HBA-NLM, TYH S.B. 86 76(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 86
By: Nelson
State Affairs
3/30/1999
Engrossed



BACKGROUND AND PURPOSE 

There has been a marked increase in retail competition in the
telecommunications services industry which has resulted in an increase in
reported incidences of unfair or fraudulent business practices. There is
additional concern that similar occurrences may result if the electric
industry is restructured to allow retail competition as well. S.B. 86
provides an increase in consumer protection of telecommunications and
electric services customers, and provides penalties. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Public Utility Commission in
SECTION 3 (Sections 17.003, 17.004, 17.005, 17.051, 17.052 and 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)  Provides legislative  findings regarding significant changes that have
occurred in the telecommunications and electric power industries, such as
the need for minimum standards of service quality, customer service, and
fair business practices, and the intent of granting the Public Utility
Commission of Texas (commission) authority to make and enforce rules
necessary to protect customers of telecommunications and electric services. 

SECTION 2.  Amends Section 15.024, Utilities code, to delete text
prohibiting a penalty from being enforced if the person being penalized
corrects the violation within 30 days of notice and provides proof that the
alleged violation was corrected.  Makes conforming changes. 

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.  Sets forth the legislative
findings regarding the new developments in telecommunications services and
the production and delivery of electricity.  Provides that the purpose of
this chapter is to establish retail customer protection standards and
provide rulemaking authority to the commission to adopt and enforce rules
to protect retail customers from fraudulent, unfair, misleading, deceptive,
or anticompetitive practices.  Prohibits anything in this section from
being construed to abridge customer rights set forth in commission rules in
effect at the time of the enactment of this chapter.  Provides that this
chapter does not limit in any way the constitutional, statutory, and common
law authority of the office of the attorney general (OAG).  Provides that
nothing in this chapter authorizes a customer to receive retail electric
service from a person other than a certificated retail electric utility. 

Sec. 17.002.  DEFINITIONS.  Defines, for this chapter, "billing agent,"
"billing utility," "certificated telecommunications utility," "customer,"
"electric utility," "retail electric provider," "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
and provide customers with information about available options and their
rights as customers.  Requires the commission to compile a comparative
customer service report yearly.  Requires the commission to make and
enforce rules to require a certificated telecommunications utility, a
retail electric provider, or an electric utility to give clear, uniform,
and understandable information to customers about rates, terms, services,
customer rights, and other necessary information.  Requires customer
awareness efforts by the commission to be conducted in English, Spanish,
and any other language as necessary. 

Sec. 17.004.  CUSTOMER PROTECTION STANDARDS.  Establishes that all buyers
of telecommunications and electric services have specified entitlements.
Provides that the commission has the authority to adopt and enforce rules
for minimum service standards on customer deposits, credit extensions,
switching fees, levelized billing programs, and service termination for a
certificated telecommunications utility, a retail electric provider, and an
electric utility.  Authorizes the commission to waive language requirements
for good cause. Requires the commission to request the comments of the OAG
in developing the rules necessary to carry out this section and to
coordinate its enforcement efforts with the OAG. Prohibits anything in this
section from being construed to abridge customer rights 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" or "billing agent"  for purposes of Sections 17.156(b) and
17.156(e).  Requires the governing body of a municipally owned utility to
have the authority to adopt, implement, and enforce rules to accomplish
objectives set out in Sections 17.004(a) and (b) and Section 17.102.
Requires the governing body of a municipally owned utility or its designee
to perform the dispute resolution function provided for by Section 17.157
for customers served within its certificated service area or otherwise
served through its distribution facilities.  Requires the provisions of
this chapter to apply to electric customers served by a municipally owned
utility outside its certificated service area or otherwise served through
others' distribution facilities, after the legislature authorizes retail
competition.  Prohibits anything in this chapter to be deemed to apply to a
wholesale customer of a municipally owned utility. 

Sec. 17.006.  LIMITATIONS ON TELEPHONE SOLICITATION.  Prohibits all service
providers from making or causing to be made any telephone solicitation to
any customer who has given notice to the commission of the customer's
objection to receiving telephone solicitations.  Requires the commission to
establish and provide for the operation of a database to compile a list of
customers who object to receiving telephone solicitations. Authorizes such
database to be operated by the commission or any other entity under
contract with the commission.  Requires each customer to be charged a fee
not to exceed $5 for inclusion in the database. 

SUBCHAPTER B.  CERTIFICATION, REGISTRATION, AND 
REPORTING REQUIREMENTS

Sec. 17.051.  ADOPTION OF RULES.  Requires the commission to adopt rules
relating to certification, registration, and reporting requirements for a
certificated telecommunications utility, a retail electric provider, an
electric utility, telecommunications utilities that are not dominant
carriers, pay telephone providers, qualifying facilities that are selling
capacity into the wholesale or retail market, exempt wholesale generators,
and power marketers.  Requires the rules to be consistent with and no less
effective than federal law, and prohibits the rules from requiring the
disclosure of highly-sensitive competitive or trade secret information. 

