HBA-DMD H.B. 2690 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2690 By: Counts State Affairs 4/6/1999 Introduced BACKGROUND AND PURPOSE As the telecommunications market in Texas continues its transition to a competitive state, it is anticipated that a number of the larger telephone companies will focus their competitive efforts in the larger urban environments. H.B. 2690 authorizes a telecommunications utility to elect to be subject to Public Utility Commission (commission) review. This bill sets conditions for an acquisition to qualify for review. It requires the commission to authorize universal service fund disbursements to the acquiring utility for the residual revenue requirements necessary for the acquiring utility to obtain a rate of return equal to that allowed by the Federal Communications Commission for the interstate jurisdiction. H.B. 2690 authorizes the commission to also consider a rate of return above the federal level. This bill also authorizes the commission to approve the review and authorize universal service disbursements by administrative review. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter B, Chapter 53, Utilities Code, by adding Section 53.088, as follows: Sec. 53.066. SALE, TRANSFER, AND MERGER REVIEW OF CERTAIN QUALIFIED EXCHANGES. (a) Authorizes a telecommunications utility, reporting its acquisition or purchase of an exchange or exchanges, under Sections 14.101 (Report of Certain Transactions; Commission Consideration) or 51.010 (Commission Investigation of Sale, Merger, or Certain Other Actions), Utilities Code, to elect to be subject to Public Utility Commission (commission) review to the extent that an acquisition qualifies herein and the utility makes the commitment specified herein. (b) Sets conditions for an acquisition to qualify for review. (c) Specifies the provisions that the acquiring utility must commit, for the acquisition to be considered a qualified acquisition. (d) Requires the commission, to the extent that a telecommunications utility makes the commitments with regard to a qualified acquisition, to authorize universal service fund disbursements under Section 56.021(1) (Universal Service Fund), Utilities Code, to the acquiring utility for the residual revenue requirements necessary for the acquiring utility, under Section 53.051 (Establishing Overall Revenues), Utilities Code, to obtain a rate of return equal to that allowed by the Federal Communications Commission for the interstate jurisdiction. Limits the revenue requirement which would otherwise be considered for the acquiring utility only to the extent that the acquiring utility purchased the exchanges above the selling utility net book value. Authorizes the commission, if circumstances justify in the public interest, to also consider a rate of return above the federal level. (e) Authorizes the commission, to the extent the acquiring utility meets the specifications of this section, to approve the review and authorize universal service disbursements by administrative review. (f) Requires the commission to conduct its review based upon the individual application of an acquiring utility or the joint application by utilities which have made the acquisitions jointly with intent to partition the exchanges among them so long as the partitioned acquisitions otherwise meet the requirements of a qualified acquisition. SECTION 2.Emergency clause. Effective date: upon passage.