchange. The term includes tone dialing, service connection charges, and directory assistance services when offered in connection with basic local telecommunications service and interconnection with other service providers. Local exchange telephone service may also be referred to as local exchange service. However, a competitive exchange service is not local exchange telephone service. This fact, and the definition of competitive exchange service, shall be liberally construed to encourage a competitive marketplace. Local message-A completed call between customer access lines located within the same local calling area. Local service charge-The charge for furnishing facilities to enable a customer to send or receive telecommunications within the local calling area. This local calling area may include more than one exchange area. Message-A completed customer telephone call. Municipality-A city, incorporated village, or town, existing, created, or organized under the general, home rule, or special laws of the state. Municipally owned utility-Any utility owned, operated, and controlled by a municipality or by a nonprofit corporation whose one or more municipalities. Nonrulemaking proceeding -A proceeding other than rulemaking proceeding, and other than proceedings concerning exceptions to rules. This definition includes both contested and uncontested proceedings. Order-The whole or part of the final disposition, whether affirmative, negative, injunctive, or declaratory in form, of the commission in a matter other than rulemaking but including issuance of "certificates of convenience and necessity", "certificates of operating authority", "service provider certificates of operating authority," and rate setting. Party-Each person or agency named or admitted as a party. Permanent installation -Any installation that is constructed or placed on and permanently affixed to a foundation, and which is, or will be, used or occupied on a permanent full-time basis. A manufactured home or prefabricated structure shall qualify as a permanent installation only if it is installed on a foundation system according to regulations of the Texas Department of Labor and Standards or is otherwise impractical to move and has the wheels, axles, and hitch or towing device removed, and if it is connected to a permanent water and sewer system. Person-Any natural person, partnership, municipal corporation, cooperative corporation, corporation, association, governmental subdivision, or public or private organization of any character other than an agency. Pleading-A written allegation by the parties of their respective claims. Pleadings may take the form of applications, petitions, protests, exceptions, replies, motions, and/or answers. Power cost recovery factor-A charge or credit that reflects an increase or decrease in purchased power costs not in base rates. Premises-A tract of land or real estate including buildings and other appurtenances thereon. Private line-A transmission path that is dedicated to a customer and that is not connected to a switching facility of a telecommunications utility, except that a dedicated transmission path between switching facilities of interexchange carriers shall be considered a private line. Proceeding-Any hearing, investigation, inquiry, or other fact-finding or decision-making procedure, including the denial of relief or the dismissal of a complaint. It may be rulemaking or nonrulemaking; rate setting or non-rate setting. Public Utility -The definition of public utility is that definition given in the Public Utility Regulatory Act of 1995, sec.2.0011(1) and sec.3.002(9). A Recreational Vehicle Park Owner who intends to recover any shortfall of revenues collected from the recreational vehicle occupants if legislative amendments are made to Texas Civil Statutes, Article 1446d-2, that would allow the recovery of such shortfall will still not be considered a public utility if such owner otherwise complies with Article 1446d-2 and keeps a record of such shortfall. Purchased power and/or energy-Electrical power and/or energy purchased from a source outside the utility's system to supply load requirements. Purchased power and/or energy adjustment factor -A factor which, when multiplied by the number of kilowatt-hours consumed by a customer during a billing period, will produce a purchased power and/or energy adjustment charge to the customer. The total of these charges to all customers is the difference in the cost of power and/or energy purchased by the utility and the component of purchased power and/or energy cost which has been included in the customers' base rates. Rate-Includes every compensation, tariff, charge, fare, fee, deposit, toll, rental, and classification, or any of them demanded, observed, charged, or collected whether directly or indirectly by any public utility for any service, product, or commodity described in the definition of "utility" in the Public Utility Regulatory Act of 1995, sec.2.0011 or sec.3.002 and any rules, regulations, practices, or contracts affecting any such compensation, tariff, charge, fare, fee, deposit, toll, rental, or classification. Register-The Texas Register established by the 64th Legislature, 1975, cited in Texas Government Code, Title 10, Chapter 2002. Regulatory authority -In accordance with the context where it is found, either the commission or the governing body of any municipality. Rule-Any commission statement of general applicability that implements, interprets, or prescribes law or policy, or describes the procedure or practice requirements of the commission. The term includes the amendment or repeal of a prior rule, but does not include statements concerning only the internal management or organization of the commission and not affecting private rights or procedures. Rulemaking proceeding -A proceeding to adopt, modify, or interpret a rule as defined in this section, or to adopt, modify, or interpret a statement which has been filed as a rule by the secretary of state. Separation-For telecommunications utilities only, the division of plant, revenues, expenses, taxes, and reserves applicable to local exchange telephone service where such items are used in common for providing both local exchange telephone service and other services, such as interstate or intrastate toll service. Service-Service is used in this chapter in its broadest and most inclusive sense and includes any and all acts done, rendered, or performed and any and all things furnished or supplied, and any and all facilities used, furnished, or supplied by public utilities in the performance of their duties under the Public Utility Regulatory Act to their patrons, employees, other public utilities and the public, as well as the interchange of facilities between two or more of them. Service shall not include the printing, distribution, or sale of advertising in telephone directories. Station-A telephone instrument or other terminal device. Tariff-The schedule of a utility containing all rates, tolls, and charges stated separately by type or kind of service and the customer class, and the rules and regulations of the utility stated separately by type or kind of service and the customer class. Telecommunications utility -A dominant carrier or a nondominant carrier. A telecommunications utility may also be referred to as a telephone utility. Test year-The most recent 12 months for which operating data for a public utility are available, and shall commence with a calendar quarter or a fiscal year quarter. Tier 1 local exchange company-A local exchange company with annual regulated operating revenues exceeding $100 million. Uncontested proceeding or case-All proceedings other than contested proceedings. sec.23.6. Spanish Language Requirements. (a) Application. This section applies to each utility that serves an applicable county as defined in subsection (b)(3) of this section and is either a dominant certificated telecommunications utility (DCTU), as the term is defined by sec.23.3 of this title (relating to Definitions), or a retail electric utility subject to the original jurisdiction of the commission over rates. (b)-(d) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 21, 1995. TRD-9516649 Paula Mueller Secretary of Commission Public Utility Commission of Texas Effective date: January 11, 1996 Proposal publication date: October 6, 1995 For further information, please call: (512) 458--0100 Records and Reports 16 TAC sec.sec.23.11-23.13, 23.17 The amendments are adopted under the Public Utility Regulatory Act of 1995, sec.1.101, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure. sec.23.11. General Reports. (a) Who shall file. The recordkeeping, reporting, and filing requirements listed in this section shall apply to all public utilities operating in the State of Texas, excluding municipally owned utilities, unless otherwise specified. In this section, the term "utility," insofar as it relates to telecommunications utilities, shall refer to dominant carriers. Moreover, the provisions of this section are applicable to all service provided by such carriers. (b)-(c) (No change.) (d) Due dates of reports. All periodic reports must be received by the commission on or before the following due dates unless otherwise specified in this section. (1)-(7) (No change.) (8) Reports required by subsection (j) of this section shall be due at the same time that filings are made with the respective governmental agency. (9) Periodic Certificate of Operating Authority report: Due as set forth in the commission order granting the certificate. (e) (No change.) (f) Relationships with affiliates. Copies of contracts or arrangements between any utility and any affiliated interest shall be filed with the commission on request. If such contract or arrangement is not in writing, it shall be reduced to writing. The requirements of this subsection are not satisfied by the filing of an earnings report. The following information shall be reported annually: (1)-(2) (No change.) (g)-(p) (No change.) sec.23.12. Financial Records and Reports. (a) Uniform System of Accounts. In this section the term "utility," insofar as it relates to telecommunications utilities, shall refer to dominant carriers. Moreover, the provisions of this section are applicable to all service provided by such carriers. Every utility shall keep uniform accounts as prescribed by the commission of all business transacted. The classification of utilities, index of accounts, definitions, and general instructions pertaining to each uniform system of accounts as amended from time to time shall be adhered to at all times, unless provided otherwise by these rules, or specifically permitted by the commission. (1) (No change.) (2) System of accounts. For the purpose of accounting and reporting to the commission, each public utility shall maintain its books and records in accordance with the following prescribed uniform system of accounts: (A)-(B) (No change.) (C) Other system of accounts. When a utility has adopted a uniform system of accounts as may be required by a state or federal agency other than those previously mentioned in this section (e.g. United States Department of Agriculture-Rural Utilities Service), that system of accounts may be adopted by the utility after notification to the commission. (D) (No change.) (3)-(4) (No change.) (b) Financial and operating reports. The following financial and operating reports shall be filed with the commission. (1) Annual reports. (A) Telephone utilities: Each Class A and B telephone utility shall file with the commission the same annual report as is required of such utility by the Federal Communications Commission or United States Department of Agriculture- Rural Utilities Service. Such annual reports shall be filed on the same dates as required to be filed by the Federal Communications Commission or the United States Department of Agriculture-Rural Utilities Service, whichever is applicable. (B) Electric utilities. (i) Each major electric utility shall file with the commission the same annual report required by the Federal Energy Regulatory Commission or United States Department of Agriculture-Rural Utilities Service. Such annual reports shall be filed with the commission on the same dates as required to be filed by the Federal Energy Regulatory Commission or United States Department of Agriculture- Rural Utilities Service, whichever is applicable. Major electric utilities which are not required to file such reports shall file with the commission an annual report on the form prescribed by the Federal Energy Regulatory Commission. (ii) Each nonmajor electric utility shall file with the commission the same annual report as is required of such utility by the Federal Energy Regulatory Commission or United States Department of Agriculture-Rural Utilities Service. Such annual reports shall be filed with the commission on the same dates as required to be filed by the Federal Energy Regulatory Commission or United States Department of Agriculture Rural Utilities Service, whichever is applicable. (C) (No change.) (2) Annual earnings report. Each utility shall file with the commission an earnings report providing the information required by the commission to enable it to properly monitor telephone and electric utilities within the state. (A)-(B) (No change.) (C) On the due date of the annual earnings report, each utility with a rate proceeding pending before the commission, pursuant to sec.sec.2.211, 2.212, 3.210 or 3.211 of the Public Utility Regulatory Act of 1995 in which a rate filing package is required, may submit an abbreviated earnings report. Specifications for the abbreviated filing will be included in the General Filing Instructions for the annual earnings report. (3)-(4) (No change.) (c)-(e) (No change.) sec.23.13. Statistical Reports. (a) Capital needs and acquisition plan. A capital needs and acquisition plan, based upon operations and construction plans, shall be filed annually by all Class A telephone utilities, and major electric utilities as described in sec.23.12(a) of this chapter, relating to financial reports and records. The plan shall be accompanied by an appropriate written description. (b)-(c) (No change.) (d) Telephone utilities. Each dominant certificated utility shall submit annually an access line report as part of its annual earnings report. (e) (No change.) sec.23.17. Administration of IntraLATA Compensation and Interexchange Carrier Access Charge Revenues. (a) Purpose. The provisions of this section are intended to ensure that the revenues from Intrastate IntraLATA Message Toll Services (MTS), Wide Area Telecommunications Services (WATS), Private Line Services, and from the imposition of access charges for the origination or termination of these services when provided between telecommunications utilities holding a certificate of convenience and necessity (CCN holders) are distributed in a fair and reasonable manner. (b) Exchange carrier association. An association shall be established by the CCN holders of Texas in order to develop administrative procedures for the purpose set out in subsection (a) of this section. These procedures shall include procedures for the distribution of revenues from Intrastate IntraLATA MTS, WATS, Private Line Services, and from the imposition of access charges for the origination or termination of these services when provided between CCN holders. (c) Procedures for the distribution of revenues. (1) Procedures developed by the association may allow for the pooling of those revenues described in subsection (a) of this section. (2) Procedures developed by the association may allow CCN holders to withdraw or remain as participants in the pooling of those revenues described in subsection (a) of this section. (3) Procedures developed by the association may provide for the imposition of access charges for the origination or termination of the services described in subsection (a) of this section when provided between CCN holders. Any such access charges shall be imposed at the same rates and under the same terms and conditions as access services are provided to interexchange carriers in Texas. (4) Procedures developed by the association may provide for transition payments to be made by CCN holders. (d) Initial filing of procedures. On January 9, 1992, the association shall file with the commission all administrative procedures developed for the purpose set out in subsection (a) of this section, including all procedures that are used to determine the distribution of those revenues described in subsection (a) of this section. Within 30 days of filing, a commissioner or any party that demonstrates a justiciable interest may request that the procedures be docketed, and upon such request the procedures shall be docketed. If the initial procedures are docketed within 30 days of filing, those initial procedures will remain in effect subject to modification or reversal upon interim or final determination of the commission or presiding officer. If the initial procedures are not docketed within 30 days of filing, those initial procedures will remain in effect unless changed pursuant to subsection (e) or (g) of this section. (e) Changes to the procedures. (1) (No change.) (2) For changes to the procedures that affect the distribution of those revenues described in subsection (a) of this section, the association must also file an application for approval of such changes within 30 days of their implementation. The commission shall process all applications for approval of changes using the criteria and procedures set out in subparagraphs (A)-(C) of this paragraph. (A) (No change.) (B) Each application shall: (i)-(ii) (No change.) (iii) identify the annual revenue impact on each CCN holder affected by the changes; and (iv) state whether the annual revenue impact identified in clause (iii) of this subparagraph will require any CCN holder to request a rate increase under the Public Utility Regulatory Act of 1995, sec.3.211, within one year of the filing of the application. (C) Each application shall be assigned a control number and reviewed pursuant to the following procedures. (i) (No change.) (ii) Within 90 days of filing, based on the comments filed under clause (i) of this subparagraph, the presiding officer shall approve, approve with modification, or deny, or set the application for hearing. The presiding officer may postpone a decision on the application beyond the 90th day after filing if he or she finds that additional information is needed. (iii) If the presiding officer approves, approves with modification, or denies the application, any party that has participated in the review process may request, within ten days of the presiding officer's ruling, that the application be set for hearing and upon such request, the application shall be set for hearing. (iv) If no request for hearing has been filed within ten days, the presiding officer's ruling becomes final. (3) (No change.) (f) Association records. The association shall maintain accurate historical and current records necessary to determine the appropriate management and distribution of those revenues described in subsection (a) of this section. The association shall make available to the Public Utility Commission of Texas and to the Office of Public Utility Counsel all books, records, studies, electronic databases, or other information upon request. The association shall file semi- annual reports with the commission and with the Office of Public Utility Counsel concerning the distribution of revenues under this rule and shall file annual audited reports on the association's management and distribution of revenues. Any claims of confidentiality that accompany information provided to the Public Utility Commission of Texas or to the Office of Public Utility Counsel will be subject to the provisions of Texas Government Code, Chapter 552 (the Open Records Act). (g) Formal inquiry. Upon its own motion, upon the motion of the commission staff, or upon petition of any person that demonstrates a justiciable interest, the commission may initiate a formal inquiry into any matter pertaining to this section. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 21, 1995. TRD-9516650 Paula Mueller Secretary of Commission Public Utility Commission of Texas Effective date: January 11, 1996 Proposal publication date: October 6, 1995 For further information, please call: (512) 458-0100 16 TAC sec.23.12 The amendment is adopted under the Public Utility Regulatory Act of 1995, sec.1.101, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure. sec.23.12. Financial Records and Reports. (a)-(d) (No change.) (e) Cost Allocation Manual. (1) Cost allocation manual requirement. Each dominant certificated telecommunications utility that provides regulated intrastate utility service and also provides nonregulated utility service or sells other services or products shall maintain and file with the commission annually a cost allocation manual (CAM) describing the methodology used for allocating its costs between its regulated activities and its other activities in accordance with this subsection. (2) Allocation of costs. Notwithstanding any provision of this subsection to the contrary, each dominant certificated telecommunications utility shall maintain its accounts and subaccounts consistently with the content and titles prescribed in the Uniform System of Accounts for Telecommunications Companies as adopted and amended by the Federal Communications Commission (FCC) for Class A utilities. Each dominant certificated telecommunications utility subject to the FCC Class A cost allocation manual (CAM) filing requirements shall apportion its total costs in each of the Part 32 accounts into regulated, nonregulated and other cost pools, as required by the FCC rules governing this allocation (FCC Rule 64.901-Allocation of Costs) and as filed in that dominant certificated telecommunications utility's CAM on file with the FCC. For such dominant certificated telecommunications utilities, the Part 32 accounts, appropriate cost pools, and approved apportionment methods are set forth in the FCC-approved CAM filed by the Class A dominant certificated telecommunications utilities. Each dominant certificated telecommunications utility not subject to the FCC Class A CAM filing requirements shall describe the methodology used to apportion its total costs in each of the Part 32 accounts into regulated, nonregulated and other cost pools. After initial assignment, costs included in the common cost pool shall be apportioned to the regulated and nonregulated cost pools utilizing the apportionment methods approved by the commission. The Part 32 accounts, appropriate cost pools, and approved apportionment methods are set forth in the commission-approved cost allocation matrix, which is available from the commission's central records office. (3) Contents of CAM. The CAM filed with the commission by a dominant certificated telecommunications utility shall contain at least the following sections and information: (A) (No change.) (B) Nonregulated Activities-identifying each nonregulated product or service provided by the dominant certificated telecommunications utility and the accounts associated with each such nonregulated product or service; (C) Incidental Activities -identifying all incidental activities of the dominant certificated telecommunications utility. Incidental activities shall be defined using the following four criteria: (i) the activity must be an outgrowth of regulated operation; (ii) the activity cannot constitute a separate line of business; (iii) the activity must have been traditionally treated as regulated for accounting purposes; and (iv) the total of all incidental activities' revenues must not exceed 1.0% of a carrier's total revenues; (D) Costs Apportionment Table-identifying the dominant certificated telecommunications utility's specific methodologies, taken from the commission- approved cost allocation matrix, applied to each Part 32 account to apportion costs between regulated activities and nonregulated activities. For Class A dominant certificated telecommunications utilities, the appropriate cost pools and apportionment methods approved by the FCC shall be used; and (E) Time Reporting Procedures-describing the time reporting system used by the dominant certificated telecommunications utility's regulated telephone operating units, how frequently the reporting system is updated, the methods used to train employees to report time accurately, and the methods used to implement, monitor, and reinforce accurate time reporting by employees. (4) Filing requirements. Each dominant certificated telecommunications utility shall file annually, by June 1st, with the commission the following information for the preceding calendar year: (A) its CAM; (B) estimates of the monetary costs or savings associated with any annual revisions by the dominant certificated telecommunications utility to its CAM, broken down with reference to particular affected Part 32 accounts; (C) a statement signed by an officer of the dominant certificated telecommunications utility attesting to the fact that the CAM was followed throughout the year for regulatory reporting purposes; (D) a regulated/nonregulated comparative percentage report. The report shall be broken down by Part 32 account, and shall be further broken down within each such account to indicate separately: (i) the dollar amount of regulated and nonregulated revenues/expenses/invested capital (ratebase); and (ii) the percentages (based on the total amount of revenues/expenses/invested capital(ratebase) within that account) of those revenues/expenses/invested capital(ratebase) that are generated by regulated activities and by nonregulated activities. The report shall present the information in a comparative form with the immediate prior year regulated/nonregulated comparative percentage report. The first report shall contain only first year information; and (E) a copy of any audits, interpretive letters, reviews, or orders pertaining to the dominant certificated telecommunications utility's CAM or its application to transactions with affiliates or nonregulated lines of business which have been issued by the FCC. (5) Alternative filings. Notwithstanding any provision of this subsection to the contrary: (A) If the FCC requires a dominant certificated telecommunications utility to file a CAM regarding its interstate activities, and that dominant certificated telecommunications utility uses the same allocation basis for its intrastate costs as it does for its interstate costs, then the dominant certificated telecommunications utility shall meet the requirements of paragraph (3) of this subsection by filing with the commission annually by June 1st a complete copy of the CAM it filed most recently with the FCC, and, for purposes of developing and maintaining a CAM for its intrastate costs, shall follow the procedures set forth by the FCC for interstate cost allocation. (B) If a dominant certificated telecommunications utility allocates its intrastate costs on the same basis on which an affiliate of the dominant certificated telecommunications utility allocates its interstate costs, and the affiliate files a CAM with the FCC, then the dominant certificated telecommunications utility shall meet the requirements of paragraph (3) of this subsection by filing with the commission annually by June 1st a complete copy of the CAM its affiliate filed most recently with the FCC, and, for purposes of developing and maintaining a CAM for its intrastate costs, shall follow the procedures set forth by the FCC for interstate cost allocation. (6) Exceptions to CAM filing requirements: (A) A dominant certificated telecommunications utility is not required to file the information specified in paragraph (4)(B) of this subsection if the only nonregulated activities in which the dominant certificated telecommunications utility engages are the sale or installation, and/or repair of customer premises equipment and/or inside wire. (B) A dominant certificated telecommunications utility shall not be required to file the information specified in paragraph (4)(B) of this subsection solely on the basis of its ownership of less than 5.0% of the voting securities of a nonregulated entity (which entity would be an affiliate of the dominant certificated telecommunications utility if the dominant certificated telecommunications utility owned 5.0% or more of its voting securities). (C) A dominant certificated telecommunications utility exclusively engaged in regulated activities is not required to file a CAM with the commission. Annually by June 1st, each such dominant certificated telecommunications utility shall file with the commission a statement signed by an officer of the dominant certificated telecommunications utility attesting to the fact that the dominant certificated telecommunications utility was engaged in only regulated activities throughout the preceding calendar year. (D) A dominant certificated telecommunications utility is not required to file a CAM with the commission if the dominant certificated telecommunications utility's rates have been approved on a reciprocal basis, as provided for in sec.22.263 of the commission Procedural Rules. (E) A dominant certificated telecommunications utility is not required to file the information specified in this subsection if the dominant certificated telecommunications utility is considered an average schedule company for determining interstate revenue requirements. (F) A Small Local Exchange Carrier(SLEC) as defined in sec.23.94 of this title (relating to Small Local Exchange Carrier Flexibility) is not required to file the information specified in paragraph (4)(A) of this subsection. Each SLEC shall file annually, by June 1st, with the commission, revision sheets containing all changes made to its CAM for the preceding calendar year. (7) Dominant certificated telecommunications utility flexibility. If a dominant certificated telecommunications utility subject to this subsection believes that certain Part 32 accounts, cost pools, or apportionment methods are not applicable to its activities, and further believes that its use of alternative accounts, cost pools, or apportionment methods would be in the public interest, then that dominant certificated telecommunications utility may apply to the commission for permission to use specifically identified alternative accounts, cost pools, or apportionment methods described in its application. If the commission finds that such alternative accounts, cost pools, or apportionment methods are in the public interest, then the commission may grant the application. Such an application by a dominant certificated telecommunications utility may be reviewed administratively. (8) Costs of affiliate transactions. Nothing in this subsection, nor the commission- approved cost allocation matrix, shall relieve the dominant certificated telecommunications utility of its burden of proving in a proceeding pursuant to the Public Utility Regulatory Act of 1995 sec.3.210 or sec.3.211 that affiliate transactions meet the requirements of sec.3.208(b) of the Act. The ability of a dominant certificated telecommunications utility to recover its affiliate transactions through the intrastate cost of service remains subject to the Act sec.3.208(b). This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 21, 1995. TRD-9516656 Paula Mueller Secretary of Commission Public Utility Commission of Texas Effective date: January 11, 1996 Proposal publication date: September 19, 1995 For further information, please call: (512) 458-0100 Rates 16 TAC sec.sec.23.21, 23.24, 23.26-23.28 The amendments are adopted under the Public Utility Regulatory Act of 1995, sec.1.101, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure. sec.23.21. Cost of Service. (a) Application. Unless the context clearly indicates otherwise, in this section the term "utility," insofar as it relates to telecommunications utilities, shall refer to dominant certificated telecommunications utilities (DCTUs). (b) Components of cost of service and post test year adjustments. Except as provided for in the Public Utility Regulatory Act of 1995, subtitles H and I of Title III, or in any section of these rules dealing with fuel expenses, rates are to be based upon a utility's cost of rendering service to the public during a historical test year, adjusted for known and measurable changes. Post test year adjustments for known and measurable changes to historical test year data (including, but not limited to revenue, expenses, and invested capital) will be considered only where the attendant impacts on all aspects of a utility's operations can be with reasonable certainty identified, quantified, and matched. The two components of cost of service are allowable expenses and return on invested capital. (c) Allowable expenses. Only those expenses which are reasonable and necessary to provide service to the public shall be included in allowable expenses. In computing a utility's allowable expenses, only the utility's historical test year expenses as adjusted for known and measurable changes will be considered, except as provided for in any section of these rules dealing with fuel expenses. (1) Components of allowable expenses. Allowable expenses, to the extent they are reasonable and necessary, and subject to the rules in this section, may include, but are not limited to, the following general categories: (A) Operations and maintenance expense incurred in furnishing normal utility service and in maintaining utility plant used by and useful to the utility in providing such service to the public. Payments to affiliated interests for costs of service, or any property, right or thing, or for interest expense shall not be allowed as an expense for cost of service except as provided in the Public Utility Regulatory Act of 1995, sec.2.208(b) and sec.3. 208(b). (B) Depreciation expense based on original cost and computed on a straight line basis as approved by the commission. Other methods of non-accelerated depreciation may be used for electric generating units when it is determined that such depreciation methodology is a more equitable means of recovering the cost of the plant. (C) Assessments and taxes other than income taxes. (D) Federal income taxes on a normalized basis. Federal income taxes shall be computed according to the provisions of the Public Utility Regulatory Act of 1995, sec.2.208(c) and sec.3.208(c). (E) Advertising, contributions and donations. The actual expenditures for ordinary advertising, contributions, and donations may be allowed as a cost of service provided that the total sum of all such items allowed in the cost of service shall not exceed 3/10 of 1.0% (0.3%) of the gross receipts of the utility for services rendered to the public. The following expenses shall be included in the calculation of the 3/10 of 1.0% (0.3%) maximum: (i) funds expended advertising methods of conserving energy; (ii) funds expended advertising methods by which the consumer can effect a savings in total utility bills; (iii) funds expended advertising load factor improvement at off peak times; (iv) funds expended in support of or membership in professional or trade associations provided such associations contribute toward the professionalism of their membership. However, membership expenses related to legislative advocacy, directly or indirectly, shall not be considered allowable expenses. (F) Nuclear decommissioning expense. The following restrictions shall apply to the inclusion of nuclear decommissioning costs that are placed in a utility's cost of service. (i) An electric utility owning or leasing an interest in a nuclear-fueled generating unit shall include its cost of nuclear decommissioning in its cost of service. Funds collected from ratepayers for decommissioning shall be deposited monthly in irrevocable trusts external to the utility, in accordance with sec.23.59 of this title (relating to Nuclear Decommissioning Trusts). All funds held in short-term investments must bear interest. The level of the annual cost of decommissioning for ratemaking purposes will be determined in each rate case based on an allowance for contingencies of 10% of the cost of decommissioning, the most current information reasonably available regarding the cost of decommissioning, the balance of funds in the decommissioning trust, anticipated escalation rates, the anticipated return on the funds in the decommissioning trust, and other relevant factors. The annual amount for the cost of decommissioning determined pursuant to the preceding sentence shall be expressly included in the cost of service established by the commission's order. (ii) In the event that an electric utility implements an interim rate increase, including an increase filed under bond, an incremental change in decommissioning funding shall be included in the increase. (iii) A utility's decommissioning fund and trust balances will be reviewed in general rate cases. In the event that a utility does not have a rate case within a five-year period, the commission, on its own motion or on the motion of the commission's General Counsel, the Office of Public Utility Counsel, or any affected person, may initiate a proceeding to review the utility's decommissioning cost study and plan, and the balance of the trust. (iv) An electric utility shall perform, or cause to be performed, a study of the decommissioning costs of each nuclear generating unit that it owns or in which it leases an interest. A study or a redetermination of the previous study shall be performed at least every five years. The study or redetermination should consider the most current information reasonably available on the cost of decommissioning. A copy of the study or redetermination shall be filed with the commission and copies provided to the commission's Regulatory Division and the Office of Public Utility Counsel. A utility's most recent decommissioning study or redeterminations shall be filed with the commission within 30 days of the effective date of this subsection. The five year requirement for a new study or redetermination shall begin from the date of the last study or redetermination. (G) Accruals credited to reserve accounts for self insurance under a plan requested by a utility and approved by the commission. The commission shall consider approval of a self insurance plan in a rate case in which expenses or rate base treatment are requested for a such a plan. For the purposes of this rule, a self insurance plan is a plan providing for accruals to be credited to reserve accounts. The reserve accounts are to be charged with property and liability losses which occur, and which could not have been reasonably anticipated and included in operating and maintenance expenses, and are not paid or reimbursed by commercial insurance. The commission will approve a self insurance plan to the extent it finds it to be in the public interest. In order to establish that the plan is in the public interest, the utility must present a cost benefit analysis performed by a qualified independent insurance consultant that demonstrates that, with consideration of all costs, self insurance is a lower cost alternative than commercial insurance and that the ratepayers will receive the benefits of the self insurance plan. The cost benefit analysis shall present a detailed analysis of the appropriate limits of self insurance, an analysis of the appropriate annual accruals to build a reserve account for self insurance, and the level at which further accruals should be decreased or terminated. (H) Postretirement benefits other than pensions (OPEB). For ratemaking purposes, expense associated with postretirement benefits other than pensions (OPEB) shall be treated as follows: (i) OPEB expense shall be included in a utility's cost of service for ratemaking purposes based on actual payments made. (ii) A utility may request a one-time conversion to inclusion of current OPEB expense in cost of service for ratemaking purposes on an accrual basis in accordance with generally accepted accounting principles (GAAP). Rate recognition of OPEB expense on an accrual basis shall be made only in the context of a full rate case. (iii) A utility shall not be allowed to recover current OPEB expense on an accrual basis until GAAP requires that utility to report OPEB expense on an accrual basis. (iv) For ratemaking purposes, the transition obligation shall be amortized over 20 years. (v) OPEB amounts included in rates shall be placed in an irrevocable external trust fund dedicated to the payment of OPEB expenses. The trust shall be established no later than six months after the order establishing the OPEB expense amount included in rates. The utility shall make deposits to the fund no less frequently than annually. Deposits on the fund shall include, in addition to the amount included in rates, an amount equal to fund earnings that would have accrued if deposits had been made monthly. The funding requirement can be met with deposits made in advance of the recognition of the expense for ratemaking purposes. The utility shall, to the extent permitted by the Internal Revenue Code, establish a postretirement benefit plan that allows for current federal income tax deductions for contributions and allows earnings on the trust funds to accumulate tax free. (2) Expenses not allowed. The following expenses shall never be allowed as a component of cost of service: (A) legislative advocacy expenses, whether made directly or indirectly, including but not limited to legislative advocacy expenses included in professional or trade association dues; (B) funds expended in support of political candidates; (C) funds expended in support of any political movement; (D) funds expended in promotion of political or religious causes; (E) funds expended in support of or membership in social, recreational, fraternal, or religious clubs or organizations; (F) funds promoting increased consumption of electricity or water; (G) additional funds expended to mail any parcel or letter containing any of the items mentioned in subparagraphs (A)-(F) of this paragraph; (H) payments, except those made under an insurance or risk-sharing arrangement executed before the date of the loss, made to cover costs of an accident, equipment failure, or negligence at a utility facility owned by a person or governmental body not selling power within the State of Texas; (I) costs, including, but not limited to, interest expense, of processing a refund or credit of sums collected in excess of the rate finally ordered by the commission in a case where the utility has put bonded rates into effect, or when the utility has otherwise been ordered to make refunds; (J) any expenditure found by the commission to be unreasonable, unnecessary, or not in the public interest, including but not limited to executive salaries, advertising expenses, legal expenses, penalties and interest on overdue taxes, criminal penalties or fines, and civil penalties or fines. (d) Return on invested capital. The return on invested capital is the rate of return times invested capital. (1) Rate of return. The commission shall allow each utility a reasonable opportunity to earn a reasonable rate of return, which is expressed as a percentage of invested capital, and shall fix the rate of return in accordance with the following principles. (A) The return should be reasonably sufficient to assure confidence in the financial soundness of the utility and should be adequate, under efficient and economical management, to maintain and support its credit and enable it to raise the money necessary for the proper discharge of its public duties. A rate of return may be reasonable at one time and become too high or too low because of changes affecting opportunities for investment, the money market, and business conditions generally. (B) The commission shall consider efforts by the utility to comply with the statewide energy plan, the efforts and achievements of the utility in the conservation of resources, the quality of the utility's services, the efficiency of the utility's operations, and the quality of the utility's management, along with other applicable conditions and practices. (C) The commission may, in addition, consider inflation, deflation, the growth rate of the service area, and the need for the utility to attract new capital. The rate of return must be high enough to attract necessary capital but need not go beyond that. In each case, the commission shall consider the utility's cost of capital, which is the composite of the cost of the various classes of capital used by the utility. (i) Debt capital. The cost of debt capital is the actual cost of debt. (ii) Equity capital. The cost of equity capital shall be based upon a fair return on its value. For companies with ownership expressed in terms of shares of stock, equity capital commonly consists of the following classes of stock. (I) Common stock capital. The cost of common stock capital shall be based upon a fair return on its value. (II) Preferred stock capital. The cost of preferred stock capital is its annual dividend requirement, if any, plus an adjustment for premiums, discounts, and cost of issuance. (2) Invested capital; rate base. The rate of return is applied to the rate base. The rate base, sometimes referred to as invested capital, includes as a major component the original cost of plant, property, and equipment, less accumulated depreciation, used and useful in rendering service to the public. Components to be included in determining the overall rate base are as follows: (A) Original cost, less accumulated depreciation, of utility plant used by and useful to the utility in providing service. (i) Original cost shall be the actual money cost, or the actual money value of any consideration paid other than money, of the property at the time it shall have been dedicated to public use, whether by the utility which is the present owner or by a predecessor. (ii) Reserve for depreciation is the accumulation of recognized allocations of original cost, representing recovery of initial investment, over the estimated useful life of the asset. Depreciation shall be computed on a straight line basis or by such other method approved under subsection (b)(1) (B) of this section over the expected useful life of the item or facility. (iii) Payments to affiliated interests shall not be allowed as a capital cost except as provided in the Public Utility Regulatory Act of 1995, sec.2.208(b) and sec.3.208(b). (B) Working capital allowance to be composed of, but not limited to the following: (i) Reasonable inventories of materials, supplies, and fuel held specifically for purposes of permitting efficient operation of the utility in providing normal utility service. This amount excludes appliance inventories and inventories found by the commission to be unreasonable, excessive, or not in the public interest. (ii) Reasonable prepayments for operating expenses. Prepayments to affiliated interests shall be subject to the standards set forth in the Public Utility Regulatory Act of 1995, sec.2.208(b) and sec.3.208(b). (iii) A reasonable allowance for cash working capital. The following shall apply in determining the amount to be included in invested capital for cash working capital: (I) Cash working capital for electric utilities shall in no event be greater than one-eighth of total annual operations and maintenance expense, excluding amounts charged to operations and maintenance expense for materials, supplies, fuel, and prepayments. (II) Cash working capital for all DCTUs shall in no event be greater than one- twelfth of total annual operations and maintenance expense, excluding amounts charged to operations and maintenance expense for materials, supplies, and prepayments. (III) For electric cooperatives, river authorities, and investor-owned utilities that purchase 100% of their power requirements, one-eighth of operations and maintenance expense excluding amounts charged to operations and maintenance expense for materials, supplies, fuel, and prepayments will be considered a reasonable allowance for cash working capital. For telephone cooperatives, one-twelfth of operations and maintenance expense excluding amounts charged to operations and maintenance expense for materials, supplies, and prepayments will be considered a reasonable allowance for cash working capital. (IV) Operations and maintenance expense does not include depreciation, other taxes, or federal income taxes, for purposes of subclauses (I), (II), (III), and (VI) of this clause. (V) For all investor-owned electric utilities and all telephone DCTUs with 31,000 or more access lines, a reasonable allowance for cash working capital, including a request of zero, will be determined by the use of a lead-lag study. A lead-lag study will be performed in accordance with the following criteria: (-a-) The lead-lag study will use the cash method; all non-cash items, including but not limited to depreciation, amortization, deferred taxes, prepaid items, and return (including interest on long-term debt and dividends on preferred stock), will not be considered. (-b-) Any reasonable sampling method that is shown to be unbiased may be used in performing the lead-lag study. (-c-) The check clear date, or the invoice due date, whichever is later, will be used in calculating the lead-lag days used in the study. In those cases where multiple due dates and payment terms are offered by vendors, the invoice due date is the date corresponding to the terms accepted by the utility. (-d-) All funds received by the utility except electronic transfers shall be considered available for use no later than the business day following the receipt of the funds in any repository of the utility (e.g. lockbox, post office box, branch office). All funds received by electronic transfer will be considered available the day of receipt. (-e-) For utilities the balance of cash and working funds included in the working cash allowance calculation shall consist of the average daily bank balance of all non-interest bearing demand deposits and working cash funds. (-f-) The lead on federal income tax expense shall be calculated by measurement of the interval between the mid-point of the annual service period and the actual payment date of the utility. (-g-) If the cash working capital calculation results in a negative amount, the negative amount shall be included in rate base. (VI) If cash working capital is required to be determined by the use of a lead-lag study under the previous subclause and either the utility does not file a lead lag study or the utility's lead-lag study is determined to be so flawed as to be unreliable, in the absence of persuasive evidence that suggests a different amount of cash working capital, an amount of cash working capital equal to negative one-eighth of operations and maintenance expense including fuel and purchased power in the case of an electric utility, or negative one- twelfth of operations and maintenance expense in the case of a telephone utility, will be presumed to be the reasonable level of cash working capital. (VII) For all investor-owned telephone DCTUs with fewer than 31,000 access lines, cash working capital shall be calculated by any method that the commission determines to be reasonable, subject to subclause (IV) of this clause. (C) Deduction of certain items which include, but are not limited to, the following: (i) accumulated reserve for deferred federal income taxes; (ii) unamortized investment tax credit to the extent allowed