Texas Senator Eyes USF Action After PUC Hikes Surcharge
The Texas Public Utility Commission quietly approved a whopping increase to the Texas USF surcharge Thursday. Texas will raise the TUSF revenue-based surcharge to 24% from 3.3% on Aug. 1, commissioners decided on unanimous consent, without discussion, at a livestreamed meeting. Legislators could provide relief soon, said state Sen. Drew Springer (R) in an interview. Industry and a consumer advocate supported broad TUSF contribution changes.
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The TUSF surcharge increase was necessitated by reduced intrastate voice revenue and increased costs, staff said Tuesday in docket 50796-58 (see 2207130036). Ruling last month on a lawsuit by rural LEC associations Texas Telephone Association (TTA) and Texas Statewide Telephone Cooperative, Inc. (TSTCI), a state court said Texas commissioners violated the state’s constitution and utility and administrative procedure laws by choosing in June 2020 not to fully fund TUSF by doubling the surcharge to 6.4% (see 2207010045). In a separate case, the court ordered the commission to fully pay AMA TechTel Communications, and the CLEC says the PUC still owes $7.3 million to comply (see 2207120028).
Gov. Greg Abbott (R) vetoed a bill last year to revamp TUSF by adding VoIP providers to the contribution base (see 2106210048). The legislature meets every two years and will return in January.
The PUC made a good decision following the court’s direction, said Springer. The state senator expects the legislature to come back in January and try to pass a bill similar to last year’s measure, which passed the legislature by wide margins before being vetoed, he said. Springer voiced optimism that Abbott will respect the court’s ruling and work with legislators. The senator doesn’t believe the PUC has authority to overhaul TUSF without legislation, he said.
In the meantime, Springer plans to propose that the legislative budget board meet to pass a supplemental budget to pay down TUSF by $200 million, which is doable with a big state surplus, he said. Texas Comptroller Glenn Hegar (R) raised the state’s revenue estimate by about $14 billion Thursday, meaning the state will have about $149 billion for general 2022-23 spending. The budget board can make emergency appropriations before legislators return. Springer said it would allow the PUC to reduce the surcharge to about what PUC staff had recommended two years ago.
The commission’s USF increase is "a direct result of the PUC’s refusal to meet its obligations as imposed by statutes and is only being done in response to a court order after needless protracted litigation resulting from the PUC’s inaction,” said Rep. John Smithee (R), who sponsored the 2021 USF bill that was vetoed, in a statement Thursday. “Unfortunately, ratepayers are the losers when state agencies refuse to do their job. Hopefully, this court order will incentivize the PUC to take its statutory responsibilities seriously in the future.”
Texas commissioners had no choice but to approve the increase because it was court-ordered, Texas Consumer Association President Sandra Haverlah said in an interview. “Unfortunately, it’s going to fall on the backs of consumers” already dealing with high gas prices and other costs, she said. The best way to lower the TUSF fee would be for the legislature to restructure contribution, she said. If legislators take up a bill early enough in session, they should have the numbers to override any veto attempt, she said. Commissioners should have increased the surcharge two years ago, said the consumer advocate. “Now we have to pay the tab.”
“TSTCI’s members are relieved that the Commission has taken action to fully fund the TUSF,” emailed Board President Kelly Allison. “These revenues are crucial to keeping the communications infrastructure across Texas in place, and allow consumers to have access to services at reasonable prices.” He said it’s “unfortunate that this could have not been addressed at some point earlier over the past two years so that such a dramatic increase would not have been necessary.” An increase to 11%-12% might have been enough to meet current obligations, but the additional increase “is meant to fund repayment of the arrearages of approximately $190 million that have accumulated since the beginning of 2021,” said Allison: The situation shows why TUSF contribution revision is needed.
It's a good first step, said TTA Executive Director Mark Seale. “While such a dramatic increase may seem an overreach, it is temporarily necessary to meet some immediate financial needs required by recent court decisions.”
“Texas should not burden consumers, particularly at such a high rate, as today’s decision does,” said CTIA Senior Vice President-State Affairs Jamie Hastings. Abbott, “by veto, and the Texas PUC, by prior vote, have reined in out-of-control Texas USF costs,” she said. “CTIA will continue to support legislative appropriations as the correct source for USF funding.”
A shift from voice to data led to reduced TUSF revenue, said Springer: Thursday’s increase was large, but “people basically had a … tax holiday for a couple years, and this is going to put it back to what they would have always been paying.”