1.1                          A bill for an act 
  1.2             relating to telecommunications; providing for pricing 
  1.3             of packaged telecommunications services, 
  1.4             interconnection, and network elements; removing power 
  1.5             of public utilities commission to determine telephone 
  1.6             company property depreciation and amortization; 
  1.7             providing for rate changes for flexibly priced 
  1.8             telecommunications serivces; modifying provisions 
  1.9             governing alternative regulation plans; amending 
  1.10            Minnesota Statutes 1996, sections 237.071; 237.12, by 
  1.11            adding a subdivision; 237.121; 237.22; 237.761, 
  1.12            subdivisions 4, 5, 6, and 7; 237.762, subdivisions 1, 
  1.13            3, 4, and 5; 237.764, subdivision 1; 237.765; 237.766; 
  1.14            237.769; and 237.772, subdivision 1; proposing coding 
  1.15            for new law in Minnesota Statutes, chapter 237; 
  1.16            repealing Minnesota Statutes 1996, section 237.761, 
  1.17            subdivision 2. 
  1.18  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.19     Section 1.  Minnesota Statutes 1996, section 237.071, is 
  1.20  amended to read: 
  1.21     237.071 [SPECIAL PRICING.] 
  1.22     (a) Except as prohibited by section 237.60, subdivision 3, 
  1.23  prices unique to a particular customer or group of customers may 
  1.24  be allowed for noncompetitive services and for services subject 
  1.25  to emerging competition when differences in the cost of 
  1.26  providing a service or a service element justifies a different 
  1.27  price for a particular customer or group of customers. 
  1.28  Individual pricing for services subject to emerging competition 
  1.29  may be allowed when a uniform price should not be required 
  1.30  because of market conditions.  Unique or individual prices for 
  1.31  services or service elements in effect before July 1, 1989, are 
  2.1   deemed to have been approved under this section. 
  2.2      (b) A telephone company may package and promote any 
  2.3   regulated service it offers with any other service at a package 
  2.4   price established by the company so long as the company 
  2.5   continues to offer the individual regulated services on a 
  2.6   separate stand-alone basis at its established tariff rate or 
  2.7   price.  A telephone company may offer, amend, or withdraw such 
  2.8   packages effective on notice to the commission. 
  2.9      Sec. 2.  Minnesota Statutes 1996, section 237.12, is 
  2.10  amended by adding a subdivision to read: 
  2.11     Subd. 4.  [PRICES FOR INTERCONNECTION OR NETWORK 
  2.12  ELEMENTS.] (a) The prices for interconnection or network 
  2.13  elements established by the commission shall be based on 
  2.14  technology that is currently generally available and shall 
  2.15  include at least the following: 
  2.16     (1) forward-looking depreciation expense for capitalized 
  2.17  assets; 
  2.18     (2) available Minnesota specific cost data including 
  2.19  current market prices for equipment and materials, current 
  2.20  actual placement costs, and tax rates; and 
  2.21     (3) factors and expenses based on currently incurred costs 
  2.22  adjusted for known changes. 
  2.23     The prices set by the commission shall also include a 
  2.24  reasonable allocation of actual joint and common costs and a 
  2.25  reasonable profit based on the company's current cost of capital.
  2.26     (b) The price applicable to each telecommunications service 
  2.27  that a telephone company must resell at wholesale rates shall be 
  2.28  equal to the retail price for the service: 
  2.29     (1) less any actually avoided costs associated with selling 
  2.30  the service at wholesale; 
  2.31     (2) plus any additional costs incurred by the 
  2.32  telecommunications carrier associated with making each service 
  2.33  available on a wholesale basis. 
  2.34     Wholesale discounts shall, at a minimum, be set at a level 
  2.35  that permits recovery of the actual costs of providing each 
  2.36  service so that no service, after the application of the 
  3.1   discount, shall be sold below cost. 
  3.2      (c) No external or internal subsidies or adjustments shall 
  3.3   be used to calculate actual or avoided costs.  There shall be no 
  3.4   imputations of any sort based upon affiliated relationships. 
  3.5      Sec. 3.  Minnesota Statutes 1996, section 237.121, is 
  3.6   amended to read: 
  3.7      237.121 [PROHIBITED PRACTICES.] 
