S.B. 13 Enrolled

TELECOMMUNICATION AMENDMENTS
1997 GENERAL SESSION
STATE OF UTAH
Sponsor: David H. Steele
AN ACT RELATING TO PUBLIC UTILITIES; MODIFYING EFFECTIVE DATES
RELATING TO TELECOMMUNICATIONS DEREGULATION; CLARIFYING TYPE
OF RATE PROCEEDING TO BE INITIATED; PROVIDING FOR REBALANCE OF
RATES OF PARTICULAR SERVICES; DEFINING EXOGENOUS FACTORS
INCLUDED IN THE PRICE INDEX; ALLOWING THE COMMISSION TO ADJUST
CERTAIN RATES; AMENDING PROVISIONS RELATED TO INTERCONNECTION;
AND MAKING TECHNICAL CORRECTIONS.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
54-8b-2.2, as enacted by Chapter 269, Laws of Utah 1995
54-8b-2.4, as enacted by Chapter 269, Laws of Utah 1995
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 54-8b-2.2 is amended to read:
54-8b-2.2. Interconnection.
(1) (a) (i) The commission may require any telecommunications corporation to
interconnect its essential facilities with another telecommunications corporation that provides
public telecommunications services in the same, adjacent, or overlapping service territory.
(ii) Interconnecting telecommunications corporations shall permit the mutual exchange
of traffic between their networks without unreasonable blocking or other unreasonable restrictions
on the flow of traffic. In determining unreasonable blocking or unreasonable restrictions, the
commission shall, among other things, take into account the necessity and time required for
adapting the network to respond to significant changes in usage patterns.
(b) (i) Whenever the commission grants a certificate to one or more telecommunications
corporations to provide public telecommunications services in the same or overlapping service
territories, all telecommunications corporations providing public telecommunications services in

the affected area shall have the right to interconnect with the essential facilities and to purchase the
essential services of all other certificate holders operating in the same area on a nondiscriminatory
and reasonably unbundled basis.
(ii) Each telecommunications corporation shall permit access to and interconnection with
its essential facilities and the purchase of its essential services on terms and conditions, including
price, no less favorable than those the telecommunications corporation provides to itself and its
affiliates.
(c) Nothing in this section shall prevent a telecommunications corporation from entering
into nondiscriminatory agreements for interconnection with its essential facilities and the purchase
and sale of essential services.
(d) (i) A telecommunications corporation shall file with the commission the prices, terms,
and conditions of any agreement it makes for the interconnection of essential facilities or the
purchase or sale of essential services.
(ii) The agreement shall take effect ten days after filing.
(iii) Each telecommunications corporation shall allow any other telecommunications
corporation to obtain interconnection with its essential facilities and to purchase essential services
on prices, terms, and conditions no less favorable than those on file with the commission.
(e) If there is a dispute over interconnection of essential facilities [or], the purchase and sale
of essential services, or the planning or provisioning of facilities or unbundled elements, one or both
of the disputing parties may bring the dispute to the commission, and the commission, by order, shall
resolve the dispute on an expedited basis.
(f) It is not a discriminatory pricing practice to vary prices to reflect genuine cost differences.
(2) (a) The commission shall adopt rules or issue an interim order which implements by
December 31, 1996, the competitive provision of facilities-based intraLATA toll and local exchange
services.
(b) The rules or interim order shall address those issues the commission determines are
essential for a competing telecommunications corporation to provide intraLATA toll and local
exchange services and necessary to protect the public interest, including the interconnection with

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essential facilities and the purchase and sale of essential services of telecommunications corporations
authorized to provide public telecommunications services in the same or overlapping service
territories on a nondiscriminatory and reasonably unbundled basis.
(3) (a) By December 31, 1997, the commission shall adopt additional rules or issue a final
order to implement the competitive provision of facilities-based intraLATA toll and local exchange
services.
(b) The rules or final order shall address other issues relating to:
(i) competition for intraLATA toll and local exchange services;
(ii) blocking, timing of provisioning of unbundled elements, and service quality standards
for interconnecting carriers;
[(ii)] (iii) the transition to a competitive market; and
[(iii)] (iv) the protection of the public interest.
(4) Nothing in this section shall require or prohibit the commission from ordering changes
in dialing patterns for intraLATA toll services.
(5) If the commission, by order, approves the application of a telecommunications
corporation to provide public telecommunications services in all or part of the service territory
certificated to an incumbent telephone corporation before the adoption of the rules or final order
described in Subsection (3), the commission may:
(a) order the interconnection of essential facilities and the purchase and sale of the essential
services of a telecommunications corporation with those of a competing telecommunications
corporation on such terms and conditions and to the extent necessary to allow the competing
telecommunications corporation to operate under authority granted by the commission; and
(b) address and resolve, by order, other issues necessary for the competitive provision of
intraLATA toll and local exchange services.
Section 2. Section 54-8b-2.4 is amended to read:
54-8b-2.4. Price regulation -- Maximum prices.
(1) The Legislature finds that:
(a) traditional rate of return regulation cannot guarantee that customers who do not have the

