Utilities Code Chapter 51

Policy objectives: The statute explicitly articulates policy goals to promote provider diversity, interconnectivity, competition, and the availability of affordable, interoperable, standards-based services (Sec. 51.001(b)-(c)). It also instructs the commission to tailor regulation to the degree of competition in markets, reducing regulatory burden where competition is strong and protecting noncompetitive markets (Sec. 51.001(e)).

Definitions as control points: The text defines multiple controlling categories which determine regulatory coverage and obligations. Key definitional controls include:

• “Basic local telecommunications service” (Sec. 51.002(1)), which enumerates services that constitute basic service and reserves to the commission the authority to add services after a hearing (Sec. 51.002(1)(H)).
• “Dominant carrier” (Sec. 51.002(2)), defined by commission determination of market power and including incumbents as of Sept. 1, 1995, for certain services; the commission thus decides dominance in particular geographic markets.
• “Incumbent local exchange company” and “local exchange company” (Secs. 51.002(3), (4)), which tie regulatory treatment to certificate status as of specific dates.
• “Telecommunications provider” and “telecommunications utility” (Secs. 51.002(10), (11)), lists of entity types that trigger obligations and exclusions.

Pricing flexibility: The statute authorizes a range of pricing tools (customer-specific contracts, packaging, volume/term discounts, zone pricing) by defining “pricing flexibility” (Sec. 51.002(7)), and then limits misuse by barring unreasonable preference, discrimination, predation, or anticompetitive conduct (Sec. 51.004(a)). It creates a statutory presumption that prices at or above long run incremental cost (LRIC) are not predatory, tying the substantive standard to an administrative cost definition (Sec. 51.004(b); Sec. 51.002(6) referencing 16 T.A.C. Sec. 23.91).

Municipal rights and interactions: The commission may assist municipalities on request (Sec. 51.005). Municipalities have statutory standing in commission cases involving utilities serving the municipality (Sec. 51.007), can engage experts and be reimbursed by the public utility to the extent the commission deems reasonable (Sec. 51.006), and may seek judicial review of commission orders as provided in Sec. 15.001 (Sec. 51.008). Utilities retain the right to pass through municipal fees to customers and must pass through fee reductions promptly (Sec. 51.009).

Procedural deadlines and consequences: The commission must complete an investigation of a public utility’s sale, merger, or similar action reported under Sec. 14.101 within 180 days (Sec. 51.010(a)). If the commission fails to enter a final order within that period, the statute deems the commission to have determined the action is consistent with the public interest (Sec. 51.010(b)). Certain companies and elections are exempted from application of Sec. 14.101 (Sec. 51.010(c)).

Interplay with federal and administrative rules: The statute incorporates and references federal definitions and administrative rules,for example, providers of commercial mobile service are treated differently under federal Sec. 332(d) (Sec. 51.002(10)(A)(iv); Sec. 51.003(5)), and LRIC is defined by 16 T.A.C. Sec. 23.91 (Sec. 51.002(6)). The statute requires offers made under its pricing flexibility regime to comply with Chapter 304, Business & Commerce Code (Sec. 51.004(d)).

Delegated discretion and qualification triggers: Several substantive determinations are left to the Public Utility Commission (referred to simply as the commission), including whether a service is “basic” (51.002(1)(H)), whether a carrier is dominant (51.002(2)), and the reasonableness of municipal reimbursement requests (51.006(b)). The statute also permits the commission to assist municipalities (51.005).

Providers: The text affects a broad class of providers defined within the statute. “Telecommunications provider” and “telecommunications utility” lists in Sec. 51.002(10) and (11) enumerate entities included: certificated telecommunications utilities, nondominant carriers, providers of commercial mobile service (subject to exceptions), interexchange carriers, resellers, specialized carriers, providers of operator services, customer-owned pay telephone service providers, shared tenant service providers, and entities the commission determines to provide telecommunications services in Texas. Incumbent local exchange companies and local exchange companies are separately defined (Secs. 51.002(3), (4)). Dominant carriers are a subset determined by the commission based on market power (Sec. 51.002(2)).

Excluded actors and services: The subtitle expressly does not apply to certain activities or entities (Sec. 51.003): companies whose only business is acting as a telecommunications manager or administering PBX-sharing/resale arrangements; telegraph services; television or radio stations; community antenna television services; and most providers of commercial mobile service subject to federal law, with a narrow exception for conventional rural radiotelephone services provided by a wire-line telephone company under FCC Public Mobile Service rules (Sec. 51.003(5)). The definition of “telecommunications provider” also excludes providers of enhanced/information services who do not also provide telecommunications (Sec. 51.002(10)(B)(i)), and the statute excludes state agencies and institutions of higher education (Sec. 51.002(10)(B)(ii)).

