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AN ACT
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relating to the distribution of universal service funds to certain |
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small and rural incumbent local exchange companies. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 56.032, Utilities Code, as effective |
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September 1, 2017, is amended to read as follows: |
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Sec. 56.032. ADJUSTMENTS: SMALL AND RURAL INCUMBENT LOCAL |
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EXCHANGE COMPANY UNIVERSAL SERVICE PLAN. (a) In this section: |
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(1) "Rate of return" means the Federal Communications |
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Commission's prescribed rate of return as of the date of any |
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determination, review, or adjustment under this section, to be no |
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greater than 9.75 percent prior to July 1, 2021. If the commission |
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finds that the Federal Communications Commission no longer |
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prescribes a rate of return necessary to implement this section, |
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the commission shall initiate proceedings to determine or modify |
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the rate of return to be used for purposes of this section as |
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necessary. |
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(2) "Small provider" means: |
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(A) an incumbent local exchange company or |
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cooperative that, on September 1, 2013, together with all local |
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exchange companies affiliated with the company or cooperative on |
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that date, served 31,000 or fewer access lines in this state; or |
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(B) a company or cooperative that is a successor |
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to a company or cooperative described by Paragraph (A). |
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(b) Except as provided by Subsections (c) through (j) [(d)
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and (e)], the commission may revise the monthly support amounts to |
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be made available from the Small and Rural Incumbent Local Exchange |
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Company Universal Service Plan by any mechanism, including support |
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reductions resulting from rate rebalancing approved by the |
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commission, after notice and an opportunity for hearing. In |
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determining appropriate monthly support amounts, the commission |
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shall consider the adequacy of basic rates to support universal |
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service. |
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(c) On the written request of a small provider that is not an |
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electing company under Chapter 58 or 59, the commission shall |
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determine and disburse support to the small provider in fixed |
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monthly amounts based on an annualized support amount the |
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commission determines to be sufficient, when combined with |
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regulated revenues, to permit the small provider the opportunity to |
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earn a reasonable return in accordance with Section 53.051. A small |
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provider that makes a request under this subsection shall continue |
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to receive the same level of support it was receiving on the date of |
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the written request until the commission makes a determination or |
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adjustment through the mechanism described by Subsection (d). |
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(d) Not later than January 1, 2018, the commission shall |
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initiate rulemaking proceedings to develop and implement a |
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mechanism to determine the annualized support amount to be |
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disbursed under Subsection (c). The mechanism must: |
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(1) require the annual filing of a report by each small |
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provider that submits a request under Subsection (c) for the |
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purpose of: |
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(A) establishing a continued level of support for |
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the provider or the eligibility of the provider for support |
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adjustment filings for the purposes of Subsections (f), (g), (h), |
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and (i); and |
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(B) determining whether support levels, when |
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combined with regulated revenues, provide the provider an |
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opportunity to earn a reasonable return as described by Subsection |
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(f); |
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(2) provide requirements for the annual filing, which |
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may include annual earnings reports filed with the commission under |
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16 T.A.C. Section 26.73 and any underlying data that, during the |
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rulemaking process, the commission determines to be reasonably |
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necessary for the purposes of Subdivision (1); |
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(3) provide requirements and procedures for |
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adjustment proceedings that are consistent with Subsections (h) and |
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(i); and |
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(4) provide a procedure for the commission to assess, |
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as necessary, whether the reported return of a small provider is |
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based on expenses that are not reasonable and necessary. |
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(e) In a proceeding to adjust support levels using the |
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mechanism described by Subsection (d), the commission may consider |
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the small provider's data for a period not to exceed three fiscal |
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years before the date the proceeding is initiated. |
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(f) For purposes of the mechanism described by Subsection |
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(d), a return is deemed reasonable if the return is within two |
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percentage points above or three percentage points below the rate |
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of return as defined in this section. A small provider's reported |
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return is subject to assessment under the procedures described in |
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Subsection (d)(4). |
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(g) The commission may not approve a support adjustment |
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under Subsection (h) or (i) if the commission determines that a |
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small provider's return for the previous fiscal year was reasonable |
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under Subsection (f). |
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(h) A small provider whose return is not reasonable under |
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Subsection (f) because the return is more than three percentage |
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points below the rate of return as defined in this section may file |
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an application that is eligible for administrative review or |
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informal disposition to adjust support or rates to a level that |
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would bring the small provider's return into the range that would be |
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deemed reasonable under Subsection (f), except that the adjustment |
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may not set a small provider's support level at more than 140 |
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percent of the annualized support amount the provider received in |
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the 12-month period before the date of adjustment. A rate |
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adjustment under this subsection may not adversely affect universal |
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service. Except for good cause, a small provider that files an |
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application for adjustment under this subsection may not file a |
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subsequent application for adjustment before the third anniversary |
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of the date on which the small provider's most recent application |
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for adjustment is initiated. |
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(i) There is no presumption that the return is unreasonable |
