1.1                          A bill for an act 
  1.2             relating to telecommunications; modifying provisions 
  1.3             for alternative forms of regulation of telephone 
  1.4             companies; amending Minnesota Statutes 2002, sections 
  1.5             237.766; 237.773, subdivision 3. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 2002, section 237.766, is 
  1.8   amended to read: 
  1.9      237.766 [PLAN DURATION AND EXTENSION.] 
  1.10     Subdivision 1.  [PLAN DURATION.] An alternative regulation 
  1.11  plan approved by the commission under section 237.764 must 
  1.12  remain in force as approved for the term specified in the plan, 
  1.13  which must be for no less than three years.  Within six months 
  1.14  prior to the termination of the plan, the plan must be reviewed 
  1.15  by the commission and, with the consent of the company, revised 
  1.16  or renewed consistent with sections 237.76 to 237.774, except 
  1.17  that the justification of earnings levels in section 237.764, 
  1.18  subdivision 1, paragraph (c), if required and the provisions 
  1.19  prohibiting rate increases at the initiation of or during the 
  1.20  first three years of a plan contained in section 237.762, shall 
  1.21  not apply to a revised or renewed plan.  Any revised or renewed 
  1.22  plan must be approved by the commission and shall contain a 
  1.23  mechanism under which a telephone company may reduce the rates 
  1.24  for price-regulated services below the initial rates or prices 
  1.25  or increase the rates or prices during the term of the revised 
  2.1   or renewed plan.  The plan must specify the reports required of 
  2.2   the telephone company for review of the plan and specify that 
  2.3   the telephone company shall maintain records in sufficient 
  2.4   detail to facilitate the review the company shall give notice 
  2.5   that it will propose a new plan, extend an existing plan, or 
  2.6   revert to rate of return regulation. 
  2.7      Subd. 2.  [NEW PLAN.] A new plan proposed by a company must 
  2.8   be reviewed by the commission and, with the consent of the 
  2.9   company, revised or renewed consistent with sections 237.76 to 
  2.10  237.774, except that the justification of earnings levels in 
  2.11  section 237.764, subdivision 1, paragraph (c), if required, and 
  2.12  the provisions prohibiting rate increases at the initiation of 
  2.13  or during the first three years of a plan contained in section 
  2.14  237.762, do not apply to a revised or renewed plan.  Any new 
  2.15  plan must be approved by the commission and contain a mechanism 
  2.16  under which a telephone company may reduce the rates for 
  2.17  price-regulated services below the initial rates or prices or 
  2.18  increase the rates or prices during the term of the plan.  The 
  2.19  plan must specify the reports required of the telephone company 
  2.20  for review of the plan and specify that the telephone company 
  2.21  shall maintain records in sufficient detail to facilitate the 
  2.22  review.  The renewal of a new plan is not an extension, which 
  2.23  must be made pursuant to subdivision 3.  
  2.24     Subd. 3.  [PLAN EXTENSION.] (a) Notwithstanding the 
  2.25  provisions of its plan, a telephone company operating under a 
  2.26  plan as of December 1, 2003, may elect to extend that plan or, 
  2.27  if the plan has expired, reinstate that plan and extend it, for 
  2.28  a period of up to three years from the expiration date of the 
  2.29  plan or until December 31, 2007, whichever is earlier.  The 
  2.30  election is effective upon notification to the commission, the 
  2.31  department, and the Office of the Attorney General.  A telephone 
  2.32  company shall provide notification of its election within 30 
  2.33  days of the effective date of this section, or within six months 
  2.34  of the expiration of its current or expired plan, whichever is 
  2.35  later.  Once a telephone company has elected to exercise the 
  2.36  option provided under this section, the company may elect at any 
  3.1   time to terminate the plan by notifying the commission, the 
  3.2   department, and the Office of the Attorney General, in writing, 
  3.3   six months prior to the termination date.  Upon termination of a 
  3.4   plan, the company shall be regulated as provided in this chapter.
  3.5      (b) A telephone company may elect to extend a plan entered 
  3.6   into after the effective date of this section in lieu of 
  3.7   proposing a new plan if the company is in substantial compliance 
  3.8   with the plan's service quality provisions and has met its 
  3.9   infrastructure obligations under the plan.  The extension must 
  3.10  be made in accordance with procedures and conditions provided 
  3.11  for in the plan.  If the company elects to extend its existing 
  3.12  plan, the rates for price-regulated services must be capped at 
  3.13  the rate levels in effect at the time the extension commences, 
  3.14  unless otherwise specified in the plan.  All other provisions of 
  3.15  the plan must continue in effect throughout the extension 
  3.16  period.  A plan may not be extended for less than one year or 
  3.17  more than three years, and may only be extended once. 
  3.18     A company electing to extend its existing plan shall notify 
  3.19  the commission and its customers of its intention to extend the 
  3.20  plan six months prior to the plan's expiration date. 
  3.21     (c) The Department of Commerce or the Office of the 
  3.22  Attorney General may file an objection to the extension with the 
  3.23  commission if the company is not in substantial compliance with 
  3.24  the service quality provisions of its plan or has not met its 
  3.25  infrastructure obligations under the plan.  Any such objection 
  3.26  must be filed within 45 days of the company's notice of its 
  3.27  intention to extend the plan. 