Customers and payers: The statute shapes what end users can expect through definitions of “basic local telecommunications service” (Sec. 51.002(1)) and policy goals to ensure access for low-income and rural customers (Sec. 51.001(g)). The municipal fee pass-through rule (Sec. 51.009) directly affects who ultimately pays municipal fees: public utilities retain the right to pass municipal fees through to customers, and are required to pass through municipal fee reductions promptly (Sec. 51.009(a)-(b)). Pricing flexibility provisions affect customers who may be offered individualized contracts, volume discounts, packaging, and zone pricing (Sec. 51.002(7), Sec. 51.004).

Municipalities and local governments: The statute gives municipalities participatory tools and standing in commission ratemaking proceedings (Secs. 51.005-51.008). Municipalities can request assistance from the commission (Sec. 51.005), hire consultants and experts and have their reasonable costs reimbursed by the public utility as determined by the commission (Sec. 51.006), and have standing in commission cases related to utilities serving the municipality subject to certain consolidation and standing determinations by the commission (Sec. 51.007). Municipalities are entitled to judicial review of commission orders under Sec. 15.001 (Sec. 51.008).

Regulators and the commission: The Public Utility Commission is the central decision-maker under the subtitle. The commission must make determinations about dominance, basic service classification, reasonableness of municipal reimbursement (Sec. 51.006(b)), and must conduct investigations and issue final orders within statutorily mandated timelines (Sec. 51.010). The commission also has authority to advise municipalities (Sec. 51.005) and to consolidate municipal interests or determine standing in retail-service disputes (Sec. 51.007(b)).

Intermediaries and third parties: Entities such as shared tenant service providers, resellers, and providers of operator and pay telephone services are listed among affected classes (Sec. 51.002(10)-(11)). Providers of Internet Protocol enabled service and Voice over IP service are defined (Secs. 51.002(3-a), (13)), which can affect their regulatory status depending on the commission’s subsequent determinations.

State-declared duties and goals: The statute instructs the commission and frames legislative intent to promote provider diversity, competition, affordability, accessibility including disabled-user access, and comparable service availability across urban and non-urban areas (Sec. 51.001(b)-(g)). These declared policies guide agency rulemaking, adjudication, and statutory interpretation.

Commission duties and authority:

• Determine dominant carriers and make market-power determinations (Sec. 51.002(2)).
• Determine whether a particular service is “basic local telecommunications service” after a hearing (Sec. 51.002(1)(H)).
• Adjust regulation to the degree of competition in the marketplace (Sec. 51.001(e)).
• Provide assistance to municipalities on request, including making staff available as witnesses or providing evidence (Sec. 51.005).
• Investigate and enter final orders within 180 days for certain public utility transactions reported under Sec. 14.101, or be deemed to have approved the action (Sec. 51.010(a)-(b)).
• Determine standing and consolidation of municipalities for retail-service disputes (Sec. 51.007(b)).

Telecommunications providers’ rights and obligations:

• Providers authorized to offer pricing flexibility may use customer-specific contracts, packaging, volume/term discounts, and zone pricing subject to limits (Sec. 51.002(7), Sec. 51.004).
• Offers that are customer-specific or in response to competitors are permitted when meeting other statutory requirements including Secs. 52.0584, 58.063, or 59.031 as applicable (Sec. 51.004(c)).
• Offers made under the pricing-flexibility allowance must comply with Chapter 304, Business & Commerce Code (Sec. 51.004(d)).
• Providers designated as public utilities may pass through municipal fees, including increases, and must pass through reductions promptly (Sec. 51.009(a)-(b)).
• Providers must be aware certain categories are excluded from the subtitle and thus outside these duties (Sec. 51.003).

Municipal rights and duties:

• Municipalities have standing in commission cases relating to utilities providing service in the municipality (Sec. 51.007(a)).
• Municipal governing bodies may hire consultants, accountants, auditors, attorneys, and engineers to participate in ratemaking proceedings and to litigate before the commission or a court (Sec. 51.006(a)).
• Municipalities can request and receive commission assistance (Sec. 51.005).
• Municipalities have a statutory entitlement to judicial review of commission orders as provided in Sec. 15.001 (Sec. 51.008).
• Municipalities seeking reimbursement for retained experts must have those costs determined reasonable by the commission; the public utility must then reimburse to that extent (Sec. 51.006(b)).