by the Internal Revenue Code; (iii) contingency and/or property insurance reserves; (iv) contributions in aid of construction; (v) customer deposits and other sources of cost-free capital; (D) Construction work in progress. The inclusion of construction work in progress is an exceptional form of rate relief. Under ordinary circumstances the rate base shall consist only of those items which are used and useful in providing service to the public. Under exceptional circumstances, the commission will include construction work in progress in rate base to the extent that the utility has proven that: (i) the inclusion is necessary to the financial integrity of the utility; and (ii) major projects under construction have been efficiently and prudently planned and managed. However, construction work in progress shall not be allowed for any portion of a major project which the utility has failed to prove was efficiently and prudently planned and managed. (E) Nuclear plant in service. A nuclear generating unit shall not be eligible for inclusion in a utility's rate base as plant in service until such time as the utility has shown that the unit is in commercial operation. Such showing of commercial operation is separate and apart from, and bears no relationship to, issues such as prudent and efficient planning and management, excess capacity, or whether the unit meets the test of used and useful, and shall not be construed as satisfying the utility's burden of proof as to such other issues in the same or subsequent proceedings. A utility seeking to show that such a unit is in commercial operation must: (i) prove that the preoperational testing program, consisting of those tests conducted following completion of construction and construction-related inspections and tests, but prior to fuel loading, to demonstrate, to the extent practical, the capability of structures, systems and components to meet performance requirements to satisfy design criteria, has been completed with all test deficiencies corrected. The requirement to correct all test deficiencies may be waived on a showing that such deficiencies do not impact on safety or system operation; (ii) prove that the startup test program, consisting of those test activities scheduled to be performed during and after fuel loading that confirm the design bases and demonstrate, to the extent practical, that the plant will operate in accordance with design, has been completed; (iii) prove that the unit has furnished power to the grid for an uninterrupted period of 100 hours, or the run duration period required by the full warranted output performance test of the nuclear steam supply system, whichever is greater, at a power level between 95% and 100% of the unit's nominal net electrical output as used for the purpose of plant design; (iv) prove by use of computer simulation studies or other evidence that the plant and associated transmission facilities can supply to the utility's Texas customers their full share of the unit's rated power with the single most critical transmission line out of service; (v) prove that the unit is supplying electricity to the utility's transmission grid with output scheduled by the load dispatcher subject to plant availability; and (vi) file with the commission a fully documented explanation of the cause of each unscheduled and unanticipated delay of 100 hours or more and each Nuclear Regulatory Commission notice of violation received in the pre-operational or startup test programs, as defined in clauses (i) and (ii) of this subparagraph, together with fully documented descriptions of the measures taken by the utility to correct and prevent reoccurrence of the incident which caused delay and the measures taken in response to the notice of violation. (F) Self insurance reserve accounts. If a self insurance plan is approved by the commission, any shortages to the reserve account will be an increase to the rate base and any surpluses will be a decrease to the rate base. The utility shall maintain appropriate books and records to permit the commission to properly review all charges to the reserve account and determine whether the charges being booked to the reserve account are reasonable and correct. (e) Adjustment for House Bill 11, Acts of 72nd Legislature, First Called Special Session 1991. (1) In this subsection the term "utility" insofar as it relates to telecommunications utilities, shall refer to incumbent local exchange companies. Each utility that is subject to the commission's rate setting jurisdiction, pays state franchise taxes, and has not had a rate proceeding under the Act, sec. sec.2.211, 2.212, 3.210 or 3.211, in which the effects of House Bill 11 were considered in the setting of rates shall be subject to this subsection. Except as provided in the following sentence, on or before December 1 of each year, each utility subject to this subsection shall file with the commission a tariff sheet, or tariff sheets, applicable to each rate class setting forth an interim House Bill 11 tax adjustment factor. If a utility chooses not to request an increase under this subsection or if the utility has otherwise limited itself by agreement to recovering tax changes that are the subject of this subsection by a method different from that prescribed in this subsection, the utility need not file tariff sheets but shall make an informational filing showing its calculations including an explanation and all underlying supporting documentation showing the effect of House Bill 11 on its taxes. If the adjustment is a decrease that amounts to less than $1.00 per customer for electric utilities or access line for telephone utilities on an annual basis, the tariff shall not include a factor, but shall state that the reduction will be applied against the adjustment for future years. In all other tariffs, the factors set forth in the tariff sheets shall be calculated as set forth in the following paragraphs. Utilities that are required to file tariff sheets shall include an explanation of how the interim factor was calculated as well as showing all the calculations. (2) If the adjustment is a decrease requiring a factor or the utility affirmatively requests that an adjustment be made to its billings to account for the effect of House Bill 11 on its state taxes, the tariff filing will be docketed and will automatically go into effect on January 1 of the year following the filing. If the adjustment is a decrease being carried forward to future years, the filing will be treated as a tariff filing except that it shall take effect on January 1 of the year following the filing. A utility may amend a tariff filed under this subsection to make mid-course corrections as necessary. For all amended filings, all tariffs will take effect on the date specified by the utility, but in no event earlier than ten days after the filing. (3) The interim House Bill 11 tax adjustment factor shall be calculated by allocating the effect on the utility's state taxes for the next calendar year of House Bill 11 as provided in paragraph (6) of this subsection. The effect on the utility's state taxes for the coming calendar year shall be calculated by subtracting the estimated state taxes that would be attributable to the calendar year if the law prior to House Bill 11 was still in effect from the estimated state taxes that will be due or are attributable to the calendar year under House Bill 11. In calculating the state taxes that would be due during the calendar year if the law prior to House Bill 11 was still in effect, four- twelfths of the franchise tax paid or that would have been paid in the previous year and eight-twelfths of the franchise tax that would have been paid in the calendar year in question will be considered attributable to the calendar year in question. In performing the calculation, the various fees imposed by House Bill 11 will not be considered taxes. In calculating the taxes that are estimated to be paid, changes resulting from audits or amended returns for previous periods that were covered by this rule shall be considered. The state franchise tax imposed by House Bill 11 will be considered to be a franchise tax and not an income tax regardless of the method of calculation. (4) If an interim factor goes into effect, it shall be subject to surcharge or refund to the extent it differs from the factor finally set by the commission. If a surcharge or refund is necessary, a credit or surcharge will be made to the existing customers' bills. If the refund or surcharge amount is less than either $10,000 in total or $1.00 per customer, calculated by dividing the total refund or surcharge by the total number of customers, the utility may make the refund or surcharge by carrying it forward until a year when the cumulative total refund or surcharge is not less than either $10, 000 or $1.00 per customer. Simple interest will be added to the amount due at the rate set by the commission for overbillings and underbillings starting at the beginning of the month in which the obligation accrued and ending on the last day of the month preceding the refund or surcharge. The month, or months, in which the obligation accrues will be determined by comparing the collections each month under the tariff filed by the utility with the amount that should have been collected had the utility been able to precisely predict its tax bill and its sales. The number of days in each month shall be considered for purposes of the interest calculation. Interest will be added to decreases that are carried to future years and will be calculated by the same method. (5) The utility shall file, on or before the first business day after March 1 of the year following the year that a particular factor was in effect, testimony supporting the final adjustment factor that it is requesting to account for the effect of House Bill 11 on its state taxes for that year. The utility's filing will include a copy of the Franchise Tax Return filed with the Comptroller's Office and the details of their computation of the tax that would have been due had House Bill 11 not been enacted. The hearing on the merits for purposes of setting the final factor, if necessary, shall be convened no earlier than 45 days after the filing of the utility's testimony and shall be strictly limited to issues under this subsection. For purposes of administrative efficiency, the presiding officer assigned to a case may grant a utility's request that the final hearing on a particular year's factor be delayed for up to three years; however, if such a request is granted, any interest to be paid by the utility shall be at the utility's cost of capital as determined in the utility's last rate case. Requests to delay the final hearing on a particular year's factor shall be filed with the testimony supporting the final adjustment factor. (6) The billing adjustment should apply over the entire year; however, if the adjustment necessary to account for the effect of House Bill 11 is so small that it would be difficult to apply on a monthly basis, the utility may make the billing adjustment during a single month. Cost allocation and rate design are as follows. (A) Electric utilities. For electric utilities, if the adjustment factor results in a lower cost to the ratepayers, the revenue decrease shall be allocated to the customers on the same basis as the franchise taxes were allocated in the utility's last rate case. If the adjustment factor results in a greater cost to the ratepayers, the revenue increase will be allocated to the customers in the same manner as were federal income taxes in the utility's last rate case. The factor for each customer within a class will then be calculated based on expected kilowatt-hour (kwh) sales and charged on a per kwh basis, except that the factor for each customer within an industrial class served at transmission-level voltage will be calculated as a percentage of the base revenues (excluding fuel, any applicable PCRF charges, and add-on revenue taxes) received from that class during the most recent 12-month period. (B) Telephone utilities. Any increase or decrease will be allocated to each customer class and service based on the revenues from that class or service. For purposes of determining revenues, the period to be used will be the same as that for the federal tax return used to compute the state taxes. The adjustment factor will be billed as a percentage of the customer's bill except that coin telephone local calling shall not be billed any adjustment. Such percentage shall be determined by computing the ratio of a class's or service's allocated franchise tax to its historic revenues. The adjustment on the customer bill will be rounded to the nearest cent. (7) The utility shall separately list the adjustment on each customer's bill and label the adjustment "cost of service surcharge" if the adjustment is an increase or "cost of service credit" if the adjustment is a decrease. sec.23.24. Form and Filing of Tariffs. (a) Application. Unless the context clearly indicates otherwise, in this section the term "utility" insofar as it relates to telecommunications utilities, shall refer to dominant carriers. (b) Effective tariff. No utility shall directly or indirectly demand, charge, or collect any rate or charge, or impose any classifications, practices, rules, or regulations different from those prescribed in its effective tariff filed with the commission. (c) Requirements as to size, form, identification and filing of tariffs. (1) Every public utility shall file with the commission filing clerk five copies of its tariff containing schedules of all its rates, tolls, charges, rules, and regulations pertaining to all of its utility service by September 1, 1976, or when it applies for a certificate of convenience and necessity to operate as a public utility, if it is not in existence as of September 1, 1976. It shall also file five copies of each subsequent revision. Each revision shall be accompanied by a cover page which contains a list of pages being revised, a statement describing each change, its effect if it is a change in an existing rate, and a statement as to impact on rates of the change by customer class, if any. If a proposed tariff revision constitutes an increase in existing rates of a particular customer class or classes, then the commission may require that notice be given. (2) All tariffs shall be in loose-leaf form of size 8 1/2 inches by 11 inches and shall be plainly printed or reproduced on paper of good quality. The front page of the tariff shall contain the name of the utility and location of its principal office and the type of service rendered (telephone, electric, etc.). (3) Each rate schedule must clearly state the territory, city, county, or exchange wherein said schedule is applicable. (4) Tariff sheets are to be numbered consecutively per schedule. Each sheet shall show an effective date, a revision number, section number, sheet number, name of the utility, the name of the tariff, and title of the section in a consistent manner. Sheets issued under new numbers are to be designated as original sheets. Sheets being revised should show the number of the revision, and the sheet numbers shall be the same. (5) Any other telecommunications utility, after a declaration by the commission that it is a dominant carrier, shall file tariffs complying with the requirements of this section. These tariffs shall be filed within the time specified in the commission order finding the telecommunications utility a dominant carrier, or within 60 days in the absence of such a specification. (d) Composition of tariffs. The tariff shall contain sections setting forth: (1) a table of contents; (2) a preliminary statement containing a brief description of the utility's operations; (3) a list of the cities, exchanges, and counties in which service is provided; (4) the rate schedules; and (5) the service rules and regulations, including forms of the service agreements. (e) Tariff filings in response to commission orders. Tariff filings made in response to an order issued by the commission shall include a transmittal letter stating that the tariffs attached are in compliance with the order, giving the docket number, date of the order, a list of tariff sheets filed, and any other necessary information. Said tariff sheets shall comply with all other rules in this chapter and shall include only changes ordered. The effective date and/or wording of said tariffs shall comply with the provisions of the order. (f) Symbols for changes. Each proposed tariff sheet shall contain notations in the right-hand margin indicating each change made on these sheets. Notations to be used are: (C) to denote a change in regulations; (D) to denote discontinued rates or regulations; (E) to denote the correction of an error made during a revision (the revision which resulted in the error must be one connected to some material contained in the tariff prior to the revision); (I) to denote a rate increase; (N) to denote a new rate or regulation; (R) to denote a rate reduction; and (T) to denote a change in text, but no change in rate or regulation. In addition to symbols for changes, each changed provision in the tariff shall contain a vertical line in the right-hand margin of the page which clearly shows the exact number of lines being changed. (g) Availability of tariffs. Each utility shall make available to the public at each of its business offices or designated sales offices within Texas all of its tariffs currently on file with the commission, and its employees shall lend assistance to seekers of information therefrom and afford inquirers an opportunity to examine any of such tariffs upon request. The utility also shall provide copies of any portion of the tariffs at a reasonable cost to reproduce such tariff for a requesting party. (h) Rejection. Any tariff filed with the commission and found not to be in compliance with these sections shall be so marked and returned to the utility with a brief explanation of the reasons for rejection. (i) Change by other regulatory authorities. Tariffs which are filed to reflect changes in rates or regulations set by other regulatory authorities shall include a copy of the order or ordinance authorizing the change. (j) Effective date of tariff change. No jurisdictional tariff change may take effect prior to 35 days after filing without commission approval. The requested date will be assumed to be 35 days after filing unless the utility requesting the change requests a different date in its application. The commission may suspend the effective date of the tariff change for 120 days after the requested effective date and extend that suspension another 30 days if it finds that a longer time will be required for final determination. In the case of an actual hearing on the merits of a case that exceeds 15 days, the suspension date is extended for two days for each one day of actual hearing in excess of 15 actual hearing days. sec.23.26. New and Experimental Services. (a) Application. This section applies to dominant certificated telecommunications utilities (DCTUs), as that term is defined by sec.23.3 of this title (relating to Definitions). In addition, the services to which this section applies are those that are a subset of a service for which the utility is dominant. (b) Definitions. The following words and terms when used in this sections shall have the following meaning unless the context clearly indicates otherwise: (1) new service means any service not offered on a tariffed basis prior to the date of the application relating to such service and specifically excludes basic local telecommunications service including local measured service. If a proposed service could serve as an alternative or replacement for a service offered prior to the date of the new-service application and does not provide significant improvements (other than price) over, or significant additional services not available under, a service offered prior to the date of such application, it shall not be considered a new service. (2) (No change.) (3) administrative review means a process whereby an application is reviewed by the commission staff and the Office of Public Utility Counsel and ruled on by the presiding officer without an evidentiary hearing and without an order signed by the commission. (c) Filings requesting approval of new and experimental services. A DCTU may request approval of a new or experimental service by following the procedures outlined in this section. In addition to copies required by other commission rules, one copy of the application shall be delivered to the Regulatory Division and one copy to the Office of Public Utility Counsel. Nothing in this section precludes a DCTU from utilizing other provisions of this title to seek approval to offer such services, however, the commission or the presiding officer, in its discretion, may require any application for a new or experimental service to comply with the requirements of this section. Not later than 30 days prior to the proposed effective date of the new or experimental service, the DCTU shall file with the commission and the Office of Public Utility Counsel an application containing the following information: (1) a statement of intent by the DCTU to use the procedures established in this section; (2)-(3) (No change.) (4) a statement detailing the type of notice, if any, the utility has provided or intends to provide to the public regarding the application and a brief statement explaining why the DCTU's notice proposal is reasonable; (5) (No change.) (6) detailed documentation showing that the proposed service is priced above the long run incremental cost of such service. The commission shall allow an incumbent LEC that is not a Tier 1 LEC as of September 1, 1995, at that company's option, to adopt the cost studies approved by the commission for a Tier 1 LEC. The application shall also include projections of revenues, demand, and expenses demonstrating that in the second year after the service is first offered, the proposed rates will generate sufficient annual revenues to recover the annual long run incremental costs of providing the service, as well as a contribution for joint and/or common costs. Capital costs related to providing the service shall be separately identified in these projections. The application shall also include all workpapers and supporting documentation relating to computations or assumptions contained in the application. (7) If the application concerns a service which will not initially be offered systemwide, the application shall separately explain for each exchange in which the service will not be offered why the DCTU's facilities in that exchange do not have the technical capability to handle the service. The application shall also include an implementation plan which shall specify the DCTU's plans for making the service available in such exchanges within a reasonable time after receipt by the LEC of a bona fide request for the service. The DCTU shall also specify in its plan what requirements must be met for a request for service to be considered bona fide. This requirement does not apply to experimental services, but the DCTU shall specify the exchanges in which it proposes to offer the experimental service. (8) (No change.) (9) Any other information which the DCTU wants considered in connection with the commission's review of its application. (d) Modifications and waivers of requirements. In its application a DCTU may request and the commission or the presiding officer may grant for good cause the modification or waiver of requirements set forth in this section concerning systemwide rates; systemwide provision of service; the one-year maximum period for offering an experimental service; the one-year, cost-related prove-in period; or long run incremental cost support. Subsequent to the introduction of an experimental service, a DCTU may also apply for modification of the period initially approved for offering the service. However, no experimental service shall be approved for more than two years, no prove-in period shall be extended beyond two years and, in lieu of incremental cost information, the DCTU must provide other cost support demonstrating that the proposed rates for the service will recover its costs plus a contribution within the required period. A waiver of the incremental cost standard shall only be granted if the presiding officer determines that such a standard imposes an unreasonable burden on a DCTU which has inadequate resources to produce the required cost information to meet that standard and if the presiding officer determines that an appropriate alternative cost standard is available. Any request for modification or waiver of these requirements shall include a complete statement of the DCTU's arguments supporting that request. The presiding officer shall rule on the waiver request within 15 days of the filing of the request. A copy of the presiding officer's ruling shall be provided to the commission, and the commission may overrule any waiver granted by a presiding officer within 15 days of the presiding officer's ruling. (e) Notice. The presiding officer may require notice to be provided to the public in addition to that proposed by the DCTU. Not less than five days before the effective date of the application, the DCTU shall file a statement indicating the date on which all notice provided to the public was completed and proof of such notice. If public notice of the application is required, it shall include a description of the new or experimental service, the proposed rates and other terms of the service, the types of customers likely to be affected if the service is approved, the probable effect on the DCTU's revenues if the service is approved, the proposed effective date for the service, and the following language: "Persons who wish to comment on this application should notify the commission by specified date, ten days before the proposed effective date. Requests for further information should be mailed to the Public Utility Commission of Texas, (insert the commission's current address), or you may call the Public Utility Commission's Public Information Office at (insert the commission's current telephone numbers), or (insert current commission telephone number for text telephone) 458-0221 teletypewriter for the deaf." (f) Requirements for proposed new and experimental services. Unless waived or modified by the presiding officer as provided under subsection (d) of this section, the following requirements shall apply to any new service approved under this section: (1) Such new service shall be offered at the same price throughout the DCTU's system. (2) The service shall also be offered in every exchange served by the DCTU, except exchanges in which the DCTU's facilities do not have the technical capability to handle the service. (3) (No change.) (4) An experimental service approved under this section may be flexibly priced provided that the minimum rate in the range of rates shall be above the long run incremental cost of providing the service. The DCTU may make a change in rates within an approved range of rates upon such notice to customers and the commission as the presiding officer may require. In addition, before discontinuing provision of an experimental service, the DCTU shall give such notice of the discontinuation as the presiding officer may require. (g) Administrative review. An application considered under this section shall be reviewed administratively unless the presiding officer, for good cause, determines at any point during the review that the application should be docketed. The operation of the proposed rate schedule may be suspended for 35 days after the effective date of the application. The effective date shall be no earlier than 30 days after the filing date of the application or 30 days after public notice is completed, whichever is later. The application shall be examined for sufficiency. If the presiding officer concludes that material deficiencies exist in the application, the applicant shall be notified within ten working days of the filing date of the specific deficiency in its application, and the earliest possible effective date of the application shall be no less than 30 days after the filing of a sufficient application with substantially complete information as required by the presiding officer. Thereafter, any time deadlines shall be determined from the 30th day after the filing of the sufficient application and information or from the effective date if the presiding officer extends that date. While the application is being administratively reviewed, the commission staff and the staff of the Office of Public Utility Counsel may submit requests for information to the DCTU. Three copies of all answers to such requests for information shall be provided to the commission staff and the Office of Public Utility Counsel within ten days after receipt of the request by the DCTU. No later than 20 days after the filing date of the application, interested persons may provide to the commission staff written comments or recommendations concerning the application. The commission staff shall and the Office of Public Utility Counsel may file with the presiding officer written comments or recommendations concerning the application. No later than 35 days after the effective date of the application, the presiding officer shall complete an administrative review to determine whether the DCTU's application meets the following requirements. (1) (No change.) (2) Notice was provided as required by the presiding officer. (3)-(5) (No change.) (h) Approval or denial of application. For its application to be approved, the DCTU must meet all of the requirements in this section, unless such requirements are modified or waived by the presiding officer as provided under subsection (d) of this section. If, based on the administrative review, the presiding officer determines that all requirements not waived have been met, the DCTU shall be permitted to offer the service at the rates and terms approved by the presiding officer. If, based on the administrative review, the presiding officer determines that one or more of the requirements not waived have not been met, the presiding officer may dismiss or, upon prior request of the DCTU, shall docket the application. (i) (No change.) (j) Interim rates. For good cause, interim rates may be approved after docketing. However, interim rates shall not be approved if the new service requires substantial initial investment by customers before they may receive the service unless the commission requires the DCTU to notify every customer prior to purchasing the service that this investment is at risk due to the interim nature of the service and the rates for the service and unless the DCTU makes appropriate provisions to protect its customers from the risks of the DCTU's failure to notify. (k) Reporting requirements. If a new service is approved based on either an administrative review or a docketed proceeding, the DCTU shall file with the commission tracking reports showing the actual revenues; demand and related expenses for the service; its progress on the implementation plan, if any such plan was approved by the commission; and such other information as may be required by the commission (or, in connection with an administrative review, by the presiding officer) or requested by the commission staff. One such report shall be due nine months after the service is first offered and shall contain information for at least the first six months the service was offered. The second such report shall be filed twelve months after the service is first offered and shall contain information for at least the first nine months the service was offered. The third such report shall be filed no later than 15 months after the service is first offered and shall contain information for at least the first 12 months the service was offered. Such reporting requirements shall be waived for experimental services of one year's duration or less, but the DCTU shall retain in its record such information related to revenues, demand and expenses and shall submit such information with any subsequent request to make a formerly experimental service a permanent new service. (l) Subsequent review of the service. Except as prohibited by Subtitle H or Subtitle I of the Public Utility Regulatory Act of 1995, if a new or experimental service is approved under the procedures set forth in this section, the commission staff or any affected person may file with the commission a petition seeking modification of the rates or terms under which the service is offered or withdrawal of the service. sec.23.27. Rate-Setting Flexibility for Services Subject to Significant Competitive Challenges. (a) Application. The provisions of this section apply to incumbent local exchange companies (LECs), as defined by sec.23.3 of this title (relating to Definitions). (b) Pricing flexibility. (1) The types of pricing flexibility that an LEC may request are set forth in subparagraphs (A)-(D) of this paragraph. (A) Banded rates. If an LEC is granted the authority to charge banded rates, the minimum rates shall yield revenues that are equal to or greater than 105% of the long run incremental cost of the service in the geographic market in which the service will be provided. When an LEC is granted the authority to charge banded rates, the LEC shall file a tariff showing the minimum and maximum rates and specifying its current rate. The current rate, as specified in the LEC's tariff, shall be applied uniformly to all customers of the service in each exchange for which the commission has approved banded rates. If the LEC desires to charge a rate different from its current rate, but between the minimum and maximum rates, it shall file a revised tariff on or before the effective date of the rate change. The minimum and maximum rates may only be changed as provided for in sec.sec.3.210, 3.211, or 3.213 of the Public Utility Regulatory Act of 1995. (B) (No change.) (C) Detariffing. If an LEC is granted the authority to detariff a service, the LEC shall maintain at the commission a current price list for the service, and the commission shall retain authority to regulate the quality, terms and conditions of the detariffed service, other than rates. The commission may determine the appropriate ratemaking treatment of any revenues from or costs of providing a detariffed service in a proceeding under sec.sec.3. 210, 3.211, or 3.213 of the Public Utility Regulatory Act of 1995. (D) (No change.) (2) LECs have the authority to enter into customer-specific contracts for those services specified in subsection (c)(1)(A)-(D) of this section. For those services, LECs may apply to the commission pursuant to this subsection to obtain a type of pricing flexibility specified in paragraph (1) of this subsection other than customer-specific contracts. For other services, LECs may apply to the commission pursuant to this subsection to obtain any type of pricing flexibility specified in paragraph (1) of this subsection. However, nothing in this subsection shall permit an LEC to obtain pricing flexibility for basic local telecommunications service, including local measured service, or for any service that includes as a component a service not subject to significant competitive challenge. Additionally, nothing in this subsection shall permit an LEC to enter into customer-specific contracts or to obtain detariffing with respect to message telecommunications services, switched access services, or wide area telecommunications service. (3) An application for pricing flexibility filed under this paragraph shall: (A)-(I) (No change.) (J) demonstrate that the service identified pursuant to subparagraph (C) of this paragraph is not basic local telecommunications service, including local measured service; (K)-(M) (No change.) (N) for any type of pricing flexibility other than detariffing, include proposed tariffs and identify any tariff language that restricts the resale, sharing, or joint use of the service identified pursuant to subparagraph (C) of this paragraph and any component thereof and demonstrate why such restrictive tariff language is consistent with the policy established in the Act, sec.3.051(a); and (O) (No change.) (4) The commission shall allow an incumbent LEC that is not a Tier 1 LEC as of September 1, 1995, at that company's option, to adopt the cost studies approved by the commission for a Tier 1 LEC. (5) An application for pricing flexibility shall be docketed and assigned to a presiding officer. No later than ten working days after the filing of an application for pricing flexibility, the presiding officer shall issue an order scheduling a prehearing conference for the purposes of determining notice requirements, establishing a procedural schedule, and addressing other matters as may be appropriate. The commission shall make a final decision no later than 180 days after the completion of notice, as ordered by the presiding officer. However, this 180-day period shall be extended two days for each one day of actual hearing on the merits of the case that exceeds 15 days. The presiding officer or commission, upon a showing of good cause relating to the applicant's failure or refusal to prosecute, including but not limited to the applicant's unreasonable resistance to discovery, may further extend the timeline, provided that the order shall specifically identify the facts found to constitute good cause. This deadline may be expressly waived by the applicant. (6) For LECs with less than 31,000 access lines, the commission shall not be limited under paragraph (7)(D)(i)-(x) of this subsection to considering only competition within the exchange(s) where the LEC will provide the service. Pursuant to paragraph (3)(O) of this subsection, an LEC with less than 31,000 access lines may provide information that addresses the criteria of paragraph (3)(G)-(I) of this subsection with respect to products or services available outside the exchange(s) designated in paragraph (3)(E) of this subsection. (7) An application for pricing flexibility shall be approved if, after an evidentiary hearing, the commission finds, based on the evidence, that: (A) no service for which pricing flexibility is sought is basic local telecommunications service, including local measured service; (B) no service for which the LEC requests detariffing of rates or authority to enter into customer-specific contracts is message telecommunications service, switched access service, or wide area telecommunications service; (C) no service for which pricing flexibility is sought includes a component that is not subject to significant competitive challenge; (D) the grant of pricing flexibility for the service identified pursuant to paragraph (3)(C) of this subsection within the exchange(s) designated pursuant to paragraph (3)(E) of this subsection is appropriate to allow the LEC to respond to a significant competitive challenge, based upon consideration of the following: (i) the number and size of telecommunications utilities or other persons providing the same, equivalent, or substitutable service within the exchange(s) designated pursuant to paragraph (3)(E) of this subsection; (ii) the extent to which the same, equivalent, or substitutable service is available within the exchange(s) designated pursuant to paragraph (3)(E) of this subsection; (iii) the ability of customers to obtain the same, equivalent, or substitutable services at comparable rates, terms, and conditions within the exchange(s) designated pursuant to paragraph (3)(E) of this subsection; (iv) the ability of telecommunications utilities or other persons to make the same, equivalent, or substitutable service readily available at comparable rates, terms, and conditions within the exchange(s) designated pursuant to paragraph (3)(E) of this subsection; (v) the existence of any significant barrier to the entry or exit of a provider of the same, equivalent or substitutable services within the exchange(s) designated pursuant to paragraph (3)(E) of this subsection; (vi) whether there are mechanisms to minimize potential anti-competitive practices, to the extent that any such practice has been identified in the record; (vii) whether there are mechanisms to prevent the subsidization of the service with revenues from regulated monopoly services; (viii) whether the ability of the LEC to flexibly price the service within the designated exchange(s) would have any significant impact on universal service; (ix) whether the type of pricing flexibility requested is appropriate in light of the level and nature of competition within the exchange(s) where the LEC will provide the service; and (x) any other relevant information contained in the record; (E) the rates, if the type of pricing flexibility granted is either banded rates or some other type of pricing flexibility pursuant to paragraph (1)(D) of this subsection that involves rate-setting, are just and reasonable and: (i) yield revenues that are equal to or greater than 105% of the long run incremental cost of the service in the geographic market in which the service will be provided; (ii) are not unreasonably preferential, prejudicial or discriminatory; (iii) are such that the service will not be subsidized directly or indirectly by regulated monopoly services; and (iv) are not predatory or anticompetitive. (8) Nothing in this subsection is intended to prevent the presiding officer from recommending, or the commission from approving based on the record evidence, relief other than that requested in the application. (c) Customer-specific contracts. (1) An LEC shall have the authority to enter into customer-specific contracts for: (A)-(C) (No change.) (D) customized services that are unique because of size or configuration, provided that such customized services shall not include basic local telecommunications service, including local measured service, or message telecommunications services, switched access services, or wide area telecommunications service; and (E) (No change.) (2)-(5) (No change.) (6) For good cause, an LEC may request interim approval of a customer-specific contract and associated tariff sheets for services other than those specified in paragraph (1)(A)-(D) of this subsection. (A) (No change.) (B) Immediately upon filing its application, the LEC shall hand-deliver to the commission's Office of Policy Development, the commission's Regulatory Division, the commission's secretary, and the Office of Public Utility Counsel a file- stamped copy of the application. (C) The request for interim approval shall be reviewed administratively. (i) The presiding officer shall issue an order setting forth a procedural schedule for review of the request for interim approval, including: (I) (No change.) (II) a date by which the commission staff shall file comments or a recommendation concerning the request. (ii) The presiding officer shall rule on the request for interim approval no sooner than ten working days after the filing of an application. (D) (No change.) (7) Approval of a customer-specific contract and associated tariff sheets is as follows. (A) An application for approval of a customer-specific contract and associated tariff sheets considered under this subsection shall be reviewed administratively, unless the LEC requests that the application be docketed or the presiding officer, for good cause, determines at any point during the review that the application should be docketed. For good cause the presiding officer may grant interim approval of an application that has been docketed, but may do so no sooner than ten working days after the filing of the application. (i) The effective date of the customer-specific contract and associated tariff sheets shall be the later of: (I) 30 days after the filing of a sufficient application, as determined by the presiding officer; (II)-(III) (No change.) (ii) (No change.) (iii) The presiding officer shall issue an order setting forth a procedural schedule for review of the application for approval of a customer-specific contract and associated tariff sheets, including, but not limited to: (I) dates by which any interested person, the Office of Public Utility Counsel, or the commission staff may file comments as to the sufficiency of the application; (II)-(III) (No change.) (IV) dates by which the commission staff shall file comments or recommendations concerning the approval of the application. (iv) The presiding officer shall review the application for approval of a customer-specific contract and associated tariff sheets filed pursuant to paragraph (4) of this subsection for sufficiency. If the presiding officer concludes, after a review of the application and all comments, that material deficiencies exist in the application, the LEC shall be notified of any specific deficiency within ten working days of the filing of its application. (B) After a sufficient application for approval of a customer-specific contract and associated tariff sheets has been filed, the presiding officer shall review the application and all comments and recommendations filed to determine whether the LEC's application meets the requirements set forth in clauses (i)-(vi) of this subparagraph. If the presiding officer finds that the application does not satisfy one or more of these requirements, the presiding officer shall deny the application or, upon prior request of the LEC, docket the application. If docketed, the commission's rules applicable to docketed proceedings shall apply and the contracted service shall not be initiated without the approval of the commission or the presiding officer. The application shall be approved by the presiding officer if all of the following requirements are satisfied: (i)-(vi) (No change.) (d) Subsequent review. The commission may, modify, or revoke, upon notice and hearing, the authorization of any type or types of pricing flexibility granted pursuant to this section. (e) Review of cost standards under this section. Any costs standards established by the commission in this section shall be subject to change pending the commission's deliberations in the cost standards rulemaking required by sec.3.051(h) of the Public Utility Regulatory Act of 1995. (f) (No change.) sec.23.28. Promotional Rates. (a) Application. This section applies to dominant certificated telecommunications utilities (DCTUs) as that term is defined by sec.23.3 of this title (relating to Definitions) which are subject to the ratemaking jurisdiction of the commission for any service or market. (b) Purpose. The procedures outlined in this section are intended to establish a process by which DCTUs network. (c) Definitions. The following words and terms when used in this section shall have the following meaning unless the context clearly indicates otherwise. (1) Promotional rate-A temporary tariff, fare, toll, rental or other compensation charged by a DCTU to new or new and existing customers and designed to induce customers to test out a service. A promotional rate shall incorporate a reduction or a waiver of some rate element in the tariffed rates of the service, or a reduction or waiver of the service's installation charge and/or service connection charges, and shall not incorporate any charge for discontinuance of the service by the customer. Such rates may not be offered for basic local telecommunications service, including local measured service. (2) Administrative review-A process whereby an application is reviewed by staff and the Office of Public Utility Counsel and ruled on by the presiding officer without an evidentiary hearing and without an order signed by the commission. (d) Filings requesting approval of promotional rates. After the effective date of this section, a DCTU may request approval of promotional rates for a service by following the procedures outlined in this section. In addition to copies required by other commission rules, one copy of the application shall be delivered to the Regulatory Division. Nothing in this section precludes a DCTU from utilizing other provisions of this title to offer such promotional rates. Not later than 30 days prior to the proposed effective date of the promotional rate, the DCTU shall file with the commission and the Office of Public Utility Counsel an application containing the following information: (1) a statement of intent by the DCTU to use the procedures established in this section; (2) a description of the specific proposed or tariffed service for which promotional rates are proposed and a description of the temporary rates for such service proposed by the DCTU; (3)-(5) (No change.) (6) a statement detailing the type of notice, if any, the DCTU has provided or intends to provide to the public regarding the application and a brief statement explaining why the DCTU's notice proposal is reasonable; (7) (No change.) (8) detailed documentation showing the long run incremental cost of the service for which promotional rates are requested, including projections of revenues, demand and expenses of the service for the period during which the promotional rates are proposed to be offered. The commission shall allow an incumbent LEC that is not a Tier 1 LEC as of September 1, 1995, at that company's option, to adopt the cost studies approved by the commission for a Tier 1 LEC. The application shall include projections of the effect of the promotional rate on the service's revenues and cost and its impact on the service's contribution during the promotional period and over the remaining life of the service. The application shall also include all workpapers and supporting documentation relating to computations or assumptions contained in the application; and (9) any other information which the DCTU wants considered in connection with the commission's review of its application. (e) Modification and waivers of requirements. In its application a DCTU may request the waiver of the long run incremental cost requirements set forth in this section. Such a waiver shall only be granted if the presiding officer determines that the long run incremental cost standard imposes an unreasonable burden on a DCTU determines that an appropriate alternative cost standard is available. If the long run incremental cost standard is waived, the DCTU must provide other cost information showing the relationship between its proposed promotional rates and the costs of providing the service. A DCTU may also request a waiver of the requirement that promotional rates be offered in every exchange when such rates are proposed to be offered for a tariffed service which is being expanded into central offices which previously did not provide the service. Any request for waiver of the long run incremental cost information requirement or the systemwide application of the promotional rates requirement shall include a complete statement of the DCTU' arguments supporting that request. (f) Notice. At least ten days before any application under this section may be filed by a DCTU, the DCTU shall file a statement of intent to file such an application and the expected filing date. Such notice shall also include a statement of the DCTU's intent to use the expedited procedures of this section, a description of the service, and a description of the proposed promotional rates and the proposed promotional period. The commission shall then publish notice of the DCTU's intent to file such application in the Texas Register. The presiding officer may require notice to be provided to the public in addition to that proposed by the DCTU in its application. Before the effective date of the application, the utility shall file a statement indicating the date on which all notice provided to the public was completed and proof of such notice. If public notice of the application is required, it shall include a description of the service for which promotional rates are proposed, the rates which are proposed by the DCTU, the time period during which the promotional rates are proposed to be in effect, the types of customers likely to be affected if the application is approved, and the following language: "Persons who wish to comment on this application should notify the commission by (specified date, ten days before the proposed effective date). Requests for further information may be mailed to the Public Utility Commission of Texas, (insert current commission address), or you may call the commission's Public Information Office at (insert current commission telephone numbers) or (insert current commission telephone number for text telephone) teletypewriter for the deaf." (g) Requirements for promotional rates. Unless waived or modified by the presiding officer as provided in subsection (e) of this section, the following requirements shall apply to promotional rates approved under this section: (1) the promotional rates shall be offered in every exchange in which the service is offered throughout the DCTU's system; (2)-(3) (No change.) (4) the promotional rate shall be designed to generate sufficient revenue to recover the long run incremental cost of providing the service (or, if the long run incremental cost standard is waived, such other costs as are approved by the commission) within one year of introduction of the promotional rate. If the proposed promotional rate is for the reduction or elimination of an installation charge or service connection charge, the revenue and costs related to provision of the entire service shall be used in determining whether the cost standard for the service is met. If the proposed promotional rate is for a service whose tariffed rate does not recover the costs of providing the service, a promotional rate may be approved if the DCTU can demonstrate that the promotional rate will move the service closer to full cost recovery. However, no promotional rate shall be approved for a service whose tariffed rate does not recover the cost of the service if such service has been found to be subject to significant competition under sec.23.27 of this title or if the service is enumerated in sec.3.051(e)(3)(B) of the Public Utility Regulatory Act of 1995. The commission may approve a promotional rate even if it does not provide a contribution to joint and common costs. (h) Administrative review. An application considered under this section shall be reviewed administratively unless the presiding officer, for good cause, determines at any point during the review that the application should be docketed. The operation of the proposed rate schedule may be suspended for 35 days after the effective date of the application. The effective date shall be no earlier than 30 days after the filing date of the application or 30 days after public notice is completed, whichever is later. The application shall be examined for sufficiency. If the presiding officer concludes that material deficiencies exist in the application, the applicant shall be notified within ten working days of the filing date of the specific deficiency in its application, and the earliest possible effective date of the application shall be no less than 30 days after the filing of a sufficient application with substantially complete information as required by the presiding officer. Thereafter, any deadlines shall be determined from the 30th day after the filing of the sufficient application and information or from the effective date if the presiding officer extends that date. While the application is being administratively reviewed, the commission staff and the Office of Public Utility Counsel may submit requests for information to the DCTU. Three copies of all answers to such requests for information shall be provided to the commission staff and the Office of Public Utility Counsel within ten days after receipt of the request by the DCTU. No later than 20 days after the filing of a sufficient application with substantially complete information as required by the presiding officer, interested persons may provide to the staff written comments or recommendations concerning the application. The commission staff shall and the Office of Public Utility Counsel may file with the presiding officer written comments or recommendations concerning the application. No later than 35 days after the effective date of the application, the presiding officer shall complete an administrative review to determine whether the DCTU's application meets the following requirements: (1) (No change.) (2) notice was provided as required by the presiding officer; (3)-(5) (No change.) (i) Approval or denial of application. For its application to be approved, the DCTU must meet all of the requirements in subsection (h) of this section, unless such requirements are modified or waived by the presiding officer as provided under subsection (e) of this section. If, based on the administrative review, the presiding officer determines that all requirements not waived have been met, the DCTU shall be permitted to offer the service at the rates and terms approved by the presiding officer. If, based on the administrative review, the presiding officer determines that one or more of the requirements not waived have not been met, the presiding officer may dismiss or, upon prior request of the DCTU, shall docket the application. (j) (No change.) (k) Notification to the public of services to be offered at promotional rates. If promotional rates for a service are approved under this section, all advertising related to such service and its promotional rates shall clearly describe the temporary nature of the rate, the date on which the promotional rate will expire, and the rate which will apply after expiration of the promotional rate. The DCTU shall provide the same information to all customers requesting rate information for such service or ordering the service during the period the promotional rates are in effect. (l) Reporting requirements. If promotional rates are approved based on either an administrative review or a docketed proceeding, the DCTU shall file with the commission a report showing the actual revenues, demand and related expenses and investment for the service over each period promotional rates are in effect. This report shall be filed with the commission within three months after each authorized period for offering promotional rates has expired. (m)-(n) (No change.) (o) Review of cost standard under this section. Any cost and pricing standard established by the commission in this section shall be subject to change pending the commission's deliberations in the cost and pricing standard rulemakings required by sec.3.051(h) of the Public Utility Regulatory Act of 1995. