SENATE BILL REPORT

ESSB 5098

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.

Senate Committee on Energy & Utilities

Senate Hearing Date(s):January 24, 1989; February 9, 1989; February 14, 1989; February 21, 1989

Majority Report:  That Substitute Senate Bill No. 5098 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Benitz, Chairman; Bluechel, Vice Chairman; Metcalf, Nelson, Pullen, Stratton, Sutherland.

Senate Staff:Phil Moeller (786-7455)

                  March 28, 1989

House Committe on Energy & Utilities

AS PASSED SENATE, MARCH 3, 1989

BACKGROUND:

The telecommunications industry consists of firms offering services with a wide range of competitiveness.  In 1985 the Legislature enacted legislation which allows the Utilities and Transportation Commission (UTC) to classify companies or services as competitive, a classification which allows pricing freedom.

Unless a service has been declared competitive by the UTC, a telephone company must submit its rates for UTC approval.  This process can last nearly a year, and critics contend the present system lacks effective incentives for companies to become more efficient.

SUMMARY:

The Utilities and Transportation Commission (UTC)  may authorize alternative forms of regulation for telecommunication companies other than traditional rate of return regulation. Alternative forms of regulation may be proposed by the UTC or by a company subject to rate of return regulation.  The UTC must consider specified conditions before ruling on any proposed alternative form of regulation.

Once the UTC orders an alternative form of regulation, a company has 60 days to withdraw from the proposal.  The UTC is granted authority to rescind an alternative form of regulation.

In certain circumstances, the UTC may authorize an abbreviated formal procedure.  In these cases, the UTC may determine to hold at least one public hearing.

The contracts of companies or services classified as competitive are exempt from sections prohibiting pricing preference or discrimination.  The UTC is given primary jurisdiction to determine whether preference or pricing discrimination has occurred.

Limitations are placed on companies which serve as interexchange carriers when offering a discounted message toll service.  The UTC is authorized to continue to require statewide averaged toll rates by companies under its jurisdiction. 

Companies providing noncompetitive services are prohibited from showing preference or price discrimination when providing these noncompetitive services.  The UTC is given primary jurisdiction in determining whether preference or price discrimination has occurred with noncompetitive services.

The UTC is directed to adopt rules on public disclosure of terms and conditions of contracts entered into by telecommunications firms.  Contracts shall be for a stated time period and shall cover costs.  Existing contracts remain enforceable.  If a contract covers both competitive and noncompetitive services, the noncompetitive services shall be unbundled and priced separately.  Other statutory references to contracts are deleted.

The UTC may not suspend rate decreases as long as there are no accompanying and offsetting rate increases.  A rate decrease filing must include information showing the rate is above the long run incremental cost of the service.

The UTC may not accept for filing, prior to June 1, 1993, a tariff proposing mandatory local measured telecommunications service.

When the UTC conducts a proceeding to determine whether a company or service is classified as competitive, the final order shall be entered within ten months of the filing.  The UTC shall enter a final order within ten months when complaints are filed by any entity other than the UTC itself.

The UTC may waive the requirements of sections prohibiting preference and price discrimination if it finds the competition will protect the public interest.

The legislative review of Chapter 450, Laws of 1985 is delayed until the 1991-1993 biennium.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested January 16, 1989

Senate Committee - Testified: Steve Wehry, Lyle Williamson, MCI (con); Mark Bloomey, Heart of America NW (con); Pamela Portin, US West (pro); John Jaeger, CWA (pro); Art Butler, Tracer; Mike Woodin, AT&T; John Riewer, IBEW Local 1011 (pro); Steve McLellan, WUTC; Frank Morris, Puget Sound Council of Senior Citizens (con); Bill Jones, Retired Railroad (con)

HOUSE AMENDMENT:

It is clarified that the section relating to rate decreases applies only to telecommunications companies.