  3.8      A telephone company or telecommunications carrier may not 
  3.9   do any of the following with respect to services regulated by 
  3.10  the commission: 
  3.11     (1) upon request, fail to disclose in a timely and uniform 
  3.12  manner information necessary for the design of equipment and 
  3.13  services that will meet the specifications for interconnection; 
  3.14     (2) intentionally impair the speed, quality, or efficiency 
  3.15  of services, products, or facilities offered to a ~~consumer under~~ 
  3.16  ~~a tariff, contract, or price list~~ wholesale or retail customer; 
  3.17     (3) fail to provide a service, product, or facility to a 
  3.18  ~~consumer other than a telephone company or telecommunications~~ 
  3.19  ~~carrier~~ retail customer in accordance with its applicable 
  3.20  tariffs, price lists, or contracts and with the commission's 
  3.21  rules and orders; 
  3.22     (4) refuse to provide a service, product, or facility to a 
  3.23  telephone company or telecommunications carrier in accordance 
  3.24  with its ~~applicable tariffs, price lists, or~~ contracts and with 
  3.25  the commission's rules and orders; 
  3.26     (5) prohibit or impose ~~restrictions on the resale or shared~~ 
  3.27  ~~use of its services or network functions, provided~~ 
  3.28  ~~that~~ unreasonable or discriminatory conditions or limitations on 
  3.29  the resale of telecommunications service, except that the state 
  3.30  commission may prohibit a reseller that obtains at wholesale 
  3.31  rates a telecommunications service that is available at retail 
  3.32  only to one category of subscribers from offering the service to 
  3.33  a different category of subscribers.  For purposes of this 
  3.34  section, at least the following restrictions are deemed 
  3.35  reasonable: 
  3.36     (i) ~~it may require~~ requiring that residential service may 
  4.1   not be resold as a different class of service; and 
  4.2      (ii) ~~the commission may prohibit~~ prohibiting resale of 
  4.3   services it has approved for provision for not-for-profit 
  4.4   entities at rates less than those offered to the general public; 
  4.5   or 
  4.6      (6) provide telephone service to a person acting as a 
  4.7   telephone company or telecommunications carrier if the 
  4.8   commission has ordered the telephone company or 
  4.9   telecommunications carrier to discontinue service to that person.
  4.10     Sec. 4.  Minnesota Statutes 1996, section 237.22, is 
  4.11  amended to read: 
  4.12     237.22 [DEPRECIATION; AMORTIZATION; FUTURE RATES.] 
  4.13     ~~The commission shall fix proper and adequate rates and~~ 
  4.14  ~~methods of depreciation and amortization with respect to~~ 
  4.15  ~~telephone company property and every telephone company shall~~ 
  4.16  ~~conform its depreciation accounts for property used in whole or~~ 
  4.17  ~~in part to provide noncompetitive services to the rates and~~ 
  4.18  ~~methods fixed by the commission.~~ 
  4.19     Subsequent to the date of enactment of this section, the 
  4.20  depreciation expense that telephone companies shall be permitted 
  4.21  to recover in rates shall be based upon the depreciation lives 
  4.22  reflected in the telephone company's audited book and records 
  4.23  for financial reporting purposes. 
  4.24     Sec. 5.  Minnesota Statutes 1996, section 237.761, 
  4.25  subdivision 4, is amended to read: 
  4.26     Subd. 4.  [FLEXIBLY PRICED SERVICES.] (a) A service not 
  4.27  listed in subdivision 3 or not otherwise determined to be price 
  4.28  regulated under subdivision 6 or 7 or nonprice regulated must be 
  4.29  classified as a flexibly priced service. 
  4.30     (b) Flexibly priced services are regulated consistent with 
  4.31  section 237.60, subdivision 2, except that: 
  4.32     (1) rate decreases may be effective immediately upon filing 
  4.33  ~~and are considered approved if no objection is filed or raised~~ 
  4.34  ~~by an interested party or the commission within ten days after~~ 
  4.35  ~~the filing~~; and 
  4.36     (2) rate increases may be effective 20 days after filing 
  5.1   and are considered approved if no objection is filed or raised 
  5.2   by an interested party or the commission within 20 days after 
  5.3   the filing.  If the commission receives an objection, it shall 
  5.4   make a final decision within 60 days of the initial filing date. 
