FINAL BILL REPORT

                 EHB 2881

                          C 82 L 00

                     Synopsis as Enacted

Brief Description:  Allowing new forms of regulation of telecommunications companies.

Sponsors:  Representatives Crouse, Poulsen and Eickmeyer; by request of Governor Locke.

House Committee on Technology, Telecommunications & Energy

Senate Committee on Energy, Technology & Telecommunications

Background:

Alternative Form of Regulation.  The Washington Utilities and Transportation Commission regulates incumbent local exchange carriers (ILECS) under rate of return regulation. Under this form of regulation, a company is permitted to charge rates that cover the costs of providing services, plus an opportunity to make a profit.  Since 1989, ILECS have had the option to request regulation under a negotiated alternative to traditional rate of return regulation called an alternative form of regulation (AFOR).  The UTC is authorized to employ an alternative form of regulation if the alternative is better suited to accomplish the telecommunications policy goals of the state.

The UTC may authorize an AFOR on its own motion or petition by a company. Before approving an AFOR plan, the UTC must adopt written findings of fact that address a number of policy goals and other criteria. The UTC may modify a proposed plan, and it may waive certain regulatory requirements under a proposed plan.

After the UTC approves an AFOR plan, a company has 60 days to withdraw from the approved plan.

The UTC may rescind an AFOR plan on its own motion or at the request of any person.

Competitive Classification.  In addition to the option of an AFOR, a company may petition the UTC to classify it as a competitive telecommunications company. A company may also seek to have any of its services classified as a competitive telecommunications service.  Competitively classified companies and services are not subject to rate of return regulation. 

Summary of Bill:

The requirement that the UTC make certain findings of fact before ruling on an AFOR are deleted.  Policy goals analyzed prior to approval of a proposed AFOR plan are revised.

Policy Goals.  The following revised policy goals must be met when evaluating a proposed AFOR plan.  The UTC must consider whether the plan will:

$facilitate the broad deployment of advanced services to underserved areas or customer classes;

$improve the efficiency of the regulatory process;

$preserve or enhance competition and protect against the exercise of market power;

$preserve or enhance service quality;

$provide rates that are fair, just, reasonable, sufficient and not unduly discriminatory or preferential; and

$not cause undue disadvantage or unreasonable prejudice to any particular customer class.

The Proposed Plan.  A company that seeks an alternative form of regulation must submit a plan for transition to the new form of regulation and the proposed duration of the new regulation.  In addition, the proposed plan must contain:

$adequate carrier to carrier service quality standards;

$performance measures for interconnection; and

$enforcement provisions. 

The UTC procedures.  The UTC must accept, modify, or reject the plan within nine months after submission of the petition.  The UTC must order implementation of the plan unless it finds that the AFOR plan fails to meet the revised policy goals.

The UTC may rescind or modify the proposed plan on petition by the company subject to the alternative regulation, in the manner requested by that company.

The UTC may not waive any legal right granted to any person, but may waive regulatory requirements for companies or services if in the public interest.

The UTC or any person may file a complaint that alleges non-compliance with the terms and conditions of the company's plan for the alternative form of regulation.  The complainant bears the burden of proof.

Votes on Final Passage:

House941

Senate460

Effective:June 8, 2000