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 21, 1995. TRD-9516651 Paula Mueller Secretary of Commission Public Utility Commission of Texas Effective date: January 11, 1996 Proposal publication date: October 10, 1995 For further information, please call: (512) 458-0100 16 TAC sec.sec.23.21, 23.26, 23.28 The amendments are adopted under the Public Utility Regulatory Act of 1995, sec.1.101, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure. sec.23.21. Cost of Service. (a)-(d) (No change.) (e) Policies for SLECS. This subsection applies to Small Local Exchange Carriers (SLECs) as defined in sec.23.94 of this title (relating to Small Local Exchange Carrier Flexibility): (1) Notwithstanding subsections (a), (b), and (c) of this section, a SLEC's future construction plans and operational changes may be considered in evaluating the overall reasonableness of the SLEC's current rates. (2) The commission may not initiate an inquiry under the Act sec.3.210 into the overall reasonableness of the current rates of a SLEC more frequently than every three years from the date of a commission order setting reasonable rates under the Act sec.3.210 or sec.3.211. sec.23.26. New and Experimental Services. (a)-(l) (No change.) (m) Provisions for SLECs. Notwithstanding subsections (c), (d), (f), and (g) of this section, the provisions of this subsection apply to a Small Local Exchange Carrier (SLEC) as defined in sec.23.94 of this title (relating to Small Local Exchange Carrier Flexibility). If the presiding examiner determines that the SLEC is seeking to adopt as its rates for its new or experimental services the rates for the same or substantially similar services offered by a larger incumbent local exchange company (LEC): (1) the SLEC's proposed rates and terms of the service will be deemed not to be unreasonably preferential, prejudicial, or discriminatory, subsidized directly or indirectly by regulated monopoly services, or predatory or anticompetitive; and (2) a waiver of the incremental cost standard shall be granted. sec.23.28. Promotional Rates for LEC Services. (a)-(o) (No change.) (p) Provisions for SLECs. Notwithstanding subsections (d), (e), (g) and (h) of this section, the provisions of this subsection apply to a Small Local Exchange Carrier (SLEC) as defined in sec.23.94 of this title (relating to Small Local Exchange Carrier Flexibility). If the presiding examiner determines that the SLEC is seeking to adopt as its promotional rates for its services the rates for the same or similar services offered by a larger incumbent local exchange company (LEC): (1) the SLEC's proposed rates and terms of the service will be deemed not to be unreasonably preferential, prejudicial, or discriminatory, subsidized directly or indirectly by regulated monopoly services, or predatory or anticompetitive; and (2) a waiver of the incremental cost standard shall be granted. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 21, 1995. TRD-9516657 Paula Mueller Secretary of Commission Public Utility Commission of Texas Effective date: January 11, 1996 Proposal publication date: September 19, 1995 For further information, please call: (512) 458-0100 Certification 16 TAC sec.23.31, sec.23.33 The amendment is adopted under the Public Utility Regulatory Act of 1995, sec.1.101, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure. sec.23.31. Certification Criteria (a) (No change.) (b) Certificates of convenience and necessity for existing service areas and facilities. For purposes of granting these certificates for those facilities and areas in which a utility was providing service on September 1, 1975, or was actively engaged in the construction, installation, extension, improvement of, or addition to any facility actually used or to be used in providing public utility service on September 1, 1975, unless found by the commission to be otherwise, the following provisions shall prevail for certification purposes: (1)-(3) (No change.) (c) Certificates of convenience and necessity for new service areas and facilities. Except for certificates granted under subsection (b) of this section, the commission may grant applications and issue these certificates only after finding that the certificate is necessary for the service, accommodation, convenience, or safety of the public. For an electric utility generating unit, the commission may grant an application only when it finds that purchased power, conservation, and alternative capacity and associated energy sources available at a lower or equal cost to the ratepayers, together with capacity from qualifying facilities with which contracts have been executed, cannot be reasonably expected to be available in sufficient quantity and for sufficient duration to allow the utility to modify its capacity expansion plan so as to provide for deferral or cancellation of the generating unit for which certification is requested. The commission may issue the certificate as applied for, or refuse to issue it, or issue it for the construction of a portion, only of the contemplated system or facility or extension thereof, or for the partial exercise only of the right or privilege. The commission may amend or revoke any certificate issued under this section upon a finding of fact that the public convenience and necessity requires such amendment or revocation. The cost of construction of a new electric generating unit found reasonable in granting a certificate may be taken into consideration in determining the amount of construction work in progress and the plant in service associated with that unit to be included in the rate base of the utility. In addition, the projected design electrical rating, capacity factor, and heat rate associated with the unit shall be taken into consideration in determining recoverable fuel expenses associated with the operation of the unit. (1) A certificate, or certificate amendment, is required for the following: (A) a change in service area; (B) a new electric generating unit; (C) a new electric transmission line; (D) any new electric substation outside the utility's certificated service area; and (E) a qualifying facility which is making or plans to make retail sales of electricity to an end user, unless the end user is also the sole purchaser of the thermal output of the qualifying facility, or unless the qualifying facility generates less than 10 megawatts of electric power by renewable resources, biomass, or waste. As a requisite to certification, the commission shall find that the ratepayers of the utility in whose service area the purchasing end user is located will not be substantially adversely impacted as a result of such retail sales. (2) A certificate is not required for the following: (A) a contiguous extension of those facilities described in sec.2.253 or sec.3.252 of the Public Utility Regulatory Act of 1995; (B)-(C) (No change.) (D) routine activities associated with transmission facilities that are conducted by electric utilities, including wholesale generation and transmission utilities, and as specifically noted following: (i)-(v) (No change.) (vi) nothing contained in clauses (i)-(v) of this subparagraph should be construed as a limitation of the commission's authority as set forth in the Public Utility Regulatory Act of 1995. Any activity described in clauses (i) - (v) of this subparagraph must be reported to the commission not less than 30 days prior to the commencement of construction, and the commission may require additional facts or call a public hearing thereon to determine whether a Certificate of Convenience and Necessity is required. Reports shall include a general description of and explanation of the reason for the project, estimated costs, a map(s) detailing the location, and copies of documents indicating landowner(s) consent, as necessary. For projects that require new or additional rights-of-way direct mail notice is required to landowners of adjacent property within 200 feet of the proposed project, the parks and recreation areas within 1,000 feet, and airports within 10,000 feet, of the proposed project is also required. (E)-(H) (No change.) (3)-(6) (No change.) (7) If an electric utility files an application for the approval of a purchase of capacity from a qualifying facility under the Public Utility Regulatory Act, sec.2.209, following a solicitation under this subsection, it shall explain why it decided to purchase the capacity it did, rather than accept one of the other proposals submitted in the solicitation. (8) Information concerning proposals made to the utility and its evaluation of those proposals shall be made available in any proceeding that is related to that capacity need, including a proceeding in which the utility seeks a certificate or seeks approval of a purchase of capacity from a qualifying facility under the Public Utility Regulatory Act of 1995, sec.2.209. (9) (No change.) (d) Certificates of operating authority. In lieu of applying for a certificate of convenience and necessity, a company may apply for a certificate of operating authority as provided under the Public Utility Regulatory Act of 1995, sec.3.2531. In granting such certificates, the commission will consider factors such as listed in paragraphs (1)-(3) of this subsection. In an application to serve an exchange where an incumbent local exchange company serves fewer than 31,000 access lines, the commission shall also consider the factors listed in paragraphs (4)-(7) of this subsection. However, the commission may not, before September 1, 1998, grant a certificate of operating authority in an exchange of an incumbent LEC serving fewer than 31,000 access lines. (1) The technical and financial qualifications of the applicant. (2) The applicant's ability to meet the commission's quality of service requirements. (3) The adequacy of the applicant's build out plan pursuant to sec.3.2531(c) and (d). (4) The effect of granting the certificate on any public utility already serving the area and on the utility's customers. (5) The existing utility's ability to provide adequate service at reasonable rates. (6) The impact on the existing utility's ability as the provider of last resort. (7) The ability of the exchange, not the company, to support more than one provider of service. (e) Service provider certificate of operating authority. Eligible companies may apply for a service provider certificate of operating authority as provided under the Public Utility Regulatory Act of 1995, sec.3.2532. In granting such certificates the commission will consider factors such as the technical and financial qualifications of the applicant, the applicant's ability to meet the commission's quality of service requirements, and whether the services meet the requirements of the Public Utility Regulatory Act of 1995, sec.3.2532. (f) Transferability of certificates. Any certificate granted under this section is not transferable without approval of the commission and shall continue in force until further order of the commission. (g) Exclusiveness of certificate. Any certificate granted under this section shall not be construed to vest exclusive service or property rights in and to the area certificated. The commission may grant, upon finding that the public convenience and necessity requires additional certification to another utility or utilities, additional certification to any other utility or utilities to all or any part of the area heretofore certificated under this section. (h) Certification forms. The commission shall adopt a form or forms which will facilitate the granting of certificates so that the granting of certificates, both contested and uncontested, will be expedited. Forms may be obtained from the secretary of the commission. (i) Radio-telephone service provided by a telephone utility. A telephone utility subject to the jurisdiction of the commission shall not be required to obtain a certificate of convenience and necessity or an amendment thereto to provide paging service, mobile telephone service, or rural radio service unless a base station or repeater facility is to be located outside the area certificated to the utility for wireline telephone service. (j) Notice-of-intent applications for generating plants. A utility should file a notice-of-intent (NOI) application upon deciding that it should construct a new generating plant. (1) Purpose of proceeding. The purpose of an NOI proceeding is to decide the appropriateness of a proposed plant, in light of the alternatives, before a utility commits or expends substantial resources on the proposed plant. It is not the purpose of an NOI proceeding to decide the specific site or site facilities, whether conservation and alternative energy sources cannot meet the need, or whether the proposed plant is the best and most economical choice of technology available, because those issues will be decided in the subsequent certification proceeding in the event that the NOI is approved. (2) Commission review. The commission will approve the NOI if it concludes that the proposed plant is feasible and reasonable, is compatible with the commission's most recent long-term forecast, and should be given further consideration in light of the alternatives. Approval of the NOI thus allows the utility to apply for certification of the proposed plant, but does not imply that the plant is the best alternative available to the utility. (3) Standards. The commission will apply the standards in this paragraph in reviewing a utility's NOI filing, which must include the information required in the commission's application to enable the commission to decide the appropriateness of the proposed plant. (A) Specificity of plans. The utility's plans and cost estimates must be specific enough for the proposed plant to be compared with alternatives, but the plans should not be final. In particular, the utility need not propose a specific site for a generating plant. (B) Need. The utility must demonstrate that the proposed plant is compatible with the commission's most recent long-term forecast. Such compatibility may be demonstrated by showing that there is a reasonable likelihood that the proposed plant will be needed when scheduled to be in service. The demonstration of compatibility includes consideration of any data that materially affect the commission's most recent long-term forecast. (4) Analysis of alternatives. The utility must show that it used a reasonable method to evaluate the advantages and disadvantages of the proposed plant and a broad range of alternatives to it. (A) Scope. At a minimum, the following alternatives must be considered: (i) increasing the capacity or efficiency of existing generation, transmission, and distribution facilities; (ii) extending the life of existing generating capacity; (iii) purchasing all or a portion of an existing or planned generating plant; (iv) constructing a generating plant employing technologies or fuels different from those of the proposed plant; and (v) demand-side management, including conservation and renewable resources. (B) Method. The utility must show that it used a reasonable method of narrowing the range of alternatives and that it adequately considered the remaining alternatives to the proposed plant. At a minimum, adequate consideration includes an assessment of the following factors for the proposed plant and each feasible alternative: (i) availability; (ii) cost and benefits -operating and capital costs, cost of related facilities, environmental costs and benefits, and any cost and benefits accruing to persons other than the utility and its ratepayers (for example, environmental, social and health); (iii) reliability; (iv) risks; and (v) financing requirements-whether the utility can finance the proposed plant or an alternative without unduly impairing its financial condition. (5) Definitions. The following words and terms, when used in this subsection, have the following meanings, unless the context clearly indicates otherwise. (A) Feasible-(With respect to a proposed plant or alternative) reasonably likely to work or be useful in attaining the end desired. (B) Proposed plant-One or more generating units, including an additional generating unit at an existing generating plant site. sec.23.33. Telephone Solicitation. (a)-(b) (No change.) (c) Responsibility of LECs. Each LEC shall inform its customers of the provisions of the Business and Commerce Code, Chapter 37, and sec.3.659 of the Public Utility Regulatory Act of 1995, by inserting the notice prescribed by this subsection annually in the billing statement mailed to a customer. The notice required by this subsection shall be mailed to each customer as a bill insert. For residential customers, the notice required by this subsection and any CPNI notice required by sec.23.57(e) of this title (relating to Telecommunications Privacy) shall be published as a single insert and mailed to the customer in a billing statement. Each LEC shall also publish the notice required by this subsection in the consumer information pages of its local telephone directory on the same page or on a page adjacent to where the CPNI notice required by sec.23.57(e) of this title appears. The notice shall read as follows: TELEPHONE SOLICITATION Texas law provides certain protections for a person who receives a telephone solicitation at a residence. A telephone solicitor must: * identify himself or herself by name; * identify the business on whose behalf he or she is calling; * identify the purpose of the call; * identify the telephone number at which the person, company, or organization making the call may be reached. A telephone solicitor may not call a residence before 9:00 a.m. or after 9:00 p.m. on a weekday or Saturday or before noon or after 9:00 p.m. on Sunday. If a telephone solicitor uses an automatic dialing/announcing device, the machine must disconnect from your line within 30 seconds after termination of the call. Exceptions: The requirements above do not apply to telephone solicitations made at your request, or solicitations made in connection with an existing debt or contract, or calls from a telephone solicitor with whom you have a prior or existing business relationship. If you use a credit card to purchase a good or service from a telephone solicitor other than a public charity (an organization exempt from federal income tax under the Internal Revenue Code sec.501(c)(3)), the seller must: * offer a full refund for the return of undamaged and unused goods within seven days after you receive the goods or service (the seller must process the refund within 30 days after you return the merchandise or cancel your order for undelivered goods or services); or * provide you with a written contract fully describing the goods or services being offered, the total price charged, the name, address, and business phone of the seller, and any terms and conditions affecting the sale. Complaints. The Texas Attorney General investigates complaints relating to a violation of this law, which is found at the Business and Commerce Code Chapter 37. If you have a complaint about a telephone solicitor whom you believe has violated this law, contact: Consumer Protections Division, Office of the Attorney General of Texas, P.O. Box 12548, Austin, Texas 78711, (512) 463-2070. Another law, found at sec.3.659 and sec.3.660 of the Public Utility Regulatory Act of 1995, requires a telephone solicitor to make every effort not to call a consumer who asks not to be called again. Complaints relating to a violation of this law are investigated by the Public Utility Commission of Texas. If you have a complaint about repeated solicitation from a telephone solicitor you have asked not to call you again, contact: Office of Consumer Affairs, Public Utility Commission of Texas, (insert current commission address), (insert current commission telephone number) or (insert current commission telephone number for teletypewriter for the deaf) teletypewriter for the deaf. Be advised that you may have additional rights under federal law. Please contact the Federal Trade Commission or the Federal Communications Commission for further information on these additional rights. (d) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 21, 1995. TRD-9516652 Paula Mueller Secretary of Commission Public Utility Commission of Texas Effective date: January 11, 1996 Proposal publication date: October 6, 1995 For further information, please call: (512) 458-0100 Customer Service and Protection 16 TAC sec.sec.23.41, 23.42, 23.44-23.46, 23.48, 23.49, 23.52, 23. 55, 23.56, 23.58 The amendments are adopted under the Public Utility Regulatory Act of 1995, sec.1.101, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure. sec.23.41. Customer Relations. (a) Application. Unless the context clearly indicates otherwise, in this section the term utility, insofar as it relates to telecommunications utilities, shall refer to dominant carriers. (b) Information to customers. Each utility shall: (1) Maintain a current set of maps showing the physical locations of its facilities. All facilities (generating plants, telephone exchange locations, transmission, distribution lines, etc.) shall be labeled to indicate the size, nominal capacity and voltage, or any pertinent information which will accurately describe the utility's facilities. These maps, or such other maps as may be required by the commission, shall be kept by the utility in a central location and will be available for commission inspection during normal working hours. Each business office or service center shall have available up-to-date maps, plans, or records of its immediate area, with such other information as may be necessary to enable the utility to advise applicants, and others entitled to the information, as to the facilities available for serving that locality. (2) Upon request for service by a residential applicant or for a transfer of service by a residential customer, the utility shall inform the applicant or customer of the utility's lowest-priced alternatives available at the customer's location. The utility shall provide this information beginning with the lowest- price alternative and giving full consideration to applicable equipment options and installation charges. (3) In compliance with the commission's rules of practice and procedure, notify customers affected by a change in rates or schedule of classification. (4) Post a notice in a conspicuous place in each business office of the utility where applications for service are received, informing the public that copies of the rate schedules and rules relating to the service of the utility, as filed with the commission, are available for inspection. (5) Beginning on or before six months from the date of adoption of this rule, each utility shall mail to all existing residential telephone or electric utility customers, and thereafter provide to all new residential telephone or electric utility customers, at the time service is initiated, a pamphlet or information packet containing the information required by this section. The information shall additionally be mailed to all customers on at least a biennial basis at no charge to the customer. The pamphlet or packet shall be entitled "Your Rights as a Customer.'' The information shall be written in plain, nontechnical language, using personal pronouns where appropriate. This information shall be provided in English and Spanish as necessary to adequately inform the customer; however, the commission may exempt the utility from the requirement that the information be provided in Spanish upon application and a showing that 10% or fewer of its customers are exclusively Spanish speaking, and that the utility will notify all customers, through a statement, in both English and Spanish, in the pamphlet or packet, that the information is available in Spanish from the utility, both by mail and at the utility's offices. (A) the customer's right to information concerning rates and services and the customer's right to inspect or obtain at reproduction cost a copy of the applicable tariffs and service rules; (B) the customer's right to have his/her meter tested without charge under sec.23.47(d) of this title (relating to Meters), if applicable; (C) the time allowed to pay outstanding bills; (D) grounds for termination of service; (E) the steps that must be taken before a utility may terminate service; (F) how the customer can resolve billing disputes with the utility and how disputes affect termination of service; (G) information on alternative payment plans offered by the utility, including, but not limited to, deferred payment plans, level billing programs, average payment plans, as well as a statement that a customer has the right to request these alternative payment plans; (H) the steps necessary to have service reconnected after involuntary termination; (I) the customer's right to a supervisory review under sec.23.46(j) and right to file a complaint with the local municipal regulatory authority and/or the commission, as may be applicable, regarding any matter concerning the utility's service. The commission's address and telephone number shall accompany this information; (J) the hours, addresses, and telephone numbers of utility offices where bills may be paid and information may be obtained; and (K) the customer's right to be instructed by the utility how to read his or her meter, if applicable; (L) the circumstances under which the utility may require a deposit or additional deposit; how a deposit is calculated; the interest paid on deposits; and the time frame and requirement for return of the deposit to the customer. (M) a statement that funded financial assistance may be available for persons in need of assistance with their electric utility payments, and that additional information may be obtained by contacting the local office of the utility, Texas Department of Human Resources, Texas Department of Community Affairs, or the Public Utility Commission of Texas. The central office telephone number (toll- free number, if available) and address for each state agency shall also be provided; (N) a statement that utility services are provided without discrimination as to a customer's race, nationality, color, religion, sex, or marital status, and a summary of the company's policy regarding the provision of credit history based upon the credit history of a customer's former spouse; (O) notice of any special services such as readers or notices in Braille, if available, and the telephone number of the teletypewriter for the deaf at the commission. (6) Telephone utilities shall either provide customers with the pamphlets or information packets as set forth in paragraph (5) of this subsection or, if the telephone utility provides the customer with the same information in the telephone directories provided each customer pursuant to sec.23.61(b) of this title(relating to Telephone Utilities), the utility shall provide a printed statement on the bill, or a billing insert identifying the location of the information in paragraph (5) of this subsection. The statement shall be published every six months. (7) Where necessary, a toll-free telephone number or the equivalent (such as WATS or collect calls) will be provided for telephone or electric customers for repair service or billing inquiries. (8) Utilities shall encourage customers with physical disabilities and those who care for such customers, to identify themselves to the utility so that special action can be taken to inform these persons of their rights, where necessary and appropriate to the person's circumstance. (c) Customer complaints. (1) Upon complaint to the utility by a customer either at its office, by letter, or by telephone, the utility shall promptly make a suitable investigation and advise the complainant of the results thereof. (2) In the event the complainant is dissatisfied with the utility's report, the utility must advise the complainant of the Public Utility Commission of Texas complaint process, giving the customer the address and telephone number of the Consumer Affairs Division of the commission. If applicable, the utility shall also give the customer the commission's TTY number for the deaf and hearing impaired. (3) The utility shall make a suitable investigation of all complaints forwarded from the commission on behalf of a customer. The utility shall advise the commission of the results of the investigation in writing. Initial response to the commission must be made within 30 days after the complaint is forwarded by the commission. The commission encourages all customer complaints to be made in writing to assist the commission in maintaining records on the quality of service of each utility. (4) The utility shall keep a record of all complaints which shall show the name and address of the complainant, the date and nature of the complaint and the adjustment or disposition thereof for a period of two years subsequent to the final settlement of the complaint. Complaints with reference to rates or charges which require no further action by the utility need not be recorded. sec.23.42. Refusal of Service. (a) Application. Unless the context clearly indicates otherwise, in this section the term utility, insofar as it relates to telecommunications utilities, shall refer to dominant carriers. (b) Compliance by applicant. Any utility may decline to serve an applicant until such applicant has complied with the state and municipal regulations and approved rules and regulations of the utility on file with the commission governing the service applied for or for the following reasons: (1) Applicant's facilities inadequate. If the applicant's installation or equipment is known to be hazardous or of such character that satisfactory service cannot be given. (2) For indebtedness. If the applicant is indebted to any utility for the same kind of service as that applied for, including only the carriage charges of interexchange carriers where a local exchange carrier bills those charges pursuant to its tariffs; provided, however, that in the event the indebtedness of the applicant is in dispute, the applicant shall be served upon complying with the deposit requirement in sec.23.43 of this title (relating to Applicant and Customer Deposit). In the event that the appropriate federal authority prohibits payment of interstate carriage charges of interexchange carriers as a condition of local exchange telephone service or prohibits disconnection of local exchange service for failure to pay interexchange carriage charges, payment of intrastate carriage charges of interexchange carriers shall not be a condition for local exchange telephone service . (3) Refusal to make deposit. For refusal to make a deposit if applicant is required to make a deposit under these sections. (c) Applicant's recourse. In the event that the utility shall refuse to serve an applicant under the provisions of these sections, the utility must inform the applicant of the basis of its refusal and that the applicant may file a complaint with the commission thereon. (d) Insufficient grounds for refusal to serve. The following shall not constitute sufficient cause for refusal of service to a present customer or applicant: (1) delinquency in payment for service by a previous occupant of the premises to be served; (2) failure to pay for merchandise, or charges for non-utility service purchased from the utility; (3) failure to pay a bill to correct previous underbilling due to misapplication of rates more than six months prior to the date of application; (4) violation of the utility's rules pertaining to operation of nonstandard equipment or unauthorized attachments which interferes with the service of others, or other services such as communication services, unless the customer has first been notified and been afforded reasonable opportunity to comply with said rules; (5) failure to pay a bill of another customer as guarantor thereof, unless the guarantee was made in writing to the utility as a condition precedent to service; and (6) failure to pay the bill of another customer at the same address except where the change of customer identity is made to avoid or evade payment of a utility bill. A customer may request a supervisory review if the utility determines that evasion has occurred and refuses to provide service. sec.23.44. New Construction. (a) Application. Unless the context clearly indicates otherwise, in this section the terms utility and public utility, insofar as they relate to telecommunications utilities, shall refer to dominant carriers. (b) Standards of construction. In determining standard practice, the commission will be guided by the provisions of the American National Standards Institute, Incorporated, the National Electrical Safety Code, and such other codes and standards that are generally accepted by the industry, except as modified by this commission or by municipal regulations within their jurisdiction. Each utility shall construct, install, operate, and maintain its plant, structures, equipment, and lines in accordance with these standards, and in such manner to best accommodate the public, and to prevent interferences with service furnished by other public utilities insofar as practical. (1) The standards of construction shall apply to, but are not limited to, the construction of any new electric transmission facilities, rebuilding, upgrading, or relocation of existing electric transmission facilities. (2) For electric transmission line construction requiring the acquisition of new rights-of-way, utilities must include, at a minimum, in the easement agreement a provision for prohibiting the new construction of habitable structures within the right-of-way. However, utilities may negotiate appropriate exceptions in instances where the utility is subject to a restrictive agreement being granted by a governmental agency or within the constraints of an industrial site. Any exception to this subsection must meet all the applicable requirements of the National Electric Safety Code. (3) For the purposes of this subsection, "habitable structures" shall include those structures normally inhabited by humans on a daily, or regular basis. The term "habitable structures" shall include, but is not limited to, single-family dwellings and related structures, apartment buildings, business structures, major additions to the aforementioned types of pre-existing structures, and mobile home parks. However, the term "habitable structures" shall not include necessary repairs to existing structures, farm or livestock facilities, storage barns, hunting structures, small personal storage sheds, or similar structures. (c) Line extension and construction charges. Every utility shall file its extension policy as required in sec.23.24(b)(1) of this title (relating to Form and Filings of Tariffs). The policy shall be consistent, nondiscriminatory, and subject to the approval of the commission. No contribution in aid of construction may be required of any customer except as provided for in the extension policy. (1) Where service is being switched between electric companies, the electric utility disconnecting such customer shall be permitted to charge the customer a disconnection fee of an amount set forth in its tariff, and such fee shall be based upon the average direct labor and vehicle costs of disconnecting such customer and any distribution facilities rendered idle and not usable elsewhere on the system based upon the original cost of such facilities less depreciation and salvage. Prior to any disconnection under this section, the customer shall pay the disconnecting electric utility for service up through the date of disconnection and the charges for disconnection set forth in this section. Upon payment of such charges the utility shall give the customer a paid receipt. The connecting electric utility may not provide service to said customer until it has evidence from the disconnecting electric utility that the customer has paid for electric service through the date of disconnection and any charges for disconnection under this section. (2) Utilities shall not charge disconnect fees, membership fees, application fees, or service call fees or any other fee or charge for service or function that is a normal utility service except as provided in the tariff of the utility. (d) Response to request for service. Every public utility shall serve each qualified applicant for service within its certificated area as rapidly as is practical. (1) Those applications for new electric service not involving line extension or new facilities should be filled within seven working days. Applications for electric residential service requiring line extension should be filled as quickly as possible and shall be filled within 90 days unless unavailability of materials causes unavoidable delays. (2) Applications for new telephone service shall be filled in accordance with sec.23.61(e)(2) of this title (relating to Telephone Utilities). Those applications for new telephone residential service requiring line extensions should be filled as quickly as possible and shall be filled within 90 days unless unavailability of materials or other situations which are reasonably beyond the control of the utility cause unavoidable delays. Drop wire less than 300 feet in length which connects the utility distribution facility to the customer premises is not considered a line extension. For this rule, facility placement which requires a permit for a road or railroad crossing will be classed as a line extension. (3) If a line extension is required by other than a large industrial or commercial electric customer or if facilities are not available, the telephone or electric utility shall inform the customer within ten working days of receipt of the application, giving the customer an estimated completion date. (4) In the event that residential utility service is delayed in excess of 90 days after an applicant has met credit requirements and made satisfactory arrangements for payment of any required construction charges, a report shall be made to the commission listing the name, location and cause for delay. Unless such delays are due to causes which are reasonably beyond the control of the utility, delay in excess of 90 days shall constitute refusal to serve, and consideration may be given to revoking the certificate of convenience and necessity (or other certificate), or to granting a certificate to another utility to serve the applicant, or refusal may be considered in arriving at a proper return on the invested capital of the utility. (5) Any construction cost options such as rebates to the customer, sharing of construction costs between the utility and the customer, or sharing of costs between the customer and other applicants shall be explained to the customer following assessment of necessary line work. sec.23.45. Billing. (a) Application. Unless the context clearly indicates otherwise, in this section the term utility, insofar as it relates to telecommunications utilities, shall refer to dominant carriers. (b) Due date. The due date of the bill for utility service shall not be less than 16 days after issuance. A bill for utility service is delinquent if not received at the utility or at the utility's authorized payment agency by the due date. The postmark, if any, on the envelope of the bill, or an issuance date on the bill, if there is no postmark on the envelope, shall constitute proof of the date of issuance. If the due date falls on a holiday or weekend, the due date for payment purposes shall be the next work day after the due date. (c) Penalty on delinquent bills for retail service. A one-time penalty not to exceed 5.0% may be made on delinquent commercial or industrial bills; however, no such penalty shall apply to residential bills under this section. A telecommunications utility providing any service to the state, including service to an agency in any branch of government, shall not assess a fee, penalty, interest, or other charge to the state for delinquent payment of a bill for that service. The 5.0% penalty on delinquent commercial and industrial bills may not be applied to any balance to which the penalty was applied in a previous billing. (d) Deferred payment plan. A deferred payment plan is any arrangement or agreement between the utility and a customer in which an outstanding bill will be paid in installments that extend beyond the due date of the next bill. The utility shall offer, upon request, a deferred payment plan to any residential customer who has expressed an inability to pay all of his or her bill, if that customer has not been issued more than two disconnection notices at any time during the preceding 12 months. In all other cases, the utility is encouraged to offer a deferred payment plan to residential customers. (1) Every deferred payment plan entered into due to the customer's inability to pay the outstanding bill in full shall provide that service will not be discontinued if the customer pays current bills and a reasonable amount of the outstanding bill and agrees to pay the balance in reasonable installments until the bill is paid. A payment of not more than one-third of the total deferred amount may be required as a reasonable amount under this paragraph. (2) For purposes of determining reasonableness under these rules, the following shall be considered: (A) size of the delinquent account; (B) customer's ability to pay; (C) customer's payment history; (D) time that the debt has been outstanding; (E) reasons why debt has been outstanding; (F) any other relevant factors concerning the circumstances of the customer. (3) A deferred payment plan offered by a utility, when reduced to writing, shall state, immediately preceding the space provided for the customer's signature and in boldface print at least two sizes larger than any other used thereon, that: If you are not satisfied with this contract, or if agreement was made by telephone and you feel this contract does not reflect your understanding of that agreement, contact the utility immediately and do not sign this contract. If you do not contact the utility, or if you sign this agreement, you give up your right to dispute the amount due under the agreement except for the utility's failure or refusal to comply with the terms of this agreement. (4) A deferred payment plan may include a 5.0% penalty for late payment but shall not include a finance charge. (5) If a customer has not fulfilled the terms of a deferred payment plan, the utility shall have the right to disconnect service. However, the utility may not disconnect service until a disconnect notice has been issued to the customer indicating the customer has not met the terms of the plan. Such notice and disconnection shall conform with the disconnection rules in sec.23.46 of this title (relating to Discontinuance of Service). Under such circumstances, the utility may, but shall not be required to, offer subsequent negotiation of a deferred payment plan agreement prior to disconnection. (6) Any utility which institutes a deferred payment plan shall not refuse a customer participation in such a program on the basis of race, color, creed, sex, or marital status. (7) A deferred payment plan may be made by visiting the utility's business office or contacting the utility by telephone. If the customer visits the utility's business office, the utility may ask the customer to sign the deferred payment plan. The utility must provide the customer with a copy of the signed plan. If the agreement is made over the telephone, the utility shall send a copy of the plan to the customer. (8) If the customer's economic or financial circumstances change substantially during the time of the deferred payment plan, the utility may renegotiate the deferred payment plan with the customer, taking into account the changed economic and financial circumstances of the customer. (9) A utility is not required to enter into a deferred payment plan with any customer who is lacking sufficient credit or a satisfactory history of payment for previous service when that customer has had service from the present utility for not more than three months. (e) Payment arrangements. Payment arrangements are any arrangements or agreements between the utility and a customer in which an outstanding bill will be paid after the due date of the outstanding bill but before the due date of the next bill. If a customer does not fulfill the terms of such payment arrangements, the utility shall have the right to disconnect service. If a disconnect notice was issued prior to the payment arrangements being made, such notice shall