  5.5      Sec. 6.  Minnesota Statutes 1996, section 237.761, 
  5.6   subdivision 5, is amended to read: 
  5.7      Subd. 5.  [NON-PRICE-REGULATED SERVICES.] (a) ~~A~~ The 
  5.8   following services are classified as non-price-regulated 
  5.9   services: 
  5.10     (1) billing or collections, excluding recording; 
  5.11     (2) CENTREX/CENTRON; 
  5.12     (3) toll service; 
  5.13     (4) WATS service; 
  5.14     (5) voice messaging service; 
  5.15     (6) directory assistance; 
  5.16     (7) coin, except access line; 
  5.17     (8) operator services; 
  5.18     (9) private line/special access; and 
  5.19     (10) services that generate less than five percent of the 
  5.20  company's gross revenues for the calendar year preceding the 
  5.21  effective date of the plan. 
  5.22     (b) Any other service must be classified as 
  5.23  non-price-regulated if the commission finds, based upon evidence 
  5.24  filed by the telephone company and other evidence available to 
  5.25  the commission and consistent with the company's proposed plan, 
  5.26  that there is sufficient competition to justify classification 
  5.27  as non-price-regulated.  In making that determination, the 
  5.28  factors the commission shall consider include: 
  5.29     (1) the number, size, and identity of competitors providing 
  5.30  the same or functionally equivalent service; 
  5.31     (2) the geographic area in which competitive service is 
  5.32  actually available to and being used by customers, to the extent 
  5.33  this information is available to the commission; 
  5.34     (3) the importance of the service to the public; and 
  5.35     (4) the effect of classification of the service on the 
  5.36  development of a competitive telecommunications market. 
  6.1      ~~(b)~~ (c) Telephone companies shall file tariffs or price 
  6.2   lists for non-price-regulated services with the commission, but 
  6.3   the rates for these services are not subject to commission 
  6.4   approval or investigation except as provided in subdivision 6 
  6.5   and sections 237.762, subdivision 6, 237.770, and 237.771. 
  6.6      Sec. 7.  Minnesota Statutes 1996, section 237.761, 
  6.7   subdivision 6, is amended to read: 
  6.8      Subd. 6.  [RECLASSIFICATION.] An alternative regulation 
  6.9   plan may contain provisions allowing for the reclassification of 
  6.10  services during the course of the plan upon a showing that the 
  6.11  service meets the criteria contained in subdivision 2, 3, 4, or 
  6.12  5, and the plan, for the requested classification.  The 
  6.13  commission shall make a final decision on any reclassification 
  6.14  within the time frame specified in the plan. 
  6.15     Sec. 8.  Minnesota Statutes 1996, section 237.761, 
  6.16  subdivision 7, is amended to read: 
  6.17     Subd. 7.  [NEW SERVICES; CLASSIFICATION; RATES.] At the 
  6.18  time the company first offers a service, it shall file a tariff 
  6.19  or price list and ~~the proposed classification for the service~~ 
  6.20  ~~under the plan along with a written explanation of why the~~ 
  6.21  ~~proposed classification is consistent with this section~~ classify 
  6.22  the service as nonprice regulated.  New services ~~classified as~~ 
  6.23  ~~flexibly priced or nonprice regulated~~ may be offered on one 
  6.24  day's notice to the commission and the department.  ~~New services~~ 
  6.25  ~~classified as price regulated may be offered pursuant to the~~ 
  6.26  ~~terms set forth in the plan.~~  A service ~~is not considered~~ may be 
  6.27  introduced as a new service even if it consists of a repackaging 
  6.28  ~~including bundling, unbundling,~~ or repricing of an already 
  6.29  existing service as long as the company continues to offer the 
  6.30  existing service on a stand-alone basis.  ~~If no interested party~~ 
  6.31  ~~or the commission objects to the company's proposed~~ 
  6.32  ~~classification within 30 days of the filing of the petition, the~~ 
  6.33  ~~company's proposed classification of the service is approved.~~  
  6.34  ~~If an objection is filed, the commission shall determine the~~ 
  6.35  ~~classification of the service within 90 days of the filing of~~ 
  6.36  ~~the new service.~~ 
  7.1      Sec. 9.  Minnesota Statutes 1996, section 237.762, 
