HBA-DMD H.B. 1730 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1730 By: Danburg State Affairs 3/3/1999 Introduced BACKGROUND AND PURPOSE Currently, there is a marked increase in retail competition in the telecommunications services industry, resulting in an increase in reported incidences of unfair or fraudulent business practices. There is also a concern that there will be similar occurrences if the electric utility industry is restructured to allow competition. H.B. 1730 promotes public awareness of changes in the telecommunications and electric utility markets by requiring the Public Utility Commission of Texas (commission) to give consumers information about rates, terms, services, and consumer rights in Spanish, English, and any other language as necessary. The bill also establishes consumer protection standards and prohibits the unauthorized switching of any telecommunications or electric service. The bill requires the commission to adopt and enforce rules relating to certification, registration, and reporting requirements for electric and telecommunications utilities. The bill authorizes the commission to require telecommunications and electric utilities to submit reports on anything over which the commission has jurisdiction. The bill requires a billing utility to maintain records concerning unauthorized charges and to rectify an unauthorized charge within 45 days and authorizes the commission to implement penalties and enforcement actions in order to enforce this Act and to resolve disputes between consumers and telecommunications and electric utilities. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Public Utility Commission of Texas in SECTIONS 1 and 3 (Sections 11.002, 17.001, 17.003, 17.004, 17.051, 17.052, 17.102, Utilities Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 11.002, Utilities Code, by adding Subsection (c), as follows: (c) Presents legislative findings. Establishes that it is the purpose of this title to grant the Public Utility Commission of Texas (commission) the authority to make and enforce rules necessary to protect customers of telecommunications and electric services consistent with the public interest. SECTION 2. Amends Section 15.024, Utilities Code, by deleting the text of Subsection (c), which prohibits a penalty from being assessed against a person who remedies the violation before the 31st day after the person receives the notice of the report that includes a brief summary of the alleged violation, the amount of the recommended penalty, and informs the person of the right to a hearing on the violation. Deletes text stating that a person who claims to have remedied an alleged violation has the burden of proving to the commission that the alleged violation was remedied and was accidental or inadvertent. Redesignates Subsections (d)-(g) to Subsections (c)-(f), respectively. SECTION 3. Amends Subtitle A, Title 2, Utilities Code, by adding Chapter 17, as follows: CHAPTER 17. CUSTOMER PROTECTION SUBCHAPTER A. GENERAL PROVISIONS Sec. 17.001. CUSTOMER PROTECTION POLICY. (a) Sets forth legislative findings. (b) Sets forth that the purpose of this chapter is to establish customer protection standards and to give the commission authority to adopt and enforce rules to protect customers from unfair, deceptive, or anti-competitive practices. (c) Requires that nothing in this section be construed to reduce customer rights that are set forth in commission rules in effect at the time of the enactment of this chapter. (d) Establishes that this chapter does not limit in any way the constitutional, statutory, and common law authority of the Office of the Attorney General of Texas (OAG). Sec. 17.002. DEFINITIONS. Defines "billing agent," "billing utility," "certified telecommunications utility," "customer," "electric utility," "service provider," and "telecommunications utility." Sec. 17.003. CUSTOMER AWARENESS. (a) Requires the commission to promote public awareness of changes in the electric and telecommunications markets, provide customers with information necessary to make informed choices about available options, and ensure that customers have an adequate understanding of their rights. (b) Requires the commission to compile a report at least yearly on customer service that details comparative customer information from the reports that are given to the commission, as it deems necessary. (c) Requires the commission to make and enforce rules requiring a certified telecommunications or electric utility (utility) to give clear, uniform, and understandable information to customers about rates, terms, services, customer rights, and other necessary information as determined by the commission. (d) Requires that customer awareness efforts be conducted in English, Spanish, and any other language as necessary. Sec. 17.004. CUSTOMER PROTECTION STANDARDS. (a) Entitles all buyers of telecommunications and electric services to: (1) protection from fraudulent, unfair, misleading, deceptive, or anti-competitive practices, and from being billed for services that were not authorized or