BP BHEAD INT S [atlas:bill]

AN ACT Relating to new procedures for alternative forms of regulation of telecommunications companies; amending RCW 80.36.135; and adding a new section to chapter 80.36 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 80.36.135 and 1995 c 110 s 5 are each amended to read as follows:

(1) The legislature declares that:

(a) Changes in technology and the structure of the telecommunications industry may produce conditions under which traditional rate of return, rate base regulation of telecommunications companies may not in all cases provide the most efficient and effective means of achieving the public policy goals of this state as declared in RCW 80.36.300, this section, and RCW 80.36.145. The commission should be authorized to employ an alternative form of regulation if that alternative is better suited to achieving those policy goals.

(b) Because of the great diversity in the scope and type of services provided by telecommunications companies, alternative regulatory arrangements that meet the varying circumstances of different companies and their ratepayers may be desirable.

(2) Subject to the conditions set forth in this chapter and RCW 80.04.130, the commission may regulate telecommunications companies subject ((~~before July 23, 1989,~~)) to traditional rate of return, rate base regulation by authorizing an alternative form of regulation. The commission may determine the manner and extent of any alternative forms of regulation as may in the public interest be appropriate. In addition to the public policy goals declared in RCW 80.36.300, the commission shall consider, in determining the appropriateness of any proposed alternative form of regulation, whether it will:

(a) Reduce regulatory delay and costs;

(b) Encourage innovation in services;

(d) Facilitate the broad dissemination of technological improvements to all classes of ratepayers;

(e) Enhance the ability of telecommunications companies to respond to competition;

(f) Ensure that telecommunications companies do not have the opportunity to exercise substantial market power absent effective competition or effective regulatory constraints; and

(g) Enhance the stability and predictability of a telecommunications company's regulatory requirements;

(h) Provide for rates and charges that are fair, just, ((~~and~~)) reasonable ((~~rates for all ratepayers.~~

~~The commission shall make written findings of fact as to each of the above-stated policy goals in ruling on any proposed alternative form of regulation~~)), sufficient, and not unduly discriminatory or preferential; and

(i) Promote the public interest.

(3) A telecommunications company or companies subject to traditional rate of return, rate base regulation may petition the commission to establish an alternative form of regulation. The company or companies shall submit with the petition a plan for an alternative form of regulation. The plan shall contain a proposal for transition to the alternative form of regulation((~~. The commission shall review and may modify or reject the proposed~~)) and the proposed duration of the plan. The commission also may initiate consideration of alternative forms of regulation for a company or companies on its own motion. The commission ((~~may approve the plan or modified plan and authorize its implementation, if it finds, after notice and hearing, that the plan or modified plan:~~

~~(a) Is in the public interest;~~

~~(b) Is necessary to respond to such changes in technology and the structure of the intrastate telecommunications industry as are in fact occurring;~~

~~(c) Is better suited to achieving the policy goals set forth in RCW 80.36.300 and this section than the traditional rate of return, rate base regulation;~~

(d) Ensures that ratepayers will benefit from any efficiency gains and cost savings arising out of the regulatory change and will afford ratepayers the opportunity to benefit from improvements in productivity due to technological change;

~~(e) Will not result in a degradation of the quality or availability of efficient telecommunications services;~~

~~(f) Will produce fair, just, and reasonable rates for telecommunications services; and~~

~~(g) Will not unduly or unreasonably prejudice or disadvantage any particular customer class.~~)), after notice and hearing, shall issue an order accepting or rejecting a plan within nine months after the petition or motion is filed, unless extended by the commission for good cause. The commission shall order implementation of an alternative plan of regulation unless it finds that traditional regulation is, on balance, more likely to meet the objectives stated in subsection (2) of this section.

(4) If consideration of the plan was initiated by the commission on its own motion not later than sixty days from the entry of the commission's order, the company or companies affected by the order may file with the commission an election not to proceed with the alternative form of regulation as authorized by the commission. ((If a company elects to appeal to the courts the final order of the commission authorizing an alternative form of regulation, it shall not change its election to proceed or not proceed after the appeal is concluded. The pendency of a petition by a company for judicial review of the final order shall not serve to extend the sixty-day period.))