  7.2   subdivision 1, is amended to read: 
  7.3      Subdivision 1.  [INITIAL RATES.] ~~As part of its evaluation~~ 
  7.4   ~~of an alternative regulation plan, the commission shall~~ 
  7.5   ~~determine whether the telephone company's existing service~~ 
  7.6   ~~substantially complies with commission rules and if its rates~~ 
  7.7   ~~and rate design are appropriate in light of the proposed plan or~~ 
  7.8   ~~whether changes should be made before the plan is implemented or~~ 
  7.9   ~~phased in during the course of the plan.~~  An alternative 
  7.10  regulation plan approved by the commission under this section 
  7.11  must provide that the recurring and nonrecurring rates or prices 
  7.12  that may be charged by a telephone company for price-regulated 
  7.13  services are no higher than the approved rate or prices on file 
  7.14  with the commission for those services on the date of the filing 
  7.15  of the plan.  Furthermore, no plan may in any way change the 
  7.16  terms or conditions of any access charge settlements approved by 
  7.17  the commission or exempt any company from compliance with any 
  7.18  commission access charge order issued before the filing of a 
  7.19  plan.  The plan must address implementation of additional access 
  7.20  charge reductions that may occur during that portion of the plan 
  7.21  that extends beyond expiration of commission-approved 
  7.22  settlements. 
  7.23     Sec. 10.  Minnesota Statutes 1996, section 237.762, 
  7.24  subdivision 3, is amended to read: 
  7.25     Subd. 3.  [RATE CHANGES.] (a) An alternative regulation 
  7.26  plan must set forth the procedures under which the telephone 
  7.27  company may reduce the rates or prices for price-regulated 
  7.28  services below the initial rates or prices or thereafter 
  7.29  increase the rates or prices during the term of the plan.  The 
  7.30  rates or prices may not be reduced below the total service 
  7.31  long-run incremental cost of providing the service.  The rates 
  7.32  or prices may not exceed the initial rates or prices for the 
  7.33  service determined under subdivision 1 for the first ~~three~~ two 
  7.34  years of the plan.  After a plan has been in effect for ~~three~~ 
  7.35  two years, price-regulated rates may be changed as appropriate 
  7.36  under a procedure set forth in an approved plan.  Rates for 
  8.1   price-regulated services may not be increased unless the company 
  8.2   has demonstrated substantial compliance with the quality of 
  8.3   service standards set forth in the plan. 
  8.4      (b) An approved plan may allow changes in rates for 
  8.5   price-regulated services after ~~three years~~ one year to reflect: 
  8.6      ~~(1) substantial financial impacts of government mandates to~~ 
  8.7   ~~construct specific telephone infrastructure and increases or~~ 
  8.8   ~~decreases in state and federal taxes, if the mandate applies to~~ 
  8.9   ~~local telephone companies and the company would not otherwise be~~ 
  8.10  ~~compensated through some other manner under the plan; and~~ 
  8.11     ~~(2) changes in jurisdictional allocations from the Federal~~ 
  8.12  ~~Communications Commission, the amount of which the telephone~~ 
  8.13  ~~company cannot control and for which equal and opposite~~ 
  8.14  ~~exogenous changes are made on the federal level.~~ 
  8.15     (1) changes in state and federal taxes; 
  8.16     (2) changes in jurisdictional allocations from the federal 
  8.17  communications commission, the amount of which the telephone 
  8.18  company cannot control and for which equal and opposite 
  8.19  exogenous changes are made on the federal level; 
  8.20     (3) substantial financial impacts of investments in 
  8.21  telecommunications infrastructure which are made: 
  8.22     (i) if the investments, for any running 12-month period, 
  8.23  exceed 20 percent of the gross plan investment of the company; 
  8.24  or 
  8.25     (ii) as the result of a government mandate to construct 
  8.26  specific telephone infrastructure, the mandate applies to a 
  8.27  local telephone company, and the company is not otherwise fully 
  8.28  compensated for the investment; and 
  8.29     (4) substantial financial impacts associated with access 
  8.30  charge reform mandated by state or federal government. 
