HOUSE BILL REPORT
ESSB 5098
As Amended by the House
BYSenate Committee on Energy & Utilities (originally sponsored by Senators Benitz, Stratton, Bluechel, Sutherland, Newhouse, Warnke, von Reichbauer, Matson, Vognild, Smitherman, Johnson, Bauer, Sellar, Saling and Madsen)
Regulating telecommunication companies.
House Committe on Energy & Utilities
Majority Report: Do pass. (11)
Signed by Representatives Todd, Vice Chair; Hankins, Ranking Republican Member; Brooks, Cooper, Gallagher, Jacobsen, Jesernig, May, R. Meyers, H. Myers and S. Wilson.
Minority Report: Do not pass. (1)
Signed by Representative Dick Nelson, Chair.
House Staff:Deborah Senn (786-7384)
AS PASSED HOUSE MARCH 27, 1989
BACKGROUND:
In 1984, as a result of the settlement of anti-trust litigation against AT&T, the Bell system was divided into seven regional companies. U.S. West and its subsidiary U.S. West Communications, is the company that provides local telecommunications service to major parts of the Pacific Northwest. Part of the reason for the break-up of the Bell system was the advent of competition for long distance service.
In 1985, in response to the loosening of regulatory restraints for competitive service on the federal level, the Washington State Legislature passed the Regulatory Flexibility Act. This legislation allowed pricing flexibility in the event that a showing is made that a particular telecommunications service or company is competitive. In 1988, U.S. West Communications proposed legislation which would have statutorily deregulated certain telecommunications services and changed the way in which other services were regulated. That legislation did not pass.
ESSB 5098 would give the Utilities and Transportation Commission, the state agency that regulates utility rates, the authority to modify the type of regulation that is applied to telecommunications companies. It will also create abbreviated procedures before the commission, and allow large users to contract for telecommunications services.
SUMMARY:
The commission is given authority to regulate or set rates in a manner other than the traditional rate base rate of return legislation. As part of its consideration of an alternative form of regulation, the commission shall consider whether the alternative form will reduce regulatory delay and costs; encourage innovation in services; promote efficiency; facilitate technological improvements to all classes of ratepayers; enhance the ability of telecommunications companies to respond to competition; ensure that telecommunications companies do not have the opportunity to exercise substantial market power absent effective competition or effective regulatory constraints; and provide fair, just and reasonable rates.
A telecommunications company can also submit an alternative plan by petition. The commission may approve or modify the plan after notice and hearing. The commission must find that the plan is in the public interest; is necessary to respond to changes in the industry; is better than traditional rate of return; ensures that ratepayers will benefit from efficiency gains and cost savings from the regulatory changes and allow the ratepayers to benefit from improvements in productivity; will not affect quality of service; will produce fair just and reasonable rates; and will not unduly prejudice or disadvantage a particular customer class.
A utility may opt out of the plan authorized by the commission. The commission cannot abridge rights under the public utility statute and it can waive different regulatory requirements for different companies if it is in the public interest. Finally, the alternative plan can be rescinded by the commission upon complaint.
The commission can conduct formal investigation and fact-finding. This section essentially provides an alternative abbreviated procedure instead of a full adjudicative hearing in cases before the commission such as a tariff filing, a competitive classification, and complaint proceeding.
The commission can limit the record to written submissions. The commission shall adopt rules for discovery and the number of rounds for written comments.
No telecommunications company may offer volume toll that prohibits aggregation of volumes of all territory served by that company. There is an exception to the discrimination provision for contracts for services that are classified as competitive. This section ensures that the commission has authority to continue to require the state-wide deaveraging of toll.
The bill also revises the section of the statute that deals with discrimination and preference. RCW 80.36.180 prohibit discrimination and preference between telecommunications customers. The bill adds a provision giving the commission primary jurisdiction over an allegation of preference or discrimination. It also adds the words "unduly or unreasonably" to the standards governing preferences and discrimination, and it waives the requirement completely for contracts for services or contracts with companies classified as competitive under the Regulatory Flexibility Act. Carrier access charges shall be priced without undue preference or discrimination.
The commission shall adopt rules that provide for the filing on the public record, the essential terms of contracts. This excludes proprietary information. The commission shall not treat contracts as tariffs or price lists. A non-competitive service can be priced by contract if it is in the public interest or there is a competitive necessity. Contracts shall be for a stated time period and cover costs. If a contract is below cost an adjustment may be made to the Company's revenue requirement. If a contract contains competitive and non-competitive services the non-competitive services shall be unbundled and priced separately. All other customers shall be able to receive the same non-competitive service under substantially the same circumstances and conditions.
A rate decrease will not be suspended and be subject to investigation and hearing under certain circumstances. The filing must not contain an offsetting increase and there must be no filing within one year to recover the revenue deficit. Only telecommunications companies are affected and not gas, electric or water companies.
There is a time limit for competitive classification cases of 10 months; a waiver of the discrimination provision when the commission classifies a telecommunications company as competitive; and a waiver of the discrimination provision when the commission classifies a telecommunications service as competitive.
The review of the 1985 Regulatory Flexibility Act is postponed from the 1989-91 biennium to the 1991-93 biennium.
Fiscal Note: Available.
House Committee ‑ Testified For: Dale Vincent, U.S. West Communications; Steve McLellan, Utilities and Transportation commission (neutral).
House Committee - Testified Against: Steve Wehrly and Lyle Williamson, MCI; Michael Gilbert, Heart of America Northwest; Ron Roseman, Evergreen Legal Services.
House Committee - Testimony For: The bill gives the commission authority to determine modified forms of regulation, and there will be a hearing process before the commission. Many of the sections of the bill were agreed to by a number of the interested parties in telecommunications issues.
House Committee - Testimony Against: Not all the parties felt that they were really included in the negotiating process, and certain consumer protections are needed. The bill moves too much of the legislative authority regarding the type of regulation to the commission.