provided; (2) a choice of a telecommunications service provider or an electric utility, where such choice is permitted by law, and to have that choice honored; (3) information in English and Spanish and any other language as the commission deems necessary concerning rates, key terms and conditions, and the basis for any claim of environmental benefits of certain production facilities; (4) protection from discrimination on the basis of race, color, sex, nationality, religion, or marital status; (5) impartial and prompt resolution of disputes with a utility and a telecommunications service provider related to unauthorized charges and switching of service; (6) privacy of customer consumption and credit information; (7) accuracy of metering and billing; (8) bills presented in a clear, readable format and easy-to-understand language; (9) information in English and Spanish and any other language as the commission deems necessary concerning low-income assistance programs and deferred payment plans; and (10) other information or protections necessary to ensure high-quality service to customers. (b) Requires the commission to adopt and enforce rules as may be necessary or appropriate to carry out this section, including but not limited to rules for minimum service standards for a utility relating to customer deposits and the extension of credit, switching fees, levelized billing programs, and termination of service. Authorizes the commission to waive the language requirements for a good cause. (c) Requires the commission to request comments from the OAG in developing the rules that may be necessary or appropriate to carry out this section. (d) Requires the commission to coordinate its enforcement efforts regarding the prosecution of fraudulent, misleading, and deceptive business practices with the OAG in order to ensure consistent treatment of specified alleged violations. (e) Requires nothing in this section to be construed to abridge customer rights that are set forth in commission rules in effect at the time of the enactment of this chapter. Sec. 17.005. PROTECTIONS FOR CUSTOMERS OF MUNICIPALLY OWNED UTILITIES. Prohibits a municipally owned utility from being deemed a "service provider" for the purposes of Section 17.156(b) and (e). Requires a governing body of a municipally owned utility to adopt, implement, and enforce rules which are required to have the effect of accomplishing the objectives set out in Section 17.004(a) and (b) and Section 17.102. Requires a governing body of a municipally owned utility or its designate to perform the dispute resolution function provided for by Section 17.157 for customers served within its certified service area. SUBCHAPTER B. CERTIFICATION, REGISTRATION, AND REPORTING REQUIREMENTS Sec. 17.051. ADOPTION OF RULES. (a) Requires the commission to adopt rules relating to certification, registration, and reporting requirements for a utility, as well as all telecommunications utilities that are not dominant carriers, pay telephone providers, qualifying facilities, exempt wholesale generators, and power marketers. (b) Requires the rules adopted under Subsection (a) to be consistent with and no less effective than federal law and prohibits the rules from requiring the disclosure of highlysensitive competitive or trade secret information. Sec. 17.052. SCOPE OF RULES. Requires the commission to have the authority to make and enforce rules to: (1) require certification or registration with the commission as a condition of conducting business in this state; (2) amend certificates or registrations to reflect changed ownership and control; (3) establish rules for customer service and protection; (4) suspend or revoke certificates or registrations for repeated violations of this chapter or commission rules; and (5) order disconnection of a pay telephone service provider's pay telephones or revocation of certification or registration for repeated violations of this chapter or commission rules. Sec. 17.053. REPORTS. Authorizes the commission to require a telecommunications service provider or an electric utility to submit reports to the commission concerning any matter over which the commission has authority under this chapter. SUBCHAPTER C. CUSTOMER'S RIGHT TO CHOICE Sec. 17.101. POLICY. Sets forth that it is the policy of this state that all customers are protected from the unauthorized switching of a telecommunications service provider or an electric utility selected by the customer to provide service. Sec. 17.102. RULES RELATING TO CHOICE. Requires the commission to adopt and enforce rules that: (1) ensure that customers are protected from deceptive practices used to obtain an authorization of service and in the verification of provider-initiated change orders, including but not limited to negative option marketing, sweepstakes, and contests that cause customers to unknowingly change their telecommunications service provider or electric utility; (2) provide for clear, easily understandable identification on the first page of each non-electric bill sent to a customer of all telecommunications service