Procedural and timing duties:

• The commission must complete investigations reported under Sec. 14.101 and enter final orders within 180 days (Sec. 51.010(a)). If it does not, the action is deemed consistent with the public interest (Sec. 51.010(b)).

Standards and limitations:

• Pricing flexibility is permitted but cannot be “unreasonably preferential, prejudicial, or discriminatory” nor “predatory or anticompetitive” (Sec. 51.004(a)).
• A price set at or above LRIC is presumed not predatory (Sec. 51.004(b)), which places the LRIC methodology and administrative definition (16 T.A.C. Sec. 23.91) at the center of compliance for pricing decisions (Sec. 51.002(6)).

Definitions that create duties: Several statutory definitions functionally impose obligations by determining coverage: status as a certificated local exchange company as of Sept. 1, 1995 affects the incumbent classification (Sec. 51.002(3)); being a “telecommunications utility” or “public utility” subjects entities to public utility statutory obligations if they meet the definitions in Sec. 51.002(8) and (11).

Statute’s express enforcement mechanisms and penalties are limited in the text provided. The subtitle primarily establishes regulatory standards, agency duties, and procedural timelines rather than specifying a detailed penalty schedule in these sections. The enforcement and penalty mechanisms implied by the text operate through administrative and civil processes that the commission and courts administer, and through substantive presumptions and duties that influence regulatory outcomes.

Administrative enforcement via the commission:

• The commission is the primary enforcement actor for statutory determinations such as dominance, classification of basic services, the reasonableness of municipal reimbursements, and compliance with pricing flexibility standards (Secs. 51.002(1)(H), 51.002(2), 51.006(b), 51.004(a)). Enforcement therefore takes the form of commission adjudication, orders, and rulemaking rather than criminal sanctions specified in these sections.
• Section 51.010(a) imposes a timing requirement on the commission to complete investigations and enter final orders within 180 days after a public utility reports under Sec. 14.101; the statutory “penalty” for commission inaction is substantive: if the commission fails to act, the action is treated as consistent with the public interest (Sec. 51.010(b)). This is an operational consequence rather than a fine or penalty imposed on a regulated entity; it constrains the commission’s enforcement leverage by creating a default approval if the commission misses the deadline.

Civil remedies and judicial review:

• Municipalities are entitled to judicial review of commission orders as provided by Sec. 15.001 (Sec. 51.008). The statute thus establishes a judicial review route for parties aggrieved by commission actions or inactions, placing enforcement and remedial authority, including potential vacatur or modification of agency orders, within the courts to the extent allowed under Sec. 15.001.
• The obligation of a public utility to reimburse municipal costs for hired experts is conditioned on the commission’s determination of reasonableness (Sec. 51.006(b)). If a public utility refuses to reimburse, the commission’s enforcement processes and subsequent judicial review would be the available remedies, though the statute does not list a specific penalty mechanism here.

Market and contractual enforcement:

• The pricing flexibility provisions rely on legal standards (unreasonable preference, discrimination, predation) that can be enforced through commission adjudication and possibly private litigation under related statutory chapters referenced (Sec. 51.004(a)-(d); cross-references to Chapters 52, 58, 59 provisions are noted in Sec. 51.004(c)). Offers must also comply with Chapter 304, Business & Commerce Code (Sec. 51.004(d)), which provides private-law remedies (for example, unconscionability and other contract-law doctrines) under that chapter; however, this subtitle does not itself specify private damages or fines.

Limitations on direct criminal or administrative fines in the text:

• The provided sections do not prescribe explicit fines, license revocations, or criminal penalties; instead enforcement flows through commission orders, judicial review, and statutory presumptions (for example LRIC presumption in Sec. 51.004(b)), which influence enforcement outcomes.

Preclusive effects and default approvals:

• The 180-day default approval in Sec. 51.010(b) can operate as a de facto enforcement restraint: if the commission does not act timely, the reported public utility’s action is deemed consistent with the public interest, limiting regulatory remedies against that action after the deadline.