(5) The commission may waive such regulatory requirements under Title 80 RCW for a telecommunications company subject to an alternative form of regulation as may be appropriate to facilitate the implementation of this section((: PROVIDED, That the commission may not grant the authority to price list services except as provided in RCW 80.36.300 through 80.36.370, the regulatory flexibility act, nor may it waive any statutory requirements or grants of legal rights to any person contained in this chapter and chapter 80.04 RCW as amended, except as otherwise expressly provided)). The commission may waive different regulatory requirements for different companies or services if such different treatment is in the public interest.

(6) Upon petition by ((~~any person, or upon its own motion~~)) the company, and after notice and hearing, the commission may rescind ((~~its approval of~~)) or modify an alternative form of regulation ((if, after notice and hearing, it finds that the conditions set forth in subsection (3) of this section can no longer be satisfied. The commission or any person may file a complaint alleging that the rates charged by a telecommunications company under an alternative form of regulation are unfair, unjust, unreasonable, unduly discriminatory, or are otherwise not consistent with the requirements of chapter 101, Laws of 1989: PROVIDED, That the complainant shall bear the burden of proving the allegations in the complaint)) in the manner requested by the company.

NEW SECTION. Sec. 2. A new section is added to chapter 80.36 RCW to read as follows:

(1) For the purposes of this section, "advanced telecommunications services" means digital subscriber line service and frame relay service. The commission may designate by rule additional advanced telecommunications services.

(2) A telecommunications company subject to regulation under this title may elect to provide advanced telecommunications services solely through one or more separate affiliates that (a) are separate from the telecommunications company; and (b) meet the requirements of subsection (4) of this section. If a company makes such an election, the commission shall not consider the revenues expenses, or investment of such an advanced telecommunications services affiliate in reviewing or setting the rates and charges of the telecommunications company of which it is an affiliate. The advanced telecommunications services affiliate is subject to the same requirements as a company classified as competitive under RCW 80.36.320.

(3) An advanced telecommunications services affiliate operating under subsection (2) of this section:

(a) Shall operate independently from the telecommunications company of which it is an affiliate;

(b) Shall maintain books, records, and accounts in the manner prescribed by the commission and separate from the books, records, and accounts maintained by the telecommunications company of which it is an affiliate;

(c) Shall have separate officers, directors, and employees from the telecommunications company of which it is an affiliate;

(d) May not obtain credit under an arrangement that would permit a creditor, upon default, to have recourse to the assets of the telecommunications company of which it is an affiliate; and

(e) Shall conduct all transactions with the telecommunications company of which it is an affiliate on an arm's length basis, with any such transactions reduced to writing and available for public inspection.

(4) A telecommunications company electing to provide advanced telecommunications services under this section:

(a) May not discriminate between an advanced services affiliate and any other entity in the provision or procurement of goods, services, facilities, and information, or in the establishment of standards; and

(b) Shall account for all transactions with an advanced services affiliate in accordance with accounting principles designated or approved by the commission.

(5) A telecommunications company electing to provide advanced telecommunications services under this section:

(a) Shall fulfill any requests from an unaffiliated entity for telephone exchange service and exchange access within a period no longer than the period in which it provides telephone exchange service and exchange access to itself or to its affiliates;

(b) Shall not provide any facilities, services, or information concerning its provision of exchange access to any advanced telecommunications services unless the facilities, services, or information are made available to other providers of advanced telecommunications services in that market on the same terms and conditions; and

(c) May provide any facilities or services to its advanced telecommunications service affiliate if the services or facilities are made available to all carriers at the same rates and on the same terms and conditions, and so long as the costs are appropriately allocated.

(6) An advanced telecommunications services affiliate operating under this section may not market or sell telephone exchange services provided by the telecommunications company of which it is an affiliate unless that company permits other entities offering the same or similar service to market and sell its telephone exchange services.

(7) Nothing in this section affects a company's obligations under chapter 80.16 RCW.