Background:

Wholesale Telecommunication Services Offered by Public Utility Districts or Rural Port Districts.

Public utility districts (PUDs) are municipal corporations authorized to provide electricity, water,

and sewer service. In 2000, the Legislature authorized PUDs and rural port districts to acquire

and operate telecommunications facilities for the following purposes: (1) to serve their own

internal telecommunications needs; (2) to provide wholesale telecommunications services within

their district limits; and (3) to provide wholesale telecommunications services to other PUDs by

contract.

Currently, 14 PUDs and three rural port districts in the state provide wholesale

telecommunications services.

PUDs and rural port districts must ensure their rates, terms, and conditions for wholesale

telecommunications services are not unduly or unreasonably discriminatory or preferential. In

addition, PUDs and rural port districts must keep separate accountings of revenues and

expenditures for their wholesale telecommunications activities and may establish a separate

utility function to provide wholesale telecommunications services. Revenues from the wholesale

activities must be used to pay off the costs incurred in building and maintaining the

telecommunications facilities.

The Washington Utilities and Transportation Commission is authorized to review petitions

brought by customers concerning a PUD's or rural port district's wholesale telecommunications

rates, terms, and conditions.

Telecommunications Services Offered by Municipalities.

There are several classifications of cities and towns under Washington law: (1) first class cities;

(2) second class cities; (3) code cities; (4) unclassified cities; and (5) towns.

Generally, the powers of municipal corporations are limited to those powers that are: (1)

expressly granted by statute or by the constitution; (2) necessarily implied in or incident to

powers expressly granted; and (3) essential to the declared purposes and objects of the municipal

corporation. However, this general rule does not apply to first class cities and code cities. These

municipalities have "home rule powers," which do not need express or implied statutory

authority to enact local legislation.

According to a 2003 Attorney General Opinion, first class cities and code cities may provide

telecommunications services as part of their "home rule powers," except as may be limited by

specific statutory language governing particular services. Second class cities and towns,

however, do not have the authority to provide telecommunication services.

Summary of Bill:

A public utility district (PUD) or rural port district may provide retail telecommunications

services in areas that are within or adjacent to the district. In addition, a PUD or rural port

district may provide wholesale telecommunications services in areas that are adjacent to its

district.

Retail telecommunications services is defined as the sale or lease of telecommunications services

or facilities to public agencies, individuals, non-profit organizations, libraries, schools,

institutions of higher education, or other public or private entities.

Any PUD or rural port district offering retail telecommunications services must ensure their

rates, terms, and conditions for retail telecommunications services are not unduly or

unreasonably discriminatory or preferential. In addition, PUDs and rural port districts must keep

separate accountings of revenues and expenditures for their retail telecommunications activities

and may establish a separate utility function. Revenues generated from the retail

telecommunications activities must be used to pay off the costs incurred in building and

maintaining the telecommunications facilities.

If a person or entity receiving retail telecommunications services from a PUD or rural port

district has a complaint regarding the reasonable of the rates, terms, conditions, or service

provided, the person or entity may file a complaint with their PUD or rural port district.

A city or town may construct, purchase, lease, operate, and maintain telecommunications

services or facilities in order to provide its inhabitants with telecommunications services. The

city or town has full authority to regulate and control the use, distribution, and price of the

service.

A definition of "utility service" is added with respect to code cities. This definition includes

telecommunications services as well as water, sewer, solid waste and electricity.