HB2524 - 531R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 40-250, Arizona Revised Statutes, is amended to read:

START_STATUTE40-250. Hearing on rate or other change in operations by public service corporation; establishment of rates or other practices by order of commission; rates for telecommunications markets

A. No public service corporation shall raise any rate, fare, toll, rental or charge, or alter any classification, contract, practice, rule or regulation to result in any increase thereof, except upon on a showing before the commission and a finding by the commission that an increase is justified. The showing before the commission by a public service corporation with gross operating revenues derived from intrastate operations of less than one million dollars, including the requested rate relief, by a telecommunications corporation or by a member‑owned nonprofit cooperative corporation may be made with or without a hearing as determined by order or rule of the commission. For the purposes of this subsection, a proposed increase is presumed to be justified if approved by an affirmative vote of the board of directors of a member‑owned nonprofit cooperative corporation.

B. When any schedule is filed with the commission stating an individual or joint rate, fare, toll, rental, charge, classification, contract, practice, rule or regulation not increasing or resulting in an increase, the commission, without answer or other pleadings by the interested corporation, but upon on reasonable notice, may conduct a hearing concerning the propriety of the rate, fare, toll, rental, charge, classification, contract, practice, rule or regulation, and pending the hearing and the decision thereon, it shall not go into effect. The period of suspension thereof shall not extend one hundred twenty days beyond the time when it would otherwise go into effect, unless the commission extends the period of suspension for a further period not exceeding six months.

C. On the hearing the commission shall by order establish the rates, fares, tolls, rentals, charges, classifications, contracts, practices, rules or regulations proposed, in whole or in part, or establish others in lieu thereof, that it finds just and reasonable, and that, if not suspended, shall, on the expiration of thirty days from the time of filing the order, or in such lesser time as the commission grants, become effective and be established, subject to the power of the commission to alter or modify the order.

D. In establishing just and reasonable rates in competitive long‑distance telecommunications markets, the commission need not use exclusively the rate of return evaluation traditionally used in establishing rates for noncompetitive telecommunications markets but may consider other factors that the commission deems more appropriate for a long‑distance competitive market. The commission may establish a rate for a particular service of a long‑distance telecommunication corporation without a hearing and without reviewing all of the rates for all of the long‑distance telecommunication corporation's services if the particular service is in a competitive market. END_STATUTE

Sec. 2. Section 40-256, Arizona Revised Statutes, is amended to read:

START_STATUTE40-256. Time periods for rate decisions; calculation; simplified filing rules; interim rates and charges; definitions

A. From the date on which a utility's rate filing is determined to be sufficient in accordance with this section, the commission shall issue a decision establishing rates and charges for service within the following time periods:

1. For class 1 utilities, within two hundred seventy days.

2. For class 2 utilities, within one hundred eighty days.

B. For the purposes of calculating the time periods prescribed in subsection A of this section, a rate filing shall be deemed sufficient if it substantially complies with the commission's rules governing the filing requirements for applications for increased rates or charges for utility service. The utilities division shall review each rate filing to ascertain whether it substantially complies with the applicable rules and shall submit its findings to the commission not more than thirty days after the date of the rate filing. If it is determined that a rate filing does not substantially comply with the applicable rules, the utilities division shall notify the utility, in writing, of the basis for its determination to allow the utility to cure its filing. If this written notice is not provided within thirty days after the date of the utility's rate filing, the rate filing is presumed to be in substantial compliance with the applicable rules and the applicable time period established in subsection A of this section begins. If any deficiencies in the rate filing are identified and written notice is given to the utility, the applicable time period begins on the date the rate filing is amended to cure the deficiencies.

C. On the motion of any party to the contested case proceedings relating to the rate filing or on its own motion, the commission may determine that an extraordinary event that would substantially alter the relief requested in the utility's rate filing has occurred. If such a determination is made, the time period prescribed in subsection A of this section begins again from the date of the determination.

D. To expedite the issuance of final decisions and to minimize the fees and expenses incurred by utilities, the commission shall promptly adopt rules providing for simplified filing requirements and procedures for rate filings by utilities whose annual operating revenues do not exceed two hundred fifty thousand dollars and by member‑owned nonprofit cooperative corporations.

E. If a decision in the rate filing has not been issued within the required time period, the commission shall provide that the utility may implement reasonable modifications to rates and charges based on those proposed in the rate filing, on an interim basis, and subject to refund, pending the issuance of a final decision. Notice of the implementation shall be given by keeping open for public inspection new schedules stating the modifications to be made in the schedules then in force and by mailing a written notice to all customers of the utility advising them of the modifications at least thirty days before the effective date of the modifications. Any party to the contested case proceedings relating to the rate filing, including the utilities division, or the commission on its own motion may request that a hearing be scheduled for the limited purpose of determining whether the utility should be required to file a bond approved by the commission in such amount and with sufficient security to ensure prompt payment of any refunds to the persons entitled to them, including an interest rate of not more than the maximum interest otherwise allowed by law, if the modified rates or charges placed into effect are finally determined by the commission to be excessive. The utility may substitute for the bond other arrangements satisfactory to the commission for the protection of the parties involved.

