HB998: HB998 Public utilities; authorize certain Tier 2 local exchange companies to elect to become subject to rate of return regulation

26 LC 56 0570S/AP House Bill 998 (AS PASSED HOUSE AND SENATE) By: Representatives Leverett of the 123rd, Camp of the 135th, Powell of the 33rd, Jasperse of the 11th, Williams of the 168th, and others A BILL TO BE ENTITLED AN ACT To amend Article 4 of Chapter 5 of Title 46 of the Official Cod e of Georgia Annotated,1 relating to telecommunications and competition development, so as to authorize certain2 Tier 2 local exchange companies to elect to become subject to r ate of return regulation; to3 extend the period of time certain distributions can be made from the Universal Access Fund;4 to require certain information from local exchange companies seeking reimbursement from5 the fund; to require the total amount of distributions not to e xceed $50 million in the6 aggregate during any single fund year; to provide annual moneta ry limitations on certain7 distributions; to require annual reports on the Universal Access Fund; to provide for contents8 of such report; to provide for a definition; to provide for related matters; to repeal conflicting9 laws; and for other purposes.10 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:11 SECTION 1.12 Article 4 of Chapter 5 of Title 46 of the Official Code of Geor gia Annotated, relating to13 telecommunications and competition development, is amended by r evising Code14 Section 46-5-165, relating to alternative regulation of rates, terms, and conditions, as follows:15 H. B. 998 - 1 - 26 LC 56 0570S/AP "46-5-165.16 (a) Any Tier 1 local exchange company may elect to have its rates, terms, and conditions17 for its services determined pursuant to the alternative regulation described in this article,18 in lieu of other forms of regulation, including, but not limited to, rate of return or rate base19 monitoring or regulation, upon the filing of notice with the commission and committing to20 provide basic local exchange services upon reasonable request and to invest $500 million21 per year for five years to improve and strengthen telecommunications services in Georgia22 this state; provided, however, that, after the expiration of three years of such investments,23 the commission shall determine, after notice and opportunity for a Tier 1 local exchange24 company or other interested parties to be heard, whether such i nvestment commitment25 should be continued for the remaining two years or whether such commitment should be26 reduced.27 (b) Any Tier 2 local exchange company may elect to have the rates, terms, and conditions28 for its services determined pursuant to the alternative regulat ion described in this article29 upon the filing of notice with the commission and committing to p r o v i d e b a s i c l o c a l30 exchange services upon reasonable request.31 (c) The alternative regulation under this article shall become effective on the date specified32 by the electing company but in no event sooner than 30 days after such notice is filed with33 the commission.34 (d) On the date a telecommunications company elects the alternative regulation described35 in this article, all existing rates, terms, and conditions for the services provided by the36 electing company contained in the then existing tariffs and contracts are shall be deemed37 just and reasonable.38 (e)(1) As used in this subsection, the term 'eligible Tier 2 l ocal exchange company'39 means a Tier 2 local exchange company that:40 (A) Is not affiliated, directly or indirectly, with any provider serving more than 50,00041 access lines nation wide; and42 H. B. 998 - 2 - 26 LC 56 0570S/AP (B) Is responsible for providing basic local exchange services upon reasonable request.43 (2) Any eligible Tier 2 local exchange company that is an electing company may elect44 to become subject to rate of return regulation by certification to the commission of such45 election no later than August 1, 2026. An eligible Tier 2 loca l exchange company46 making such election shall be prohibited from making a subsequent election to have the47 rates, terms, and conditions for its services determined pursua nt to the alternative48 regulation described in subsection (b) of this Code section prior to August 1, 2031.49 (3) Nothing in this subsection shall be construed to limit any election to become subject50 to rate of return regulation made prior to July 1, 2026."51 SECTION 2.52 Said article is further amended in Code Section 46-5-166, relat ing to rates for switched53 access, by revising subsection (c) as follows:54 "(c) Beginning January 1, 2011, and ending December 31, 2015, e ach Tier 2 local55 exchange company shall adjust in equal annual increments its in trastate switched access56 charges to parity with its similar interstate switched access r ates. The commission shall57 have authority to govern the transition of Tier 2 local exchange company switched access58 rates to their corresponding interstate levels and the commission shall allow adjustment of59 basic local exchange services or universal access funds, as nec essary to recover those60 revenues, based on calendar year 2008, lost through the concurr ent reduction of the61 intrastate switched access rates. In the event that the rates for switched access cannot be62 negotiated in good faith between the parties, the commission shall determine the reasonable63 rates