providers or electric utilities submitting charges on the bill; (3) ensure that every service provider submitting charges on the bill is clearly and easily identified on the bill along with its services, products, and charges; (4) require a telecommunications service provider or an electric utility to maintain records of non-public customer-specific information that may be used to establish that the customer authorized a change in service for 24 months; (5) provide that unauthorized changes in service be remedied at no cost to the customer within a period established by the commission; (6) require refunds or credit with interest to the customer in the event of an unauthorized change; and (7) provide for penalties for violations of commission rules adopted under this section, including but not limited to fines and revocation of certificates or registrations, thereby denying the utility the right to provide service in this state. SUBCHAPTER D. PROTECTION AGAINST UNAUTHORIZED CHARGES Sec. 17.151. REQUIREMENTS FOR SUBMITTING CHARGES. (a) Authorizes a service provider or billing agent to submit charges for a product or service to be billed on a customer's telephone or electric bill only if: (1) the service provider offering the product or service has thoroughly informed the customer of the product or service being offered, including all associated charges, and has explicitly informed the customer that the associated charges for the product or service will appear on the customer's telephone or electric bill; (2) the customer has clearly and explicitly consented to obtain the product or service offered and to have the associated charges appear on the customer's telephone or electric bill and the consent has been verified and recorded as provided by Subsection (b); and (3) the service provider offering the product or service and any billing agent for the service provider: (A) has provided the customer with a toll-free telephone number the customer may call and an address to which the customer may write to resolve any billing dispute and to answer questions; and (B) has contracted with the billing utility to bill for products and services on the billing utility's bill. Requires the contract to be maintained as provided by Subsection (c) and must include the service provider's name, business address, and business telephone number. (b) Provides that the customer consent required by Subsection (a)(2) must be verified by the person, corporation, or telecommunications or electric utility offering the product or service by authorization from the customer in the manner prescribed by the commission. Provides that a record of the customer consent, including verification, must be maintained by the person, corporation, or telecommunications or electric utility offering the product or service and any billing agent for such person, corporation, or telecommunications or electric utility for at least 24 months immediately after the consent and verification have been obtained. (c) Requires the contract that is required by Subsection (a)(3)(B) to be maintained by the billing utility for as long as the billing for such products and services continues and for the 24 months immediately after the permanent discontinuation of such billing. (d) Prohibits a service provider that is offering a product or service to be charged on a customer's telephone or electric bill and any billing agent for the service provider from using any fraudulent, unfair, misleading, deceptive, or anti-competitive marketing practice in order to obtain customers, including the use of negative option marketing, sweepstakes, and contests. (e) Sets forth that this section does not apply to customer initiated transactions for which the service provider has appropriate documentation. Sec. 17.152. RESPONSIBILITIES OF A BILLING UTILITY. (a) Requires a billing utility, upon its knowledge or being notified that an unauthorized charge appeared on a customer's telephone or electric bill, to promptly but not later than 45 days after notification or knowledge of such a charge: (1) cease to charge the customer for such unauthorized product or service; (2) remove any unauthorized charge from the customer's bill; (3) refund or credit to the customer all money that has been paid by the customer for any unauthorized charge; (4) upon the customer's request, provide the customer with all billing records under its control related to any unauthorized charge within 10 business days of the removal of the unauthorized charge from the customer's bill; and (5) maintain a record for at least 24 months of every customer who has experienced any unauthorized charge for a product or service on the customer's telephone or electric bill and who has notified the billing utility of the unauthorized charge. (b) Requires a record that is required by Subsection (a)(5) to contain for each unauthorized charge the name of the service provider that offered the product or service, any affected telephone numbers or addresses, the date the customer requested that the billing utility remove the unauthorized charge, the