In short, enforcement in the provided text is primarily administrative and civil, driven by commission determinations, judicial review channels, and statutory presumptions, rather than by a standalone penalty schedule in the quoted sections. Practitioners should consult adjoining chapters and the commission’s rules for explicit sanctioning mechanisms applicable to specific violations, because this subtitle references other statutory frameworks without detailing all enforcement sanctions here.

Cross-references and incorporation by reference: The subtitle expressly references other statutes, administrative rules, and federal law to define key terms and limit or shape regulatory coverage. These cross-references create operational dependencies:

• Long run incremental cost (LRIC) is defined by 16 Texas Administrative Code Section 23.91 or its successor (Sec. 51.002(6)). This ties the statutory presumption in Sec. 51.004(b) (price at or above LRIC presumed not predatory) to an administrative cost standard created and maintained in the Public Utility Commission’s rules. Practically, compliance with the LRIC presumption requires engagement with the PUC’s current LRIC rule and methodology.

• The statute references the federal Communications Act and FCC rules for the definition of commercial mobile service (Section 332(d)) and the Omnibus Budget Reconciliation Act, using those federal definitions to carve out certain entities from the subtitle’s application (Secs. 51.002(10)(A)(iv), 51.003(5)). This makes federal regulatory categorizations directly relevant for state coverage.

• The pricing-flexibility provisions require offers made under the statute to be made in compliance with Chapter 304, Business & Commerce Code (Sec. 51.004(d)). Chapter 304 contains contractual and consumer-protection rules, so pricing offers under Sec. 51.004 must satisfy both telecommunications regulatory constraints and civil contract law obligations under Chapter 304.

• Section 51.004(c) expressly conditions some permitted offers on meeting the requirements of Sections 52.0584, 58.063, or 59.031. Those cross-references bring in other statutory restrictions or procedural requirements that apply to those specified services and markets, so compliance with pricing flexibility depends on satisfying provisions located elsewhere in the code.

• Municipalities’ judicial review rights are linked to Section 15.001 (Sec. 51.008). That cross-reference imports the procedural framework for judicial review from a different chapter.

• The subtitle’s definitions of “telecommunications provider” include and exclude certain entity types and cross-reference other chapters such as Chapters 17, 55, and 64 for exemptions (Sec. 51.002(10)(A)(iv)-(B)(i)). This creates a matrix where state regulatory obligations under this subtitle apply only to those entities identified by reference and not to federal-regulated or differently-categorized providers.

Scope limitations and federal preemption context: The statute explicitly relies on federal categorizations in multiple places; for example, providers of commercial mobile service are excluded under federal definitions (Sec. 51.003(5)), and the definition of a telecommunications provider refers to federal Communications Act language (Sec. 51.002(10)(A)(iv)). While the statute itself does not resolve federal preemption questions, it builds its coverage model on federal categories, so practitioners will need to track federal regulatory status to determine Texas statute applicability.

Administrative rule interplay: Several statutory standards require the commission to define or interpret concepts. For instance, the commission determines whether an item is a “basic local telecommunications service” after a hearing (Sec. 51.002(1)(H)) and determines dominance (Sec. 51.002(2)). Compliance therefore depends on commission rules and adjudications. The reference to 16 T.A.C. Sec. 23.91 for LRIC ties statutory defenses directly to administrative rulemaking and evidentiary standards.

Interchapter dependencies: The statute requires compliance with other Texas statutes for specific offerings (Sec. 51.004(d)) and references particular statutory sections that govern related conduct (Sec. 51.004(c)). It also excludes certain companies from Sec. 14.101 reporting requirements per Sec. 51.010(c), linking this subtitle to Sec. 14.101 and to Chapters 54 and 58.

Consequences for contract and tort law: The requirement that offers comply with Chapter 304 (Sec. 51.004(d)) means that contractual defenses and private remedies in Chapter 304 can be raised against offers made under Sec. 51.004, so commercial contracting discipline and consumer-protection rules intersect with regulatory pricing allowances.

In sum, the subtitle operates in a network of federal and state statutory regimes plus administrative rules. Compliance is not self-contained: practitioners must consult the PUC’s rules (e.g., for LRIC), federal classifications (e.g., for CMRS), related Texas statutory chapters referenced, and procedural statutes offering judicial-review frameworks.

The statute text itself provides the legislative provenance and subsequent amendments at the end of several sections. The origin and subsequent amendments recorded in the text are as follows:

• Original enactment: Acts 1997, 75th Legislature, Chapter 166, Section 1, effective September 1, 1997. This citation appears at the end of multiple sections (Secs. 51.001-51.010) indicating the subtitle was enacted in 1997.