suffice as notice to the customer. If payment arrangements are made prior to issuance of a disconnect notice, such notice must be issued before the customer's service may be disconnected. (f) Level and average payment plan. Electric utilities with seasonal usage or seasonal demands are encouraged to offer a level payment plan or average payment plan to elderly or chronically ill residential customers who may be on fixed incomes and to other customers having similarly unique financial needs. (1) The payment plan may be one of the following methods: (A) A level payment plan allowing eligible residential customers to pay on a monthly basis a fixed billing rate of one-twelfth of that customer's estimated annual consumption at the appropriate customer class rates, with provisions for quarterly adjustments as may be determined based on actual usage. (B) An average payment plan allowing eligible residential customers to pay on a monthly basis one-twelfth of the sum of that customer's current month's consumption plus the previous 11 month's consumption (or an estimate thereof, for a new customer) at the appropriate customer class rates, plus a portion of any unbilled balance. (2) If a customer for a utility service does not fulfill the terms and obligations of a level payment agreement or an average payment plan, the utility shall have the right to disconnect service to that customer pursuant to the disconnection rules provided elsewhere in these sections. (3) The utility may collect a customer deposit from all customers entering into level payment plans or average payment plans; the deposit will not exceed an amount equivalent to one-sixth of the estimated annual billing. Notwithstanding any other provision of these sections, the utility may retain said deposit for the duration of the level or average payment plan; however, the utility shall pay such interest on the deposit as is provided elsewhere in these sections. (g) Rendering and form of bills. (1) Telephone utilities. (A) Bills for telephone service shall be rendered monthly unless otherwise authorized by the Commission, or unless service is rendered for a period of less than one month, and shall provide a listing of all charges due and payable including outstanding amounts in the same customer class the utility has chosen to transfer from a customer's prior delinquent account(s). The utility shall provide, at no charge to the customer, a breakdown of local service charges at the time the service is initially installed or modified and upon request. Additionally, a notice shall be included on the customer's bill offering, at no charge to the customer, either an annual or monthly itemized breakdown of all local service charges. The itemized breakdown may be provided as a part of the customer's bill or as a separate mailing. Itemized toll statements shall be included in each bill. If the telephone utility is billing the customer for services provided by another telecommunications utility or for services provided by a provider of pay telephone service that uses automated call completion technology to complete operator service calls, the bill shall identify the utility or the provider of pay telephone service whose rates are used to calculate the charges for each call listed on the bill. This requirement to identify the entity whose rates are used to calculate the charges does not apply to intraLATA services provided in another state by a regulated local exchange carrier. Customer billing sent through the United States mail shall be sent in an envelope. (B) Billing information provided to each customer on a monthly basis shall include but not be limited to: (i) the period for which the bill is rendered; (ii) each applicable telephone number and/or account number; (iii) the total amount due for features and services provided; (iv) the sub-total for basic local telecommunications service. If EMS/EAS service is mandatory, charges for the service shall be included in the sub-total for basic local service. If EMS/EAS service is optional, the incremental charges for EMS/EAS shall be included in the subtotal for optional features; (v) the sub-total for all optional features or services included in the bill; (vi) the customer access line charge(s); (vii) each fee or charge set by an agency of the federal, state, or local government, including but not limited to, subscriber line charges and charges for 911 service, as more fully set forth in subsection (l) of this section; (viii) applicable taxes; (ix) explanations of any abbreviations or symbols used on the customer's bill to identify specific charges; and (x) the information required by this paragraph which shall be arranged so as to allow the customer to readily compute the bill with the information provided. (C) In the event a customer's service is interrupted other than by the negligence or willful act of the customer, and it remains out of order for 24 hours or longer after access to the premises is made available and after being reported to be out of order, appropriate adjustment or refunds shall be made to the customer. The amount of adjustment or refund shall be determined on the basis of the known period of interruption, generally beginning from the time the service interruption is first reported. The refund to the customer shall be the pro rata part of the month's flat rate charges for the period of days and that portion of the service facilities rendered useless or inoperative. The refund may be accomplished by a credit on a subsequent bill for telephone service. (2) Electrical utilities. (A) Bills for electric service shall be rendered monthly, unless otherwise authorized by the commission, or unless service is rendered for a period of less than a month. Bills shall be rendered as promptly as possible following the reading of meters. (B) The customer's bill shall show all the following information: (i) if the meter is read by the utility, the date and reading of the meter at the beginning and at the end of the period for which the bill is rendered; (ii) the number and kind of units metered; (iii) the applicable rate schedule and title or code; (iv) the total amount due for services provided, including outstanding amounts in the same customer class the utility has chosen to transfer from a customer's prior delinquent account(s). Such transferred accounts shall not include continuation of service from one address to another within the same utility serving area, or contracts of guarantee involving a written agreement between a utility and its guarantor if a customer defaults; (v) the total amount due after addition of any penalty for nonpayment within a designated period. The terms "gross bill" and "net bill" or other similar terms implying the granting of a discount for prompt payment shall be used only when an actual discount for prompt payment is granted. The terms shall not be used when a penalty is added for nonpayment within a designated period; (vi) a distinct marking to identify an estimated bill; (vii) any conversions from meter reading units to billing units, or any other calculations to determine billing units from recording or other devices, or any other factors used in determining the bill; and (viii) the information required in clauses (ii)-(v), and (vii) of this subparagraph shall be arranged so as to allow the customer to readily compute his bill with the applicable rate schedule which shall be mailed on request to the customer. Customer charges are to be identified separately on the residential customer's bill. (3) Past due balance. All rules pertaining to billing and disconnection of service shall apply to backbilling, with the exception of sec.23.45(b). (h) Overbilling and underbilling. If billings for utility service are found to differ from the utility's lawful rates for the service being purchased by the customer, or if the utility fails to bill the customer for such service, a billing adjustment shall be calculated by the utility. If the customer is due a refund, an adjustment shall be made for the entire period of the overcharges. If an overcharge is adjusted by the utility within three billing cycles of the bill in error, interest shall not accrue. Unless otherwise provided in this section, if an overcharge is not adjusted by the utility within three billing cycles of the bill in error, interest shall be applied to the amount of the overcharge at the rate set by the commission annually for a calendar year. That rate shall be based on an average of prime commercial paper rates for the previous 12-month period. Interest on overcharges that are not adjusted by the utility within three billing cycles of the bill in error shall accrue from the date of payment unless the utility chooses to provide interest to all of its affected customers from the date of the bill in error. All interest shall be compounded annually. Interest shall not apply to leveling plans or estimated billings that are authorized by statute or rule. Interest shall not apply to undercharged amounts unless such amounts are found to be the result of meter tampering, bypass, or diversion by the customer, as defined in sec.23.47(f) of this title (relating to Meters). Interest on undercharged amounts shall also be compounded on an annual basis and shall accrue from the day the customer is found to have first tampered, bypassed or diverted. If the customer was undercharged, the utility may backbill the customer for the amount which was underbilled. The backbilling is not to exceed six months unless the utility can produce records to identify and justify the additional amount of backbilling or unless such undercharge is a result of meter tampering, bypassing, or diversion by the customer as defined in sec.23.47(f). However, the utility may not disconnect service if the customer fails to pay charges arising from an underbilling more than six months prior to the date the utility initially notified the customer of the amount of the undercharge and the total additional amount due unless such undercharge is a result of meter tampering, bypassing, or diversion by the customer as defined in sec.23.47(f). If the underbilling is $25 or more, the utility shall offer the customer a deferred payment plan option for the same length of time as that of the underbilling. In cases of meter tampering, bypass, or diversion, a utility may, but is not required to, offer a customer a deferred payment plan. (i) Estimated bills. (1) When there is good reason for doing so, an electric utility may submit estimated bills provided that an actual meter reading is taken every three months. In months where the meter reader is unable to gain access to the premises to read the meter on regular meter reading trips, or in months where meters are not read, the utility must provide the customer with a postcard and request the customer to read the meter and return the card to the utility. If such postcard is not received by the utility in time for billing, the utility may estimate meter reading and render bill accordingly. (2) If an electric utility has a customer-read program in which customers read their own meters and report their usage monthly, and no meter reading is submitted by a customer, the utility may estimate the customer's meter reading and render a bill accordingly. However, the utility must read the meter if the customer does not submit readings for three consecutive months so that a corrected bill may be issued. (j) Disputed bills. (1) In the event of a dispute between a customer and a utility regarding any bill for utility service, the utility shall forthwith make such investigation as shall be required by the particular case, and report the results thereof to the customer and, in the event the dispute is not resolved, shall inform the customer of the complaint procedures of the commission. (2) Notwithstanding any other section of these rules, the customer, except customers of telephone utilities, shall not be required to pay the disputed portion of the bill which exceeds the amount of that customer's average monthly usage at current rates pending the completion of the determination of the dispute, but in no event more than 60 days. For purposes of this rule only, the customer's average monthly usage at current rates shall be the average of the customer's gross utility service for the preceding 12-month period. Where no previous usage history exists, consumption for calculating the average monthly usage shall be estimated on the basis of usage levels of similar customers and under similar conditions. (3) Notwithstanding any other section of these rules, a telephone utility customer's service shall not be subject to discontinuance for nonpayment of that portion of a bill under dispute pending the completion of the determination of the dispute, but in no event to exceed 60 days. The customer is obligated to pay any billings not disputed as established in sec.23. 46 of this title (relating to Discontinuance of Service). (k) Notification of alternative payment programs or payment assistance. Anytime a customer contacts a utility to discuss their inability to pay a bill or indicate that they are in need of assistance with their bill payment, the utility or utility representative shall inform the customer of all available alternative payment and payment assistance programs available from the utility, such as deferred payment plans, disconnection moratoriums for the ill, and energy assistance programs, as applicable, and of the eligibility requirements and procedure for applying for each. (l) Fees. Any fee or charge set by an agency of the federal, state, or local government shall be shown on the bill as a separate item, indicating the federal, state, or local government agency and concisely stating the nature of the fee or charge. This section does not apply to sales taxes or franchise fees. (m) Adjusted bills due to meter tampering. There shall be a presumption of reasonableness of billing methodology by an electric utility with regard to a case of meter tampering, bypassing, or other service diversion if any of the following methods of calculating such bills are used: (1) estimated bills based upon service consumed by that customer at that location under similar conditions during periods preceding the initiation of meter tampering or service diversion. Such estimated bills shall be based on at least 24 consecutive months of comparable usage history of that customer, when available, or lessor history if the customer has not been served at that site for 24 months; (2) estimated bills based upon that customer's usage at that location after the service diversion has been corrected; (3) where a customer will allow the electric utility to perform a load study of the customer's appliances, heating/cooling equipment, etc., in use during the period of meter tampering, by estimated bills using the total for the projected loads of those appliances, heating/cooling equipment, etc., using nationally recognized appliance load studies published by the Edison Electric Institute or the manufacturer's information for each appliance for other item of electrical equipment, or where available, comparable load study data obtained by the utility submetering appliance operation in its service area; (4) in cases of a tampered meter where the amount of actual unmetered consumption can be calculated after testing the meter using industry recognized testing procedures, bills may be calculated for the consumption over the entire period of meter tampering; (5) in cases of meter bypassing or other service diversion, where the amount of actual unmetered consumption can be calculated by industry recognized testing procedures, bills may be calculated for the consumption over the entire period of meter bypassing or other service diversion; (A) paragraph (1) of this subsection does not prohibit utilities from using other methods of calculating bills for unmetered electricity or water when the usage of other methods can be shown to be more appropriate in the case in question; (B) a utility may charge for all labor, material and equipment necessary to repair or replace all equipment damaged due to meter tampering or bypassing or other service diversion, and other costs necessary to correct service diversion where there is no equipment damage, including incidents where service is reconnected without authority. An itemized bill of such charges must be provided to the customer; (C) a utility may not charge any additional penalty or make any other additional charge for meter tampering or bypassing or other service diversion unless such penalty has been expressly approved by the commission and filed in the utility's tariff, or such other additional charge has been approved by order of the commission or court of law of competent jurisdiction. (n) Record retention. Each utility shall maintain monthly billing records for each account for at least two years after mailing of the bill. The billing records shall contain data sufficient to reconstruct a customer's billing for a given month. Copies of billing records may be obtained by the customer upon request. (o) Compliance. All utilities shall revise their billing format in compliance with this section within 365 days of the effective date of this section. sec.23.46. Discontinuance of Service. (a) Application. Unless the context clearly indicates otherwise, in this section the terms utility and public utility, insofar as they relate to telecommunications utilities, shall refer to dominant carriers. (b) Disconnection for delinquent bills. A customer's utility service may be disconnected if a bill has not been paid or a deferred payment agreement entered into within 26 days from the date of issuance of a bill and if proper notice has been given. Proper notice shall consist of a separate mailing or hand delivery at least 10 days prior to a stated date of disconnection, with the words "termination notice" or similar language prominently displayed on the notice. The information included in the notice shall be provided in English and Spanish as necessary to adequately inform the customer. Attached to or on the face of the termination notice or electric bills shall appear a statement notifying the customer that if they are in need of assistance with the payment of their bill, or are ill and unable to pay their bill, they may be eligible for payment assistance or special payment programs, such as deferred payment plans, disconnection moratoriums for the ill, or energy assistance programs, and to contact the local office of the utility for information on the available programs. Attached to or on the face of the termination notice for telephone bills shall appear a statement notifying the customer that if they are in need of assistance with payment of their bill, or are ill and unable to pay their bill, they may be eligible for alternative payment programs, such as deferred payment plans, and to contact the local office of the utility for more information. If mailed, the cut-off day may not fall on a holiday or weekend, but shall fall on the next working day after the tenth day. Payment at a utility's authorized payment agency is considered payment to the utility. The company shall not issue late notices or disconnect notice to the customer earlier than the first day the bill becomes delinquent, so that a reasonable length of time is allowed to ascertain receipt of payment by mail or at the utility's authorized payment agency. (c) Disconnection with notice. Utility service may be disconnected after proper notice for any of the following reasons: (1) failure to pay a delinquent account for utility service or failure to comply with the terms of a deferred payment agreement including only the carriage charges of interexchange carriers where a local exchange carrier's tariff provides for billing for those carriers. In the event the appropriate federal authority prohibits disconnection of local exchange telephone service for failure to pay the interstate charges of an interexchange carrier or prohibits payment of interexchange carriage charges as a condition of local exchange telephone service, intrastate carriage charges of an interexchange carrier shall not be a cause for disconnection of local exchange telephone service. (2) violation of the utility's rules pertaining to the use of service in a manner which interferes with the service of others or the operation of nonstandard equipment, if a reasonable attempt has been made to notify the customer and the customer is provided with a reasonable opportunity to remedy the situation. (3) failure to comply with the deposit or guarantee arrangements where required by sec.23.43 of this title (relating to Applicant and Customer Deposit). (d) Disconnection without notice. Utility service may be disconnected without notice where a known dangerous condition exists for as long as the condition exists or where service is connected without authority by a person who has not made application for service or who has reconnected service without authority following termination of service for nonpayment or in instances of tampering with the utility company's meter or equipment, bypassing the same, or other instances of diversion as defined in sec.23.47 of this title (relating to Meters). Where reasonable, given the nature of the hazardous condition, a written statement providing notice of disconnection and the reason therefor shall be posted at the place of common entry or upon the front door of each affected residential unit as soon as possible after service has been disconnected. (e) Disconnection prohibited. Utility service may not be disconnected for any of the following reasons: (1) delinquency in payment for utility service by a previous occupant of the premises. (2) failure to pay for merchandise, or charges for nonutility service provided by the utility. (3) failure to pay for a different type or class of utility service unless fee for such service is included on the same bill. (4) failure to pay the account of another customer as guarantor thereof, unless the utility has in writing the guarantee as a condition precedent to service. (5) failure to pay charges arising from an underbilling occurring due to any misapplication of rates more than six months prior to the current billing. (6) failure to pay charges arising from an underbilling due to any faulty metering, unless the meter has been tampered with or unless such underbilling charges are due under sec.23.47 of this title (relating to Meters). (7) failure to pay an estimated bill other than a bill rendered pursuant to an approved meter-reading plan, unless the utility is unable to read the meter due to circumstances beyond its control. (f) Disconnection on holidays or weekends. Unless a dangerous condition exists, or unless the customer requests disconnection, service shall not be disconnected on a day, or on a day immediately preceding a day, when personnel of the utility are not available to the public for the purpose of making collections and reconnecting service. (g) Disconnection due to utility abandonment. No public utility may abandon a customer or a certified service area without written notice to its customers therein and all similar neighboring utilities, and approval from the commission. (h) Disconnection for ill and disabled. No electric public utility may discontinue service to a delinquent residential customer permanently residing in an individually metered dwelling unit when that customer establishes that discontinuance of service will result in some person residing at that residence becoming seriously ill or more seriously ill if service is discontinued. Each time a customer seeks to avoid termination of service under this rule, the customer must have the attending physician (for purposes of this rule, the term "physician" shall mean any public health official, including, but not limited to, medical doctors, doctors of osteopathy, nurse practitioners, registered nurses, and any other similar public health official) call or contact the utility within 16 days of issuance of the bill. A written statement must be received by the utility from the physician an within 26 days of the issuance of the utility bill. The prohibition against service termination provided by this rule shall last 63 days from the issuance of the utility bill or such lesser period as may be agreed upon by the utility and the customer or physician. The customer who makes such request shall enter into a deferred payment plan. (i) Disconnection to energy assistance grantees. No electric public utility may terminate service to a delinquent residential customer for a billing period in which the customer has applied for and been granted energy assistance funds if any agency for administration of these funds has notified the utility, prior to the date of disconnection, of approval of an award sufficient to cover the bill, or a portion of the bill so that the customer can successfully enter into deferred payment plan for the balance of the bill. (j) Disconnection during extreme weather. On a day when the previous day's highest temperature did not exceed 32 degrees F, and the temperature is predicted to remain at that level for the next 24 hours, according to the nearest National Weather Service (NWS) reports, or in zones where an excessive heat alert is in effect as determined by the NWS and reported by the National Oceanic and Atmospheric Administration (NOAA), an electric utility cannot disconnect a customer until the utility ascertains that no life-threatening condition exists in the customer's household, or would exist, because of disconnection during severe weather conditions. (k) Resolution of disputes. Any customer or applicant for service requesting the opportunity to dispute any action or determination of a utility under the customer service rules of the commission sec.23.41-23.48 of this title (relating to Customer Service and Protection) shall be given an opportunity for a supervisory review by the utility. If the utility is unable to provide a supervisory review immediately following the customer's request for such review, arrangements for the review shall be made for the earliest possible date. Service shall not be disconnected pending completion of the review. If the customer chooses not to participate in such review or to make arrangements for such review to take place within five days after requesting it, the company may disconnect service, providing notice has been issued under standard disconnect procedures. Any customer who is dissatisfied with the review by the public utility must be informed of their right to file a complaint and/or request a hearing before the appropriate municipal regulatory body or the Public Utility Commission of Texas, whichever is applicable. The results of the supervisory review must be provided in writing to the customer within ten days of the review, if requested. (l) Disconnection of master-metered apartments. When a bill for utility services is delinquent for a master-metered apartment complex (defined as a submetered or nonsubmetered building in which a single meter serves five or more residential dwelling units), the following shall apply: (1) The utility shall send a notice to the customer as required in subsection (a) of this section. At the time such notice is issued, the utility shall also inform the customer that notice of possible disconnection will be provided to the tenants of the apartment complex in six days if payment is not rendered before that time. (2) At least six days after providing notice to the customer and at least four days prior to disconnect, the utility shall post a minimum of five notices in conspicuous areas in the corridors or other public places of the apartment complex. Language in the notice shall be prominently displayed and shall read: (3) Notice to residents of (name and address of apartment complex) electric utility service to this apartment complex is scheduled for disconnection on (date), because (reason for disconnection). (m) Disconnection for non-payment of charges for calls placed from combat or war zones. Residential local exchange telephone service may not be disconnected for failure to pay any charges for calls placed from combat or war zones, as designated by the federal government, by American military personnel that are billed to a telephone number in Texas, subject to the provisions of paragraphs (1)-(6) of this subsection. (1) The dominant certificated telecommunications utility (DCTU) must offer a deferred payment plan to any residential customer who expresses an inability to pay that portion of a bill associated with calls placed from a combat or war zone, as designated by the federal government, by American military personnel. (2) The deferred payment plan must, at the customer's choice, provide either: (A) that the customer pays current charges other than current charges for calls placed from such combat or war zones, plus 1/12th each month of the outstanding balance of all charges for calls placed from such combat or war zones; or (B) that the customer pays current charges, other than current charges for calls placed from such combat or war zones, and upon the return of the calling party or parties from any such combat or war zone or upon conclusion of any such combat or war, whichever occurs later, the customer pays no more than 1/12th each month of the outstanding balance of all charges for calls placed from any such combat or war zone where such combat or war has concluded. (3) A deferred payment plan offered by a utility, when reduced to writing, must state, immediately preceding the space provided for the customer's signature and in boldface print at least two sizes larger than any other used thereon, that: "If you are not satisfied with this contract, or if agreement was made by telephone and you feel this contract does not reflect your understanding of that agreement, contact the utility immediately and do not sign this contract. If you do not contact the utility, or if you sign this agreement, you give up your right to dispute the amount due under the agreement except for the utility's failure or refusal to comply with the terms of this agreement". (4) If a customer has not fulfilled the terms of a deferred payment plan under this subsection, the utility is required to offer subsequent negotiation of a deferred payment plan agreement under reasonable terms and conditions no more onerous to the customer than those required in paragraphs (1)-(3) and (5) and (6) of this subsection. (5) Any DCTU that institutes a deferred payment plan must not refuse a customer participation in such a program on the basis of race, color, creed, sex, or marital status. (6) A deferred payment plan may be made by visiting the utility's business office or contacting the DCTU by telephone. If the customer visits the DCTU's business office, the DCTU may ask the customer to sign the deferred payment plan. The DCTU must provide the customer with a copy of the signed plan. If the agreement is made over the telephone, the DCTU must send a copy of the plan to the customer. (7) Interest or penalties shall not be assessed under any deferred payment plan authorized in this subsection. (n) Disconnection for non-payment of electric utility service charges for families with military personnel serving in a combat or war zone and for certain members of the reserve component. An electric utility shall not disconnect a customer's residential electric utility service for the customer's failure to pay for such service, if the customer, a spouse, or the head of the household is serving military duty in a combat or war zone, as designated by the federal government, or is a member of the reserve component who is serving military duty that is directly related to such hostilities, subject to the following provisions of this subsection. (1) The utility will verify with the customer or his or her family member that the customer, a spouse, or the head of the household is serving military duty in such a combat or war zone, or is a member of the reserve component who is serving military duty that is directly related to such hostilities. (2) A utility must offer a deferred payment plan under this subsection to any residential customer who expresses an inability to pay for electric utility service because of the service of the customer, a spouse, or the head of the household on military duty in such a combat or war zone or as a member of the reserve component on military duty that is directly related to such hostilities. Upon the cessation of hostilities or the return of the person serving military duty, whichever occurs later, and upon request by a customer, a utility will offer subsequent renegotiation of a deferred payment plan agreement under reasonable terms and conditions for the outstanding balance owed for electric utility service charges. Such renegotiation shall include a deferred payment plan under this subsection with terms extending up to 12 months for the unpaid balance. (3) A deferred payment plan offered by a utility under this subsection, when reduced to writing, must state, immediately preceding the space provided for a customer's signature and in boldface print at least two sizes larger than any other used thereon, that: "If you are not satisfied with this contract, or if agreement was made by telephone and you feel this contract does not reflect your understanding of that agreement, contact the utility immediately and do not sign this contract. If you do not contact the utility, or if you sign this agreement, you give up your right to dispute the amount due under the agreement except for the utility's failure or refusal to comply with the terms of this agreement". (4) Any electric utility that institutes a deferred payment plan under this subsection must not refuse a customer participation in such a program on the basis of race, color, creed, sex, or marital status. (5) A deferred payment plan offered under this subsection may be made by visiting the utility's business office or contacting the utility by telephone. If the customer visits the utility's business office, the utility may ask the customer to sign the deferred payment plan. The utility must provide the customer with a copy of the signed plan. If the agreement is made over the telephone, the utility must send a copy of the plan to the customer. (6) Interest or penalties shall not be assessed under any deferred payment plan authorized in this subsection. sec.23.48. Continuity of Service. (a) Application. Unless the context clearly indicates otherwise, in this section the term utility, insofar as it relates to telecommunications utilities, shall refer to dominant carriers. (b) Service interruptions. (1) Every utility shall make all reasonable efforts to prevent interruptions of service. When interruptions occur, the utility shall reestablish service within the shortest possible time. (2) Each utility shall make reasonable provisions to meet emergencies resulting from failure of service, and each utility shall issue instructions to its employees covering procedures to be followed in the event of emergency in order to prevent or mitigate interruption or impairment of service. (3) In the event of national emergency or local disaster resulting in disruption of normal service, the utility may, in the public interest, interrupt service to other customers to provide necessary service to civil defense or other emergency service agencies on a temporary basis until normal service to these agencies can be restored. (c) Record of interruption. Except for momentary interruptions due to automatic equipment operations, each utility shall keep a complete record of all interruptions, both emergency and scheduled. This record shall show the cause for interruptions, date, time, duration, location, approximate number of customers affected, and, in cases of emergency interruptions, the remedy and steps taken to prevent recurrence. (d) Report to commission. (1) Telephone utilities. The following guidelines are a minimum basis for reporting service interruptions. Any report of service interruption shall state the cause(s) of the interruption. Dominant certificated telecommunications utilities (DCTUs) should use judgment in reporting major outages lasting less than four hours. DCTUs shall notify the commission in writing of interruptions in service lasting four or more hours affecting: (A) 50% of the toll circuits serving an exchange; (B) 50% of the Extended Area Service circuits serving an exchange; (C) 50% of a central office; or (D) 20% or more of an exchange's access lines. (2) Electric utilities. The commission shall be notified in writing of interruptions in service affecting the entire system or any major division of the system which is owned or operated by the utility lasting more than one hour. The notice shall also state the cause(s) of such interruptions. This subsection applies only to outages occurring within this state. (e) Change in character of service. In case any change is made by the utility in the type of service rendered which would adversely affect the efficiency of operation or the adjustment of the equipment of customers, all customers who may be affected shall be notified by the utility at least 60 days in advance of the change or if such notice is not possible, as early as feasible. Where adjustments or replacements of the utility's standard equipment must be made to permit use under such changed conditions, adjustment shall be made by the utility without charge to the customers, or in lieu of such adjustments or replacements, the utility may make cash or credit allowances based on the duration of the change and the degree of efficiency loss. (f) Emergency Operations Plan. By December 31, 1992, or within 60 days of being declared a dominant carrier, whichever is later, each utility shall file with the commission a general description of its emergency operations plan. Each utility shall thereafter update its plan by filing revision sheets that clearly indicate any changes in the plan within 30 days of such changes. A general description of the plan shall also be made available at the utility's main office for inspection by the public. A complete copy of the plan shall be made available at the utility's main office for inspection by the commission or its staff upon request. (1) Telephone utilities. Each emergency plan filed by a dominant carrier must include, but need not be limited to, the following: (A) a communications plan that describes the procedures for contacting the media, customers and critical users (including but not limited to hospitals, police stations, fire stations and critical city offices) as soon as reasonably possible either before or at the onset of an emergency. The communications plan should also: (i) address how the utility's telephone system and complaint handling procedures will be augmented during an emergency; (ii) identify key personnel and equipment that will be required to implement the plan when an emergency occurs; (B) priorities for restoration of service. (2) Electric utilities. Each electric utility's emergency plan must include, but need not be limited to, the following: (A) a description of the registry of customers directly served by the utility with special in-house, major, life-sustaining equipment and the plan to identify and communicate with these customers; (B) a communications plan that describes the procedures for contacting the media and customers and critical loads directly served by the utility (including but not limited to hospitals, police stations, fire stations and critical water and wastewater facilities) as soon as reasonably possible either before or at the onset of an electrical emergency. The communications plan should also address how the utility's telephone system and complaint handling procedures will be augmented during an emergency. Utilities should make every reasonable effort to solicit help from cogenerators during times of generation shortages to prevent interruptions in service; (C) curtailment priorities and procedures for shedding load and rotating black-outs; (D) priorities for restoration of service; (E) a summary of power plant weatherization plans and procedures; and (F) a summary of the utility's alternative fuel and storage capacity. sec.23.49. Telephone Extended Area Service (EAS) and Expanded Toll-free Local Calling Areas. (a) Purpose. This section is intended to establish consistent procedures for the processing of requests for extended area service (EAS) and to provide for an expedited hearing allowing the expansion of two-way toll-free local calling for rural areas, as enacted in Senate Bill 632 by the 73rd Legislature. (b) Extended Area Service. The term utility(ies) in this subsection refers to dominant certificated telecommunications utility(ies). (1) Filing Requirements. (A) -(E) (No change.) (F) Petitions for extended area service into metropolitan exchanges on file with the commission on or before the effective date of this section will be grouped by relevant metropolitan exchange. For each metropolitan exchange, the commission staff will file a motion to docket a proceeding for the determination of uniform extended area service rate additives as directed by paragraphs (3), (4), and (5) of this subsection for all pending EAS requests to that metropolitan exchange. Upon the docketing of such a proceeding, two weeks notice in a newspaper of general circulation in the metropolitan area shall be published. The notice shall contain such information as deemed reasonable by the presiding officer in the proceeding. No fewer than 60 days from the final publication of notice shall pass before the demand studies required by paragraph (3) of this subsection are initiated. New petitioners for extended area service into the metropolitan exchange may be accepted prior to the initiation of the demand studies. (2) Community of interest. (A)-(C) (No change.) (D) The project shall be established as a formal docket upon the motion of the commission staff. (E) Following the docketing of a request, a prehearing conference will be scheduled to establish the exchange to which EAS is sought, and to report any agreements reached by the parties. The utility(ies) involved shall conduct appropriate demand and costing analyses according to paragraphs (3) and (4) of this subsection. (3) (No change.) (4) Determination of costs. (A)-(B) (No change.) (C) The utility(ies) shall file with the commission and serve copies on commission staff and other parties to the proceeding the summary results of these studies, together with such supporting schedules and detailed documentation as will permit the identification of study components and verification and understanding of study results according to the following schedule, unless the utility(ies) can demonstrate that good cause exists to expand the time schedule for a particular study: (i) Incremental costs identified in paragraph (1) of this subsection shall be filed no later than 90 days from the filing of the results of the demand analysis conducted pursuant to paragraph (3) of this subsection; and (ii) toll revenue effects, if analyzed pursuant to subparagraph (B) of this paragraph, shall be filed no later than 90 days from the filing of the results of the incremental costs, pursuant to clause (i) of this subparagraph. (5) (No change.) (6) Subscription threshold. (A) A threshold demand level shall be established by the commission's order in the docketed proceeding prior to the design or construction of facilities for the service. A reasonable pre-subscription process will then be undertaken to determine the likely demand level. If the likely demand level equals or exceeds the threshold demand level, then EAS shall be provided in accordance with the commission's order. If the threshold demand level is not met, the affected utility(ies) is not required to provide the EAS approved by the commission. (B) (No change.) (7) Notice. (A) Notice of the filing of an EAS application must be provided to all subscribers within the petitioning exchange(s), by publication for two consecutive weeks in a newspaper of general circulation in the area. Notice must also be given to individual subscribers either through inserts in customer bills, or through a separate mailing to each subscriber. The notice must state: the project number, the nature of the request, and the commission's mailing address and telephone number to contact in the event an individual wishes to protest or intervene. The commission shall also publish notice in the Texas Register. (B) -(C) (No change.) (8) Joint filings. (A) EAS agreements. The commission may approve agreements for EAS or EAS substitute services filed jointly by the representatives of petitioning exchanges and the affected utility(ies) (joint filings) so long as the agreements are in accordance with subparagraph (C)(i)-(x) of this paragraph. Notwithstanding any other provisions of this paragraph, if more than one political subdivision is affected by a proposed optional calling plan under sec.3.262(a)(4) of the Public Utility Regulatory Act of 1995, the agreement of each political subdivision is not required. (B) (No change.) (C) Joint filings shall be permitted subject to the following: (i) The parties to such joint filings shall include the name of each utility which provides service in the affected exchanges representative for each of the affected exchange. Each exchange representative shall be designated jointly by the governing officials of all incorporated areas within the affected exchange and the county commission(s) representing any unincorporated areas within the affected exchange. (ii)-(vi) (No change.) (vii) These joint filings shall demonstrate that the proposed rate additives: (I) (No change.) (II) shall recover, for the utility providing the service, the appropriate cost of providing EAS including a contribution to joint costs. (viii)-(x) (No change.) (c) (No change.) sec.23.52. Tel-Assistance and Lifeline Service. (a) Application. This section applies to local exchange carriers (LECs) of this title (relating to Telephone Utilities), that are subject to the rate- making jurisdiction of the commission for any service or geographic market. (b) Definitions. The following words and terms, when used in this section, shall have the following meaning, unless the context clearly indicates otherwise. (1) Tel-Assistance Service-A program providing eligible consumers, as determined under applicable rules of the Texas Department of Human Services, with a reduction in costs of certain telecommunications services. (2)-(3) (No change.) (4) Qualifying service- (A) residential flat rate basic local exchange service; (B)-(C) (No change.) (c) Rate reductions under tel-assistance service. Each LEC shall provide tel- assistance service to all eligible consumers within its certificated area in the form of a 65 % reduction in the applicable tariff rate for the service provided. The reduction shall apply only to the qualifying service. The reduction for local area calling usage shall be limited to an amount such that together with the reduction for local exchange access service the overall rate reduction does not exceed the comparable reduction applicable to flat rate service. (d) -(j) (No change.) sec.23.55. Operator Services. (a) Purpose. The provisions of this section are intended to ensure that competitive operator services are provided in a fair and reasonable manner and to maximize consumer choice by assuring consumers access to their carriers of choice when using telephones intended for use by the public. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Operator service-Any service using live operator or automated operator functions for the handling of telephone service, such as toll calling via collect, third number billing, and calling card services. The transmission of 800 numbers, where the called party has arranged to be billed, is not operator service. (2) Operator Service Provider (OSP)-Any person or entity that provides operator services by using either live or automated operator functions. When more than one entity is involved in processing an operator service call, the party setting the rates shall be considered to be the OSP. However, subscribers to customer-owned pay telephone service shall not be deemed to be OSPs. (3) Commission-The Public Utility Commission of Texas. (4) Call aggregator-Any person or entity that owns or otherwise controls telephones intended to be utilized by the public. For the purposes of this definition, a person or entity controls a telephone if that person or entity has the authority to post notices and/or unblock access. (5) Rate information-All charges ultimately charged to the end user by the OSP, including any surcharges, fees, and any other form of compensation charged by the OSP on behalf of the call aggregator. (6) Call transferring-Handing off a call from one OSP to another OSP. (7) Call splashing-Call transferring (whether caller-requested or OSP- initiated) that results in a call being rated and/or billed from a point different from that where the call originated. (8) "0-" call-A call made by the caller dialing the digit "0" and no other digits within five seconds. A "0-" call may be made after a digit (or digits) to access the local network is (are) dialed. (9) Automatic Number Identification (ANI) -The automatic transmission by the local switching system of the originating billing telephone number to an interexchange carrier or other communications carrier in the normal course of telephone operations. (10) Originating Line Screening (OLS)-A two digit code passed by the local switching system with the ANI at the beginning of a call that provides information about the originating line. (11) Administrative review-A process whereby an application is reviewed by the staff and the Office of Public Utility Counsel and ruled on by the presiding officer without an evidentiary hearing and without an order signed by the commission. (12) End user choice-A system that allows the automatic routing of interexchange, operator-assisted calls to the billed party's chosen carrier without the use of access codes. (13) Telephones intended to be utilized by the public -Telephones that are accessible to the public, including, but not limited to, pay telephones, telephones in guest rooms and common areas of hotels, motels, or other lodging locations, and telephones in hospital patient rooms. (14) Redirect the call-A procedure used by OSPs that transmits a signal back to the originating telephone instrument that causes the instrument to disconnect the OSP's connection and to redial the digits originally dialed by the caller directly to the local exchange carrier's network. (c) Requirements to provide operator service. (1) An OSP that provides end user operator services for a call aggregator through a telephone intended to be utilized by the public must do so pursuant to a contract with the call aggregator, as a presubscribed interexchange carrier, or, in the case of a dominant certificated telecommunications utility (DCTU), pursuant to a tariff approved by the commission. (2) Notwithstanding the provisions of paragraph (1) of this subsection, an OSP that owns or otherwise controls the telephones that are intended to be utilized by the public shall for those telephones comply with all provisions of this section otherwise required to be included in contracts between OSPs and call aggregators, without the necessity of a contract. (3) Where an OSP is presubscribed for interLATA operator services at pay telephones owned by a DCTU, the DCTU shall for those telephones comply with all provisions of this section otherwise required to be included in contracts between OSPs and call aggregators. (4) If a DCTU or presubscribed interexchange carrier provides operator services through telephones intended to be utilized by the public, other than those telephones subject to paragraphs (2) and (3) of this subsection, and pays fees or other forms of compensation to a call aggregator, the DCTU or presubscribed interexchange carrier shall do so pursuant to a contract with the call aggregator. (d) Information to be provided at the telephone set. (1) A contract between an OSP and a call aggregator for the provision of operator services through telephones intended to be utilized by the public shall require the call aggregator to attach to each telephone set that has access to the operator service and that is intended to be utilized by the public a card furnished by the OSP that provides: (A) the name of the OSP; (B) instructions for accessing the OSP, with a statement that the OSP will quote rate information upon request at no charge to the caller, 24 hours a day, seven days a week, or a statement that instructions for obtaining rate information are available at a designated toll-free telephone number, 24 hours a day, seven days a week; (C) instructions for accessing the operator of a local exchange carrier that meets the requirements of subsection (k)(3) of this section, or a statement that instructions for accessing such local exchange carrier operator are available at a designated toll-free telephone number, 24 hours a day, seven days a week, except, local exchange carriers meeting the requirements of subsection (k)(3) of this section are exempt from this subparagraph if the local exchange carrier is the OSP for which instructions are posted pursuant to subparagraph (B) of this paragraph; (D) instructions for registering a complaint about the service at a designated toll-free telephone number; (E) instructions in English and Spanish for accessing emergency service; and (F) a notice that states, "You may use another long distance carrier. Follow your carrier's instructions, or contact the local exchange carrier operator for assistance." or, in the case of telephones that directly route "0-" calls to the local exchange carrier operator, a notice that states, "You may use another long distance carrier. Follow your carrier's instructions, or dial "0" for assistance." (The local exchange carrier referred to in this subparagraph must serve the area and meet the requirements of subsection (k)(3) of this section.) (2) Notwithstanding paragraph (1) of this subsection, in the case of pay telephones owned by the DCTU, where the DCTU is the OSP for intraLATA operator service and another carrier is the OSP for interLATA operator service, the interLATA OSP shall inform the DCTU of the appropriate information to be posted, and the DCTU shall post the information required by paragraph (1)(A), (B), and (D) of this subsection for the interLATA OSP. In addition, the DCTU shall post the information required by paragraph (1)(E) and (F) of this subsection. After initial information cards are posted, DCTUs may file tariffs to recover from the OSPs presubscribed to pay telephones owned by the DCTUs the incremental cost for maintaining updated information cards plus a reasonable contribution. (3) The commission may approve applications for modification of the requirements contained in this subsection upon showing of good cause. Applications for modification may be filed by the call aggregator or by the OSP. The commission shall process applications for modification using the following criteria and procedures: (A) Each application for modification shall contain a certificate of service attesting that a copy of the request has been served upon the Office of Public Utility Counsel. (B) Each application for modification shall clearly set forth the good cause for approval of the modification. (C) Each application for modification shall initially be assigned a project control number, assigned to a presiding officer, and reviewed administratively. (i) No later than 30 days after the filing date of the application, interested persons other than the commission staff and the Office of Public Utility Counsel may file written comments or recommendations concerning the application. No later than 60 days after the filing of the application, the commission staff shall, and the Office of Public Utility Counsel may, file written comments or recommendations concerning the application. (ii) Within 90 days of filing, after administrative review, the presiding officer shall approve, deny, or docket the application. The presiding officer may postpone a decision on the application beyond the 90th day after filing if he or she finds that additional information is needed. (D) Any participating party may request, within ten days of the presiding officer's order approving or denying the application, that the application be docketed, and upon such request, the application shall be docketed. (E) If the presiding officer either approves or denies the application for modification and no participating party has requested that the application be docketed, a copy of the presiding officer's ruling shall be provided to the commission. The commission may, within 40 days of the presiding officer's ruling, overrule the approval or denial and order that the application for modification be docketed. (4) The requirements of this subsection shall not apply to telephones located in confinement facilities. (e)-(f) (No change.) (g) 911 calls, "0-" calls, and end user choice. (1) A contract between an OSP and a call aggregator for the provision of operator services through telephones intended to be utilized by the public shall require the call aggregator to allow 911 calls to be outpulsed directly to the Public Service Answering Point without requiring a coin or credit card. (2) Where End User Choice, as herein defined, is not available, a contract between an OSP and a call aggregator for the provision of operator services through telephones intended to be utilized by the public shall require the call aggregator to allow "0-" calls and to directly, without charge to the calling party, route all "0-" calls to an without charge to the calling party unless the OSP provides access to emergency service providers. In providing access to emergency service providers, the] OSP that provides access to emergency services that meet the technical standards set forth in subparagraphs (A)-(F) of this paragraph. Specifically, such an OSP shall: (A) easily identify the originating telephone number and the location of the originating telephone, except DCTUs shall be allowed to identify the location using internal sources such as repair service or business office records if such internal sources are accessible to operators for emergency purposes 24 hours a day; (B) (No change.) (C) be available 24 hours a day, seven days a week, without requiring a coin or credit card; (D)-(F) (No change.) (3)-(4) (No change.) (5) Nothing in this section shall be deemed to require the initial routing of "0-" calls from pay telephones owned by a local exchange carrier that provides access to emergency service providers and that meets the requirements enumerated in subsection (k)(3) of this section to any OSP other than the local exchange carrier itself. (h) Customer complaints. (1) The OSP shall have a toll-free telephone number that callers may utilize, during normal business hours, to voice complaints and make inquiries. (2) (No change.) (3) In the event the complainant is dissatisfied with the OSP's report, the OSP shall advise the complainant of the Public Utility Commission of Texas complaint process, giving the customer the address and telephone number of the Public Information Office of the commission. If appropriate, the OSP shall also give the customer the commission's TDD number for the speech-and hearing- impaired. (4)-(5) (No change.) (i) Access. A contract between an OSP and a call aggregator for the provision of operator services through telephones intended to be utilized by the public shall require that the call aggregator allow access to the operator of a local exchange carrier that meets the requirements enumerated in subsection (k)(3) of this section and serves the area from which the call is made, and to other telecommunications utilities unless otherwise provided in paragraph (3) of this subsection. (1) The access required by this subsection shall be provided subject to the conditions contained in subparagraphs (A)-(C) of this paragraph. (A) Access to such local exchange carrier operator shall be accomplished either: (i) (No change.) (ii) by transfer or redirection of the call by the OSP, without charge to the caller, in accordance with the requirements of subclauses (I)-(III) of this clause: (I) the OSP shall transfer or redirect the call to such local exchange carrier operator serving the originating area; (II) the OSP shall transfer or redirect the call to such local exchange carrier operator in such a way that the local exchange carrier operator receives all signaling information (e.g., ANI and OLS) that would have been received by the local exchange operator if the call had been directly routed to the local exchange carrier; and (III) (No change.) (B) (No change.) (C) Access to interexchange carriers by "10XXX+0" (whether "10XXX+0+" or "10XXX+0-") dialing shall not be blocked if the end office serving the originating line has originating line screening capability. A nonpresubscribed interexchange carrier shall not bill the call aggregator or the presubscribed interexchange carrier for local or toll messages originated at the call aggregator's facility by use of "10XXX+0" (whether "10XXX+0+" or "10XXX+0-") dialing, or where the calls originated at the call aggregator's facility and otherwise reached an operator position, if the call aggregator has subscribed to the necessary local exchange carrier-provided outgoing call screening or has otherwise provided the necessary call screening to ensure that appropriate originating line screening is transmitted with each call. (2) (No change.) (3) Waivers to the access requirement may be granted by the commission to prevent fraudulent use of telephone services or for other good cause. An application under subparagraph (B) of this paragraph is not required for any generic waiver granted by subparagraph (A) of this paragraph. (A) (No change.) (B) Applications for waiver of the requirement for access to the local exchange carrier operator or to other telecommunications utilities to prevent fraudulent use of telephone service or for other good cause may be filed by the call aggregator or the OSP. The commission shall process such applications for waiver using the following criteria and procedures: (i) Each application for waiver shall contain a certificate of service attesting that a copy of the application has been served upon the Office of Public Utility Counsel and affected telecommunications utilities, such telecommunications utilities to include those identified in the list referred to in paragraph (2) of this subsection and the local exchange carriers serving the affected exchange. If the application for waiver pertains to technical limitations of certain equipment, the application for waiver shall contain a certificate of service attesting that a copy of the application has been served upon the Office of Public Utility Counsel and all telecommunications utilities registered with or certificated by the commission. The certificate shall list the telecommunications utilities on which copies of the application were served. (ii)-(iii) (No change.) (iv) Each application for waiver shall initially be assigned a project control number, assigned to a presiding officer, and reviewed administratively. (I) (No change.) (II) Within 90 days of the filing, after administrative review, the presiding officer shall approve, deny, or docket the application. The presiding officer may postpone a decision on the application beyond the 90th day after filing if he or she finds that additional information is needed to determine whether good cause exists. (v) participating party may request, within ten days of the presiding officer's ruling, approving or denying the application, that the application be docketed, and upon such request, the application shall be docketed. (vi) If the presiding officer either approves or denies the application for waiver and no participating party has requested that the application be docketed, a copy of the presiding officer's ruling shall be provided to the commission. The commission may, within 40 days of the presiding officer's ruling, overrule the approval or denial and order that the request for waiver be docketed. (vii) (No change.) (j) (No change.) (k) Dominant certificated telecommunications utility (DCTU) requirements. (1) Each DCTU shall make validation information (e.g. DCTU calling card numbers, whether an access line is equipped with billed number screening, or whether an access line is a pay telephone) available to any interexchange carrier requesting it by December 31, 1991, on the same prices, terms, and conditions that the DCTU provides the service to any other interexchange carrier. The DCTU may comply with the requirements of this paragraph by providing its own data base, making arrangements with another DCTU to provide the information, or making arrangements with a third-party vendor. (2) Each DCTU shall offer billing and collection services to any interexchange carrier requesting it by December 31, 1991, on the same prices, terms, and conditions that the DCTU provides the services to any other interexchange carrier. If validation information is available for calls that the interexchange carrier (or a third-party billing and collection agent operating on behalf of the interexchange carrier) will bill through the DCTU, the interexchange carrier is required to validate the call and is allowed to submit the call for billing only if the call was validated. (3) If a DCTU receives a request from a caller to access another carrier, the DCTU shall, using the same prices, terms, and conditions for all carriers, either: (A) (No change.) (B) instruct the caller how to access the caller's carrier of choice if that carrier has provided the DCTU with the information referred to in subsection (l)(2) of this section. (l) (No change.) (m) Other requirements. (1) OSPs that are not DCTUs are subject to the requirements contained in the Public Utility Regulatory Act of 1995 and the commission's substantive rules for nondominant telecommunications utilities. (2) (No change.) (n) Enforcement. The commission may investigate any complaint against any OSP, interexchange carrier or DCTU alleged to have violated the provisions of this section. The company shall be given an opportunity to informally resolve any complaint involving violation of these rules. If no resolution is achieved informally, the commission may upon its own motion or upon request of the original complainant formally investigate the complaint, and, upon proper notice, evidentiary hearing, and determination that a violation has occurred or is about to occur, may take action to stop, correct or prevent the violation. (o) (No change.) sec.23.56. Statewide Dual-Party Relay Service. (a) Purpose. The provisions of this section are intended to establish a statewide telecommunications dual-party relay service for the hearing-impaired and speech-impaired using special communications equipment such as telecommunications devices for the deaf (TDD), computers, and operator translations. The service shall be provided on a statewide basis by one telecommunications carrier. However, certain aspects of the operation of the dual-party relay service are applicable to local exchange carriers and other telecommunications utilities, as those terms are defined by sec.23.3 of this title (relating to Definitions). (b)-(g) (No change.) (h) Universal Service Fund Assessment. (1)-(2) (No change.) (3) Division of LEC Assessment among LECs. (A) The Administrator shall establish an assessment rate to apply to LECs. This rate shall be calculated by dividing the cost assessed to LECs as set forth in paragraph (2) of this subsection for the current period by the total number of customer access lines as of December 31 of the previous year. (B) The assessment to each LEC shall be the number of that LEC's customer access lines as of December 31 of the previous year multiplied by the LEC assessment rate for the period. (4) (No change.) (i)-(k) (No change.) (l) Reports. The relay service carrier, local exchange carriers, and other telecommunications utilities shall make such reports as required by the commission. The commission staff will forward to the Universal Service Fund Administrator the total number of access lines counts received pursuant to sec.23.13(d). (m) (No change.) sec.23.58. Pay-per-call Information Services Call Blocking. (a) Definition. Pay-per-call Information Services are services that allow a caller to dial a specified 1-900-XXX-XXXX or 976-XXXX number. Such services routinely deliver, for a predetermined (sometimes time-sensitive) fee, a pre- recorded or live message or interactive program. Usually a telecommunications utility will transport the call and bill the end-user on behalf of the information provider. (b) Free Blocking. Within 90 days of March 7, 1991 or within 90 days of being declared a dominant carrier, whichever is later, all dominant certificated telecommunications utilities (DCTUs) LECs] are required, upon request, to block access to all Pay-per-call Information Services (900 and 976 services) when a call is placed to a 1-900-XXXX or 976-XXXX number. There will be no charge to the end-user for the first blocking request. However, there may be a non- recurring charge applicable for subsequent blocking requests. (c) Subscription to Blocking. The request of the end-user shall be determined in the following method: (1) End-users not currently receiving blocking. In order to restrict access to Pay-per-call Information Services, end-users must order blocking either orally or by means of a written ballot. Within 60 days of March 7, 1991 or within 60 days of being declared a DCTU, whichever is later, each DCTU must notify its end-users of the upcoming free blocking and send a post-paid ballot to all existing end-users (either through bill inserts or a separate mailing) allowing them to choose whether they want to restrict access to Pay-per-call Information Services. (2) End-users currently receiving blocking. End-users that are receiving blocking of 976-XXXX services by a DCTU on March 7, 1991, shall be notified by the DCTU that by order of the commission, blocking of Pay-per-call Information Services may only be offered for both 1-900-XXXX and 976-XXXX numbers. Within 60 days of March 7, 1991 or within 60 days of being declared a DCTU, whichever is later, each DCTU shall send a post-paid ballot to all existing end-users (either through bill inserts or a separate mailing) allowing them to choose whether they want access to Pay-per-call Information Services. The DCTUs shall indicate to the end-user that on the date for which blocking will be implemented by all DCTUs pursuant to this section, all Pay-per-call Information Services (900 and 976 services) will be blocked for such end-users unless the customer notifies the DCTU orally or in writing that such end-user desires no blocking. (3)-(4) (No change.) (d) Mandatory Blocking. In areas where restricting access to Pay-per-call Information Services is not technically possible all access to the Pay-per-call Information Services must be blocked. (1) (No change.) (2) Once an area that has been mandatorily blocked attains the capability to provide blocking, the DCTU shall provide the notice and balloting procedures set out in subsections (b) and (c) of this section, and such requests received by the DCTU from the end-user shall thereafter be treated as an initial blocking request. (e) Disconnection. DCTUs may not disconnect an end-user's local telephone service for nonpayment of charges for Pay-per-call Information Service. DCTUs may implement involuntary blocking of Pay-per-call Information Service for nonpayment of charges for Pay-per-call Information Service. (f) Compliance. By March 7, 1991, or within 45 days of being declared a DCTU, whichever is later, each DCTU shall file tariffs in compliance with this section. The compliance tariffs will be reviewed by Staff. Within 35 days of the date of filing of the report, the tariff will either be approved or the effective date of the tariff will be suspended for further review. (g) Severability. If any provision of this section or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this section that can be given effect without the invalid provision or application. It is the intent of the commission that the provisions of this section are severable. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 21, 1995. TRD-9516653 Paula Mueller Secretary of Commission Public Utility Commission of Texas Effective date: January 11, 1996 Proposal publication date: October 10, 1995 For further information, please call: (512) 458-0100 Quality of Service 16 TAC sec.23.61, sec.23.69 The amendments are adopted under the Public Utility Regulatory Act of 1995, sec.1.101, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure. sec.23.61. Telephone Utilities. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Base rate area-A specific area within an exchange area as set forth in the DCTUs' tariffs, maps or descriptions. Local exchange service within this area is furnished at uniform rates without extra mileage charges. (2) Baud-Unit of signaling speed. Speed expressed in baud is the number of discrete conditions or signal elements per second. (3) Bit Error Ratio-Bit Error Ratio (BER) is the ratio of the number of bits received in error to the total number of bits transmitted in a given time interval. (4) Bit Rate-The rate at which data bits are transmitted over a communications path, normally expressed in bits per second. The bit rate is not to be confused with the data signaling rate (baud), which measures the rate of signaling elements being transmitted. (5) Busy hour-The clock hour each day during which the greatest usage occurs. (6) Busy season-That period of the year during which the greatest volume of traffic is handled in the office. (7) Complex service-The provision of a circuit requiring special treatment, special equipment, or special engineering design. This includes private lines, WATS, PBX trunks, rotary lines, special assemblies, etc. (8) Customer trouble report-Any oral or written report from a customer or user of telecommunications service received by any telecommunications utility relating to a physical defect, difficulty, or dissatisfaction with the service provided by the telecommunications utility's facilities. A separate report shall be counted for each telephone or PBX switchboard position reported in trouble when several items are reported by one customer at the same time, unless the group of troubles so reported is clearly related to a common cause. (9) dBrn-A unit used to express noise power relative to one Pico watt (-90 dBm). (10) dBrnC-Noise power in dBrn, measured with C-message weighting. (11) dBrnCO-Noise power in dBrnC referred to or measured at a zero transmission level point. (12) Grade of service-The number of customers a line is designated to serve. (13) Impulse Noise-Any momentary occurrence of the noise on a channel significantly exceeding the normal noise peaks. It is evaluated by counting the number of occurrences that exceed a threshold. This noise degrades voice and data transmission. (14) Intercept service-A service arrangement provided by the local exchange carrier whereby calls placed to a disconnected or discontinued telephone number are intercepted and the calling party is informed by an operator or by a recording that the called telephone number has been disconnected, or discontinued, or changed to another number, or that calls are being received by another telephone, etc. (15) Local message charge-The charge that applies for a completed telephone call that is made when the calling customer access line and the customer access line to which the connection is established are both within the same local calling area, and a local message charge is applicable. (16) Long distance telecommunications service-That part of the total communication service rendered by a telecommunications utility which is furnished between customers in different local calling areas in accordance with the rates and regulations specified in the utility's tariff. (17) Message rate service-A form of local exchange service under which all originated local messages are measured and charged for in accordance with the utility's tariff. (18) Nondominant carrier- (A) An interexchange telecommunications carrier (including a reseller of interexchange telecommunications services). (B) Any of the following that is not a dominant carrier: (i) a specialized communications common carrier; (ii) any other reseller of communications; (iii) any other communications carrier who conveys, transmits, or receives communications in whole or in part over a telephone system; or (iv) a provider of operator services who is not a subscriber. (19) Out-of-service trouble report-An initial customer trouble report in which there is complete interruption of incoming or outgoing local exchange service. On multiple line services a failure of one central office line or a failure in common equipment affecting all lines is considered out of service. If an extension line failure does not result in the complete inability to receive or initiate calls, the report is not considered to be out of service. (20) Pricing flexibility-Discounts and other forms of pricing flexibility may not be preferential, prejudicial, or discriminatory. Pricing flexibility includes: (A) customer specific contracts; (B) volume, term, and discount pricing; (C) zone density pricing; (D) packaging of services; and (E) other promotional pricing flexibility (21) Primary service-The initial provision of voice grade access between the customer's premises and the switched telecommunications network. This includes the initial connection to a new customer or the move of an existing customer to a new premises, but does not include complex services. (22) Public telephone service-An individual line customer service equipped with a coin collecting or coinless public telephone instrument installed for use of the general public in locations where the general public has access to these telephones. (23) Regrade-An application for a different grade of service. (24) Repeated trouble report-A customer trouble report regarding a specific line or circuit occurring within 30 days or one calendar month of a previously cleared trouble report on the same line or circuit. (25) Trunk-A circuit facility connecting two switching systems. (26) Virtual private line-Circuits or bandwidths, between fixed locations, that are available on demand and that can be dynamically allocated. (b) (No change.) (c) Emergency operation. (1) Each DCTU's central office not equipped with permanently installed standby generators shall contain as a minimum four hours of battery reserve without voltage falling below the level required for proper operation of all equipment. It is also essential that all central offices have adequate provisions for emergency power. In offices without installed emergency power facilities, there shall be a mobile power unit available which can be delivered and connected on short notice. (2) (No change.) (d) Inspections and tests. (1) Each DCTU shall adopt a program of periodic tests, inspections, and preventive maintenance aimed at achieving efficient operation of its system and rendition of safe, adequate, and continuous service. (2) Each DCTU shall maintain or have access to test facilities enabling it to determine the operating and transmission capabilities of all equipment and facilities. The actual transmission performance of the network shall be monitored in order to determine if the service objectives in this chapter are met. This monitoring function shall include, but not be limited to, circuit order tests prior to placing trunks in service, routine periodic trunk maintenance tests, tests of actual switched trunk connections, periodic noise tests of a sample of customer loops in each exchange, and special transmission surveys of the network. (3) Each central office serving more than 300 customer access lines shall be equipped with a 1,000+20 hertz, one milliwatt test signal generator and a 900 Ohm balanced termination device wired to telephone numbers so that they may be accessed for dial test purposes. Each DCTU shall advise the commission of the numbers assigned for these test terminations. (e) Service objectives and Surveillance Levels. This section establishes service objectives that should be provided by a DCTU, as applicable. The rules also include surveillance levels that indicate a need for the utility to investigate, take appropriate corrective action, and provide a report of such activities to the commission. The objective service levels are based on monthly averages, except for dial service and transmission requirements, which are based on specific samples. DCTUs shall make measurements to determine the level of service quality for each item included in these rules. Each DCTU shall provide the commission with the measurements and summaries thereof for any of the items included herein on request of the commission. Records of these measurements and summaries shall be retained by the DCTU as specified by the commission. (1) One-Party Line Service and Voice Band Data. (A)-(C) (No change.) (D) Within 180 days of the effective date of this section, a DCTU may request a waiver from the requirements of subparagraph (C) of this paragraph. Such a waiver request may be granted only if the commission determines that all of the following requirements have been met. (i) The cost to the DCTU of implementing the provisions of subparagraph (C) of this paragraph exceeds the public benefit thereof. (ii) The DCTU has submitted a reasonable implementation plan stating, on an exchange-by-exchange basis, the date (not later than December 31, 2003) by which it will comply with the requirement, for each exchange, that all switched voice circuits shall be adequately designed and maintained to allow transmission of at least 2,400 bits of data per second when connected through an industry standard modem (CCITT V.22bis or equivalent) or a facsimile machine. The DCTU may also seek to show why this clause requirement should not be imposed. The commission shall have discretion to waive or modify this clause requirement consistent with the terms of clause (i) of this subparagraph. (iii) The DCTU has submitted proposed tariff sheets which provide that: (I) upon request by a customer, the DCTU will upgrade the customer's switched voice circuits to allow transmission of at least 2,400 bits of data per second when connected through an industry standard modem (CCITT V.22bis or equivalent) or a facsimile machine; (II) -(III) (No change.) (iv) The DCTU has agreed to provide an on-going customer education program, acceptable to the commission, which assures that the DCTU's customers are aware of the availability of the service quality upgrade. (2) Installation of service. Unless otherwise provided by the commission: (A) Ninety-five percent of the DCTU's service orders for installing primary service shall be completed within five working days, excluding those orders where a later date was specifically requested by the customer. Surveillance Level: 85% in any exchange area for a period of three consecutive months. (B) Ninety percent of the DCTU's service orders for regular service installations shall be completed within five working days, excluding those orders where a later date was specifically requested by the customer. This includes orders for primary and other services, installations, moves, or changes, but not complex services. Surveillance Level: 85% in any exchange area for a period of three consecutive months. (C) Each DCTU shall establish and maintain installation time commitment guidelines for the various complex services contained in its tariff. Those guidelines should be available for public review and should be applied in a nondiscriminatory manner. (D) (No change.) (E) If the DCTU elects, it may collect data on the basis of seven calendar days. In that case, these requirements shall pertain to seven calendar days in lieu of five working days. (F) The DCTU shall provide to the customer a due date on which the requested installation or change shall be made. If a customer requests that the work be done on a regular working day later than that offered by the DCTU, then the customer's requested date shall be the commitment date. If a premises visit is required, the DCTU shall establish an appointment period with the customer for morning or afternoon, on the due date. Where an appointment cannot be kept by the DCTU, the DCTU shall attempt to notify the customer by a telephone call and schedule a new appointment. If unable to gain access to the customer's premises during the scheduled appointment period, the DCTU carrier representative shall leave a notice at the premises advising the customer how to reschedule the work. (G) Ninety percent of the DCTU's commitments to customers as to the date of installation of service orders shall be met excepting customer-caused delays. Surveillance Level: 88% in any exchange area for a period of three consecutive months. (H) (No change.) (I) A held regrade order is one not filled within 30 days after the customer has made application for a different grade of service except where the customer requests a later date. In the event of the DCTU's inability to so fill such an order, the customer will be advised and furnished the date when it will be available. The number of held regrade orders shall not exceed 1.0% of the total number of customer access lines served. (3) Operator handled calls. (A) DCTUs shall maintain adequate personnel to provide an average operator answering performance as follows for each exchange on a monthly basis: (i)-(iii) (No change.) (B) (No change.) (C) DCTUs may measure answer time on a toll center or operating unit basis in lieu of measuring answer time in each exchange unless specifically requested by the commission. (4) (No change.) (5) Local interoffice dial service. (A) Each DCTU shall provide and maintain interoffice trunks on its portion of the local exchange service network so that 97% of the interoffice local calls excluding calls between central offices in the same building are completed without encountering equipment busy conditions or equipment failures. For DCTUs' testing, record-keeping, and reporting purposes, DCTUs are not required to separate local dial service results from local interoffice dial service results unless specifically requested by the commission. (B) (No change.) (6) (No change.) (7) Customer trouble reports. (A) The DCTU shall maintain its network service in such a manner that the average monthly rate of customer trouble reports, excluding customer premises equipment (CPE) reports, per 100 customer access lines does not exceed six. Surveillance Level: eight per 100 access lines per month per exchange for a period of three consecutive months. (B) The DCTU shall provide to the customer a commitment time by which the trouble will be cleared. If a premises visit is required, the DCTU shall establish an appointment period with the customer for the morning or afternoon. When an appointment cannot be kept by the DCTU, the DCTU shall attempt to notify the customer by a telephone call and schedule a new appointment. If unable to gain access to the customer's premises during the scheduled appointment period, the DCTU representative shall leave a notice at the premises advising the customer how to reschedule the work. (C) At least 90% of out-of-service trouble reports on service provided by a DCTU shall be cleared within eight working hours, except where access to the customer's premises is required but not available or where interruptions are caused by unavoidable casualties and acts of God affecting large groups of customers. Surveillance Level: 85% in any exchange area for a period of three consecutive months. (D) Each DCTU shall establish procedures to insure the prompt investigation and correction of trouble reports so that the percentage of repeated trouble reports on residence and single line business lines does not exceed 22% of the total customer trouble reports on those lines. (8) Transmission requirements. (A) Requirements. All voice-grade trunk facilities shall conform to accepted transmission design factors and shall be maintained to meet the following objectives when measured from line terminals of the originating central office to the line terminals of the terminating central office. (i) Interoffice local exchange service calls. Excluding calls between central offices in the same building, 95% of the measurements on the network of a DCTU should have from two to ten decibels loss at 1000+20 hertz and no more than 30 decibels above reference noise level ("C" message weighting). (ii) (No change.) (B) (No change.) (C) PBX, key, and multiline trunk circuits. PBX, key, and multiline trunk circuits shall be designed and maintained so that transmission loss at the subscriber station does not exceed eight decibels. If the PBX or other terminating equipment is customer owned and if transmission loss exceeds eight decibels the DCTU's responsibility shall be limited to providing a trunk circuit with no more than five decibels loss from the central office to the point of connection with customer facilities. (D) (No change.) (f) Service observing. Before any business telephone customer utilizes service observing equipment to monitor calls originated by or received at the business telephones, the customer must agree in writing to inform all employees that calls over the business telephones are subject to being monitored. (g) Traffic usage studies. In all DCTU central offices serving 2,000 or fewer access lines, traffic usage studies shall be performed at least once every three years unless otherwise authorized by the commission. In all DCTU central offices serving in excess of 2,000 customer access lines, traffic usage studies shall be performed at least annually unless otherwise authorized by the commission. Traffic usage studies shall include at least three days (within a consecutive five-day period or five days within a consecutive seven-day period) and shall include a usage record on at least an hourly basis. The usage record shall be in CCS or similar measurement (peg counts are not acceptable for this purpose). Record of the most recent study shall be maintained and made available on request for commission review. (h) Depreciation rates. DCTUs shall utilize depreciation rates approved by the commission for determination of depreciation expense and provision for accumulated depreciation (also referred to as depreciation reserve). For the purpose of this rule depreciation rates used prior to September 1, 1976 and those in effect on September 1, 1976 shall be deemed appropriate for use unless subsequently modified by the commission. (1) (No change.) (2) Depreciation rate changes for other dominant carriers. Any DCTU, except as covered in paragraph (1) of this subsection, requesting a change in depreciation rates must request commission approval and include the following in its request: (A)-(C) (No change.) (3) (No change.) (4) Burden of proof. A DCTU shall have the burden of proof to show that depreciation or amortization expense is reasonable, necessary and in the public interest. The DCTU shall also be required to show that depreciation rate changes were timely requested in accordance with prudent management practices. The burden of proof shall not be satisfied solely by demonstrating that the depreciation rates or amortization periods utilized were approved. If the DCTU fails to meet this burden the commission may deny as a cost of service that depreciation or amortization expense. (5) Interim booking. Unless ordered otherwise by the commission or any presiding officer, a DCTU may, at its option, book depreciation and amortization expense on an interim basis based on proposed depreciation rates from the month of filing until interim or final action by a presiding officer. Such interim booking must be revised using the finally approved depreciation rates and records must be maintained showing the interim booking and the adjustments, if any, after a final order is entered. (6) Special amortization. Where all or a substantial portion of a property account or subaccount is retired earlier than anticipated and the reserve for that account is less than the amount to be retired less salvage, or in other instances when an amortization is appropriate, special amortization may be requested. (A) If the amortization period is two years or less and the annual amount is less than 2.0% of annual revenues, the DCTU shall so advise the commission. No commission approval is necessary. However the commission may review the appropriateness of said amortization during rate cases. (B) (No change.) (7) New depreciation rates. When a DCTU determines a need to establish a new depreciation rate for a new class of property it may adopt a depreciation rate approved by the commission for another similar DCTU for the same property class if the estimated lives and salvage are expected to be similar. The DCTU must notify the commission of said action but no commission approval is necessary. The commission may review said rate and make changes upon appropriate motion or in subsequent rate or depreciation proceedings. (i) Registration of nondominant telecommunications carriers. Each nondominant carrier not holding a certificate of operating authority or service provider certificate of operating authority and not currently registered with the commission shall file with the commission the information set forth in paragraphs (1)-(7) of this subsection within 30 days of commencing service in Texas. Each uncertificated nondominant carrier shall keep this information updated and current at all times. Each certificated nondominant carrier also shall keep updated and current the similar information included in its application for a certificate. By June 30 of each year each nondominant carrier that has not filed during the previous 12-months changes to the information filed pursuant to this subsection shall file with the commission a letter informing the commission that no changes have occurred. An uncertificated nondominant carrier failing to file either the letter or the updates required by this subsection during the 12-month period ending June 30 may no longer be considered to be registered with the commission. (1)-(7) (No change.) (j) Information regarding rates and services of nondominant carriers. All nondominant carriers, including those holding a certificate of operating authority or a service provider certificate of operating authority, shall file the information set forth in paragraphs (1)-(3) of this subsection. This information shall be updated and kept current at all times. By June 30 of each year, each nondominant carrier that has not filed during the previous 12 months changes to the information filed pursuant to this subsection shall file with the commission a letter informing the commission that no changes have occurred. An uncertificated nondominant carrier failing to file either this letter or the updates required by this subsection during the 12-month period ending June 30 may no longer be considered to be registered with the commission. (1)-(3) (No change.) sec.23.69. Integrated Services Digital Network (ISDN). (a) Purpose. The commission finds that Integrated Services Digital Network (ISDN) is an alternative to "plain old telephone service." At this time, ISDN is not a replacement for "plain old telephone service," but rather ISDN provides the public switched telephone network with end-to-end digital connectivity. As such, ISDN should be made available to customers at a reasonable price, should be as accessible as possible to customers who want ISDN, should meet minimum standards of quality and consistency, and should be provided in such a manner that permits the dominant certificated telecommunications utility (DCTU) a reasonable opportunity to earn a reasonable return on invested capital. The provisions of this section are intended to establish the minimum criteria for the provision of ISDN. (b) Application. (1) This section applies to DCTUs. (2) All DCTUs providing ISDN must do so in accordance with the requirements of this section. (3) An application to make ISDN available under this section shall comply with the requirements of sec.23.57 of this title (relating to Telecommunications Privacy). (c) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1)-(4) (No change.) (5) Exchange Area-has the same meaning as defined in sec.23.3 of this title (relating to Definitions). (6)-(8) (No change.) (9) Line-has the same meaning as defined in sec.23.3 of this title (relating to Definitions). (10)-(12) (No change.) (d) Availability of ISDN. (1) No later than July 1, 1996, each DCTU shall make ISDN available to all customers in exchange areas having 50,000 or more access lines as of the February 22, 1995. For purposes of this section, making ISDN available means providing ISDN to a customer within 30 days of that customer's request. Nothing in this section shall be construed as requiring a DCTU to provide ISDN to any customer prior to that customer's request for ISDN. The requirements of this paragraph shall not be met by making ISDN available to the customers of these exchange areas using a foreign exchange (FX) arrangement. (2) No later than July 1, 1996, each DCTU subject to the requirements of paragraph (1) of this subsection shall make ISDN available to all customers in exchange areas having less than 50,000 access lines as of February 22, 1995. The requirements of this paragraph may be met by making ISDN available to the customers of these exchange areas using a foreign exchange (FX) arrangement, if that is the most economically efficient means for the DCTU to make ISDN available. (3) It is the goal of the commission that ISDN should be made available to customers in all exchange areas not included in paragraphs (1) and (2) of this subsection. To this end, all telecommunications providers are encouraged to work together to make ISDN available to the customers of the DCTUs that do not have the facilities with which to make ISDN available to their customers. In the exchange areas not included in paragraph (1) of this section, the commission recognizes that ISDN may be made available using a foreign exchange (FX) arrangement, if that is the most economically efficient means for the DCTU to make ISDN available. (4) No later than July 1, 1996, each LEC subject to paragraphs (1) and (2) of this subsection shall prepare a plan describing in detail the DCTU's proposal for its good faith effort toward making ISDN available without FSO and FX arrangements to all of the DCTU's customers no later than January 1, 2000, and/or the DCTU's proposal for its good faith effort toward making available end-to-end digital connectivity that is equal to or superior to ISDN as offered pursuant to this section and that is compatible with such ISDN. (5) No later than January 1, 1997, each DCTU not subject to paragraphs (1) and (2) of this subsection shall prepare a plan describing in detail the DCTU's proposal for its good faith effort toward making ISDN available to all of the DCTU's customers no later than January 1, 2000, and/or the DCTU's proposal for its good faith effort toward making available end-to-end digital connectivity that is equal to or superior to ISDN as offered pursuant to this section and that is compatible with such ISDN. (6) The plans required by paragraphs (4) and (5) of this subsection shall include, but not be limited to, information as to the number and percentage of access lines in the DCTU's service area for which ISDN would be available; the total number of customers that would be served via FX and FSO arrangements; a specific timetable for the upgrading of each exchange; and the proposed steps and methods of each upgrade. (e) ISDN Standards and Services. (1) ISDN standards. (A) At a minimum, all ISDN shall comply with National ISDN-1 and National ISDN-2 Standards as promulgated by Bellcore as of February 22, 1995. (B) All ISDN shall be capable of providing end-to-end digital connectivity. (2) ISDN services. At a minimum, the DCTU shall make available the ISDN services listed in the National ISDN-1 and National ISDN-2 Standards promulgated by Bellcore as of February 22, 1995. (3) Existing customers. Existing customers as of February 22, 1995 may continue to receive ISDN irrespective of whether that ISDN complies with this subsection. Those customers may continue to receive such ISDN and shall be required to receive ISDN under the requirements of this subsection only if there is at least a 30 day customer-caused cessation of the ISDN service provided by the DCTU. (4) Waiver provision. A DCTU may request, and the presiding officer may grant for good cause, modification or waiver of paragraphs (1) and/or (2) of this subsection. Such a request may be reviewed administratively. Any request for modification or waiver of the requirements of paragraphs (1) and/or (2) of this subsection shall include a complete statement of the DCTU's arguments and factual support for that request. (f) Costing and Pricing of ISDN. (1) Costing of ISDN. The cost standard for ISDN shall be the long run incremental cost (LRIC) of providing ISDN. (2) Pricing of ISDN. (A) Rates and terms. (i) The rates and terms of ISDN, including BRI, PRI and other ISDN services, shall be just and reasonable and shall not be unreasonably preferential, prejudicial, or discriminatory, subsidized directly or indirectly by regulated monopoly services, or predatory or anticompetitive. (ii) The annual revenues for ISDN, including BRI, PRI, and other ISDN services, shall be sufficient to recover the annual long run incremental cost and a contribution for joint and/or common costs, in the second year after it is first offered under the tariffs approved pursuant to this section. (B) Foreign serving office (FSO) rate. Where the DCTU makes ISDN available by designating a foreign serving office (FSO) arrangement, the DCTU shall not charge an FSO rate. (C) Foreign exchange (FX) rate. (i) Except as provided in clause (ii) of this subparagraph, where the DCTU is allowed to make ISDN available by designating a foreign exchange (FX) arrangement, the DCTU may charge an FX rate. A new FX rate shall be developed specifically for ISDN and this rate shall not be usage based. If the FX rate is priced at not less than 100% of LRIC and at not more than 105% of LRIC, there shall be a rebuttable presumption that the amount of joint and/or common costs recovered is appropriate. (ii) Where the DCTU can make ISDN available to a customer by designating an FSO arrangement, the DCTU shall not charge a foreign exchange (FX) rate. (D) Pricing of BRI. To further the commission's policy that ISDN be made available at a reasonable price and that ISDN be as accessible as possible to those customers who want ISDN, BRI should be priced to recover its LRIC plus a minimal