Text: HSB00058 Text: HSB00060 Text: HSB00000 - HSB00099 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 476.3, subsection 2, Code 1995, is 1 2 amended by adding the following new unnumbered paragraph: 1 3 NEW UNNUMBERED PARAGRAPH. Notwithstanding the provisions 1 4 of this subsection, the consumer advocate shall not file a 1 5 petition under this subsection which alleges that a utility's 1 6 rates are excessive while the utility is participating in a 1 7 price regulation plan approved by the board pursuant to 1 8 section 476.30A. 1 9 Sec. 2. NEW SECTION. 476.30 FINDINGS &endash; STATEMENT OF 1 10 POLICY. 1 11 The general assembly finds all of the following: 1 12 1. Communications services should be available throughout 1 13 the state at just, reasonable, and affordable rates. 1 14 2. Regulatory flexibility is appropriate when competition 1 15 provides consumers with choices in the variety, quality, and 1 16 pricing of communications services, and when consistent with 1 17 consumer protection and other relevant public interests. 1 18 3. The utilities board should respond rapidly and with 1 19 flexibility to changes in the communications industry. 1 20 4. Economic development can be fostered by advanced 1 21 communications networks. 1 22 Sec. 3. NEW SECTION. 476.30A DEFINITIONS. 1 23 As used in sections 476.30 through 476.30B, unless the 1 24 context otherwise requires: 1 25 1. "Essential communications service" includes at a 1 26 minimum, basic local telephone service, switched access, 911 1 27 and E-911 services, and relay service for communications- 1 28 impaired persons. The board may classify by rule other 1 29 communications services as essential communications services 1 30 consistent with community expectations and the public 1 31 interest. 1 32 2. "Nonessential communications services" means all 1 33 communications services subject to the board's jurisdiction 1 34 not defined or classified either by statute or by rule as 1 35 essential communications services. Consistent with community 2 1 expectations and the public interest, the board may reclassify 2 2 by rule as nonessential those communications services 2 3 previously classified by rule as essential. 2 4 Sec. 4. NEW SECTION. 476.30B PRICE REGULATION. 2 5 1. Notwithstanding contrary provisions of this chapter 2 6 relating to rate regulation, the board may adopt rules 2 7 relating to price regulation for rate-regulated utilities 2 8 furnishing communications services. 2 9 2. If rules for price regulation are adopted, a rate- 2 10 regulated utility certified under section 476.29 shall submit 2 11 a plan for price regulation specific to that utility. The 2 12 board, after notice and opportunity for hearing, may approve, 2 13 modify, or reject the plan. 2 14 3. A price regulation plan shall, at a minimum, include 2 15 provisions for all of the following: 2 16 a. Establishing and changing prices, terms, and conditions 2 17 for essential communications services. 2 18 b. Establishing and changing prices, terms, and conditions 2 19 for nonessential communications services. 2 20 c. Reporting new service offerings to the board. 2 21 d. Reflecting changes in revenues, expenses, and 2 22 investment due to exogenous factors beyond the control of the 2 23 utility in the rates charged by the utility. 2 24 e. Modernizing the utility's telecommunications 2 25 infrastructure. 2 26 4. The board shall consider the extent to which a proposed 2 27 plan achieves the following: 2 28 a. Just, nondiscriminatory, and reasonable rates. 2 29 b. High quality, universally available communications 2 30 services. 2 31 c. Investment in communications infrastructure, efficiency 2 32 improvements, and technological innovation. 2 33 d. Introduction of new communications products and 2 34 services. 2 35 e. Regulatory efficiency, including reduction of 3 1 regulatory costs and delays. 3 2 5. The board shall have authority over all of the 3 3 following: 3 4 a. The level, extent, and timing of the unbundling of 3 5 services by the local exchange utility. 3 6 b. Ensuring against cross subsidization of nonessential 3 7 services by essential services. 3 8 6. Any person may file a complaint pursuant to section 3 9 476.3, subsection 1, regarding a utility's operation under its 3 10 price regulation plan. 3 11 7. The consumer advocate may represent consumers before 3 12 the utilities board regarding any rule, order, or proceeding 3 13 pertaining to price regulation. The consumer advocate may act 3 14 as attorney for and represent consumers generally before any 3 15 state or federal court concerning a utilities board rule, 3 16 order, or proceeding pertaining to price regulation. 3 17 8. In implementing price regulation, the board shall 3 18 consider methods to assist low-income Iowans to secure and 3 19 retain telephone services. 3 20 9. The board shall review a utility's operation under its 3 21 plan, with notice and an opportunity for hearing, prior to the 3 22 termination of the plan or within five years of the initiation 3 23 of the plan, whichever comes first. 3 24 Sec. 5. NEW SECTION. 