Sec. 17.052.  SCOPE OF RULES.  Requires the commission to have authority to
make and enforce rules to accomplish enumerated tasks. 

Sec. 17.053.  REPORTS.  Authorizes the commission to require a
telecommunications service provider, a retail electric provide, or an
electric utility to submit reports to the  commission concerning any matter
over which the commission has authority. 

SUBCHAPTER C.  CUSTOMER'S RIGHT TO CHOICE

Sec. 17.101.  POLICY.  Provides that it is the policy of the state to
protect customers from unauthorized switching of a selected
telecommunications service provider, a retail electric provide, or an
electric utility. 

Sec. 17.102.  RULES RELATING TO CHOICE.  Requires the commission to adopt
and enforce rules that accomplish the enumerated measures of protection for
the customers. 

SUBCHAPTER D.  PROTECTION AGAINST UNAUTHORIZED CHARGES

 Sec. 17.151.  REQUIREMENTS FOR SUBMITTING CHARGES.  Authorizes a service
provider, retail electric provider, or billing agent to submit charges on a
customer's bill if enumerated requirements are met.  Provides that customer
consent must be verified by the service provider offering the product or
service in a manner prescribed by the commission, and a record of the
consent must be kept for at least 24 months.  Requires the contract
required by Subsection (a)(3)(B) to be maintained by the billing utility
for a specified  period of time.  Prohibits the use of any fraudulent,
unfair, misleading, deceptive, or anticompetitive marketing practices,
including the use of negative option marketing, sweepstakes, and contests,
by any billing agent or service provider.  Provides that this section does
not apply to customer initiated transactions for which the service provider
has appropriate documentation.  Requires a service provider, if the service
provider is notified by a billing utility that a customer has reported to
the billing utility that a charge made by the service provider is
unauthorized, to cease to charge the customer for the unauthorized product
or service. 

Sec. 17.152.  RESPONSIBILITIES OF A BILLING UTILITY. (a) Requires the
billing utility,  if a customer's telephone or retail electric bill is
charged for any product or service without proper customer consent or
verification, upon its knowledge or notification of any unauthorized
charge, to promptly, but in no event later than 45 days after such
knowledge or notification of such charge: 

(1) notify the service provider to cease charging 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; if the unauthorized charge is not
adjusted within three billing cycles, interest shall be paid on the amount
of the 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 for at least 24 months a record 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 required by Subsection (a)(5) to contain specified
information for each unauthorized charge. 
  
(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 the customer has alleged were
unauthorized unless the dispute regarding the unauthorized charge is
ultimately resolved against the customer.  Requires the customer to remain
obligated to pay any charges that are not in dispute, and this subsection
does not apply to those undisputed charges. 

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 the record required under Subsection (a) to contain certain
information for every disputed charge. 
   
(c)  Requires the record required by Subsection (a) to be maintained for at
least 24 months following the completion of all 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)  Specifies that a notice of a customer's rights must be provided by
mail to each residential and retail business customer within 60 days of the
effective date of this section or by inclusion in the next publication of
the 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 a copy of records maintained under the requirements of Sections
17.152, 17.153, and 17.154 to the commission staff upon request. 

Sec. 17.156.  VIOLATIONS.  (a)  Provides that the commission has the
authority to implement penalties and other enforcement actions pursuant to
Chapter 15 (Judicial Review, Enforcement, and Penalties),  if 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, if the commission finds that certain service providers or
billing agents have engaged in violations of this subchapter or has
knowingly provided false information to the commission on matters subject
to this subchapter. 

(c)  Provides that neither the authority granted under this section nor any
other provision of this subchapter shall 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 to suspend, restrict, or revoke the
registration or certificate of the telecommunications service provider,
retail electric provider, or electric utility, if the commission finds that
a billing utility or service provider repeatedly violates this subchapter.
Prohibits the commission from revoking a certificate of convenience and
necessity of an electric utility except as provided by Section 37.059
(Revocation or Amendment of Certificate). 

(e)   Authorizes the commission to order the billing utility to terminate
billing and collection services for that service provider or billing agent,
if the commission finds that a service provider or billing agent has
repeatedly violated any provision of this subchapter. 

(f)  Provides that nothing in this subchapter shall 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 retail customer and a billing utility, service provider,
telecommunications utility, retail electric provider, or electric utility. 

(b)  Authorizes the commission to perform certain activities in exercising
its authority under Subsection (a).  
   
(c)  Requires the commission to adopt procedures for the resolution of
disputes in a timely manner which in no event shall exceed 60 days. 

SECTION 4.  Emergency clause.
  Effective date: upon passage.