amount of joint and/or common costs. If BRI is priced at not less than 100% of LRIC and at not more than 105% of LRIC, there shall be a rebuttable presumption that the amount of joint and/or common costs recovered is appropriate. (E) Existing customers. Existing customers as of February 22, 1995 shall be subject to the rates set in compliance with this subsection, notwithstanding their choice to continue receiving ISDN under subsection (e) of this section. (3) Pricing of ISDN for Small LECs. After a Class A DCTU is in compliance with this section, a Small Local Exchange Carrier (SLEC) as defined in sec.23.94 of this title (relating to Small Local Exchange Carrier Flexibility) may price ISDN services at plus or minus 25% of the rates approved by the commission for that Class A DCTU providing the service within the State of Texas or at the rates for ISDN services approved by the commission for a similar SLEC. For the purpose of this section a similar SLEC is defined as a SLEC having a total number of access lines within 5,000 access lines of the applying SLEC. (g) Requirements for notice and contents of application in compliance with this section. (1) Notice of application. The presiding officer may require notice to the public as required by Subchapter D of the commission's Procedural Rules and shall require direct notice to all existing ISDN customers. Unless otherwise required by the presiding officer or by law, the notice shall include at a minimum a description of the service, the proposed rates and other terms of the service, the types of customers likely to be affected if the application is approved, the probable effect on the DCTU's revenues if the application is approved, the proposed effective date for the application, and the following language: "Persons who wish to comment on this application should notify the commission by (specified date, ten days before the proposed effective date). Requests for further information should be mailed to the Public Utility Commission of Texas, (insert current commission address), or you may call the Public Utility Commission Public Information Office at (insert current commission telephone number) or (insert current commission telephone number for text telephone) for text telephone." (2) Contents of application for each DCTU not electing the SLEC pricing provisions of subsection (f)(3) of this section. A DCTU that makes ISDN available shall file with the commission an application complying with the requirements of this section. In addition to copies required by other commission rules, one copy of the application shall be delivered to the Regulatory Division and one copy shall be delivered to the Office of Public Utility Counsel. The application shall contain the following: (A) the proposed tariff sheets to implement the requirements of subsections (d), (e), and (f) of this section as required by subsection (h) of this section; (B) a statement by the DCTU describing how it intends to comply with this section, including how it intends to comply with subsections (d), (e) and (f) of this section as required by subsection (h) of this section; (C) a description of the proposed service(s) and the rates, terms, and conditions under which the service(s) are proposed to be offered and an explanation of how the proposed rates and terms of the service(s) are just and reasonable and are not unreasonably preferential, prejudicial, or discriminatory, subsidized directly or indirectly by regulated monopoly services, or predatory or anticompetitive; (D) a statement by the DCTU of whether the application contains a rate change; (E) the proposed effective date of the service; (F) a statement detailing the method and content of the notice, if any, the utility has provided or intends to provide to the public regarding the application and a brief statement explaining why the DCTU's notice proposal is reasonable and that the DCTU's notice proposal complies with applicable law; (G) a copy of the text of the notice, if any; (H) a long run incremental cost study (LRIC) supporting the proposed rates; (I) projections of revenues, demand, and costs demonstrating that in the second year after the ISDN service is first offered under the tariffs approved pursuant to this section, the proposed rates will generate sufficient annual revenues to recover the annual long run incremental costs of providing the service, as well as a contribution for joint and/or common costs; (J) the information required by sec.23.57 of this title; (K) a statement specifying the exchanges in which the DCTU proposes to offer ISDN, the exchanges in which the DCTU proposes to offer ISDN using an FSO arrangement, the exchanges in which the DCTU proposes to offer ISDN using an FX arrangement, and the exchanges in which the DCTU does not propose to offer ISDN; and (L) any other information which the DCTU wants considered in connection with the commission's review of its application. (3) Contents of application for a SLEC. A SLEC that makes ISDN available and elects to price ISDN services under subsection (f)(3) of this section shall file with the commission an application complying with the requirements of this section. In addition to copies required by other commission rules, one copy of the application shall be delivered to the Regulatory Division and one copy shall be delivered to the Office of Public Utility Counsel. The application shall contain the following: (A) contents of application required by paragraph (2)(A), (B), (D), (E), (F), (G), (J), (K), and (L) of this subsection; (B) a description of the proposed service(s) and the rates, terms, and conditions under which the service(s) are proposed to be offered and an affidavit from the general manager or an officer of the SLEC approving the proposed ISDN service; (C) a notarized affidavit from a representative of the SLEC: (i) verifying the number of access lines, including the access lines of affiliates of such SLEC providing local exchange telephone service within the state, the SLEC has in service in the State of Texas; (ii) verifying that the rates have been determined by the SLEC independently; (iii) including a statement affirming that the rates are just and reasonable and are not unreasonably preferential, prejudicial, or discriminatory; subsidized directly or indirectly by regulated monopoly services; or predatory, or anticompetitive; and (D) an explanation demonstrating that the rates for the proposed ISDN service are within the guidelines provided by subsection (f)(3) of this section; and (E) projections of the amount of revenues that will be generated by the ISDN service. (h) Timing of and requirements for each DCTU's compliance with this section. (1) Timing of and requirements for the compliance application. (A) Each DCTU that is required to make ISDN available under subsection (d)(1) and (2) of this section shall file with the commission within 270 days of February 22, 1995 an application (as described in subsection (g) of this section). The effective date for the tariffs and compliance under this paragraph shall be no later than July 1, 1996. Pursuant to subsection (g)(2)(A) and (B) of this section, the DCTU shall show its compliance with the requirements of: (i) subsection (d)(1) and (2) of this section; (ii) subsection (e)(1)(A) and (B), (2)(A), and (3) of this section or request a waiver pursuant to subsection (e)(4) of this section and provide sufficient justification for the good cause exception; and (iii) subsection (f)(2)(B), (C), and (D) of this section. (B) Each DCTU having ISDN tariffs in effect as of February 22, 1995 and that is not subject to subparagraph (A) of this paragraph shall file with the commission within 270 days of February 22, 1995, an application (as described in subsection (g) of this section). The effective date for the tariffs and compliance under this paragraph shall be no later than July 1, 1996. Pursuant to subsection (g)(2)(A) and (B) of this section, the DCTU shall show its compliance with the requirements of: (i) subsection (e)(1)(A) and (B), (2)(A), and (3) of this section or request a waiver pursuant to subsection (e)(4) of this section and provide sufficient justification for the good cause exception; and (ii) subsection (f)(2)(B), (C), and (D) of this section. (C) Rates proposed for services pursuant to paragraph (1)(A)(ii) and (B)(i) of this subsection that are not tariffed as of the effective date of this section and rates proposed under paragraph (1)(A) (iii) and (B)(ii) of this subsection shall comply with the requirements of subsection (f)(1), (2)(A) and (E) of this section. (D) Each DCTU offering ISDN after the effective date of this section shall file with the commission an application (as described in subsection (g) of this section). Pursuant to subsection (g)(2)(A) and (B) of this section the DCTU shall show its compliance with the requirements of: (i) subsection (e)(1)(A) and (B) and (2)(A) of this section or request a waiver pursuant to subsection (e)(4) of this section and provide sufficient justification for the good cause exception; and (ii) subsection (f)(1) and (2) of this section for each DCTU not electing the SLEC pricing provisions of subsection (f)(3) of this section or subsection (f)(3) of this section for a SLEC. (2) Timing of each DCTU's plan. (A) Each DCTU's plan required by subsection (d)(4) of this section shall be filed with the commission no later than July 1, 1996 and each DCTU's plan required by subsection (d)(5) of this section shall be filed with the commission no later than January 1, 1997. (B) After the due date of the plan, each DCTU shall file a revised plan with the commission as updates or modifications are made to the DCTU's plan. (i) Commission processing of application. (1) Administrative review. An application considered under this section may be reviewed administratively unless the DCTU requests the application be docketed or the presiding officer, for good cause, determines at any point during the review that the application should be docketed. (A) The operation of the proposed rate schedule may be suspended for 35 days after the effective date of the application. The effective date shall be no earlier than 30 days after the filing date of the application or 30 days after public notice is completed, whichever is later. (B) The application shall be examined for sufficiency. If the presiding officer concludes that material deficiencies exist in the application, the applicant shall be notified within 10 working days of the filing date of the specific deficiency in its application, and the earliest possible effective date of the application shall be no less than 30 days after the filing of a sufficient application with substantially complete information as required by the presiding officer. Thereafter, any time deadlines shall be determined from the 30th day after the filing of the sufficient application and information or from the effective date if the presiding officer extends that date. (C) While the application is being administratively reviewed, the commission staff and the staff of the Office of Public Utility Counsel may submit requests for information to the DCTU. Six copies of all answers to such requests for information shall be filed with Central Records and one copy shall be provided the Office of Public Utility Counsel within 10 days after receipt of the request by the DCTU. (D) No later than 20 days after the filing date of the sufficient application, interested persons may provide to the commission staff written comments or recommendations concerning the application. The commission staff shall and the Office of Public Utility Counsel may file with the presiding officer written comments or recommendations concerning the application. (E) No later than 35 days after the effective date of the application, the presiding officer shall issue an order approving, denying, or docketing the DCTU's application. (2) Approval or denial of application. The application shall be approved by the presiding officer if the proposed ISDN offered by the DCTU complies with each requirement of this section. If, based on the administrative review, the presiding officer determines that one or more of the requirements not waived have not been met, the presiding officer shall docket the application. (3) Standards for docketing. The application may be docketed pursuant to sec.22.33(b) of the commission's Procedural Rules. (4) Review of the application after docketing. If the application is docketed, the operation of the proposed rate schedule shall be automatically suspended to a date 120 days after the applicant has filed all of its direct testimony and exhibits, or 155 days after the effective date, whichever is later. Affected persons may move to intervene in the docket, and the presiding officer may schedule a hearing on the merits. The application shall be processed in accordance with the commission's rules applicable to docketed cases. (5) Interim rates. For good cause, interim rates may be approved after docketing. If the service requires substantial initial investment by customers before they may receive the service, interim rates shall be approved only if the DCTU shows, in addition to good cause, that it will notify each customer prior to purchasing the service that the customer's investment may be at risk due to the interim nature of the service. (j) Commission processing of waivers. Any request for modification or waiver of the requirements of this section shall include a complete statement of the DCTU's arguments and factual support for that request. The presiding officer shall rule on the request expeditiously. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 21, 1995. TRD-9516654 Paula Mueller Secretary of Commission Public Utility Commission of Texas Effective date: January 11, 1996 Proposal publication date: October 6, 1995 For further information, please call: (512) 458-0100 Telephone 16 TAC sec.23.91 The amendment is adopted under the Public Utility Regulatory Act of 1995, sec.1.101, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure. sec.23.91. Long Run Incremental Cost Methodology for Dominant Certificated Telecommunications Utility (DCTU) Services. (a) Application. This section shall apply to DCTUs with annual revenues from regulated telecommunications operations in Texas of $100 million or more for five consecutive years. An incumbent local exchange carrier that is not a Tier 1 local exchange company as of September 1, 1995, at that company's option, may adopt the cost studies approved by the commission for a Tier 1 local exchange company. (b) Purpose. This section shall be used to determine the long run incremental costs incurred by DCTUs in the provision of telecommunications services. The costs determined in this section shall not be used to determine a company's revenue requirement during a proceeding pursuant the Public Utility Regulatory Act of 1995, sec.3.210 or sec.3.211. (c) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1)-(8) (No change.) (9) Cost of money-The weighted annual cost to the DCTU of the debt and equity capital invested in the company. (10) Dedicated and Switched Transport-The category of BNFs that provide for dedicated or shared transmission transport between two or more DCTU switching offices or wire centers. This BNF category consists of two subcategories of BNFs: Dedicated Transport and Switched Transport. (A)-(B) (No change.) (11)-(17) (No change.) (18) Network Access-The category of BNFs that accommodate access to other network functions provided by DCTUs. Access is accomplished by transmission paths between customers and LEC wire centers. This category consists of three subcategories of BNFs: Network Access Channel; Network Access Channel Connection; and Channel Performance and Other Features and Functions. (A) Network Access (NA) Channel-The subcategory of BNFs that provide the transmission path between the point of interface at the customer location and the main distribution frame, or equivalent (e.g., DSX-1, DSX-3), of a DCTU wire center. (B) Network Access (NA) Channel Connection-The subcategory of BNFs that provide the interface between the Network Access Channel and the DCTU wire center switching equipment, subsequent dedicated transport equipment (dedicated interoffice circuits), or subsequent channel equipment (dedicated intraoffice circuits). (C) (No change.) (19)-(20) (No change.) (21) Switching and Switch Functions-The category of BNFs that provide for switched access between two or more Network Access Channels or between Network Access Channels and other BNFs, such as interoffice transport. This function is accomplished through the establishment of a temporary transmission path between Network Access Channels in the same switching office; between a Network Access Channel and the interoffice facilities that interconnect switching offices; or between a Network Access Channel and other BNFs. This BNF category shall cover the first point of switching for a customer. This BNF category consists of three subcategories of BNFs: Interoffice Switching; Intraoffice Switching; and Switching Features. (A) Interoffice Switching-The subcategory of BNFs that provide for: switching between Network Access Channels and Switched Transport facilities which are connected to different wire centers; and switching between Network Access Channels and Switched Transport facilities when a tandem switch is used as the first point of interface to the DCTU switched network (e.g., connection of facilities from an interexchange carrier's point of network interface). (B) (No change.) (22)-(24) (No change.) (d) General principles. (1) Underlying the construction and application of this section is the recognition that the DCTU network consists of a finite number of BNFs that, when bundled in various combinations, can be used to deliver and market a vast variety of telecommunications services. Therefore, the determination of the cost of a service and the costs of a group of services under this section shall involve the identification and costing of BNFs. (2) The LRIC studies that the DCTU is required to file under this section shall assume that the company is operating in the long run and employs least cost technologies, as those terms are defined in subsection (c) of this section. (3) In order to obtain accurate LRIC study results, the DCTU shall avoid the use of embedded cost data; expense items and capital costs shall reflect long run incremental costs and the DCTU shall justify any instance in which embedded cost data are used. Further, the fact that the costs determined under this section may differ from the company's embedded costs as determined during proceedings under the Public Utility Regulatory Act of 1995, sec.3.210 or sec.3. 211, should in no way cause the company to attribute any of this cost discrepancy to LRIC studies for BNFs, services, or groups of services. (4)-(7) (No change.) (8) Nothing in this section is intended to either endorse or reject the DCTU's current rate and tariff structures. (e) Identification of Basic Network Functions. The DCTU shall identify for each subcategory of BNFs the relevant and separately identifiable BNFs. The determination of the appropriate degree of aggregation of network components, functions, or activities into separately identifiable BNFs shall be consistent with the principles described in subsection (d) of this section. Furthermore, in choosing BNFs, the DCTU shall seek to minimize the number of network components, functions, or activities that are not included in BNFs. In addition to BNFs the company identifies under this subsection, the company shall identify for each subcategory of BNFs the following prescribed BNFs: (1)-(11) (No change.) (f) LRIC studies for individual BNFs. The DCTU shall perform a LRIC study for each of the BNFs identified under subsection (e) of this section. The company shall perform the LRIC studies consistent with the principles described in subsection (d) of this section. Additionally, the company shall use the following instructions in determining the LRIC for individual BNFs. (1)-(10) (No change.) (g) LRIC studies for tariffed services. The DCTU shall perform a LRIC study for each tariffed service, except those services for which a waiver has been granted under the workplan approved under subsection (m) of this section. Each LRIC study for a tariffed service shall be calculated as the sum of the costs caused by that a service's use of BNFs and any other service specific costs associated with functions not identified as separate BNFs, such as expenses of billing, service specific advertising and marketing, and service specific taxes. Each LRIC study for a tariffed service shall be consistent with the principles described in subsection (d) of this section. Additionally, the company shall use the following instructions in determining the LRIC for individual tariffed services: (1)-(9) (No change.) (h) (No change.) (i) LRIC studies for groups of tariffed services that share significant common costs. The DCTU shall perform a LRIC study for each group of services identified under subsection (h)(2) of this section. Each group LRIC shall be calculated as the sum of the LRICs (as determined under subsection (g) of this section) for the services in the group and the common costs for those services (as identified under subsection (h)(2) of this section). Each LRIC study shall be consistent with the principles described in subsection (d) of this section. Additionally, the company shall use the following instructions in determining the LRIC for groups of services. (1)-(6) (No change.) (j) Filing requirements for DCTU provided workplan. Within 70 days of the effective date of this section, the DCTU shall file with the commission and the Office of Public Utility Counsel (OPUC) a plan for compliance with the provisions of this section. The workplan shall be consistent with the principles, instructions and requirements set forth in this section and shall be reviewed in accordance with the procedures established in subsection (m) of this section. The workplan submitted by the DCTU shall include the following components. (1) Identification of BNFs and cost methodology. The workplan submitted by the DCTU shall discuss the BNFs identified under this section and include a detailed discussion of the cost methodology the DCTU proposes to use for the studies required under this section. Additionally, the workplan shall meet the following requirements: (A) List of BNFs. The workplan shall include a list of all BNFs that the DCTU has identified pursuant to subsection (e) of this section. (B) Additional BNFs. If the DCTU proposes to identify BNFs in addition to the BNFs identified in subsection (e)(1)-(11) of this section, the workplan shall include a description of each of the BNFs that the DCTU proposes to identify, and a discussion of why these BNFs should be identified in addition to the BNFs identified in subsection (e)(1)-(11) of this section. (C) Definitions of BNFs. For each BNF identified under subsection (e) of this section, the workplan shall include, a precise definition of the BNF, including the points of demarcation in the DCTU's network between each BNF and other BNFs. (D) Diagrams. For each BNF identified under subsection (e) of this section, the workplan shall include a diagram that illustrates the BNF's role in the provision of DCTU services. (E) (No change.) (F) Identification of investments. The workplan shall include a discussion of the methodology that the DCTU proposes to use in identifying investments associated with each of the BNFs identified under subsection (e) of this section. (G)-(H) (No change.) (I) Automated cost models. The workplan shall include a description of any automated cost models which the DCTU proposes to use in developing the cost of the BNF. For each such automated cost model, the workplan shall provide a detailed description of the algorithm of the cost model and demonstrate that the methodology of the cost model is consistent with the long run incremental cost methodology described in this section. (J) (No change.) (K) List of cost drivers. For each BNF identified under subsection (e) of this section, the workplan shall identify the cost drivers that the DCTU has identified pursuant to subsection (f)(10) of this section. (L) Additional cost drivers. If the DCTU proposes to identify and account for cost drivers in addition to the cost drivers identified in subsection (f)(10)(A)-(G) of this section, the workplan shall include a description of each of the cost drivers that the DCTU proposes to use, and a discussion of why these cost drivers should be used in addition to the cost drivers identified in subsection (f)(10)(A)-(G) of this section. (M) Loading factors. The workplan shall include a discussion of the methodology that the DCTU proposes to use in identifying operating expenses, depreciation and taxes relating to each of the BNFs identified under subsection (e) of this section. (N)-(P) (No change.) (2) Identification of costs common to BNFs. The workplan submitted by the DCTU shall identify which BNFs share common costs and the sources of the common costs (as identified under subsection (h)(1) of this section). (3) Identification of groups of services. The workplan submitted by the DCTU shall include a list of all groups of services that the DCTU has identified pursuant to subsection (h)(2) of this section. The list shall meet the following requirements: (A)-(C) (No change.) (4) Proposed schedule for completion and filing of cost studies. The workplan submitted by the DCTU shall include a proposed completion and filing date for: the LRIC study for each BNF identified under subsection (e) of this section, including the required BNFs specified in subsection (e)(1)-(11) of this section; the LRIC study for each tariffed service offered by the DCTU; and the LRIC study for each group of services identified under subsection (h) of this section. The proposed schedule submitted by the DCTU shall meet the following requirements: (A) If the schedule proposed by the DCTU would result in completion of any cost study later than 18 months following September 10, 1993, the DCTU should discuss in detail the reasons why the cost study may not be completed within 18 months. (B) In no event should the schedule proposed by the DCTU result in the completion of any cost study later than thirty months following September 10, 1993. (C) The schedule proposed by the DCTU should space the completion and filing of cost studies relatively evenly over the course of the period of time allowed for completing the studies and avoid, to the greatest degree possible, the filing of large quantities of studies at any one date. (D) The schedule proposed by the DCTU shall not result in completion of any LRIC study for a tariffed service before the completion of the LRIC studies for all the BNFs that are used in the provision of the tariffed service. (5) Prototype LRIC studies for BNFs, tariffed services, and groups of tariffed services. The workplan shall provide prototype LRIC studies for BNFs, tariffed services, and groups of tariffed services, to serve as models for the studies filed pursuant to this section. In devising the prototype studies the DCTU shall consider the following instructions. (A)-(C) (No change.) (6) (No change.) (7) Proposal for the treatment of information designated as confidential or proprietary. The workplan submitted by the DCTU shall include the DCTU's proposal for the treatment of information to be filed pursuant to this section that the DCTU designates or intends to designate as confidential and/or proprietary. The DCTU shall include the following information: (A) Identification. Identification of the information to be filed pursuant to this section (e.g. cost models, algorithms, data) that the DCTU will designate as confidential and/or proprietary. (B) Explanation. For each item identified in subparagraph (A) of this paragraph, an explanation supporting the DCTU's designation of information as confidential and/or proprietary. (C) Proposal. The DCTU's proposal for the treatment of information designated by the DCTU as confidential and/or proprietary that the DCTU will file pursuant to this section (e.g., a proposed protective agreement). (k) Requirements for initial filings of LRIC studies. The DCTU shall file with the commission and OPUC the LRIC studies required under this section. The LRIC studies shall be consistent with the principles, instructions, and requirements set forth in this section and shall be reviewed in accordance with the procedures established in subsection (n) of this section. In accordance with the workplan, and the waivers therein, approved under subsection (m) of this section, the DCTU shall file LRIC studies for: (1) -(4) (No change.) (l) Requirements for subsequent filings of LRIC studies. The LRIC studies required by this subsection shall be consistent with the principles, instructions and requirements set forth in this section and the workplan approved in subsection (m) of this section and shall be reviewed in accordance with the procedures established in subsection (n) of this section. (1) Updated studies. Thirty-six months after the effective date of the section, and every six months thereafter, the DCTU shall file with the commission and OPUC updated versions of all filings, other than the workplan, required under this section. The DCTU is not required to update its filings for those studies where no significant changes have occurred. (2) Provisions for new BNFs. When significant technological or other changes occur that necessitate a change in the definition of current BNFs or the identification of new BNFs, the DCTU shall file with the commission and OPUC updated versions for all affected LRIC studies or new studies as appropriate. (3) Provisions for new services. For each application for a service filed pursuant to this title, the DCTU shall file with the commission and OPUC a LRIC study for the service consistent with the principles described in subsection (d) of this section and the specific requirements set forth in subsection (g) of this section. (4) Unbundling of existing tariffed services. When an application filed pursuant to this title proposes a service that previously had been bundled with other BNFs into a tariffed service, the DCTU shall carefully reexamine the identification of groups of services that share significant common costs (as required under subsection (h) of this section). If the new service significantly changes the identification of groups of services and the identification of common costs, the DCTU should update all studies required under this section that are affected by these changes. (m) Review process for DCTU workplan. A DCTU workplan considered under this section shall be reviewed administratively to determine whether the DCTU's workplan is consistent with the principles, instructions and requirements set forth in this section. (1) Sufficiency. The workplan shall be examined for sufficiency. To be sufficient, the DCTU's workplan shall include the components required by subsection (j) of this section. If the presiding officer or the commission staff concludes that material deficiencies exist in the workplan, the DCTU shall be notified within 15 days of the filing date of the specific deficiency in its workplan. The DCTU shall have 15 days from the date it is notified of the deficiency to file a corrected workplan. (2) Time Schedule. (A) No later than 60 days after the filing date of the sufficient workplan, any party that demonstrates a justiciable interest may file with the presiding officer written comments or recommendations concerning the workplan. (B) No later than 70 days after the filing date of the sufficient workplan, OPUC may file with the presiding officer written comments or recommendations concerning the workplan. (C) No later than 80 days after the filing date of the sufficient workplan, the commission staff shall file with the presiding officer written comments or recommendations concerning the workplan. (D) No later than 90 days after the filing date of the sufficient workplan, any party that demonstrates a justiciable interest, OPUC, or the DCTU may file with the presiding officer a written response to the commission staff's recommendation. (E) No later than 100 days after the filing date of the sufficient workplan, the presiding officer shall complete an administrative review to determine whether the DCTU's workplan is consistent with the principles, instructions and requirements set forth in this section. The presiding officer shall approve the workplan or order the DCTU to refile the workplan incorporating all modifications recommended by the presiding officer. (3) Requests for Information. While the workplan is being administratively reviewed, the commission staff, OPUC, and any party that demonstrates a justiciable interest may submit requests for information to the DCTU. Three copies of all answers to such requests for information shall be provided within 15 days after receipt of the request by the DCTU to the commission staff, OPUC and any party that demonstrates a justiciable interest. (4) Suspension. At any point within the first 60 days of the review process, the presiding officer, the commission staff, OPUC, the DCTU, or any party that demonstrates a justiciable interest may request that the review process be suspended for 30 days. The presiding officer may grant a request for suspension only if he or she has determined that the party has demonstrated that good cause exists for such suspension. (5) Effective date of the DCTU's workplan. The effective date of the DCTU's workplan shall be the date it is approved by the presiding officer. (n) Review process for LRIC studies. A LRIC study considered under this section shall be reviewed administratively to determine whether the DCTU's LRIC study is consistent with the principles, instructions and requirements set forth in this section. (1) Sufficiency. The LRIC study shall be examined for sufficiency. To be sufficient, the LRIC study shall conform to the prototype studies developed under the workplan approved under subsection (m) of this section. If the presiding officer or the commission staff concludes that material deficiencies exist in the LRIC study, the DCTU shall be notified within 15 days of the filing date of the specific deficiency in its LRIC study. The DCTU shall have 15 days from the date it is notified of the deficiency to file a corrected LRIC study. (2) Time Schedule. (A) No later than 45 days after the filing date of the sufficient LRIC study, any party that demonstrates a justiciable interest may file with the presiding officer written comments or recommendations concerning the LRIC study. (B) No later than 55 days after the filing date of the sufficient LRIC study, OPUC may file with the presiding officer written comments or recommendations concerning the LRIC study. (C) No later than 65 days after the filing date of the sufficient LRIC study, the commission staff shall file with the presiding officer written comments or recommendations concerning the LRIC study. (D) No later than 75 days after the filing date of the sufficient LRIC study, any party that demonstrates a justiciable interest, OPUC, or the DCTU may file with the presiding officer a written response to the commission staff's recommendation. (E) No later than 85 days after the filing date of the sufficient LRIC study, the presiding officer shall complete an administrative review to determine whether the DCTU's LRIC study is consistent with the principles, instructions and requirements set forth in this section. The presiding officer shall approve the LRIC study or order the DCTU to refile the LRIC study incorporating all modifications recommended by the presiding officer. (F) Any party may appeal to the commission an administrative determination by a presiding officer within five days after the date of notification of the determination. The commission shall rule on the appeal within 30 days after the date it receives the appeal. If the commission or a presiding officer orders a cost study to be changed, the dominant certificated telecommunications utility shall be ordered to make those changes within a period that is commensurate with the complexity of the LRIC study. (3) Requests for Information. While the LRIC study is being administratively reviewed, the commission staff, OPUC, and any party that demonstrates a justiciable interest may submit requests for information to the DCTU. Three copies of all answers to such requests for information shall be provided within ten days after receipt of the request by the DCTU to the commission staff, OPUC and any party that demonstrates a justiciable interest. (4) Suspension. At any point within the first 45 days of the review process, the presiding officer, the commission staff, OPUC, the DCTU, or any party that demonstrates a justiciable interest may request that the review process be suspended for 30 days. The presiding officer may grant a request for suspension only if he or she has determined that the party has demonstrated that good cause exists for such suspension. (5) Effective date of the LRIC study. The effective date of the LRIC study shall be the date it is approved by the presiding officer. (o) Notice requirements. At least ten days before a DCTU files any workplan or LRIC study pursuant to this section, the DCTU shall file with the commission and OPUC a notice of its intent to file such workplan or LRIC study and the expected filing date. The DCTU's notice shall indicate that the filing is being made pursuant to this section. The commission shall then publish notice of the DCTU's intent to file the workplan or LRIC study in the Texas Register. (p) Pricing rule. Within 180 days of September 10, 1993, the commission shall initiate a rulemaking proceeding to develop a pricing methodology for DCTU services that is consistent with the cost information obtained under this section. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 21, 1995. TRD-9516655 Paula Mueller Secretary of Commission Public Utility Commission of Texas Effective date: January 11, 1996 Proposal publication date: October 6, 1995 For further information, please call: (512) 458-0100 TITLE 22. EXAMINING BOARDS Part IX. Texas State Board of Medical Examiners Chapter 161. General Provisions 22 TAC sec.161.1 The Texas State Board of Medical Examiners adopts an amendment to sec.161. 1, without changes to the proposed text as published in the September 12, 1995, issue of the Texas Register (20 TexReg 7153). The section as adopted will more clearly define the function of the committee through the change of its name. The section as adopted will function by changing the name of the Reciprocity Committee to the Endorsement Committee. No comments were received regarding adoption of the amendment. The amendment is adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. Article 4495b, sec.2.09(I), is affected by this amendment. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516728 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: September 12, 1995 For further information, please call: (512) 305-7016 Licensure 22 TAC sec.163.1 The Texas State Board of Medical Examiners adopts an amendment to sec.163. 1, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9244). The section as adopted will implement the changes made through Senate Bill 1301, 74th Legislature. The section as adopted will clarify definitions related to eligibility for licensure, examinations administered by the board, and medical schools substantially equivalent to Texas medical schools. No comments were received regarding adoption of the amendment. The amendment is adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. Article 4495b, sec.3.01(c), 3.03, 3.0305, 3.04, and 3.05 are affected by this amendment. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516736 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 305-7016 22 TAC sec.sec.163.6-163.9, 163.11-163.13 The Texas State Board of Medical Examiners adopts amendments to sec.163. 6- 163.9 and 163.11-163.13, without changes to the proposed text as published in the September 12, 1995, issue of the Texas Register (20 TexReg 7153). The sections as adopted will assure compliance with Senate Bill 1301, 74th Legislature. The sections as adopted will function by eliminating documentation no longer required and changing the dates of examination administration made by the Federation of State Medical Boards. No comments were received regarding adoption of the amendments. The amendments are adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. Article 4495b, sec.3.03, 3.04, and 3.05 are affected by these amendments. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516733 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: September 12, 1995 For further information, please call: (512) 305-7016 22 TAC sec.sec.163.14-163.16 The Texas State Board of Medical Examiners adopts repeals to sec.163. 14- 163.16, without changes to the proposed text as published in the September 12, 1995, issue of the Texas Register (20 TexReg 7155). The repeals as adopted will assure compliance with Senate Bill 1301, 74th Legislature. The repeals as adopted will eliminate outdated language. No comments were received regarding adoption of the repeals. The repeals are adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. Article 4495b, sec.3.03 and 3.0305 are affected by this repeals. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516734 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: September 12, 1995 For further information, please call: (512) 305-7016 22 TAC sec.163.14 The Texas State Board of Medical Examiners adopts new sec.163.14, without changes to the proposed text as published in the September 12, 1995, issue of the Texas Register (20 TexReg 7155). The section is adopted in order to renumber the sections of this chapter. Two sections were deleted from the licensure rules as a result of legislation passed during the 74th Legislature. The section as adopted will function by renumbering the sections of Chapter 163. The new section is adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. Article 4495b, sec.3.03 and 3.0305 are affected by this new section. sec.163.14. Temporary Licensure of Primary Care Physicians for Practice in Rural Counties or Medically Underserved Areas in Texas. (a) This rule is adopted to provide assistance to rural counties and medically underserved areas in Texas in meeting their needs in the area of primary medical care. (b) If the executive director of the board determines that it is in the best interest of the public and that the health and welfare of the public will not be endangered, but will be served, the executive director of the board may, at his discretion, issue a temporary license to an endorsement applicant: (1) who has a completed application that has been filed, processed, and found to be in order; (2) who has successfully completed a three-year primary care graduate medical training program in Texas that was approved by the board on the date the training was completed; (3) who has met all requirements for licensure, except: (A) certification by a specialty board that is a member of the American Board of Medical Specialties or the Advisory Board for Osteopathic Specialists, if such certification is required for licensure; and (B) valid certification by the Educational Commission for Foreign Medical Graduates, if such certification is required for licensure; (4) who has a valid contract to provide medical services in a rural county or medically underserved area in Texas; and (5) who has passed the Texas medical jurisprudence examination. (c) Any temporary license issued under this section shall be valid for a continuous one-year period; however, such a temporary license may be renewed for up to two additional one-year periods, at the discretion of the executive director, only if necessary for the temporary licensee to meet any requirement relating to continuous unsupervised medical practice set as a prerequisite for specialty board examination for the specific medical specialty in which the temporary licensee is seeking specialty board certification and to obtain a valid certificate issued by the Educational Commission for Foreign Medical Graduates. (d) Any temporary license issued under this section shall be restricted so as to allow the temporary licensee to practice medicine only within the context of the contract for medical services in a rural county or medically underserved area in Texas. (e) Any temporary license issued under this section shall expire upon termination of the physician's contract to practice medicine in a rural county or medically underserved area in Texas. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516735 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: September 12, 1995 For further information, please call: (512) 305-7016 22 TAC sec.sec.163.15 The Texas State Board of Medical Examiners adopts new sec.163.15, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9245). The section as adopted will assist in answering questions regarding those physicians who practice administrative medicine and those who have not had direct patient care in several years. The section as adopted will function by clarification of rules related to physicians practicing administrative medicine. The new section is adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. Article 4495b, sec.3.03(g) is affected by this new section. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516737 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 305-7016 Chapter 166. Physician Registration 22 TAC sec.sec.166.1, 166.2, 166.4 The Texas State Board of Medical Examiners adopts amendments to sec.166.1, 166.2, and 166.4, without changes to the proposed text as published in the September 12, 1995, issue of the Texas Register (20 TexReg 7156). The section as adopted will assure compliance with Senate Bill 1301 of the 74th Legislature, which created a 30-day grace period for physician registration and changed the penalty fees for late registration. The section as adopted will function by reducing the penalty fees for annual registration and enacting a 30-day grace period to allow physicians to pay annual registration fees without penalty. No comments were received regarding adoption of the amendments. The amendments are adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. Article 4495b, sec.3.01 and 3.025 are affected by this amendment. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516729 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: September 12, 1995 For further information, please call: (512) 305-7016 22 TAC sec.166.3 The Texas State Board of Medical Examiners adopts an amendment to sec.166. 3, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9245). The section as adopted will assure that only qualified physicians will be approved by the board to return to the active practice of medicine. The section as adopted will function by clarifying the requirements for approval of physicians to return to active practice. The amendment is adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. Article 4495b, sec.3.01, is affected by this amendment. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516738 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 305-7016 Chapter 175. Schedule of Fees and Penalties 22 TAC sec.175.1, sec.175.2 The Texas State Board of Medical Examiners adopts amendments to sec.175.1 and sec.175.2, without changes to the proposed text as published in the September 12, 1995, issue of the Texas Register (20 TexReg 7157). The section as adopted will assure compliance with Senate Bill 1301, 74th Legislature. The section as adopted will function by eliminating unnecessary fees, amending penalty fees for late registration, and creating fees for new categories of temporary licenses. No comments were received regarding adoption of the amendments. The amendments are adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. Article 4495b, sec.3.01 is affected by this amendment. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516730 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: September 12, 1995 For further information, please call: (512) 305-7016 Chapter 177. Certification of Non-Profit Organizations 22 TAC sec.sec.177.1-177.15 The Texas State Board of Medical Examiners adopts new sec. sec.177.1-177.15, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9246). The sections as adopted will more clearly define the certification procedures for non-profit health organizations and the mechanisms for regulation by the board. The rules will further serve to preserve the independent medical judgment of licensed physicians and avoid improper influence by non-physicians. The sections as adopted will function by setting out the requirements for documentation and fees for certification and recertification as a non-profit health organization. A number of comments were received regarding the adoption of these new sections, most of which were in favor of the adoption. The commentors included practicing physicians, hospital administrators, law firms, Texas Hospital Association, physician credentialling organizations, and representatives of Texas medical schools. The following comments were made suggesting changes or were in disagreement with sections of the proposed rule. COMMENT: One comment from a Houston law firm stated that "the proposed rules make an unnecessary and detrimental distinction among applicants based upon the identity of the Member of an applicant and impose fees not authorized by Statute." RESPONSE: The Board disagrees with this comment in that no support has been cited to explain or support this contention. Without cited support or further explanation, this criticism appears to be without merit. The Board also disagrees with the comment that the imposition of fees is not authorized by statute. The Medical Practice Act ("Act"), Article 4495b, sec.2.09(k), specifically authorizes the board to establish reasonable and necessary fees so that the fees, in the aggregate, produce sufficient revenue to cover the cost of administering the Act. COMMENT: A Texas physician states "The definition for actively engaged in the practice of medicine' has redefined practicing medicine.'" The commentor further states that the proposed definition of "actively engaged in the practice of medicine" is inconsistent with the Medical Practice Act. These written comments also maintain that proposed sec.177.4(2)(C) allows the corporation to engage in the practice of medicine and direct the medical, professional and ethical aspects of the practice of medicine. The commentor further states that proposed sec.177.4(2)(F) is "unclear as to whether due process' termination procedures are required in retention agreements." The commentor also argues that sec.177.5(1) authorizes the corporate practice of medicine, and is inconsistent with the Act. The commentor further states that "It is unreasonable to insist that the corporate member determines the tax and legal opinions for the Health Organization that supposedly has an independent board. The tax exempt status of the corporate member is the problem of the corporate member's board." RESPONSE: The board disagrees with the comments that the definition of "actively engaged in the practice of medicine" redefines the statutory definition of "practicing medicine," and is inconsistent with the Act. The board disagrees on the grounds that the definitions are not mutually exclusive and that the definition for purpose of the rules recognizes the wide diversity of physician involvement in medicine. The proposed rules also acknowledge that the active practice of medicine involves physician judgment and expertise in areas involving infrequent or indirect patient contact. The board disagrees with the comments concerning proposed sec.177.4(2)(C) and 177.5(1) based on the safeguards contained in sec.177.4(3) and 177.5 which preserve independent medical judgment for physicians and physician control over medical decisions, including utilization review and credentialing. Similarly, the board disagrees with the comment in light of the various disclosure and reporting requirements intended to minimize and regulate improper influence by non-physicians. The board further disagrees with the comment because the proposed rules comply with the corporate practice of medicine doctrine by maintaining physician control over medical decisions, and are therefore, not inconsistent with the Act. The board disagrees with the comment that sec.177.4(2)(F) is "unclear as to whether due process' termination procedures are required in retention agreements." The board disagrees because the provisions require applicable due process whether in retention agreements or otherwise adopted by the Board of Directors or its physician designees. Although not requiring that due process be explicitly stated in a retention agreement, the plain language of the rule mandates due process for purposes of termination of retention. Termination procedures, by the language of the proposed rule, would be implemented by physician Directors or their physician designees. The board finds that the commentor's views about the tax exempt status of the member of a non-profit organization are unfounded. The board disagrees with the comments because the commentor makes an assumption that the member will improperly exercise authority under the guise of the need to maintain tax exemption. The board disagrees with the comment and discounts the concerns underlying the comment due to the reporting requirements and obligations imposed on the physician directors. The new sections are adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516739 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 305-7016 Chapter 177. Certification of Nonprofit Health Corporations 22 TAC sec.177.1 The Texas State Board of Medical Examiners adopts the repeal of sec.177.1, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9246). The repeal as adopted was necessary due to extensive rewrite of existing language. The repeal as adopted will clarify the rules for certification of non-profit health organizations by omission of outdated language. No comments were received regarding adoption of the repeal. The repeal is adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516740 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 305-7016 Chapter 183. Acupuncture 22 TAC sec.183.2 The Texas State Board of Medical Examiners adopts an amendment to sec.183. 2, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9250). The section as adopted will clarify the definition of and create a higher standard for acceptable approved acupuncture schools. The section as adopted will function by outlining the requirements for an acceptable acupuncture school after January 1, 1996. No comments were received regarding adoption of the amendment. The amendment is adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. In addition, the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.6.05(a) authorizes the Texas State Board of Medical Examiners to approve rules recommended by the Texas State Board of Acupuncture Examiners. Article 4495b, sec.6.07, is affected by this amendment. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516741 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 305-7016 22 TAC sec.183.20 The Texas State Board of Medical Examiners adopts new sec.183.20, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9250). The section as adopted will more clearly define what is required of acupuncture school owners and to make students more aware of the criteria for acceptable acupuncture schools in Texas. The section as adopted will function by outlining the requirements for owners of acupuncture schools to properly inform students of accreditation standards for acupuncture schools in Texas. No comments were received regarding adoption of the new section. The new section is adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. In addition, the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.6.05(a) authorizes the Texas State Board of Medical Examiners to approve rules recommended by the Texas State Board of Acupuncture Examiners. Article 4495b, sec.6.07, is affected by this new section. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516742 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 305-7016 Chapter 185. Physician Assistants 22 TAC sec.sec.185.1-185.29 The Texas State Board of Medical Examiners adopts the repeal of sec.185. 1- 185.29, without changes to the proposed text as published in the September 12, 1995, issue of the Texas Register (20 TexReg 7158). The repeals as adopted will assure compliance with Senate Bill 1302, 74th Legislature. The repeals as adopted will function by eliminating outdated language. No comments were received regarding adoption of the repeals. The repeals are adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. Article 4495b-1 is affected by this repeals. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516731 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: September 12, 1995 For further information, please call: (512) 305-7016 22 TAC sec.sec.185.1-185.29 The Texas State Board of Medical Examiners adopts new sec. sec.185.1-185.29, without changes to the proposed text as published in the September 12, 1995, issue of the Texas Register (20 TexReg 7159). The sections as adopted will assure compliance with Senate Bill 1302, 74th Legislature. The sections as adopted will function by changing the name of the Physician Assistant Advisory Council to the Texas State Board of Physician Assistant Examiners, creating rehabilitation orders, and other miscellaneous changes as directed by legislative change. One written comment was received from Texas Hospital Association which questioned the requirement that a physician assistant post the board's address and phone number for the purposes of initiating a complaint against a physician assistant. The board disagrees with the comment because this particular section of the rules had no change in the wording, but was simply a part of the overall repeal and replace process due to the numerous changes made in other sections of the chapter. The new sections are adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. Article 4495b-1 is affected by this amendments. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516732 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: September 12, 1995 For further information, please call: (512) 305-7016 Chapter 187. Procedure Subchapter D. Posthearing 22 TAC sec.187.41 The Texas State Board of Medical Examiners adopts new sec.187.41, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9251). The section as adopted will more clearly define the circumstances requiring recusal from participation and voting in matters brought before the board and to clarify the procedure for recusals. The section as adopted will function by providing guidance to board members concerning recusal from participation in board matters. No comments were received regarding adoption of the new section. The new section is adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. Article 4495b, sec.2.09, is affected by this new section. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516743 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: January 12, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 305-7016 Part XV. Texas State Board of Pharmacy Chapter 281. General Provisions 22 TAC sec.281.24 The Texas State Board of Pharmacy adopts an amendment to sec.281.24, concerning Grounds for Discipline for a Pharmacist License, with changes to the proposed text as published in the July 4, 1995, issue of the Texas Register (20 TexReg 4899). There were two oral comments received regarding adoption of the amendment. Both the Texas Pharmacy Association and the Texas Federation of Drug Stores indicated that the language regarding dispensing errors should more appropriately be included in the rules for the operational standards of the various classes of pharmacy rather than in this section. The Board agrees with these comments and has stricken this language. The adopted amendment to this section corrects references to other sections of the rules. The amendment is adopted under the Texas Pharmacy Act (Texas Civil Statutes, Article 4542-1), sec.16(a), which specifies that the Board has the authority to adopt rules for the proper administration and enforcement of the Act; sec.16(b)(3), which specifies that the Board is responsible for the specification of procedures for the delivery, dispensing in a suitable container appropriately labeled; and sec.26(a), which specifies that the Board may discipline a pharmacist's license or application for a pharmacist's license if the licensee or applicant has engaged in unprofessional conduct as that term is defined by the rules of the Board. sec.281.24. Grounds for Discipline for a Pharmacist License. (a) For the purposes of the Act, sec.26(a), "unprofessional conduct" shall include, but not be limited to: (1)-(26) (No change.) (27) the sale, purchase, or trade or the offer to sell, purchase, or trade of prescription drug samples; provided however, this paragraph does not apply to: (A) prescription drugs provided by a manufacturer as starter prescriptions or as replacement for such manufacturer's out-dated drugs; (B) prescription drugs provided by a manufacturer in replacement for such manufacturer's drugs that were dispensed pursuant to written starter prescriptions; or (C) prescription drug samples possessed by a pharmacy of a health care entity which provides health care primarily to indigent or low income patients at no or reduced cost and if: (i) the samples are possessed in compliance with the Prescription Drug Marketing Act of 1987; (ii) the pharmacy is owned by a charitable organization described in the Internal Revenue Code of 1986, or by a city, state or county government; and (iii) the samples are for dispensing or provision at no charge to patients of such health care entity. (28) the sale, purchase, or trade or the offer to sell, purchase, or trade of prescription drugs: (A) sold for export use only; (B) purchased by a public or private hospital or other health care entity; or (C) donated or supplied at a reduced price to a charitable organization described in the Internal Revenue Code of 1986, sec.501(c)(3); (D) provided that subparagraphs (A)-(C) of this paragraph do not apply to: (i) the purchase or other acquisition by a hospital or other health care entity which is a member of a group purchasing organization or from other hospitals or health care entities which are members of such organization; (ii) the sale, purchase, or trade of a drug or an offer to sell, purchase, or trade a drug by an organization described in paragraph (28)(C) of this subsection to a nonprofit affiliate of the organization to the extent otherwise permitted by law; (iii) the sale, purchase or trade of a drug or an offer to sell, purchase, or trade a drug among hospitals or other health care entities which are under common control; (iv) the sale, purchase, or trade of a drug or an offer to sell, purchase, or trade a drug for emergency medical reasons including the transfer of a drug between pharmacies to alleviate temporary shortages of the drug arising from delays in or interruptions of regular distribution schedules; (v) the dispensing of a prescription drug pursuant to a valid prescription drug order to the extent otherwise permitted by law; (29) (No change.) (30) failure to repay a guaranteed student loan, as provided in the Texas Education Code, sec.57.491; or (31) failure to respond and to provide all requested records within the time specified in an audit of continuing education records under sec.295.8 of this title (relating to Continuing Education Requirements). (b)-(c) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 20, 1995. TRD-9516687 Fred S. Brinkley, Jr., R.Ph., M.B.A. Executive Director/Secretary Texas State Board of Pharmacy Effective date: January 12, 1996 Proposal publication date: July 4, 1995 For further information, please call: (512) 832-0661 Chapter 283. Licensing Requirements for Pharmacists 22 TAC sec.sec.283.2, 283.4-283.6 The Texas State Board of Pharmacy adopts amendments to sec.sec.283.2, 283.4 and 283.6, concerning Definitions, Internship Requirements, Pharmacist-Intern Duties, and Preceptor Requirements. Sections 283.2, 283.4, and 283.6 are adopted with changes to the proposed text as published in the September 26, 1995, issue of the Texas Register (20 TexReg 7784). Section 283.5 is adopted without changes and will not be republished. The adopted amendments update internship requirements to be consistent with the changing role of pharmacists and implement the recommendations of the Board's Task Force on Pharmacist Internship. The agency received two written comments on the proposed rules. The Texas Federation of Drug Stores commented that the requirement for six hours of preceptor training every three years contained in sec.283.6 may discourage pharmacists from becoming preceptors and pose a hardship for pharmacists practicing in rural areas who wish to become preceptors. The Board disagrees with the comments and believes that preceptor training is vital to preparing pharmacists to properly train and evaluate pharmacist interns. In addition, since this requirement does not take effect until September 1, 1997, there is time for preceptor program development for rural areas. The second comment regarding this section suggests a change to allow the six hours of preceptor training to be acquired through several shorter programs totaling six hours, rather than only through a single, six-hour program. The Board agrees with the flexibility allowed by this suggestion and the text has been amended accordingly. The Texas Federation of Drug Stores asked for clarification of the provisions of sec.283.6(c)(1). The comment asked whether the phrase "one year of experience in the internship practice setting," requires the one year of experience to be in a single pharmacy. It was not the intent of the Board to limit the one year of experience in a pharmacy practice setting to a single pharmacy. The text has been amended to clarify the requirement. The changes to sec.283.2 were as a result of staff recommendations and include: (1) amending the definition of "Extended-Intern" to clarify that this includes a person who has been ordered by the Board to complete an internship; and (2) replacing the phrase "registered pharmacist" with "licensed pharmacist" in the definition of the term "Preceptor." The changes to sec.283.4 were as a result of staff recommendations and include: (1) the deletion of 283.4(c)(1)(C) and relettering the remainder of the paragraph since subparagraph (C) is no longer necessary; (2) clarifying that a student-intern participating in a Texas college-based internship program may be awarded hours earned in excess of 1, 500; and (3) amending subsection (d) (relating to extended-internship programs) to be consistent with the change to the definition of "Extended-Intern." The changes to sec.283.6 were are a result of staff recommendations and include: (1) replacing the term "pharmacist" with "preceptor" to clarify that only a preceptor can supervise pharmacist-interns; and (2) granting an extension for currently approved Texas college-based internship programs until August 31, 1996, with respect to the preceptor to pharmacist-intern ratio. The amendments are adopted under the Texas Pharmacy Act (Texas Civil Statutes, Article 4542a-1), sec.4, which specifies that the purpose of the Act is to protect the public through the effective control and regulation of the practice of pharmacy; sec.16(a), which gives the Board the authority to adopt rules for the proper administration and enforcement of the Act; sec.17(a)(3), which gives the Board the authority to establish requirements for practical training, including internship; sec.21(f), which requires an applicant for licensure by examination to obtain practical experience under conditions determined by the Board; and sec.21(g), which requires the Board to establish standards for internship and qualifications for preceptors. The statutes affected by these amendments: Texas Civil Statutes, Article 4542a- 1. sec.283.2. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Extended Intern -A pharmacist-intern registered with the board, who has: (A)-(C) (No change.) (D) applied to the Board for re-issuance of a pharmacist license which has been expired for more than two years but less than ten years and has successfully passed the Texas Pharmacy Jurisprudence examination, but lacks the required number of hours of internship or continuing education required for licensure; or (E) been ordered by the Board to complete an internship. Internship-A practical experience program that is approved by the board. Pharmaceutical care -The provision of drug therapy and other pharmaceutical services defined in the rules of the board and intended to assist in the cure or prevention of a disease, elimination or reduction of a patient's symptoms, or arresting or slowing of a disease process. Pharmacist-intern-An undergraduate student enrolled in the professional sequence of a college of pharmacy who has completed a minimum of 30 credit hours of work towards a professional degree in pharmacy and is participating in a board-approved internship program or an extended-intern participating in a board-approved internship program. Preceptor-A pharmacist licensed in Texas to practice pharmacy who meets certification requirements under board rules and is certified by the board to supervise and be responsible for the activities and functions of a pharmacist- intern in the internship program. Student-intern-A pharmacist-intern, registered with the board who is enrolled in the professional sequence of a college of pharmacy and has completed a minimum of 30 credit hours of work towards a professional degree in pharmacy and is participating in a board-approved internship program. sec.283.4. Internship Requirements. (a) Goals and competency objectives of internship. (1) The goal of internship is for the pharmacist-intern to attain the knowledge, skills, and abilities to safely, efficiently, and effectively provide pharmaceutical care to individual patients and practice pharmacy under the laws and regulations of the State of Texas. (2) The following competency objectives are necessary to accomplish the goal of internship in paragraph (1) of this subsection. (A) Provides drug products. The pharmacist-intern shall acquire competence in determining the appropriateness of prescription drug orders and medication orders; evaluating and selecting products; and assuring the accuracy of the product/prescription dispensing process. (B) Communicates with patients and/or their care givers about prescription drugs. The pharmacist-intern shall acquire competence in interviewing and counseling patients, and/or their care givers, on drug usage, dosage, packaging, and storage; discussing drug cautions, side effects, and patient conditions; explaining policies on fees and services; relating to patients in a professional manner; and interacting to confirm patient understanding. (C) Communicates with patients and/or their care givers about nonprescription products, devices, and diagnostic aids. The pharmacist-intern shall acquire competence in interviewing and counseling patients and/or their care givers on conditions and intended drug use; assisting in and recommending drug selection; referring patients to other health professionals; providing information on medical/surgical and home health-care devices and home diagnostic products; and providing poison control treatment information and referral. (D) Communicates with health professionals and the public. The pharmacist- intern shall acquire competence in obtaining and providing accurate and concise information in a professional manner and using appropriate oral, written, and nonverbal language. (E) Collaborates with physicians, other health-care professionals, patients and/or their care givers to develop a therapeutic plan which will include monitoring and evaluating drug therapy. The pharmacist-intern shall acquire competence in collaborating with physicians, other health care professionals, patients, and/or their care givers to formulate a therapeutic plan. The pharmacist-intern shall acquire competence in establishing and interpreting data-bases, identifying drug-related problems and recommending appropriate pharmacotherapy specific to patient needs and devising follow-up plans. (F) Maintains professional-ethical standards. The pharmacist-intern is required to comply with laws and regulations pertaining to pharmacy practice; to learn to apply good professional judgment; to exhibit reliability and credibility in dealing with others; to deal professionally and ethically with colleagues and patients; to demonstrate sensitivity and empathy for patients/care givers; and to maintain confidentiality. (G) Compounds. The pharmacist-intern shall acquire competence in using acceptable professional procedures; selecting appropriate equipment and containers; appropriately preparing compounded dosage forms; and documenting calculations and procedures. (H) Retrieves and evaluates drug information. The pharmacist-intern shall acquire competence in selecting best available resources for answering a drug- related request in a timely fashion and in interpreting the information obtained and judging its relevance. (I) Manages general pharmacy operations. The pharmacist-intern shall develop a general understanding of planning and policy-making. The pharmacist-intern shall have an understanding of drug security, storage and control procedures, and maintaining quality assurance. The pharmacist-intern shall learn to notice and document discrepancies and irregularities, keep accurate records and document actions. The pharmacist-intern shall attend meetings requiring pharmacy representation. (J) Understands the necessity of participating in public health and professional activities. The pharmacist-intern shall develop basic knowledge and skills needed to become an effective health educator and active participant in public health programs and professional organizations. (K) Conducts research. The pharmacist-intern may develop research skills to expand and/or refine knowledge in the areas of pharmaceutical sciences or pharmaceutical services. This includes data collection and analysis of scientific, clinical, sociological, and/or economic impacts of pharmaceuticals (including investigational drugs), pharmaceutical care, and patient behaviors, with dissemination of findings to the scientific community and the public. (b) Hours requirement. (1) The board requires 1,500 hours of internship for licensure. These hours may be obtained through one of more of the following methods. (A) In a board approved student internship program, as specified in subsection (c) of this section; (B)-(C) (No change.) (2) Pharmacist-interns participating in an internship may be credited no more than 50 hours per week of internship experience. (3) Internship hours may be used for the purpose of licensure for no longer than two years from the date the internship is completed. (c) Student internship programs. (1) Texas colleges of pharmacy internship programs. (A) The board shall review for approval Texas colleges of pharmacy internship programs on or before September 1 of each fiscal year. The purpose of the board review will be to determine if such internship programs demonstrate that the competency objectives listed in subsection (a) of this section are capable of being met by each student-intern completing the internship. The board reserves the right to set conditions relating to the approval of such programs. (B) The Texas colleges of pharmacy shall determine through examinations that each student-intern completing the college internship program meets the competency objectives listed in subsection (a) of this section. (C) Internship experience shall be gained under a pharmacist licensed by the board and approved as a preceptor by the board. (D) All internship experience shall be approved by the board and shall occur in sites and under conditions which teach one or more of the competency objectives listed in subsection (a) of this section. (E) Prior to taking the licensure examination any applicant participating in a Texas college-based internship shall complete the requirements of such internship. (F) Pharmacist-interns completing a board-approved Texas college-based structured internship will be awarded 1,500 hours of internship experience, or the number of hours actually obtained if greater than 1,500. No credit shall be awarded for didactic experience. (2) Internship experience acquired by student-interns not in a Texas College of Pharmacy Internship Program. (A) A person may be designated a student-intern provided he/she meets all of the following requirements: (i) has made application to the board; (ii) is enrolled in the professional sequence of a college of pharmacy whose professional degree program has been accredited by ACPE and approved by the board; and (iii) has completed 30 credit hours of work towards a professional degree in pharmacy. (B) The terms of the student internship shall be as follows. (i) The internship shall be gained concurrent with college attendance, which may include: (I) partial semester breaks such as spring breaks; (II) between semesters; and (III) whole semester breaks provided the student-intern attended the college in the immediate preceding semester and is scheduled with the college to attend in the immediate subsequent semester. (ii) The student internship shall be board-approved and gained in a pharmacy licensed by the board, or a federal government pharmacy participating in a board-approved internship program. (iii) The student internship shall be in the presence of and under the direct supervision of a board-approved preceptor who is licensed by the board. (C) None of the internship hours acquired may be substituted for any of the hours required in the Texas college of pharmacy internship program. (3) Expiration date for student-intern designation. The student-internship remains in effect until the earlier of the following occurs: (A) the student-intern voluntarily or involuntarily ceases enrollment in a college of pharmacy whose professional degree program has been accredited by ACPE and approved by the board; (B) the failure of the student-intern to take the next regularly scheduled examination after graduation; (C) upon receipt of the results of the next regularly scheduled examination after graduation. (d) Extended-internship program. (1) A person may be designated an extended-intern provided he/she has made application to the board and met one of the following requirements: (A)-(B) (No change.) (C) applied to the board to take the next scheduled examination after obtaining full certification from the Foreign Pharmacy Graduate Equivalency Commission; (D) applied to the board for re-issuance of a pharmacist license which has expired for more than two years but less than ten years and has successfully passed the Texas pharmacy jurisprudence examination, but lacks the required number of hours of internship or continuing education required for licensure; or (E) been ordered by the Board to complete an internship. (2) The terms of the extended-internship shall be as follows. (A) The extended-internship shall be board-approved and gained in a pharmacy licensed by the board, or a federal government pharmacy participating in a board-approved internship program. (B) The extended-internship shall be in the presence of and under the direct supervision of a board-approved preceptor who is licensed by the board. (3) (No change.) (4) An applicant for licensure who has completed less than 500 hours of internship at the time of application shall complete the remainder of the 1, 500 hours of internship and have the preceptor certify that the applicant has met the objectives listed in subsection (a) of this section. (e) Pharmacist-intern identification. (1)-(2) (No change.) (3) All pharmacist-interns shall wear an identification tag or badge which bears the person's name and identifies him or her as a pharmacist-intern. sec.283.6. Preceptor Requirements. (a) Preceptors shall be pharmacists whose license to practice pharmacy in Texas is current and not on inactive status with the board. (b) (No change.) (c) For certification as a preceptor after September 1, 1997, a pharmacist must: (1) have at least one year of experience in the type of internship practice setting; (2) have completed six hours of preceptor training developed by a Texas college of pharmacy and provided by an ACPE approved provider within the previous three years; (3) complete six hours of preceptor training developed by a Texas college of pharmacy and provided by an ACPE approved provider every three years; and (4) meet the requirements of subsection (f) of this section. (d) Any preceptor approved and certified by the board shall be approved and certified for a three-year period commencing on the date of such approval and certification. (e) A preceptor may supervise only one pharmacist-intern at any given time. Texas Colleges of Pharmacy may request a different preceptor to pharmacist- intern ratio during the board's annual review and approval of their college based, structured internship program. Any such ratio shall apply only to the internship experience acquired as a part of the college based, structured internship program. For the purpose of this subsection, the approval of internship programs previously granted by the Board shall remain in effect through August 31, 1996. (f) No pharmacist may serve as a preceptor if his or her license to practice pharmacy has been the subject of an order of the board imposing any penalty set out in the Act, sec.28(a), during the period he or she is serving as a preceptor or within the three-year period immediately preceding application for approval as a preceptor. Provided, however, a pharmacist who has been the subject of such an order of the board may petition the board, in writing, for approval to act as a preceptor. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 20, 1995. TRD-9516686 Fred S. Brinkley, Jr., R.Ph., M.B.A. Executive Director/Secretary Texas State Board of Pharmacy Effective date: February 1, 1996 Proposal publication date: September 26, 1995 For further information, please call: (512) 832-0661 Part XXI. Texas State Board of Examiners of Psychologists Chapter 461. General Rulings 22 TAC sec.461.17 The Texas State Board of Examiners of Psychologists adopts an amendment to sec.461.17, concerning Timeliness of Complaints, without changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8387). The rule is being amended to offer more protection to the consumers of psychological services. The amended rule will permit the Board to address incidents of harm that consumers are more reluctant or unable to report as soon due to the nature of the harm. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 4512c, which provide the Texas State Board of Examiners of Psychologists with the authority to promulgate rules consistent with the Statute. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 20, 1995. TRD-9516631 Rebecca E. Forkner Executive Director Texas State Board of Examiners of Psychologists Effective date: January 11, 1996 Proposal publication date: October 17, 1995 For further information, please call: (512) 305-7700 Part XXXIV. Texas State Board of Social Worker Examiners Chapter 781. Social Work Licensure Subchapter D. Code of Ethics and Professional Standards of Practice 22 TAC sec.781.401 The Texas State Board of Social Worker Examiners (board) adopts an amendment to sec.781.401, concerning the licensing and regulation of social workers, with changes to the proposed text as published in the July 18, 1995, issue of the Texas Register (20 TexReg 5133). The amendment will clarify the intended meaning of sec.781.401(a)(9) by more clearly stating the ethical responsibility of a licensee. COMMENT: Concerning sec.781.401(a)(9), one commenter stated that the restriction on sexual contact with a former client should be limited to a specific time period such as five years. RESPONSE: The board has referred sec.781.401(a)(9) back to the rules committee for further discussion and has not revised the existing subsection (a)(9). The amendment is adopted under the Texas Professional Social Work Act, Human Resources Code, Chapter 50, sec.50.006, which provides the Texas State Board of Social Worker Examiners with the authority to adopt rules that are necessary to administer the Act. sec.781.401. Code of Ethics. (a) A social worker must observe and comply with the code of ethics and standards of practice set forth in this subchapter. Any violation of the code of ethics or standards of practice will constitute unethical conduct or conduct that discredits or tends to discredit the profession of social work and is grounds for disciplinary action. (1) -(7) (No change.) (8) A social worker shall be responsible for setting and maintaining professional boundaries. (9)-(12) (No change.) (b) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 22, 1995. TRD-9516725 Catherine Clancy Chairperson Texas State Board of Social Worker Examiners Effective date: January 12, 1996 Proposal publication date: July 18, 1995 For further information, please call: (512) 458-7236 TITLE 30. ENVIRONMENTAL QUALITY Part I. Texas Natural Resource Conservation Commission Chapter 291. Water Rates The Texas Natural Resource Conservation Commission (commission) adopts the repeal of sec.sec.291.73, 291.85-291.89, 291.101, 291.102, and 291.105-291. 118; amendments to sec.sec.291.3, 291.5-291.8, 291.13-291.15, 291.21-291.23, 291. 26, 291.29-291.31, 291.41, 291.71, 291.72, 291.75, 291.76, 291.81-291.84, 291. 91- 291.95, 291.103; 291.104, 291.121-291.123, 291.125, and 291.127; and new sec.sec.291.73, 291.80, 291.85-291.90, 291.101, 291.102, 291.105-291.119, and 291.141-291.143, relating to the regulation of retail public utilities and submetered and nonsubmetered master metered service providers. Amendments to sec.sec.291.3, 291.5, 291.8, 291.93, 291.103; new sec.sec.291.80, 291.85-291.87, 291.89, 291.105, 291.107, 291.111, 291.112, 291.115; and Appendix A are adopted with changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6080). Amendments to sec.291.21, sec.291.22 and sec.291.29 are adopted with changes to the proposed text as published in the August 15, 1995, issue of the Texas Register (20 TexReg 6192). The repeals of sec.sec.291.73, 291.85-291.89, 291.101, 291.102, and 291. 105- 291.118; amendments to sec.sec.291.6; 291.7, 291.13-291.15, 291.23, 291.26, 291.30-291.31, 291.41, 291.71, 291.72, 291.75, 291.76, 291.81-291.84, 291.91, 291.92, 291.94, 291.95, 291.104, 291.121-291.123, 291.125, and 291.127; and new sec.sec.291.73, 291.88, 291.90, 291.101, 291.102, 291.106, 291.108-291.110, 291.113, 291.114, 291.116-291.119 and 291.141-291.143 are adopted without changes and will not be republished. The repeals, amendments and new sections will bring the current rules into conformance with current statutes, clarify the rules by reorganizing and rewording sections, eliminate certain requirements, and provide for implementation of policies and procedures authorized by statutory changes. The repeals, amendments and new sections are adopted under House Bill (HB) 827, 72nd Legislature, 1991; Senate Bill 2, Special Session, August 1991; HB 2677, 73rd Legislature, 1993; and HB 1001 and 2387, 74th Legislature, 1995, which in pertinent part amended the Texas Water Code, Chapter 13. The new or amended sections establish the substantive regulations which affect the policies of the commission regarding the assurance of water and sewer rates, fees, operations, and services which are just and reasonable. The new sections also outline the procedures for presentation of these matters to the commission for consideration and decision. A public hearing on these proposed rules was conducted on September 5, 1995 in Austin, Texas. Oral and/or written testimony on these rules was provided by six commenters. Oral and/or written testimony in support of certain sections but which also questioned and/or opposed other sections of the proposed rules and which requested clarification, was provided by the following groups: the Independent Water and Sewer Companies of Texas, the Texas Rural Water Association, and the Texas Manufactured Housing Association, and representatives of the following utility service providers: Elim Water Company, Inc., Technology Hydraulics, and Aqua Water Supply Corporation. The following paragraphs summarize the written and oral comments received. One commenter argued that the commission had exceeded its authority in the definitions of "Membership Fee" and "Water supply or sewer service corporation" (WSC). The commission agrees that the WSC has the authority to set the membership fee without commission approval. However, the commission is required in an appeal of the charges for extending service to an applicant to determine the reasonable charges for the extension "other than the regular membership or tap fees." The definition has been amended to clarify that it is applicable only to appeals under the Texas Water Code, sec.13.043(g) and ensures that a WSC cannot include extension or other fees and charges within the membership fee to avoid this appellate jurisdiction. The commission agrees that it cannot dictate to a WSC requirements for "bylaws, directors and membership fee payment requirements." However, the Texas Water Code, sec.13.002 (24) "Water supply or sewer service corporation," defines a WSC for purposes of commission regulation as a "nonprofit, member-owned, member-controlled corporation" which requires the commission to adopt requirements for determining when a WSC is in fact "member- owned and member-controlled." It can still operate as a WSC under the Texas Constitution, Article 1434a, but it cannot operate under the reduced regulatory requirements available to a "member-owned, member-controlled" WSC. The definition has been amended to clarify that it is applicable only to Chapter 291. The commission has revised sec.291.5, Submission of Documents, and sec.291.8, relating to Administrative Completeness, to move the provision in sec.291.5 to sec.291.8 relating to filing fees accompanying an application before it is deemed to have been filed. One commenter suggested that the rules should authorize the commission to allow a pass-through or approve emergency rate increases to compensate utilities required to reduce customer consumption as a result of court or agency ordered reductions in pumping. The commission considered making changes to sec.291.21(b)(2)(C) and sec.291.21(h) to clearly allow the implementation of a previously approved pass-through clause, but decided this issue warrants further public review and comment. The commission will propose this issue in a separate rulemaking project. The commission disagrees on the need for an emergency rate increase. Section 291.14, Emergency Orders, was amended to include specific statutory language authorizing the commission to issue an emergency order to appoint a temporary manager under the Texas Water Code, sec.13.4134 and/or to approve an emergency rate increase under the Texas Water Code, sec.13.4133. The commission does not have statutory authority to bypass customer notice and application filing requirements to authorize a rate increase under the circumstances mentioned. One commenter suggested changes to allow a pass-through of a potential pumping fee for water pumped from the Edwards Aquifer without the necessity of a rate case. The commission believes that provisions in sec.291.21(b)(2)(D) as published in Texas Register (20 TexReg 6192) would allow the executive director to authorize such a pass through as a minor tariff change. Several commenters suggested changing sec.291.21(h), relating to Form and Filing of Tariffs, to allow pass through clauses for purchased water or sewer treatment to be approved by the executive director as minor tariff changes without the necessity of customer notice and opportunity for hearing. In sec.291.21(b)(2)(D) of the proposed rules, the commission did propose approving surcharges to recover the actual costs for charges incurred as a result of specific, known governmental requirements beyond the control of the utility. However, the decision to purchase water or sewer treatment from another entity is within the utility's control. In addition, a customer's volume charges typically include other charges which may not be directly dependent on consumption. Similarly, if purchased water is replacing utility produced water there are often complex decisions on how to reduce current charges to account for the switch from self produced water and how to include the new costs of purchased water. The commission believes that a customer should have a right to a hearing to review the necessity and costs of purchasing such treatment and the proposed rate design before the authority to pass through any future cost increases is granted to the utility. The burden should not be shifted to the commission to institute a proceeding to determine if the costs are reasonable at some future time, and customers should not be required to pay increased charges in the interim just to allow a utility to avoid presenting justification for the costs to be incurred because it has decided to purchase water or sewer treatment. The court decision in Public Utility Commission vs. GTE-Southwest, Inc., 901 S.W. 2d 401. Tex. (1995). has also cast doubt on the authority of the commission to retroactively order refunds should an after the fact hearing determine that the utility's formula was over collecting revenues. Therefore, the commission did not make a change in the rule to allow such pass-throughs outside of the current process. One commenter suggested deleting the requirement in sec.291.22(d), relating to Notice of Intent to Change Rates, that a utility that requests a rate increase from the commission for customers outside a city provide a copy of the application filed with the commission to the city. The commission believes this rule requiring only that the utility copy its application and provide it to the city is not overly burdensome and would be helpful to the city since revenue changes allowed to the utility by the commission for customers outside the city can have an impact on how the city treats the utility whose in-city operations are under the city's jurisdiction. Therefore, no changes to sec.291. 22(d) have been made with regard to this comment. One commenter suggested allowing emergency rate increases pursuant to sec.291.22(h) to comply with "Water Conservation Orders" by a court or governmental agency. The commission responds that statutory authority for emergency rate increases is only provided under the Texas Water Code, sec.13. 412 and sec.13.4132 for persons or receivers operating a utility in place of the owner of the utility and then only if the increase is necessary to ensure the provision of continuous and adequate service to the utility's customers. For these reasons and those mentioned on the comment related to sec.291.14, the commission has not made changes to sec.291.22(h) with regard to this comment. The commission has revised sec.291.21, relating to Form and Filing of Tariffs, and sec.291.22, relating to Notice of Intent to Change Rates, to reorganize the language on purchased water or sewage treatment and surcharges for improved clarity. Section 291.21(h) now contains the notice requirements for the purchased water or sewage treatment provision. The commission has also added sec.291.21(k), which explains the general purpose of the surcharge, and incorporates language from sec.291.21(a) and sec.291.22(g) which provides for the approval of the surcharge, and establishes the requirements for the use of surcharges. The language relating to surcharges was deleted from sec.291.21(a) and sec.291.22. The commission also clarifies that the explanation of the general purpose of the surcharge is not intended to limit what the commission may allow to be recovered in a surcharge. Additionally, the commission has added sec.291.21(b)(2)(G) to establish that an addition of an extension policy to a tariff or a change to an existing extension policy does not qualify as a minor tariff change that may be approved by the executive director because the policy must now be approved or amended in a rate change application. Section 291.22 has also been revised to specifically require that an extension policy be approved or amended in a rate change application. The commission has determined that extension fees are rates and should be handled through a rate proceeding. Section 291.29, relating to Interim Rates, has also been revised to add subsection (j) to provide that the State Office of Administrative Hearings may establish interim rates when a rate complaint proceeding concerning a utility's extension policy under Texas Water Code, sec.13.186 and sec.13.041, has been referred to that office. One commenter suggested changes to sec.291.31(c)(2)(B)(ii), relating to Cost of Service, to allow return on prepaid operating expenses. The commission responds that this section was not proposed for changes; therefore no additional changes will be made. Two commenters suggested changes to sec.291.32, Rate Design, to allow different rates for different parts of a utility's service area. The commission responds that this section was not proposed for changes, therefore no additional changes will be made. Additionally, the commission clarifies that the current rules would allow a different set of rates for different portions of a service area if there is a clear difference in the cost of providing service. However, because there is also a potential for discriminatory rates in such a case unless there is a thorough investigation of the issues, these types of rate structures cannot be approved unless the utility requests a rate under the normal rate increase provisions. Also with regard to sec.291.32, Rate Design, another commenter suggested that in the event of a court or agency order to reduce pumping from an aquifer that the rules should allow for a temporary rate structure which would be somewhat punitive towards high volume users to effect significant reductions in use. As discussed with comments on sec.291.14, the commission believes an authorization for a temporary rate in response to a conservation order should be handled in a new rulemaking. The commission believes the rules already provide for such a rate structure. One commenter suggested alternative language for sec.291.73(b)(3), relating to Water and Sewer Utilities Annual Report; however, the commenter's proposed wording appears to be identical to the wording in the published rule and therefore no change is necessary. One commenter suggested that the requirement to report detailed information on affiliated transactions in sec.291.73(b)(4) and the requirement to submit verified or certified copies of permits in sec.291.73(b)(7) were overly burdensome. The commission clarifies that this provision is identical to the old rule and has only been reorganized to a new section for improved clarity. The commission further clarifies that a utility is not automatically required to provide this information. The rule only allows the commission to request it if it is determined to be important to the commission's regulatory oversight activities. Although the commission has never required utilities to routinely submit this type of information, the commission believes these requirements are necessary if questionable affiliated transactions are taking place. Therefore, no changes are necessary. Several commenters suggested changes in the notice requirements in sec.291. 