  8.31     Sec. 11.  Minnesota Statutes 1996, section 237.762, 
  8.32  subdivision 4, is amended to read: 
  8.33     Subd. 4.  [~~BUNDLED RATES~~ PACKAGED SERVICES.] ~~When the rates~~ 
  8.34  ~~or prices for services are unbundled, the price for each basic~~ 
  8.35  ~~network function must be set to equal or exceed its total~~ 
  8.36  ~~service long-run incremental cost.  Before August 1, 1997, if~~ 
  9.1   ~~the rates or prices for price-regulated services are bundled,~~ 
  9.2   ~~the bundled rate or price may not exceed the sum of the~~ 
  9.3   ~~unbundled rates or prices for the individual service elements or~~ 
  9.4   ~~services or the total initial bundled rate or price for those~~ 
  9.5   ~~service elements or services~~ Nothing in this section shall be 
  9.6   deemed to prevent a telephone company from packaging any service 
  9.7   listed in Minnesota Statutes 1996, section 237.761, subdivision 
  9.8   2, with any other service, or engaging in promotional activities 
  9.9   concerning such services, so long as the company also continues 
  9.10  to offer the service listed in Minnesota Statutes 1996, section 
  9.11  237.761, subdivision 2, as a separate stand-alone service at the 
  9.12  prices required by this section. 
  9.13     Sec. 12.  Minnesota Statutes 1996, section 237.762, 
  9.14  subdivision 5, is amended to read: 
  9.15     Subd. 5.  [INCOME-NEUTRAL CHANGES.] Other than as 
  9.16  authorized in this ~~subdivision~~ chapter, an initial alternative 
  9.17  regulation plan must not permit income-neutral rate changes for 
  9.18  price-regulated services during the plan except as is necessary 
  9.19  to implement extended area service or any successor to that 
  9.20  service.  Any plan must provide that after the rules issued 
  9.21  pursuant to section 237.16 are adopted, rates for 
  9.22  price-regulated services may be increased, as approved by the 
  9.23  commission, to the extent necessary to carry out the purpose of 
  9.24  those rules.  However, rate increases, if any, for those 
  9.25  services must be incorporated with a universal service fund so 
  9.26  that the effective rate for the customers of those services does 
  9.27  not increase during the first three years of the plan. 
  9.28     Sec. 13.  Minnesota Statutes 1996, section 237.764, 
  9.29  subdivision 1, is amended to read: 
  9.30     Subdivision 1.  [PETITION, NOTICE, HEARING, AND DECISION.] 
  9.31  (a) Before acting on a petition for approval of an alternative 
  9.32  regulation plan, the commission shall conduct any public 
  9.33  meetings it may consider necessary.  
  9.34     (b) The commission shall require the petitioning telephone 
  9.35  company to provide notice of the proposed plan to its customers, 
  9.36  along with a summary description of the plan provisions and the 
 10.1   dates, times, and locations of public meetings scheduled by the 
 10.2   commission.  
 10.3      (c) The company's petition shall contain an explanation of 
 10.4   how ratepayers will benefit from the plan and a justification of 
 10.5   the appropriateness of earnings levels and rates in light of the 
 10.6   proposed plan as well as any proposed changes in rates for 
 10.7   price-regulated services for the first three years of the 
 10.8   proposed plan.  If a telephone company has completed a general 
 10.9   rate proceeding, rate investigation, or audit of its earnings by 
 10.10  the department or commission within two years of the initial 
 10.11  application for an alternative form of regulation plan, the 
 10.12  commission order or department audit report, updated for the 
 10.13  most recent calendar year, is sufficient justification of 
 10.14  earnings levels to initiate the filing of an alternative 
 10.15  regulation plan.  If, at the time of the filing of the plan, a 
 10.16  telephone company is providing interconnection service pursuant 
 10.17  to a contract approved by the commission, to a competing carrier 
 10.18  that provides local service using its own switch and facilities, 
 10.19  the current earnings level of the company is deemed reasonable 
 10.20  and no further justification required. 