476.30C PROHIBITED ACTS. 3 25 A utility under a price regulation plan shall not do any of 3 26 the following: 3 27 1. Discriminate against another provider of communications 3 28 services by refusing or delaying access to regulated services 3 29 or in the pricing of regulated services. 3 30 2. Degrade the quality of access or service provided to 3 31 another provider of communications services. 3 32 3. Fail to disclose in a timely manner, upon request and 3 33 pursuant to a protective agreement concerning proprietary 3 34 information, all information reasonably necessary for the 3 35 design of network interface equipment or network interface 4 1 services that will meet the specifications of the 4 2 participating utility's local exchange network. 4 3 Sec. 6. REPORT. The utilities board shall submit a report 4 4 to the general assembly no later than January 15, 1999, 4 5 concerning the implementation of price regulation for 4 6 utilities furnishing communications services. 4 7 EXPLANATION 4 8 The bill provides the utilities board with the authority to 4 9 adopt rules to implement price regulation for rate-regulated 4 10 telephone companies. The bill provides that the board is to 4 11 consider the extent to which a proposed plan achieves just, 4 12 nondiscriminatory, and reasonable rates; high quality, 4 13 universally available communications services; investment in 4 14 communications infrastructure, efficiency improvements, and 4 15 technological innovation; the introduction of new 4 16 communications products and services; and regulatory 4 17 efficiency, including reduction of regulatory costs and 4 18 delays. The consumer advocate is authorized to represent 4 19 consumers before the utilities board regarding any proceeding 4 20 pertaining to price regulation. In implementing price 4 21 regulation, the board is directed to consider methods to 4 22 assist low-income Iowans in securing and retaining telephone 4 23 services. 4 24 The bill defines essential communications services to 4 25 include at a minimum, basic local telephone service, switched 4 26 access, 911 and E-911 services, and relay service for 4 27 communications-impaired persons. Nonessential communications 4 28 services are defined as all communications services subject to 4 29 the board's jurisdiction not deemed either by statute or by 4 30 rule as essential communications services. 4 31 BACKGROUND STATEMENT 4 32 SUBMITTED BY THE AGENCY 4 33 The bill allows price regulation for rate-regulated 4 34 telephone companies in place of traditional rate-of-return 4 35 regulation. Under price regulation, utilities are allowed to 5 1 change rates within limits and on notice to their customers 5 2 and the board. Price increases under typical price regulation 5 3 plans are limited by an index that includes inflation, 5 4 industry productivity, and other factors. Generally, price 5 5 reductions are not limited. 5 6 The reasons for authorizing price regulation relate to 5 7 increasing competition in the telephone industry. A number of 5 8 services have already been deregulated by the board, pursuant 5 9 to statute, because they are subject to effective competition. 5 10 Other services offered by the former monopoly providers are 5 11 beginning to be offered by competitors. In this environment, 5 12 the traditional rate-making method hinders competition by 5 13 rate-regulated providers. Price regulation allows flexible 5 14 and timely responses in a dynamic marketplace. It also 5 15 provides those companies better incentives to control costs 5 16 and introduce new services. In a more competitive industry, 5 17 price regulation will usually produce better results for the 5 18 telephone company's ordinary customers, for other telephone 5 19 companies that must buy services from it, and for the company 5 20 itself, than traditional rate-of-return regulation, without 5 21 being unfair or sending improper economic signals to potential 5 22 competitors. A properly designed price regulation plan can 5 23 allow the telephone company to compete within reasonable 5 24 parameters, while offering customers appropriate protection as 5 25 to rates and service quality. 5 26 Traditional rate-of-return regulation requires complex and 5 27 lengthy rate cases to consider evidence on the utility's 5 28 revenues, expenses, capital structure, and a proper return on 5 29 its investment, as well as testimony on the amount of revenue 5 30 to be recovered from individual services offered by the 5 31 utility. These cases take up to 10 months at the agency and 5 32 up to three years, if appealed to the courts. A rate case can 5 33 be initiated by the utility if it believes its revenues are 5 34 inadequate, or by the consumer advocate if it believes the 5 35 utility is overearning. Rate-of-return regulation gets its 6 1 name because in a rate case the utilities board determines the 6 2 amount of revenue needed to provide the utility the 6 3 opportunity to recover its expenses plus a reasonable rate of 6 4 return on the investment of shareholders. 6 5 LSB 1200DP 76 6 6 mj/sc/14.1
Text: HSB00058 Text: HSB00060 Text: HSB00000 - HSB00099 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
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