85(e)(2), relating to Response to Requests for Service by a Retail Public Utility Within Its Certified Area, to clarify that published notice of subdivision requirements of a water supply or sewer service corporation or special utility district must be in "substantial" compliance with the form in Appendix A but does not have to be exactly like the form notice. The commission agrees and has added the word "substantial" in sec.291.85(e)(2) and has modified the form in Appendix A for improved clarity. The commission has also revised sec.291.86, relating to Service Connections, to remove the language that an extension policy can be approved by the executive director. As previously mentioned, sec.291.22 specifically requires that an extension policy be approved or amended in a rate change application. The commission has determined that extension fees are rates and should be handled through a rate proceeding. An additional change to sec.291.86 provides that a utility shall not be reimbursed for facilities in excess of the amount the utility paid for the facilities. One commenter suggested changes to sec.291.87(g), related to billing. The commenter's concern is that a utility is only authorized under the rule to backbill for 6 months if a customer is underbilled, but a customer is entitled to a refund for overbilling for an indefinite period of time, up to 4 years under other applicable statutes. The commission further clarifies that the rule does not preclude a utility from seeking back payments under these other applicable statutes, only from doing so under the commission's rules. Because a utility installs, owns, and tests meters, the commission believes it is not unreasonable to expect a well-managed utility to identify billing errors and make adjustments to a customer's bills within 6 months. The customer on the other hand has almost no way of recognizing billing problems, except perhaps when comparing usage to similar bills in prior years. Therefore, it is reasonable to require the utility to correct overbilling problems more than 6 months after the event occurs. The commission clarifies that the proposed rule is identical to the existing rule and was only reorganized to a new section for improved clarity. The commission believes no change to the rule as published is necessary. One commenter suggested changes to sec.291.87(j) to clarify when a utility must prorate bills due to interruption of "serious impairment" of service for a 24 hour period. The commission agrees that the wording "seriously impaired" is vague and it has been deleted. One commenter suggested changes to sec.291.87(o) to clarify that a manufactured housing rental community would not be deemed to be a developer for purposes of paying standby fees unless the utility actually installed facilities to the rental spaces as opposed to providing service to a master meter. The commission agrees and has added sec.291.87(o)(1)(C) to clarify this point. One commenter suggested changes to sec.291.89(h), relating to Meters, to include in the definition of "meter tampering, bypass or diversion," the interconnecting of an additional residence or consuming facility without authorization by the utility. The commenter notes that these activities violate the individual meter/service connection rules and there is a remedy under those rules. The commission responds that the rule on "meter tampering, bypass or diversion" is intended to address activities not otherwise addressed in the rules, which are not readily apparent to utility staff passing the customer's property and which would allow the use of service without any compensation to the utility. The actual water service is not being diverted or bypassed since it should still be passing through the meter and the customer at least is being charged the volumetric charge. Therefore, the commission does not believe the rule should be broadened to include activities already covered under other rules. One commenter suggested changes to sec.291.93(a)(2), relating to Adequacy of Utility Service, to recognize the necessity of instituting water rationing to comply with a state agency or court ordered conservation plan. The commenter also expressed concern that a utility would have to hire a professional engineer to prepare a planning report to address lack of capacity, demand exceeding 85% of capacity, to serve its certificated area solely because of compliance with the conservation order. The commission agrees with the concerns raised by the commenter and has revised sec.291.93(a)(2) to add state agency or court orders to the list of reasons for instituting rationing and a clarification that a planning report is not required unless the conservation order is expected to last more than 18 months. The commission also clarifies that in the proposed rule as published in the August 15, 1995 issue of the Texas Register (20 TexReg 6080), the services of a professional engineer are not required to prepare the planning report if one is required under sec.291.93(a)(3). The commission has also made grammatical corrections in sec.291.93(a)(2)(C) and sec.291.93(c), and has specified a cross-reference in sec.291.93(a)(3)(B)(ii) . One commenter suggested that some provisions in sec.291.103(d)(6)(B), relating to Certificates Not Required, to partially exempt utilities with less than 15 potential connections and to delegate ratemaking authority to the executive director exceed the authority provided by the Texas Water Code. The commission agrees and has modified sec.sec.291.103(d)(6)(B)-291.103(d)(6)(C) and added sec.291.103(d)(6)(D) to clarify that the executive director does not have sole authority over the rates of exempted utilities and to provide for an appeal to the commission by either the utility or the customers. In addition, the commission deleted WSCs from the modified rate appeal provisions since the statute does not clearly authorize a change to the provisions for customer appeals for WSCs in the Texas Water Code, sec.13.043(b) in a similar way to those for utilities. Additionally, for purposes of consistency, the commission has replaced all references in sec.291.103 to "service provider" with "exempt utility." Although no formal comments were received, the commission did receive an inquiry regarding whether an exempt utility or water supply corporation operating under the provisions of sec.291.103(d) could cease to provide water utility services without commission authorization. To clarify, the commission has reworded sec.291.103(d)(7) to more clearly state that a utility or water supply corporation operating without a Certificate of Convenience and Necessity under the provisions in sec.291.103(d) cannot cease water utility service without the written authorization of the executive director. One commenter suggested changes to sec.291.125(c)(6), relating to Billing, to clarify that the total charges for water or wastewater service billed to a submeterer by a utility can be passed on to the tenants in the submetered bill. The commission responds that no changes were proposed to this section, and therefore the commission did not make any changes. However, the commission clarifies that the total charges including regulatory assessments and surcharges are to be included when determining the submetered bill and interprets the meaning of the rules in that way. One commenter suggested changes to sec.291.127(a)(1), relating to Submeters, to clarify that submeterers do not sell water or wastewater services but simply allocate it based on the bill that they receive from the utility service provider. The commission believes that the Texas Water Code, sec.13.503 is clear on this point and does interpret submetering as an allocation of utility service charges by the landlord to the tenants, but since this section was not proposed for changes, no changes in response to this comment have been made. Although no formal comments were received regarding the relationship of these rules to House Bill 1001, (1995), the commission received several inquiries regarding which provisions of the rules apply to "affected counties" which are defined as "utilities" by House Bill 1001 but are also exempted from some requirements related to commission jurisdiction over rates that apply to utilities in other portions of the bill. To clarify these concerns, the commission adopts changes to sec.sec.291.21, 291.80, 291.86 and 291.87 to clarify the applicability of these provisions to counties. These changes simply clarify in the rules what the statute already provides and do not expand or limit the applicability of the statute. Additionally, the commission has revised sec.291.87(c), relating to Billing, and sec.291.89(d), relating to Meters, to make minor typographical corrections. The commission has also revised sec.291.86(b)(3)(A) to clarify that customer service line and appurtenances installed by the customer shall be constructed in accordance with the laws and regulations of the State of Texas governing plumbing practices which must be at least as stringent and comprehensive as one of the following nationally recognized codes: the Southern Standard Plumbing Code, the Uniform Plumbing Code, and/or the National Standard Plumbing Code, or other standards as prescribed by the commission. Additionally, sec.291.85(d), relating to Response to Requests for Service by a Retail Public Utility Within Its Certificated Area, sec.291.86(a)(3) and sec.291.86(d)(2)(B)(ii), relating to Service Connections, and sec.291.89(e)(3), relating to Meters, have been revised to make wording changes for improved clarity. The commission has also deleted a reference to the Texas Department of Health in sec.291.105(4), relating to Contents of Certificate of Convenience and Necessity Applications, that is no longer necessary. Subchapter A. General Provisions 30 TAC sec.sec.291.3, 291.5, 291.8, 291.13-291.15 The amendments are adopted under the Texas Water Code sec. sec.5.103, 5.105, and 13.041 which provides the commission with rulemaking authority relating to the regulation and supervision of retail public utilities' rates, fees, operations, and services and submetered and nonsubmetered master metered service providers. The amended sections establish the substantive regulations which affect the policies of the commission regarding the assurance of water and sewer rates, fees, operations, and services which are just and reasonable. These amendments are adopted under House Bill (HB) 827, 72nd Legislature, 1991, Senate Bill 2, Special Session, August 1991, HB 2677, 73rd Legislature, 1993, and House Bills 1001, and 2387, 74th Legislature, 1995, which in pertinent part amended the Texas Water Code, Chapter 13, and under the Texas Water Code sec. sec.5.103, 5.105, and 13.041 which provide the Texas Natural Resource Conservation Commission with rulemaking authority relating to the regulation and supervision of retail public utilities' rates, fees, operations, and services. sec.291.3. Definitions of Terms. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Affected County -A county; (A) that has a per capita income that averaged 25% below the state average for the most recent three consecutive years for which statistics are available and an unemployment rate that averaged 25% above the state average for the most recent three consecutive years for which statistics are available; and, (B) any part of which is within 50 miles of an international border. Billing period -The usage period between meter reading dates for which a bill is issued or in nonmetered situations, the period between bill issuance dates. Member-A person who holds a membership in a water supply or sewer service corporation and who either receives water or sewer utility service from the corporation or is a record owner of a fee simple title to property in an area served by a water supply or sewer service corporation. In determining member control of a water supply or sewer service corporation, a person is entitled to only one vote regardless of the number of memberships the person owns. Membership fee -A fee assessed each water supply or sewer service corporation service applicant which entitles the applicant to one connection to the water or sewer main of the corporation. The amount of the fee is generally defined in the corporation's bylaws and payment of the fee provides for issuance of one membership certificate in the name of the applicant, for which certain rights, privileges, and obligations are allowed pursuant to said bylaws. For purposes of Texas Water Code, sec.13.043(g), a membership fee is a fee not exceeding approximately 12 times the monthly base rate for water or sewer service or an amount that does not include any materials, labor, or services required for or provided by the installation of a metering device for the delivery of service, capital recovery, extension fees, buy-in fees, impact fees or contributions in aid of construction. Physician-Any public health official, including, but not limited to, medical doctors, doctors of osteopathy, nurse practitioners, registered nurses, and any other similar public health official. Point of use use-The primary location where water is used or sewage is generated; for example a residence or commercial or industrial facility. Standby fee-A charge imposed on unimproved property for the availability of water or sewer service when service is not being provided. Water and sewer utility-Any person, corporation, cooperative corporation, affected county, or any combination of those persons or entities, other than a municipal corporation, water supply or sewer service corporation, or a political subdivision of the state, except an affected county, or their lessees, trustees, and receivers, owning or operating for compensation in this state equipment or facilities for the production, transmission, storage, distribution, sale, or provision of potable water to the public or for the resale of potable water to the public for any use or for the collection, transportation, treatment, or disposal of sewage or other operation of a sewage disposal service for the public, other than equipment or facilities owned and operated for either purpose by a municipality or other political subdivision of this state or a water supply or sewer service corporation, but does not include any person or corporation not otherwise a public utility that furnishes the services or commodity only to itself or its employees or tenants as an incident of that employee service or tenancy when that service or commodity is not resold to or used by others. Water supply or sewer service corporation -Any nonprofit, member-owned, member-controlled corporation organized and operating under Chapter 76, Acts of the 43rd Legislature, 1st Called Session, 1933 (Texas Civil Statutes, Article 1434a) that provides potable water or sewer service for compensation. The term does not include a corporation that provides retail water or sewer service to a person who is not a member, except that the corporation may provide retail water or sewer service to a person who is not a member if the person only builds on or develops property to sell to another and the service is provided on an interim basis before the property is sold. For purposes of this chapter and the Texas Water Code, Chapter 13 to qualify as member-owned, member-controlled a water supply or sewer service corporation must also meet the following conditions: (A) all members of the corporation meet the definition of "member" under this section, and all members are eligible to vote in those matters specified in the articles and bylaws of the corporation. Payment of a membership fee in addition to other conditions of service may be required provided that all members have paid or are required to pay the membership fee effective at the time service is requested; (B) each member is entitled to only one vote regardless of the number of memberships owned by that member; (C) a majority of the directors and officers of the corporation must be members of the corporation; and (D) the corporation's by-laws include language indicating the factors specified in subparagraphs (A)-(C) are in effect. sec.291.5. Submission of Documents. All documents to be considered by the executive director under this chapter shall be submitted to the Utility Rates and Services Section, Water Utilities Division, Mail Code 153, Texas Natural Resource Conservation Commission, P.O. Box 13087, Austin, Texas 78711-3087. Unless otherwise provided in this chapter, an original and four copies shall be submitted. sec.291.8. Administrative Completeness. (a) Notice of rate/tariff change, report of sale, acquisition, lease or rental or merger or consolidation, and sale, assignment of, or lease of a certificate, and applications for certificates of convenience and necessity shall be reviewed by the staff for administrative completeness within ten working days of receipt of the application. A notice or an application for rate/tariff change, report of sale, acquisition, lease or rental or merger or consolidation, and applications for certificates of convenience and necessity shall not be deemed to have been filed until received by the commission, accompanied by the filing fee, if any, required by statute or commission rules, and a determination of administrative completeness is made. Upon determination that the notice or application is administratively complete, the executive director will notify the applicant by mail of that determination. If the executive director determines that material deficiencies exist in any pleadings, statement of intent, applications, or other requests for commission action addressed by this chapter, the notice or application may be rejected and the effective date suspended until the deficiencies are corrected. (b) (No change.) (c) In cases involving a proposed sale, acquisition, lease, or rental or merger or consolidation of any water or sewer system required by law to possess a certificate of convenience and necessity, the proposed effective date of the transaction must be at least 120 days after the date that an application is received by the commission and public notice is provided, unless notice is waived for good cause shown. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 20, 1995. TRD-9516571 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: January 10, 1996 Proposal publication date: August 11, 1995 For further information, please call: (512) 239-4640 Subchapter B. Rates, Rate Making And Rate/Tariff Changes 30 TAC sec.sec.291.21-291.23, 291.26, 291.29-291.31 The amendments are adopted under Texas Water Code, Chapter 13, and under the Texas Water Code sec.sec.5.103, 5.105, and 13.041, which provide the Texas Natural Resource Conservation Commission with rulemaking authority relating to the regulation and supervision of retail public utilities' rates, fees, operations, and services. sec.291.21. Form and Filing of Tariffs. (a) Approved tariff. No utility shall directly or indirectly demand, charge, or collect any rate or charge, or impose any classifications, practices, rules, or regulations different from those prescribed in its approved tariff filed with the commission or with the municipality exercising original jurisdiction over the utility, except as noted in this subsection. A utility may charge the rates proposed under the Texas Water Code, sec.13.187(a) (relating to notice of intent) after the proposed effective date, unless the rates are suspended or the commission sets interim rates. The regulatory assessment required in sec.5.235(n) of the code does not have to be listed on the utility's approved tariff to be charged and collected but shall be included in the tariff at the earliest opportunity. A person who possesses facilities used to provide water utility service or a utility that holds a certificate of public convenience and necessity to provide water service which enters into an agreement pursuant to sec.13.250(b)(2) of the code, may collect charges for wastewater services on behalf of another retail public utility on the same bill with its water charges and shall at the earliest opportunity include a notation on its tariff that it has entered into such an agreement. (b) Requirements as to size, form, identification, minor changes and filing of tariffs. (1) Tariffs filed with applications for certificates of convenience and necessity. (A) Every public utility shall file with the commission the number of copies of its tariff required in the application form containing schedules of all its rates, tolls, charges, rules, and regulations pertaining to all of its utility service when it applies for a certificate of convenience and necessity to operate as a public utility. The tariff shall be on the form the commission prescribes or another form acceptable to the commission. (B) Every water supply or sewer service corporation shall file with the commission the number of copies of its tariff required in the application form containing schedules of all its rates, tolls, charges, rules, and regulations pertaining to all of its utility service when it applies for a certificate of convenience and necessity to operate as a retail public utility. (2) Minor Tariff Changes. Except for an affected county, a public utility's approved tariff may not be changed or amended without commission approval. An affected county can change rates for water or wastewater service without commission approval but must file a copy of the revised tariff with the commission within 30 days after the effective date of the rate change. The executive director may approve the following minor changes to tariffs: (A) service rules and policies; (B) changes in fees for customer deposits, meter tests, return check charges and late charges, provided they do not exceed the maximum allowed by the applicable sections; (C) implementation of a purchased water or sewage treatment provision or water use fee provision previously approved by the commission; (D) surcharges over a time period determined by the executive director to reflect the change in the actual cost to the utility for sampling costs, commission inspection fees, or at the discretion of the executive director, other governmental requirements beyond the utility's control; (E) addition of the regulatory assessment as a separate item or to be included in the currently authorized rate; or (F) addition of a provision allowing a utility to collect wastewater charges pursuant to an agreement under the Texas Water Code, sec.13.250(b)(2). (G) The addition of an extension policy to a tariff or a change to an existing extension policy does not qualify as a minor tariff change because it must be approved or amended in a rate change application. (3) Tariff Revisions and Tariffs Filed With Rate Changes. The utility shall file three copies of each revision or in the case of a rate change, the number required in the application form. Each revision shall be accompanied by a cover page which contains a list of pages being revised, a statement describing each change, its effect if it is a change in an existing rate, and a statement as to impact on rates of the change by customer class, if any. If a proposed tariff revision constitutes an increase in existing rates of a particular customer class or classes, then the commission may require that notice be given. (4) Each rate schedule must clearly state the territory, subdivision, city, or county wherein said schedule is applicable. (5) (No change.) (c) (No change.) (d) Tariff filings in response to commission orders. Tariff filings made in response to an order issued by the commission shall include a transmittal letter stating that the tariffs attached are in compliance with the order, giving the application number, date of the order, a list of tariff sheets filed, and any other necessary information. Any service rules proposed in addition to those listed on the commission's model tariff or any modifications of a rule in the model tariff must be clearly noted. All tariff sheets shall comply with all other sections in this chapter and shall include only changes ordered. The effective date and/or wording of the tariffs shall comply with the provisions of the order. (e) Availability of tariffs. Each utility shall make available to the public at each of its business offices and designated sales offices within Texas all of its tariffs currently on file with the commission or regulatory authority, and its employees shall lend assistance to persons requesting information and afford these persons an opportunity to examine any of such tariffs upon request. The utility also shall provide copies of any portion of the tariffs at a reasonable cost to reproduce such tariff for a requesting party. (f) Rejection. Any tariff filed with the commission and found not to be in compliance with these sections shall be so marked and returned to the utility with a brief explanation of the reasons for rejection. (g) Change by other regulatory authorities. Tariffs must be filed to reflect changes in rates or regulations set by other regulatory authorities and shall include a copy of the order or ordinance authorizing the change. Each utility operating within the corporate limits of a municipality exercising original jurisdiction must have a copy of its current tariff which has been authorized by the municipality on file with the commission. (h) Purchased water or sewage treatment provision. (1) A utility which purchases water or sewage treatment or pays water use fees to an underground water conservation district may include a provision in its tariff to pass through to its customers changes in such costs. The provision shall specify how it is calculated and affects customer billings. (2) This provision must be approved by the commission in a rate proceeding. A proposed change in the method of calculation of the provision must be approved in a rate proceeding. (3) Once the provision is approved, any revision of a utility's billings to its customers to allow for the recovery of additional costs under the provision may be made only upon issuing notice as required by paragraph (4) of this subsection. The executive director's review of a proposed revision is an informal proceeding. Only the commission, the executive director or the utility may request a hearing on the proposed revision. The recovery of additional costs is defined as an increase in water use fees or in costs of purchased water or sewage treatment. (4) A utility that wishes to revise utility billings to its customers pursuant to an approved purchased water or sewer treatment or water use fee provision to allow for the recovery of additional costs shall take the following actions prior to the beginning of the billing period in which the revision takes effect: (A) submit a written notice to the executive director; and (B) mail notice to the utility's customers. Notice may be in the form of a billing insert and shall contain the effective date of the change, the present calculation of customer billings, the new calculation of customer billings, and the change in charges to the utility for purchased water or sewage treatment or water use fees. The notice shall include the following language: "This tariff change is being implemented in accordance with the utility's approved (purchased water)(purchased sewer)(water use fee) adjustment clause to recognize (increases)(decreases) in the (water use fee) (cost of purchased)(water)(sewage treatment). The cost of these charges to customers will not exceed the (increased) (decreased) cost of (the water use fee)(purchased)(water)(sewage treatment)." (5)-(6) (No change.) (i) Effective date. The effective date of a tariff change is the date of approval by the executive director unless otherwise stated in the letter transmitting the approval or the date of approval by the commission, unless otherwise specified in a commission order or rule. The effective date of a proposed rate increase under sec.13.187 of the code is the proposed date on the notice to customers and the commission, unless suspended and must comply with the requirements of sec.291.8(b) of this title (relating to Administrative Completeness). (j) Tariffs filed by water supply or sewer service corporations. Every water supply or sewer service corporation shall file, for informational purposes only, one copy of its tariff showing all rates that are subject to the appellate jurisdiction of the commission and that are in force for any utility service, product, or commodity offered. The tariff shall include all rules and regulations relating to or affecting the rates, utility service or extension of service or product, or commodity furnished and shall specify the CCN number and in which counties or cities it is effective. (k) Surcharge. (1) A surcharge is an authorized rate to collect revenues over and above the usual cost of service. (2) A surcharge to recover the actual increase in costs to the utility for sampling, inspection fees or other governmental requirements beyond the control of the utility may be collected over a specifically authorized time period without being listed on the approved tariff if specifically authorized for the utility in writing by the executive director or the municipality exercising original jurisdiction over the utility. (3) A utility shall use the revenues collected pursuant to a surcharge only for the purposes noted and handle the funds in the manner specified according to the notice or application submitted by the utility to the commission, unless otherwise directed by the executive director. The utility may redirect or use the revenues for other purposes only after first obtaining the approval of the executive director. sec.291.22. Notice of Intent To Change Rates. (a) In order to change rates which are subject to the commission's original jurisdiction, the applicant utility shall file with the commission an original completed application for rate change with the number of copies specified in the application form and shall give notice of the proposed rate change by mail or hand delivery to all affected utility customers at least 30 days prior to the proposed effective date. Notice shall be provided on the notice form included in the commission's rate application package and shall contain the following information: (1) the utility name and address, current rates, the proposed rates, the effective date of the proposed rate change, the increase or decrease requested over test year revenues as adjusted for test year customer growth and annualization of test year rate increases, stated as a dollar amount, and the classes of utility customers affected. The effective date of the new rates must be the first day of a billing period, which should correspond to the day of the month when meters are typically read, and the new rates may not apply to service received before the effective date of the new rates; (2) information on how to protest the rate change, the required number of protests to ensure a hearing, the address of the commission, and the time frame for protests; and, (3) any other information which is required by the executive director in the rate change application form. (b) The governing body of a municipality or a political subdivision which provides retail water or sewer service to customers outside the boundaries of the municipality or political subdivision shall mail or hand deliver individual written notice to each affected ratepayer eligible to appeal who resides outside the boundaries within 30 days after the date of the final decision on a rate change. The commissioners court of an affected county which provides water or sewer service shall mail or hand deliver individual written notice to each affected ratepayer eligible to appeal within 30 days after the date of the final decision on a rate change. The notice must include at a minimum, the effective date of the new rates, the new rates, and the location where additional information on rates can be obtained. (c) Notices may be mailed separately, or may accompany customer billings. Notice of a proposed rate change by a utility must be mailed or hand delivered to the customers at least 30 days prior to the effective date of the rate increase. (d) The applicant utility shall mail or deliver a copy of the statement of intent to change rates to the appropriate officer of each affected municipality at least 30 days prior to the effective date of the proposed change. If the utility is requesting a rate change from the commission for customers residing outside the municipality, it must also provide a copy of the rate application filed with the commission to the municipality. The commission may also require that notice be mailed or delivered to other affected persons or agencies. (e) (No change.) (f) Standby Fees. A utility may request in a rate change application that standby fees be approved for property or lots for which the utility has previously entered into an agreement to serve or construction of water or sewer utility facilities has already begun or been completed if the developer owning the property at the time the rate change application is filed is given individual written notice by certified mail of the request and an opportunity to protest. (g) Emergency Rate Increase in Certain Circumstances. (1) After receiving a request, the commission may authorize an emergency rate increase for a utility: (A) for which a person has been appointed under the Texas Water Code, sec.13.4132; or (B) for which a receiver has been appointed under the Texas Water Code, sec.13.412; and (C) if the increase is necessary to ensure the provision of continuous and adequate services to the utility's customers. (2) A request for an emergency rate increase must include the following: (A) the effective date of the rate increase; (B) a summary of the reasons for the rate increase; (C) sufficient information to support the computation of the proposed rates; and (D) any other information requested by the executive director. (3) The effective date must be the first day of a billing cycle unless otherwise authorized by the commission. (4) Any emergency rate increase related to charges for actual consumption will be for consumption after the effective date. An increase or the portion of the increase which is not related to consumption may be billed at the emergency rate on the effective date or the first billing after approval by the commission. (5) The utility, after receiving authorization for the emergency rate increase, shall provide notice of the rate increase to each ratepayer as soon as possible, but not later than the effective date for the new rate. This notice shall contain the following information: (A) the utility name and address, the previous rates, the emergency rates, the effective date of the rate increase, and the classes of utility customers affected; and (B) the following statement: "This emergency rate increase has been approved by the Texas Natural Resource Conservation Commission under authority granted by the Texas Water Code, sec.13.4133 to ensure the provision of continuous and adequate service to the utility's customers. The commission is also required to schedule a hearing to establish a final rate within 15 months after the date on which the emergency rates take effect. The utility is required to provide notice of the hearing to all customers at least ten days prior to the date of the hearing. The additional revenues collected under this emergency rate increase are subject to refund if the commission finds that the rate increase was larger than necessary to ensure continuous and adequate service." (6) The utility shall maintain adequate books and records for a period not less than 12 months to allow for the determination of a cost of service as set forth in sec.291.31 of this title (relating to Cost of Service). (7) During the pendency of the emergency rate increase, the commission may require that the utility deposit all or part of the rate increase into an interest-bearing escrow account as set forth in sec.291.30 of this title (relating to Escrow of Proceeds Received Under Rate Increase). (h) Line extension and construction charges. A utility shall request in a rate change application that its extension policy be approved or amended. The application shall show the proposed tariff, and other information requested by the executive director. The request may be made with a request to change one or more of the utility's other rates. sec.291.29. Interim Rates. (a)-(g) (No change.) (h) The utility must provide a notice including the interim rates set by the commission with the first billing at the interim rates with the following wording: "The Texas Natural Resource Conservation Commission has established the following interim rates to be in effect until the final decision on the requested rate change or until another interim rate is established". (i) If the commission establishes interim rates or an escrow account, the commission must make a final determination on the rates within 335 days after the effective date of the interim rates or escrowed rates or the rates are automatically approved as requested by the utility. (j) This subsection applies to a rate application proceeding under sec.291.22(h) of this title (concerning Notice of Intent to Change Rates) if the application concerns only a proposed adoption or change in an extension policy. It also applies to a rate complaint proceeding concerning a utility's extension policy under Texas Water Code, sec.13.186 or sec.13.041. In such cases if the case has been referred to the State Office of Administrative Hearings, the assigned judge may in accordance with the requirements of this section order interim rates concerning the utility's extension policy. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 20, 1995. TRD-9516570 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: January 10, 1996 Proposal publication date: August 15, 1995 For further information, please call: (512) 239-4640 Subchapter C. Ratemaking Appeals 30 TAC sec.291.41 The amendment is adopted under Texas Water Code, sec. sec.5.103, 5.105, and 13.041, which provides the Texas Natural Resource Conservation Commission with rulemaking authority relating to the regulation and supervision of retail public utilities' rates, fees, operations, and services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 20, 1995. TRD-9516569 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: January 10, 1996 Proposal publication date: August 11, 1995 For further information, please call: (512) 239-4640 Subchapter D. Records And Reports 30 TAC sec.sec.291.71-291.73, 291.75, 291.76 The amendments and new section are adopted under the Texas Water Code, Chapter 13, and under the Texas Water Code sec. sec.5.103, 5.105, and 13.041, which provides the Texas Natural Resource Conservation Commission with rulemaking authority relating to the regulation and supervision of retail public utilities' rates, fees, operations, and services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 20, 1995. TRD-9516568 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: January 10, 1996 Proposal publication date: August 11, 1995 For further information, please call: (512) 239-4640 30 TAC sec.291.73 The repeal is adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 13.041, which provides the commission with rulemaking authority relating to the regulation and supervision of retail public utilities' rates, fees, operations, and services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 20, 1995. TRD-9516560 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: January 10, 1996 Proposal publication date: August 11, 1995 For further information, please call: (512) 239-4640 Subchapter E. Customer Service and Protection 30 TAC sec.sec.291.80-291.90 The amendments and new sections are adopted under the Texas Water Code, Chapter 13, the Texas Water Code sec.sec.5.103, 5.105, and 13.041, which provides the Texas Natural Resource Conservation Commission with rulemaking authority relating to the regulation and supervision of retail public utilities' rates, fees, operations, and services. sec.291.80. Applicability. Unless otherwise noted, this subchapter is applicable only to "water and sewer utilities" as defined under Subchapter A of this Chapter (relating to General Provisions) and includes affected counties. sec.291.85. Response to Requests for Service by a Retail Public Utility Within Its Certificated Area. (a) Except as provided for in subsection (e) of this section, every retail public utility shall serve each qualified service applicant within its certificated area as soon as is practical after receiving a completed application. A qualified service applicant is an applicant who has met all of the retail public utility's requirements contained in its tariff, schedule of rates, or service policies and regulations for extension of service including the delivery to the retail public utility of any service connection inspection certificates required by law. (1) Where a new service tap is required, the retail public utility may require that the property owner make the request for the tap to be installed. (2) Upon request for service by a service applicant, the retail public utility shall make available and accept a completed written application for service. (3) Except for good cause, at a location where service has previously been provided the utility must reconnect service within one working day after the applicant has submitted a completed application for service and met any other requirements in the utility's approved tariff. (4) A request for service that requires a tap but does not require line extensions, construction, or new facilities shall be filled within five working days after a completed service application has been accepted. (5) If construction is required to fill the order and if it cannot be completed within 30 days, the retail public utility shall provide a written explanation of the construction required and an expected date of service. (b) Except for good cause shown, the failure to provide service within 30 days of an expected date or within 180 days of the date a completed application was accepted from a qualified applicant may constitute refusal to serve, and may result in the assessment of administrative penalties or revocation of the certificate of convenience and necessity or the granting of a certificate to another retail public utility to serve the applicant. (c) The cost of extension and any construction cost options such as rebates to the customer, sharing of construction costs between the utility and the customer, or sharing of costs between the customer and other applicants shall be provided to the customer in writing upon assessment of the costs of necessary line work, but before construction begins. Also see sec.291.81(a)(1) of this title (relating to Customer Relations). (d) Where recorded public utility easements on the service applicant's property do not exist or public road right-of-way easements are not available to access the property of a service applicant, the retail public utility may require the service applicant or land owner to grant a permanent recorded public utility easement dedicated to the retail public utility which will provide a reasonable right of access and use to allow the retail public utility to construct, install, maintain, inspect and test water and/or sewer facilities necessary to serve that applicant. As a condition of service to a new subdivision, retail public utilities may require developers to provide permanent recorded public utility easements to and throughout the subdivision sufficient to construct, install, maintain, inspect, and test water and/or sewer facilities necessary to serve the subdivision's anticipated service demands upon full occupancy. (e) Service Extensions by a Water Supply or Sewer Service Corporation or Special Utility District. (1) A water supply or sewer service corporation or a special utility district organized under Chapter 65 of the code is not required to extend retail water or sewer utility service to a service applicant in a subdivision within its certificated area if it documents that: (A) the developer of the subdivision has failed to comply with the subdivision service extension policy as set forth in the tariff of the corporation or the policies of the special utility district; and (B) the service applicant purchased the property after the corporation or special utility district gave notice of its rules which are applicable to service to subdivisions in accordance with the notice requirements in this subsection. (2) Publication of notice, in substantial compliance with the form notice in Appendix A, in a newspaper of general circulation in each county in which the corporation or special utility district is certificated for utility service of the requirement to comply with the subdivision service extension policy constitutes notice under this subsection. The notice must be published once a week for two consecutive weeks on a biennial basis and must contain information describing the subdivision service extension policy of the corporation or special utility district. The corporation or special utility district must be able to provide proof of publication through an affidavit of the publisher of the newspaper that specifies each county in which the newspaper is generally circulated: Figure 1: 30 TAC sec.291.85(e)(2) (3) As an alternative to publication of notice, a corporation or special utility district may demonstrate by any reasonable means that a developer has been notified of the requirement to comply with the subdivision service extension policy, including: (A) an agreement executed by the developer; (B) correspondence with the developer that sets forth the subdivision service extension policy; or (C) any other documentation that reasonably establishes that the developer should be aware of the subdivision service extension policy. (4) For purposes of this subsection: (A) "Developer" means a person who subdivides land or requests more than two water or sewer service connections on a single contiguous tract of land. (B) "Service applicant" means a person, other than a developer, who applies for retail water or sewer utility service. sec.291.86. Service Connections. (a) Water Service Connections. (1) Tap Fees. The fees for initiation of service, where no service previously existed, shall be in accordance with the following: (A) The fee charged by a utility for connecting a residential service applicant's premises to the system shall be as stated on the approved tariff. In determining the reasonableness of a tap fee, the commission will consider the actual costs of materials, labor, and administrative costs for such service connections and road construction or impact fees charged by authorities with control of road use if typically incurred and may allow a reasonable estimate of tax liabilities. The commission may limit the tap fee to an amount equal to the average costs incurred by the utility. (B) Whether listed on the utility's approved tariff or not, the tap fee charged for all service connections requiring meters larger than 3/4 inch shall be limited to the actual cost of materials, labor and administrative costs for making the individual service connection and road construction or impact fees charged by authorities with control of road use and a reasonable estimate of tax liabilities. The service applicant shall be given an itemized statement of the costs. (C) An additional fee may be charged to a residential service applicant, if stated on the approved tariff, for a tap expense not normally incurred; for example, a road bore for customers outside of subdivisions or residential areas. (2) Installation and Service Connection. (A) The utility shall furnish and install, for the purpose of connecting its distribution system to the service applicant's property, the service pipe from its main to the meter location on the service applicant's property. See also sec.291.86(a)(3) of this title (relating to Source Connections). For all new installations, a utility-owned cut-off valve shall be provided on the utility side of the meter. Utilities without customer meters shall provide and maintain a cut-off valve on the customer's property as near the property line as possible. This does not relieve the utility of the obligation to comply with sec.291.89 of this title (relating to Meters). (B) The service applicant shall be responsible for furnishing and laying the necessary service line from the meter to the place of consumption and shall keep the service line in good repair. For new taps, service applicants may be required to install a customer owned cut-off valve on the customer's side of the meter or connection. Customers who have damaged the utility's cut-off valve or curb stop through unauthorized use or tampering may be required to install a customer owned cut-off valve on the customer's side of the meter or connection within a reasonable time frame of not less than 30 days if currently connected or prior to restoration of service if the customer has been lawfully disconnected under these rules. The customer's responsibility shall begin at the discharge side of the meter or utility's cut-off valve if there are no meters. If the utility's meter or cut-off valve is not on the customer's property, the customer's responsibility will begin at the property line. (3) Location of meters. Meters shall be located on the customer's property, readily accessible for maintenance and reading and, so far as practicable, the meter shall be at a location mutually acceptable to the customer and the utility. The meter shall be installed so as to be unaffected by climatic conditions and reasonably secure from damage. (4) Relocation and conversion of meters. If an existing meter is moved to a location designated by the customer for the customer's convenience, the utility may not be responsible except for negligence. The customer may be charged the actual cost of relocating the meter. If the customer requests that an existing meter be replaced with a meter of another size or capacity, the customer may be charged the actual cost of converting the meter including enlarging the line from the main to the meter if necessary. (b) Sewer Service Connections. (1) Tap Fees. The fees for initiation of sewer service, where no service previously existed, shall be in accordance with the following: (A) The fee charged by a utility for connecting a residential service applicant's premises to the sewer system shall be as stated on the approved tariff. In determining the reasonableness of a tap fee, the commission will consider the actual costs of materials, labor, and administrative costs for such service connections and road construction or impact fees charged by authorities with control of road use if typically incurred and may allow a reasonable estimate of tax liabilities. The commission may limit the tap fee to an amount equal to the average costs incurred by the utility. (B) The fee charged for all commercial or nonstandard service connections shall be set at the actual cost of materials, labor and administrative costs for making the service connection and road construction or impact fees charged by authorities with control of road use and may include a reasonable estimate of tax liabilities. The service applicant shall be given an itemized statement of the costs. (C) A fee in addition to the standard tap fee may be charged for a new residential service connection which requires expenses not normally incurred if clearly identified on the approved tariff; for example, a road bore for service applicants outside of subdivisions or residential areas. (D) Tap fees for sewer systems designed to receive effluent from a receiving tank located on the customer's property, whether fed by gravity or pressure into the utility's sewer main, may include charges to install a receiving tank and appurtenances on the customer's property and service line from the tank to the utility's main which meets the minimum standards set by the utility and authorized by the commission. The tank may include grinder pumps, etc. to pump the effluent into the utility's main. Ownership of and maintenance responsibilities for the receiving tank and appurtenances shall be specified in the utility's approved tariff. (2) Installation and Service Connections. (A) The utility shall furnish and install, for the purpose of connecting its collection system to the service applicant's service line, the service pipe from its main to a point on the customer's property. (B) The customer shall be responsible for furnishing and laying the necessary customer service line from the utility's line to the residence. (3) Maintenance By Customer. (A) The customer service line and appurtenances installed by the customer shall be constructed in accordance with the laws and regulations of the State of Texas governing plumbing practices which must be at least as stringent and comprehensive as one of the following nationally recognized codes: the Southern Standard Plumbing Code, the Uniform Plumbing Code, and/or the National Standard Plumbing Code, or other standards as prescribed by the commission. (B) It shall be the customer's responsibility to maintain the customer service line and any appurtenances which are the customer's responsibility in good operating condition, such as, clear of obstruction, defects, leaks or blockage. If the utility can provide evidence of excessive infiltration or inflow into the customer's service line or failure to provide proper pretreatment, the utility may, with the written approval of the executive director, require that the customer repair the line or eliminate the infiltration or inflow or take such actions necessary to correct the problem. If the customer fails to correct the problem within a reasonable time, the utility may disconnect the service after notice as required under sec.291.88 of this title (relating to Discontinuance of Service). Less than ten days notice may be given if authorized by the executive director. (C) If the customer retains ownership of receiving tanks and appurtenances located on the customer's property under the utility's tariff, routine maintenance and repairs are the customer's responsibility. The utility may require in its approved tariff that parts and equipment meet the minimum standards set by the utility to ensure proper and efficient operation of the sewer system but cannot require that the customer purchase parts or repair service from the utility. (c) Line extension and construction charges. Each utility shall file its extension policy with the commission as part of its tariff. The policy sh