 10.21     (d) The commission shall conduct a proceeding under section 
 10.22  237.61 to decide whether to approve the plan and shall grant 
 10.23  discovery as appropriate.  
 10.24     (e) The commission shall issue findings of fact and 
 10.25  conclusions concerning the appropriateness of the proposed 
 10.26  initial rates, when necessary, and the proposed plan, or any 
 10.27  modifications to it, but may not order that a modified plan take 
 10.28  effect without the agreement of the petitioning telephone 
 10.29  company.  The commission shall issue its decision on a plan 
 10.30  within six months after receiving the petition to approve the 
 10.31  plan unless the commission and the petitioning company agree to 
 10.32  an extension of the time for commission action.  
 10.33     (f) If a settlement is submitted to the commission, the 
 10.34  commission shall accept, reject, or modify the proposed 
 10.35  settlement within 60 days from the date it was submitted. 
 10.36     Sec. 14.  Minnesota Statutes 1996, section 237.765, is 
 11.1   amended to read: 
 11.2      237.765 [QUALITY OF SERVICE.] 
 11.3      For an alternative regulation plan to be approved by the 
 11.4   commission under sections 237.76 to 237.774, the plan must 
 11.5   contain ~~and~~ either an existing service quality plan or 
 11.6   settlement approved by the commission or, if no such service 
 11.7   quality plan or settlement has been approved, the commission 
 11.8   shall require: 
 11.9      (1) evidence that current service quality substantially 
 11.10  complies with commission rules as to justify lessened rate 
 11.11  regulation; 
 11.12     (2) a baseline measurement of the quality of service levels 
 11.13  as achieved by the company during the previous three years, to 
 11.14  the extent the data are available, and specific statewide 
 11.15  standards for measuring the quality of price-regulated and 
 11.16  flexibly priced services provided by the company, including, but 
 11.17  not limited to (i) time intervals for installation, (ii) time 
 11.18  intervals for restoration or repair of service, (iii) trouble 
 11.19  rates, (iv) exchange access line held orders, and (v) customer 
 11.20  service answer time; 
 11.21     (3) provisions for reporting to the commission at least 
 11.22  annually the company's performance as to the quality of service 
 11.23  standards by quarter for the previous year; 
 11.24     (4) provisions that index quality of service standards for 
 11.25  local residence services to similar standards for local business 
 11.26  services; 
 11.27     (5) appropriate remedies, including penalties and 
 11.28  customer-specific adjustments or payments to compensate 
 11.29  customers for specific quality of service failures, so as to 
 11.30  ensure substantial compliance with the quality of service 
 11.31  standards set forth in the plan; and 
 11.32     (6) provisions for informing customers of their rights as 
 11.33  to quality of service and how customers can register their 
 11.34  complaints regarding service. 
 11.35     Any penalties under clause (5) may be paid into a universal 
 11.36  service fund or returned to customers under a method set forth 
 12.1   in the plan.  The terms of an existing service quality plan or 
 12.2   settlement approved by the commission must be offered to extend 
 12.3   through the duration of an alternative regulation plan filed 
 12.4   under this section. 
 12.5      Sec. 15.  Minnesota Statutes 1996, section 237.766, is 
 12.6   amended to read: 
 12.7      237.766 [PLAN DURATION.] 
 12.8      An alternative regulation plan approved by the commission 
 12.9   under section 237.764 must remain in force as approved for the 
 12.10  term specified in the plan, which must be for no less than ~~four~~ 
 12.11  three years.  Within six months prior to the termination of the 
 12.12  plan, the plan must be reviewed by the commission and, with the 
 12.13  consent of the company, revised or renewed consistent with 
 12.14  sections 237.76 to 237.774, except that the justification of 
 12.15  earnings levels in section 237.764, subdivision 1, paragraph 
 12.16  (c), if required, and the provisions prohibiting rate increases 
 12.17  at the initiation of or during the first ~~three years~~ year of a 
 12.18  plan contained in section 237.762, shall not apply to a revised 
 12.19  or renewed plan.  If a plan has a duration of only three years, 
 12.20  the revised or renewed plan must contain a mechanism for 
 12.21  changing the prices of price-regulated services.  The plan must 
 12.22  specify the reports required of the telephone company for review 
 12.23  of the plan and specify that the telephone company shall 
 12.24  maintain records in sufficient detail to facilitate the review. 