date the unauthorized charge was removed from the customer's telephone or electric bill, and the date any money that the customer paid for the unauthorized charges was refunded or credited to the customer. (c) Prohibits a billing utility from disconnecting or terminating telecommunications or electric service to any customer for nonpayment of an unauthorized charge or from filing an unfavorable credit report against a customer who has not paid charges under this section unless the dispute is ultimately resolved against the customer. Sec. 17.153. RECORDS OF DISPUTED CHARGES. (a) Requires every service provider to maintain a record of every disputed charge for a product or service placed on a customer's bill. (b) Requires that the record required by Subsection (a) contain for every disputed charge any affected telephone numbers or addresses, the date the customer requested that the billing utility remove the unauthorized charge, the date the unauthorized charge was removed from the customer's telephone or electric bill, and the date action was taken to refund or credit to the customer any money that the customer paid for the unauthorized charges. (c) Requires that the record required by Subsection (a) be maintained for at least 24 months after the completion of all the steps required by Section 17.152(a). Sec. 17.154. NOTICE. (a) Requires a billing utility to provide notice of a customer's rights under this section in the manner prescribed by the commission. (b) Provides that notice of a customer's rights must be provided by mail to each residential and business customer within 60 days of the effective date of this section or by publication of the next telephone directory following the effective date of this section. Requires each billing utility to send the notice to new customers at the time service is initiated or to any customer at that customer's request. Sec. 17.155. PROVIDING COPY OF RECORDS. Requires a billing utility to provide to the commission staff a copy of records maintained under Sections 17.152, 17.153, and 17.154 upon request. Sec. 17.156. VIOLATIONS. (a) Authorizes the commission to implement penalties and other enforcement actions under Chapter 15 (Judicial Review, Enforcement, and Penalties), Utilities Code, provided that the commission finds that a billing utility has engaged in a violation of this subchapter. (b) Authorizes the commission to enforce the provisions of Chapter 15 against the service provider or billing agent as if it were regulated by the commission provided that the commission finds that any service provider or billing agent subject to the provisions of this subchapter has engaged in violations of this subchapter or has knowingly provided false information to the commission on matters subject to this subchapter. (c) Requires that neither the authority granted nor any other provision of this subchapter be construed to grant the commission jurisdiction to regulate service providers or billing agents who are not otherwise subject to commission regulation, other than as specifically provided by this chapter. (d) Authorizes the commission, if the commission finds that a billing utility has repeatedly violated this subchapter, to suspend, restrict, or revoke the registration or certificate of the telecommunications service provider or electric utility if such action is consistent with the public interest, thereby denying the telecommunications service provider or electric utility the right to provide service in this state. (e) Authorizes the commission to order the billing utility to terminate billing and collection services for a service provider or billing agent that has repeatedly violated any provision of this subchapter. (f) Requires that nothing in this subchapter be construed to preclude a billing utility from taking action on its own to terminate or restrict its billing and collection services. Sec. 17.157. DISPUTES. (a) Authorizes the commission to resolve disputes between a customer and a utility. (b) Authorizes the commission in exercising its authority under Subsection (a) to: (1) order a utility to produce information or records; (2) require that all contracts, bills, and other communications from a utility display a working toll-free telephone number that customers may call with complaints and inquiries; (3) require a utility to refund overcharges or unauthorized charges with interest if the utility has failed to comply with commission rules or a contract with the customer; (4) order appropriate relief to ensure that a customer's choice of a telecommunications service provider or an electric utility is honored, in an area in which more than one provider has been certified; (5) require the continuation of service to a residential or small commercial customer while a dispute is pending regarding charges the customer has alleged were unauthorized; and (6) investigate an alleged violation. (c) Requires the commission to adopt procedures for resolution of disputes in a timely manner which in no event shall exceed 60 days. SECTION 4.Emergency clause. Effective date: upon passage.