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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