  3.28     (d) If an objection is filed by the Department of Commerce 
  3.29  or the Office of the Attorney General, the commission may hold a 
  3.30  hearing on the issues raised in the objection.  Any such 
  3.31  hearings must be completed within 30 days of the deadline for 
  3.32  filing the objections.  If the commission finds that the issues 
  3.33  raised in the objection are valid, it may reject the extension.  
  3.34  If the commission finds that the issues raised in the objection 
  3.35  are not valid, it shall approve the extension.  The commission 
  3.36  shall issue its decision within 15 days of the completion of any 
  4.1   hearings held in response to an objection.  
  4.2      (e) If the Department of Commerce or the Office of the 
  4.3   Attorney General does not file an objection, the commission 
  4.4   shall approve the extension within 60 days of the company's 
  4.5   filing of its notice of its intention to extend the plan.  
  4.6      Sec. 2.  Minnesota Statutes 2002, section 237.773, 
  4.7   subdivision 3, is amended to read: 
  4.8      Subd. 3.  [LOCAL RATE.] (a) Except as provided in paragraph 
  4.9   (b), a small telephone company shall not implement a rate 
  4.10  increase for any service listed in section 237.761, subdivision 
  4.11  3, beyond the level in effect 60 days prior to an election under 
  4.12  subdivision 2, until the later of January 1, 1998, or two years 
  4.13  after making an election.  However, a small telephone company 
  4.14  may implement any new service and establish rates for any new 
  4.15  service and may change rates for any other service at any time 
  4.16  subject to the requirements of section 237.761, subdivision 4.  
  4.17  A small company shall provide to its customers the ability to 
  4.18  block, at no extra charge, any new service which it offers, 
  4.19  provides, or bills.  This requirement shall not apply to 
  4.20  services that require affirmative subscription by the customer.  
  4.21  Nothing in this section shall prevent the commission from 
  4.22  requiring blocking or other privacy or safety protections for 
  4.23  other types of telecommunications services under section 237.081.
  4.24     (b) At any time following one year after electing under 
  4.25  subdivision 2, a small telephone company may change rates for 
  4.26  local services except switched network access services, listed 
  4.27  in section 237.761, subdivision 3, to reflect: 
  4.28     (1) changes in state and federal taxes; 
  4.29     (2) changes in jurisdictional allocations from the Federal 
  4.30  Communications Commission, the amount of which the small 
  4.31  telephone company cannot control and for which equal and 
  4.32  opposite exogenous changes are made on the federal level; 
  4.33     (3) substantial financial impacts of investments in network 
  4.34  upgrades which are made; or 
  4.35     (i) if the investment exceeds 20 percent of the gross plant 
  4.36  investment of the company; or 
  5.1      (ii) as the result of government mandates to construct 
  5.2   specific telephone infrastructure, if the mandate applies to 
  5.3   local telephone companies and the company would not otherwise be 
  5.4   compensated. 
  5.5   A small telephone company may change rates for local services 
  5.6   listed in section 237.761, subdivision 3, at any time, to 
  5.7   implement extended area service or any successor to that service 
  5.8   on an income-neutral basis. 
  5.9   A small telephone company proposing an increase under this 
  5.10  subdivision shall provide 60 days' advance written notice to the 
  5.11  department and each of the company's customers including the 
  5.12  individual rates affected and the procedure necessary for the 
  5.13  customers to petition for investigation.  If the department 
  5.14  receives a petition within 45 days after the notice from five 
  5.15  percent or 500, whichever is fewer, of the customers of the 
  5.16  small telephone company, the department and the company shall 
  5.17  jointly determine if the petition is valid and, if so, may 
  5.18  investigate the rate change to determine if it conforms to the 
  5.19  limitations of this subdivision.  Within 30 days of validating 
  5.20  the petition, the department shall report its findings to the 
  5.21  commission, which shall either adopt the report or order changes 
  5.22  to conform to this subdivision. 
  5.23     (c) On or after the later of January 1998, or two years 
  5.24  after making an election under subdivision 2, a small telephone 
  5.25  company may increase rates for local services, except switched 
  5.26  network access services, listed in section 237.761, subdivision 
  5.27  3.  A small telephone company proposing an increase shall 
  5.28  provide 60 days' advance written notice to its customers 
  5.29  including individual rates affected and the procedure necessary 
  5.30  for the customers to petition for investigation.  If the 
  5.31  commission receives a petition within 45 days after such notice, 
  5.32  from five percent or 500, whichever is fewer, of the customers 
  5.33  of the small telephone company, the department and the company 
  5.34  shall jointly determine if the petition is valid and, if so, may 
  5.35  investigate the proposed rate increase to determine if it is 
  5.36  appropriate in light of rates charged by other local exchange 
  6.1   telephone companies for comparable services, taking into account 
  6.2   calling scope, quality of service, the availability of 
  6.3   competitive alternatives, service costs, and the features 
  6.4   available to the customers.  Within 30 days of validating the 
  6.5   petition, the department shall file a report with the commission 
  6.6   which shall then approve appropriate rates for those services.  
  6.7   Rates established by the commission under this paragraph shall 
  6.8   not be increased within one year of implementation. 
  6.9      Sec. 3.  [EFFECTIVE DATE.] 
  6.10     Sections 1 and 2 are effective the day following final 
  6.11  enactment.