 12.25     Sec. 16.  Minnesota Statutes 1996, section 237.769, is 
 12.26  amended to read: 
 12.27     237.769 [UNBUNDLING AND INTERCONNECTION.] 
 12.28     ~~Every plan must contain, and the commission shall approve,~~ 
 12.29  ~~rates for and procedures under which the telephone company will,~~ 
 12.30  ~~on or before the effective date of the plan, permit~~ 
 12.31  ~~interconnection with and unbundle its intrastate services and~~ 
 12.32  ~~facilities to the same extent and in the same manner as the~~ 
 12.33  ~~Federal Communications Commission requires the interconnection~~ 
 12.34  ~~and unbundling for interstate purposes for that company.~~  Any 
 12.35  company under a plan is subject to any rules adopted under 
 12.36  section 237.16 on the same date as those rules are applicable to 
 13.1   other companies. 
 13.2      Sec. 17.  Minnesota Statutes 1996, section 237.772, 
 13.3   subdivision 1, is amended to read: 
 13.4      Subdivision 1.  [TOTAL SERVICE LONG-RUN INCREMENTAL COST.] 
 13.5   (a) For purposes of this chapter, total service long-run 
 13.6   incremental cost (TSLRIC) means the total cost to the company of 
 13.7   supplying a service~~,~~ or group of services~~, or basic network~~ 
 13.8   ~~function~~.  The term "long-run" means a period of time sufficient 
 13.9   so that all inputs are avoidable based on the total increment of 
 13.10  service~~,~~ or group of services~~, or basic network function~~ and 
 13.11  includes the relevant costs resulting from the company's 
 13.12  decision to provide the service~~,~~ or group of services~~, or basic~~ 
 13.13  ~~network function,~~ holding constant the production levels of all 
 13.14  other services~~,~~ or groups of services~~, or basic network~~ 
 13.15  ~~functions~~ provided by the company.  
 13.16     (b) A telephone company is not required to prepare or file 
 13.17  TSLRIC or variable cost studies for all of its services as a 
 13.18  prerequisite to filing a plan.  However, the commission may 
 13.19  order cost studies to be prepared for specific services as a 
 13.20  condition of approval of the plan. 
 13.21     Sec. 18.  [237.78] [DEAVERAGED RATES.] 
 13.22     Rates for unbundled network elements must not be 
 13.23  geographically deaveraged unless corresponding retail rates are 
 13.24  similarly deaveraged.  When rates of a telephone company subject 
 13.25  to an alternative plan of regulation are geographically 
 13.26  deaveraged, the requirements of section 237.762, subdivision 5, 
 13.27  must be met.  If rates of a telephone company not subject to an 
 13.28  alternative regulation plan are required to be geographically 
 13.29  deaveraged, a universal service mechanism must be in place to 
 13.30  ensure that rates remain affordable. 
 13.31     Sec. 19.  [DEPRECIATION RESERVE DEFICIENCIES; ANALYSIS AND 
 13.32  REPORT.] 
 13.33     Before the effective date of this section, the depreciation 
 13.34  rates and charges the commission authorized telephone companies 
 13.35  to include in rates and recover from customers have been 
 13.36  inadequate to enable telephone companies to recover their 
 14.1   investment in telephone plant, equipment, and facilities on a 
 14.2   timely basis.  As a result of these past practices, telephone 
 14.3   companies in Minnesota generally have unrecovered depreciation 
 14.4   reserve deficiencies.  The commission shall convene a task force 
 14.5   of telephone industry representatives, shall investigate the 
 14.6   nature and extent of the deficiencies, and, before January 1, 
 14.7   1998, shall submit a report to the legislature containing 
 14.8   recommendations regarding the recovery of the deficiencies. 
 14.9      Sec. 20.  [REPEALER.] 
 14.10     Minnesota Statutes 1996, section 237.761, subdivision 2, is 
 14.11  repealed. 
 14.12     Sec. 21.  [EFFECTIVE DATE.] 
 14.13     Sections 1 to 20 are effective on the day following final 
 14.14  enactment.