for switched access in accordance with the procedures provided in subsection (b) of64 this Code section. Any Tier 2 local exchange company that is an electing company may65 elect to become subject to rate of return regulation by certifi cation to the commission of66 this election no later than December 31, 2010. A Tier 2 local exchange company making67 this election is prohibited from making a subsequent election to have the rates, terms, and68 H. B. 998 - 3 - 26 LC 56 0570S/AP conditions for its services determined pursuant to the alternat ive regulation described in69 subsection (b) of Code Section 46-5-165 prior to January 1, 2016."70 SECTION 3.71 Said article is further amended in Code Section 46-5-167, relating to Universal Access Fund,72 by revising subparagraph (d)(2)(B) and subsection (e) and by adding new subsections to read73 as follows:74 "(B) Except for those distributions to Tier 2 local exchange co mpanies that have75 reduced intrastate switched access charges pursuant to subsecti on (c) of Code76 Section 46-5-166, distributions to a Tier 2 local exchange carr ier subject to rate of77 return regulation shall also be reduced by the amount per acces s line, which if added78 to the carrier's basic local exchange service rate, in accordan ce with a schedule79 established by the commission, results in an amount that would be equal to 110 percent80 of the July 1, 2009, residential state-wide weighted average ra t e f o r b a s i c l o c a l81 exchange services imputed across all access lines and adjusted annually for inflation82 measured by the change in GDP-PI. The commission shall determi ne any such83 distributions upon application, demonstration, and good cause s hown that the84 reasonable actual costs to provide basic local exchange services exceed the maximum85 fixed price permitted for such basic local exchange services; any distributions pursuant86 to this subparagraph shall be limited to a period of no more than 20 years.87 (e) The commission shall require any local exchange company se eking reimbursement88 from the fund pursuant to subparagraph (d)(2)(B) of this Code s ection to file the89 information reasonably necessary to determine the actual and reasonable costs of providing90 basic local exchange services. Such information shall include, but not be limited to, the91 most recent unredacted audited financial reports with any accom panying notes for each92 company and its parent company. No distribution pursuant to this subsection shall be made93 for any expense incurred after December 31, 2040."94 H. B. 998 - 4 - 26 LC 56 0570S/AP "(h)(1) Beginning with distributions made for approved costs incurred on or after July95 1, 2026, the total amount of distributions from the fund pursua nt to this Code section96 shall not exceed $50 million in the aggregate during any single fund year; provided,97 however, that, if the total amount of distributions authorized by the commission exceeds98 the annual monetary limitation, the commission shall reduce dis tributions on a99 proportional, pro rata basis so that the total distributions do not exceed such monetary100 limitation.101 (2) For purposes of this subsection, the annual monetary limitation on distributions shall102 apply only to distributions attributable to costs incurred during fund years beginning on103 or after July 1, 2026, regardless of the date such distributions are disbursed.104 (3) The commission shall continue to administer, review, appro ve, and disburse105 distributions as reimbursements for eligible costs incurred pri or to July 1, 2026, in106 accordance with this Code section, without regard to the limita tion established in107 paragraph (1) of this subsection.108 (4) Nothing in this subsection shall be construed to impair or delay the payment of any109 distributions lawfully approved for costs incurred prior to July 1, 2026.110 (i) The commission shall submit a written report on December 31, 2026, and every other111 year thereafter, concerning the Universal Access Fund to the Go vernor, the Lieutenant112 Governor, and the Speaker of the House of Representatives. Such report shall be submitted113 no later than December 31 of every even-numbered year and shall include the following114 information for the most recently completed Universal Access Fund year:115 (1) The total amount of contributions collected for the Universal Access Fund, including116 the percentage rate charged to consumers for such contributions and the remaining117 balance of the fund as of the end of the reporting period;118 (2) The total amount of fund requests and disbursements made f rom the Universal119 Access Fund and notable findings from annual audits;120 H. B. 998 - 5 - 26 LC 56 0570S/AP (3) The total number of access lines providing basic local exchange service in the State121 of Georgia;122 (4) The total number of access lines receiving support from the Universal Access Fund;123 (5) The number of eligible local exchange companies receiving distributions from the124 Universal Access Fund; and125 (6) Any other information determined by the commission to be material to describing the126 financial condition and operation of the Universal Access Fund, so long as such127 information does not disclose any trade secret or proprietary information of any specific128 provider."129 SECTION 4.130 All laws and parts of laws in conflict with this Act are repealed.131 H. B. 998 - 6 -