F. For the purposes of this section:

1. "Annual operating revenues" means gross utility operating revenues derived from a utility's jurisdictional operations, including the requested rate relief.

2. "Class 1 utility" means a utility with annual operating revenues of one million dollars or more.

3. "Class 2 utility" means a utility with annual operating revenues of less than one million dollars.

4. "Combination utility" means a utility that provides more than one of the commodities or services in paragraph 7. For combination utilities, departmental operating revenues shall be used for classification purposes.

5. "Decision" means a final order, decision or determination of the commission that disposes of all issues involved in all parts or phases of the proceedings before the agency concerning a rate filing.

6. "Rate filing" means an application filed by a utility for the permanent modification to any rate or charge for service requiring the commission to determine the fair value of the utility's jurisdictional property used for the provision of utility service and the rate of return.

7. "Utility" means a public service corporation that is engaged in supplying electric, gas, telephone, water or sewer utility service in this state and that is subject to the jurisdiction of the commission. END_STATUTE

Sec. 3. Section 40-285, Arizona Revised Statutes, is amended to read:

START_STATUTE40-285. Disposition of plant by public service corporations; acquisition of capital stock of public service corporation by other public service corporations; exemption

A. A public service corporation shall not sell, lease, assign, mortgage or otherwise dispose of or encumber the whole or any part of its railroad, line, plant or system necessary or useful in the performance of its duties to the public, or any franchise or permit or any right thereunder, nor shall such corporation merge such system or any part thereof with any other public service corporation without first having secured from the commission an order authorizing it so to do. Every such disposition, encumbrance or merger made other than in accordance with the order of the commission authorizing it is void.

B. The approval or permit of the commission under this section shall not revive or validate any lapsed or invalid franchise or permit, or enlarge or add to the powers or privileges contained in the grant of any franchise or permit, or waive any forfeiture.

C. This section does not prevent the sale, lease or other disposition by any such corporation of property that is not necessary or useful in the performance of its duties to the public, and any sale of its property by such corporation shall be conclusively presumed to have been of property that is not useful or necessary in the performance of its duties to the public as to any purchaser of the property in good faith for value.

D. A public service corporation shall not purchase, acquire, take or hold any part of the capital stock of any other public service corporation organized or existing under the laws of this state without a permit from the commission.

E. Every assignment, transfer, contract or agreement for assignment or transfer of any stock in violation of the provisions of this section is void, and the transfer shall not be made on the books of any public service corporation.

F. This section does not apply to:

1. A telecommunications corporation whose retail telecommunications services are all classified as competitive by the commission, except as may otherwise be determined by a commission order after the effective date of this amendment to this section September 13, 2013.

2. A member‑owned nonprofit cooperative corporation. END_STATUTE

Sec. 4. Section 40-301, Arizona Revised Statutes, is amended to read:

START_STATUTE40-301. Issuance of stocks and bonds; authorized purposes

A. The power of public service corporations to issue stocks and stock certificates, bonds, notes and other evidences of indebtedness, and to create liens on their property located within this state is a special privilege, the right of supervision, restriction and control of which is vested in the state, and such power shall be exercised as provided by law and under rules, regulations and orders of the commission.

B. A public service corporation may issue stocks and stock certificates, bonds, notes and other evidences of indebtedness payable at periods of more than twelve months after the date thereof, only when authorized by an order of the commission.

C. The commission shall not make any order or supplemental order granting any application as provided by this article unless it finds that such issue is for lawful purposes which that are within the corporate powers of the applicant, are compatible with the public interest, with sound financial practices, and with the proper performance by the applicant of service as a public service corporation and will not impair its ability to perform that service.

D. The provisions of This article shall does not apply to:

1. Foreign public service corporations providing communications service within this state whose physical facilities are also used in providing communications service in interstate commerce.

2. A member‑owned nonprofit cooperative corporation. END_STATUTE

Sec. 5. Section 40-361, Arizona Revised Statutes, is amended to read:

START_STATUTE40-361. Charges by public service corporations required to be just and reasonable; service and facilities required to be adequate, efficient and reasonable; rules and regulations relating to charges or service required to be just and reasonable

A. Charges demanded or received by a public service corporation for any commodity or service shall be just and reasonable. Every unjust or unreasonable charge demanded or received is prohibited and unlawful.

B. Every public service corporation shall furnish and maintain such service, equipment and facilities as will promote the safety, health, comfort and convenience of its patrons, employees and the public, and as will be in all respects adequate, efficient and reasonable.

C. All rules and regulations made by a public service corporation affecting or pertaining to its charges or service to the public shall be just and reasonable.

D. For the purposes of this section, charges, rules and regulations are presumed to be just and reasonable if approved by an affirmative vote of the board of directors of a member‑owned nonprofit cooperative corporation. END_STATUTE