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for a small provider whose return is more than two percentage points |
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above the rate of return as defined in this section. However, on |
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its own motion, the commission may initiate a proceeding to review |
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the small provider's support level and regulated revenues and after |
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notice and an opportunity for a hearing, adjust the provider's |
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level of support or rates, if appropriate. A rate adjustment under |
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this subsection may not adversely affect universal service. Except |
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for good cause, the commission may not initiate a subsequent |
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adjustment proceeding for a small provider under this subsection |
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before the third anniversary of the date on which the small |
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provider's most recent adjustment proceeding is initiated. |
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(j) A small provider that is eligible to have support |
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determined and distributed under Subsection (c) shall continue to |
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receive the same level of support it was receiving on August 31, |
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2017, until the earlier of: |
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(1) the date on which the commission makes a |
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determination or adjustment through the mechanism described by |
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Subsection (d); or |
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(2) the 61st day after the date the commission adopts |
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the mechanism described by Subsection (d). |
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(k) A report or information the commission requires a small |
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provider to provide under Subsection (d) is confidential and is not |
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subject to disclosure under Chapter 552, Government Code. In any |
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proceeding related to Subsection (d), a third party's access to |
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confidential information is subject to an appropriate protective |
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order. |
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(l) Except as provided by Subsection (m), this [This] |
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section does not: |
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(1) affect the commission's authority under Chapter 53 |
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or this chapter; or |
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(2) limit the commission's authority to initiate a |
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review of a small provider under another provision of this title. |
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(m) In a proceeding for a small provider initiated under |
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Subchapter A, B, C, or D, Chapter 53, the commission may recalculate |
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the annualized support amount to be disbursed to the small provider |
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and to be used as the basis for adjustment in any subsequent |
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proceeding under Subsections (c) through (j). |
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(n) Subsections (a), (c), (d), (e), (f), (g), (h), (i), (j), |
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(k), (l), and (m) and any monthly amounts approved under those |
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subsections expire September 1, 2023. |
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[(h)
Subsections (a), (c), (d), (e), and (f) and any monthly
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support amount approved under those subsections expire September 1,
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2017.] |
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SECTION 2. (a) In this section, "commission" means the |
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Public Utility Commission of Texas. |
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(b) On or after January 1, 2022, and before July 1, 2022, the |
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commission shall initiate a proceeding to review and evaluate |
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whether: |
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(1) Section 56.032, Utilities Code, as amended by this |
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Act, including any rules adopted to implement that section, |
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accomplishes the purposes of the establishment of the universal |
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service fund under Section 56.021(1)(B), Utilities Code, and allows |
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each small provider, as defined by Section 56.032, Utilities Code, |
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as amended by this Act, the opportunity to earn a reasonable return |
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in accordance with Section 53.051, Utilities Code, and should be |
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continued; or |
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(2) changes in law to amend or replace the mechanism |
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created by Section 56.032, Utilities Code, are necessary to |
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accomplish the purposes described in Subdivision (1) of this |
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subsection. |
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(c) The commission has all authority necessary to conduct |
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the review under Subsection (b) of this section. |
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(d) After the review conducted under Subsection (b) of this |
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section, and not later than September 1, 2022, the commission shall |
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submit to the legislature a report on: |
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(1) the continued appropriateness of using the Federal |
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Communications Commission prescribed rate of return for the |
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mechanism established under Section 56.032(d), Utilities Code, as |
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added by this Act, if the Federal Communications Commission still |
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prescribes a rate of return that may be used for that mechanism; |
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(2) the efficiency and frequency of adjustment |
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proceedings conducted under Section 56.032(h), Utilities Code, as |
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amended by this Act, and Section 56.032(i), Utilities Code, as |
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added by this Act; |
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(3) the frequency and efficiency of determinations |
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made on reasonable and necessary expenses under Section |
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56.032(d)(4), Utilities Code, as added by this Act; |
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(4) the effect of changes in technology on regulated |
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revenue and support needs or determinations made under Section |
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56.032, Utilities Code, as amended by this Act; and |
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(5) any other relevant information the commission |
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determines is necessary for inclusion in the report and is in the |
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public interest. |
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(e) Notwithstanding Subsection (b) of this section or |
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Section 56.024, Utilities Code, a party to a commission proceeding |
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under this section examining the universal service fund and the |
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effectiveness of Section 56.032, Utilities Code, as amended by this |
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Act, is entitled to access confidential information provided to the |
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commission under Section 56.024(a), Utilities Code, if a protective |
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order is issued in the proceeding for the confidential information. |
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SECTION 3. This Act takes effect September 1, 2017. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I hereby certify that S.B. No. 586 passed the Senate on |
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April 20, 2017, by the following vote: Yeas 28, Nays 3. |
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______________________________ |
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Secretary of the Senate |
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I hereby certify that S.B. No. 586 passed the House on |
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May 16, 2017, by the following vote: Yeas 128, Nays 18, one |
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present not voting. |
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______________________________ |
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Chief Clerk of the House |
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Approved: |
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______________________________ |
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Date |
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______________________________ |
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Governor |