By:  Turner, et al. (Senate Sponsor - Van de Putte)               H.B. No. 412
	(In the Senate - Received from the House April 25, 2005; 
April 26, 2005, read first time and referred to Committee on 
Business and Commerce; May 20, 2005, reported adversely, with 
favorable Committee Substitute by the following vote:  Yeas 6, 
Nays 0; May 20, 2005, sent to printer.)


COMMITTEE SUBSTITUTE FOR H.B. No. 412                                    By:  Estes

A BILL TO BE ENTITLED
AN ACT
relating to the use of credit scoring and credit history by certain telecommunications and electric service providers. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Subchapter A, Chapter 17, Utilities Code, is amended by adding Sections 17.008, 17.009, and 17.010 to read as follows: Sec. 17.008. PROTECTION OF RESIDENTIAL ELECTRIC SERVICE APPLICANTS AND CUSTOMERS. (a) In this section, Section 17.009, and Section 17.010: (1) "Credit history": (A) means information regarding an individual's past history of: (i) financial responsibility; (ii) payment habits; or (iii) creditworthiness; and (B) does not include an individual's outstanding balance for retail electric or telecommunications service. (2) "Credit score" means a score, grade, or value that is derived by a consumer reporting agency, as defined under Section 603(f) of the Fair Credit Reporting Act (15 U.S.C. Section 1681a(f)), using data from a credit history in any type of model, method, or program for the purpose of grading or ranking credit report data, whether derived electronically, from an algorithm, through a computer software application model or program, or through any other analogous process. (3) "Electric service provider" includes: (A) a retail electric provider; (B) an electric utility; (C) an electric cooperative; or (D) a municipally owned electric utility that serves retail customers. (4) "Satisfactory electric bill payment history" means verifiable information showing that the customer or applicant: (A) has been a customer of one or more electric service providers in this state during the entire 12-month period preceding the request for electric service; (B) is not delinquent in payment of any electric service account; and (C) during the preceding 12-month period of service was not late in paying an electric service bill more than twice. (5) "Utility payment data" means a measure that is derived by a consumer reporting agency, as defined under Section 603(f) of the Fair Credit Reporting Act (15 U.S.C. Section 1681a(f)), from a model specifically designed to correlate to utility payment histories. (b) A retail electric provider may not deny an applicant's request to become a residential electric service customer on the basis of the applicant's credit history or credit score if: (1) the applicant provides satisfactory electric bill payment history as provided by Subsection (f); or (2) the database described by Section 17.010 is being maintained and the database demonstrates that the applicant has a satisfactory electric bill payment history. (c) Notwithstanding Subsection (b), while a retail electric provider is required to provide price to beat service to a geographic area as the affiliated retail electric provider, the provider may not deny an applicant's request to become a residential electric service customer within that geographic area on the basis of the applicant's credit history, credit score, or retail electric service payment history, unless the applicant has an outstanding balance. (d) A retail electric provider may not use a credit score, a credit history, or utility payment data as the basis for determining the price for month-to-month electric service or electric service that includes a fixed price commitment of 12 months or less: (1) for an existing residential electric service customer; or (2) in response to an applicant's request to become a residential electric service customer. (e) If a retail electric provider is otherwise required to provide to an applicant for residential electric service written notice of adverse action the provider has taken based on the applicant's credit score or credit history, the written notice must include information on how an applicant may overcome that adverse action by providing satisfactory electric bill payment history under Subsection (b). (f) On request by a customer or former customer in this state, an electric service provider shall timely provide to the customer or former customer bill payment history information with the electric service provider during the preceding 12-month period. Bill payment history information may be obtained by the customer or former customer once during each 12-month period without charge. If additional copies of bill payment history information are requested during a 12-month period, the electric service provider may charge the customer or former customer a reasonable fee for each copy. (g) On request by a retail electric provider, an electric service provider shall timely verify information that purports to show the service and bill payment history of a customer or former customer in this state with the electric service provider. (h) Subsections (e), (f), and (g) apply only if the database described by Section 17.010 is not being maintained. (i) This section does not limit a retail electric provider's authority to require a deposit or advance payment as a condition of service. (j) Notwithstanding Subsection (d), a retail electric provider may provide rewards, benefits, or credits to residential electric service customers on the basis of the customer's payment history for retail electric service to that provider. (k) On notice to the office and opportunity for hearing, the commission shall exempt a retail electric provider from Subsection (b) if the retail electric provider demonstrates that actual customer bill payment history is not as predictive of payment behavior as the credit scoring methodology used by the retail electric provider. Sec. 17.009. PROTECTION OF RESIDENTIAL TELEPHONE SERVICE APPLICANTS AND CUSTOMERS. (a) A provider of local exchange telephone service may not deny an applicant's request to become a residential customer on the basis of the applicant's credit history or credit score. (b) A provider of local exchange telephone service may not use a credit score or credit history as the basis for determining price for service: (1) for an existing residential customer; or (2) in response to an applicant's request to become a residential customer. (c) This section does not limit the authority of a provider of local exchange telephone service to require a deposit, advance payment, or credit limit as a condition of service. Sec. 17.010. DATABASE. (a) The commission may require residential electric service providers to submit to an independent third party approved by the commission customer information that is necessary to determine whether a customer has a satisfactory electric bill payment history if: (1) the commission determines that the cost to residential electric service providers for submitting data to the independent third party is reasonable in comparison to the benefit to be gained by customers who have a satisfactory electric bill payment history but an inadequate credit score or credit history; (2) the commission determines that the cost of accessing information to determine whether a customer has a satisfactory electric bill payment history does not exceed one-half of the average cost of obtaining an individual customer's credit score; (3) information in the database may only be accessed by: (A) residential retail electric providers; and (B) an individual customer for information specific to the customer; and (4) information in the database is reliable from both the perspective of the customer and a residential retail electric provider. (b) A retail electric provider may not use information in the database for purposes of targeted marketing to specific customers. (c) On notice to the office and opportunity for hearing, the commission shall withdraw approval of the database described by this section if the commission determines that the database does not meet the criteria established in Subsection (a). (d) Except as provided by Subsection (b), this section does not limit the provision or use of information in excess of the minimum required to determine whether a customer has a satisfactory electric bill payment history. SECTION 2. If the Public Utility Commission of Texas has not approved a database described by Section 17.010, Utilities Code, as added by this Act, by September 1, 2006, the commission shall report that fact and the reason for it to the governor, the lieutenant governor, and the speaker of the house of representatives not later than October 1, 2006. SECTION 3. This Act takes effect September 1, 2005.
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