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choice of alternative providers will be protected from the economic responsibility for making up for
an incumbent telephone corporation's competitive losses or from providing for the recovery of past,
regulated investments;
(b) the method of regulation set forth in this section will provide better protection to
customers who lack competitive choices than does traditional rate of return regulation; and
(c) before moving from traditional rate of return regulation, it is essential the commission
address issues relating to the movement of prices towards cost and removing subsidies in the existing
price structure of incumbent telephone corporations to encourage competition for all
telecommunications services.
(2) (a) Effective May 1, 1997, any incumbent telephone corporation with more than 30,000
access lines in the state shall be regulated pursuant to this section and may not be regulated on the
basis of rate of return or any similar method of regulation that is based on the earnings of the
incumbent telephone corporation, except as provided in this section.
(b) Any incumbent telephone corporation serving fewer than 30,000 access lines in the state
may petition the commission to be regulated under price regulation rather than traditional rate of
return regulation. In adopting price regulation for incumbent telephone corporations with fewer than
30,000 access lines, the commission may modify the provisions of this section taking into
consideration the individual circumstances of the incumbent telephone corporation seeking price
regulation.
(3) (a) Any general rate proceeding for an incumbent telephone corporation with more than
30,000 access lines in the state initiated before May 1, 1997, shall be based on a 1996 test period and
shall be conducted under the principles of traditional rate of return regulation, even though the final
order in the case is not issued until May 1, 1997, or thereafter.
(b) A rate proceeding for an incumbent telephone corporation with more than 30,000 access
lines in the state may be initiated after April 30, 1997, and before March 1, 1998.
(i) The rate proceeding shall be revenue neutral relative to the last proceeding filed pursuant
to Subsection (3)(a), except that the commission may increase or decrease the revenue anticipated
from all rates to account for changes in the following factors which are known and measurable at the

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time of hearings in the case:
(A) any removal of subsidies in the existing price structure of the incumbent telephone
corporation required by federal or state law or approval by the commission;
(B) changes in rules of the Federal Communications Commission, including rules with
regard to the separation of interstate and intrastate revenues, expenses, or investments;
(C) changes in tax rates applied to the incumbent telephone corporation;
(D) any other change external to the business operations of the incumbent telephone
corporation resulting from:
(I) accounting rules adopted by the Financial Accounting Standards Board and approved by
the commission; or
(II) laws or rules enacted or adopted by a governmental entity having jurisdiction; or
(E) any other extraordinary events not reasonably foreseeable as of April 30, 1997.
(ii) In the rate proceeding, the commission may also rebalance rates of particular services
to move rates of those services toward cost.
(4) (a) The prices of tariffed telecommunications services offered by an incumbent telephone
corporation with more than 30,000 access lines in the state may not increase during the three-year
period commencing with the date of the final order in the last rate case initiated before May 1, 1997.
The prices of services offered pursuant to a price list or competitive contract shall be governed by
Section 54-8b-2.3.
(b) Notwithstanding Subsection (4)(a), prices may increase pursuant to any prices
established in a final order of the commission for a [general] rate proceeding initiated before [May]
March 1, [1997] 1998, or the adjustment of those prices as a result of an appeal or remand of the
final order.
(5) (a) Effective at the end of the three-year period specified in Subsection (4), the
commission shall regulate the maximum prices for the tariffed public telecommunications services
of the incumbent telephone corporation according to an aggregate price index or price indices
associated with groups of services. The aggregate price index or price indices shall be adjusted
annually to reflect the effects of inflation, productivity, and exogenous factors and to maintain an

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appropriate level of service quality. The precise manner of annual adjustment shall be developed
by the commission after notice and a hearing and before the end of the three-year period.
(b) Factors in the price index or price indices may also include the following:
(i) any removal of subsidies in the existing price structure of the incumbent telephone
corporation required by federal or state law or approved by the commission;
(ii) the impact of alteration in asset lives to better reflect changes in the economic lives of
plant and equipment approved by the commission consistent with Section 54-7-12.1;
(iii) changes in rules of the Federal Communications Commission, including rules with
regard to the separation of interstate and intrastate revenues, expenses, or investments adopted by
the commission;
(iv) changes in tax rates applied to the incumbent telephone corporation;
(v) any other change external to the business operations of the incumbent telephone
corporation resulting from:
(A) accounting rules adopted by the Financial Accounting Standards Board and approved
by the commission; or
(B) laws or rules enacted or adopted by a governmental entity having jurisdiction; or
(vi) any other extraordinary events not reasonably foreseeable as of April 30, 1997.
(6) (a) The incumbent telephone corporation may decrease the price of a tariffed
telecommunications service subject to the limitation in Section 54-8b-3.3.
(b) Any decrease in price shall be made by filing a tariff with the commission. The decrease
shall become effective 30 days after filing.

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