• Amendments recorded in the statute text include:

  • Acts 1999, 76th Legislature, Chapter 1212, Section 4, effective September 1, 1999. This amendment is noted for Sec. 51.001 and Sec. 51.002, indicating changes to policy or definitions made in 1999.
  • Acts 1999, 76th Legislature, Chapter 1579, Section 4, effective August 30, 1999. This is cited at the end of Sec. 51.002, showing additional definitional adjustments in 1999.
  • Acts 2001, 77th Legislature, Chapter 651, Section 5, effective September 1, 2001. This appears in Sec. 51.002 and indicates further definitional changes in 2001.
  • Acts 2003, 78th Legislature, Chapter 32, Section 1, effective September 1, 2003. This amendment is cited in Sec. 51.004, implying modifications to pricing-flexibility rules in 2003.
  • Acts 2007, 80th Legislature, Regular Session, Chapter 885 (H.B. 2278), Section 2.39, effective April 1, 2009. This is cited at the end of Sec. 51.004, noting a later modification that took effect in 2009.
  • Acts 2011, 82nd Legislature, Regular Session, Chapter 98 (S.B. 980), Sections 1 and 2, effective September 1, 2011. These are cited at the end of Secs. 51.001 and 51.002 respectively, showing additional edits made in 2011.

The statute’s internal amendment notes therefore identify a chain of legislative activity spanning 1997 through 2011 recorded in the statutory margins. The notes do not describe the content of each amendment in legislative-history detail; they identify the session law citations and effective dates. To determine the precise textual changes enacted in each session-law citation, one must compare the current statute text to earlier codified versions and the session-law language cited. The statute as presented includes those historical markers, but does not narrate purposes or debates from those sessions.

The statute text provided does not contain or cite judicial decisions. It does not list case law, appellate or district-court rulings, or examples of litigation applying these sections. The statutory sections reference judicial-review rights for municipalities under Section 15.001 (Sec. 51.008) and create administrative determinations and procedures that could be the subject of litigation, but the text itself contains no litigation history.

Practically, that means any effort to understand how courts have interpreted:

• definitions like “dominant carrier” or whether a service is “basic,”
• the LRIC presumption in Sec. 51.004(b) tied to 16 T.A.C. Sec. 23.91,
• the scope and application of the 180-day default approval in Sec. 51.010(b), or
• municipal reimbursement reasonableness under Sec. 51.006(b)

will require independent case-research external to the statute text provided. The statute does not supply precedent or judicial gloss. For litigation posture, one must consult reported judicial decisions, commission orders, and administrative appeals addressing these particular sections, none of which are included in the material provided here.

Closely read definitions and exclusions: The statutory coverage depends heavily on precise definitions. For example, “basic local telecommunications service” lists specific elements (flat rate local service, tone dialing, operator and directory assistance access, 911, problem reporting seven days a week, lifeline/tel-assistance) but also permits the commission to add services after a hearing (Sec. 51.002(1)(A)-(H)). That commission authority can change what services are regulated as basic without further legislative action. Likewise, “local exchange telephone service” expressly excludes many services that might otherwise look like local service (PBX services over 75 stations, billing and collection services, high-speed private lines over 1.544 Mbps, customized services, dark fiber, certain non-voice data services), so a superficial label will not determine coverage; the statutory exclusions in Sec. 51.002(5) are detailed and mandatory.

Presumption tied to administrative rule: The presumption that prices at or above LRIC are not predatory (Sec. 51.004(b)) hinges on the LRIC definition in 16 T.A.C. Sec. 23.91 (Sec. 51.002(6)). LRIC methodology is technical and administratively defined, so a provider relying on the statutory presumption must ensure the price-comparison methodology conforms to whatever the current PUC rule specifies. That means a pricing defense can fail if the underlying LRIC calculation or evidentiary showing does not match the administrative standard.

Default approval for commission inaction: Section 51.010(b) states that if the commission does not issue a final order within 180 days after a public utility reports under Sec. 14.101, the commission is considered to have determined the action consistent with the public interest. This creates what is effectively a statutory default approval of certain utility actions if the commission misses the statutory deadline, transferring the cost of commission delay to stakeholders opposing the action and potentially shifting incentives for timely administrative action. Parties opposing a reported action must be mindful of the 180-day clock and the statute’s default consequence.

Municipal fee pass-through mechanics: Section 51.009(a) preserves the public utility’s right to pass through municipal fees, including increases, and requires prompt pass-through of municipal fee reductions (Sec. 51.009(b)). For customers and consumer-advocates, the operative effect is that municipal fee changes are likely to flow through to customer bills unless other regulatory limits apply elsewhere. Practitioners drafting municipal finance arrangements or advising utilities should account for this pass-through obligation.

Pricing flexibility subject to multiple constraints: Pricing flexibility is allowed (customer-specific contracts, volume/term discounts, zone pricing; Secs. 51.002(7), 51.004), but offers must not be unreasonably preferential, discriminatory, predatory, or anticompetitive (Sec. 51.004(a)), must meet requirements of specified sections (Sec. 51.004(c)), and must comply with Chapter 304, Business & Commerce Code (Sec. 51.004(d)). The multiplicity of cross-references means an apparently permissible commercial offer can trip procedural or substantive prohibitions in other statutes or rules if practitioners do not check those authorities.

Municipal reimbursement subject to commission reasonableness: Municipalities can hire experts and expect reimbursement by the public utility for reasonable costs, but reimbursement is only required “to the extent the commission determines is reasonable” (Sec. 51.006(b)). That allocates substantial discretion to the commission over whether and how much will be reimbursed, leaving municipalities with some exposure for unreimbursed costs.

Determinations left to the commission: Several consequential determinations are commission-driven: whether a service is “basic” (Sec. 51.002(1)(H)), whether a carrier is “dominant” (Sec. 51.002(2)), and the reasonableness of municipal reimbursements (Sec. 51.006(b)). Parties cannot rely solely on statutory text for these questions; they must engage in commission proceedings and evidentiary showings. This creates litigation and administrative burdens for parties whose status or obligations turn on those determinations.

Exclusions can be counterintuitive: The statute excludes certain services and entities that may be functionally similar to regulated activities (e.g., providers of enhanced or information services are excluded if they do not also provide telecommunications; Sec. 51.002(10)(B)(i)). Misclassifying a service can produce regulatory surprise. Practitioners should verify classification against the statutory definitions and commission determinations rather than relying on market labels.

Interplay with federal definitions: For commercial mobile service and other federal categories, state coverage follows federal definitions referenced in the statute (Secs. 51.002(10)(A)(iv), 51.003(5)). Changes in federal law or FCC rulemaking can therefore shift which providers fall under this subtitle; parties should monitor relevant federal authorities.

Map entity status to statutory definitions: Start by classifying the organization under the statutory definitions in Sec. 51.002. Determine whether the entity is a certificated local exchange company as of September 1, 1995 (affecting “incumbent” status under Sec. 51.002(3)), whether it is a telecommunications utility or provider under Sec. 51.002(10)-(11), and whether it falls into any of the applicability exclusions in Sec. 51.003. Classification determines applicable duties, pricing rules, municipal interaction rights, and procedural obligations.

If offering basic-local-type services, review basic-service scope: If a service may be “basic local telecommunications service” as listed in Sec. 51.002(1), or a candidate for commission designation under Sec. 51.002(1)(H), prepare to document service characteristics and be ready for commission hearings if classification is contested. Providers and municipalities should track commission determinations adding services to the list of basic services.

Pricing compliance and LRIC: For pricing decisions and offers:

• Use the pricing-flexibility definition in Sec. 51.002(7) as the menu of permitted options.
• Avoid conduct that could be “unreasonably preferential, prejudicial, or discriminatory” or “predatory or anticompetitive” under Sec. 51.004(a).
• When asserting the statutory presumption that a price is not predatory because it is at or above long run incremental cost, ensure the LRIC calculation conforms to 16 T.A.C. Sec. 23.91 or its successor (Sec. 51.002(6)) and document the methodology and supporting data (Sec. 51.004(b)). Maintain contemporaneous cost studies and legal analysis of the LRIC methodology.
• For customer-specific or competitor-response offers allowed by Sec. 51.004(c), verify compliance with the requirements of Sections 52.0584, 58.063, or 59.031 as applicable, and ensure offer terms comply with Chapter 304, Business & Commerce Code (Sec. 51.004(d)). Maintain documentation showing the reasonable business purpose for any selective discount or contract.

Municipal engagement and reimbursement: If advising or representing a municipality:

• Use Sec. 51.005 to request commission assistance when needed; understand the commission may make staff available as witnesses or provide evidence.
• When hiring consultants, auditors, engineers, or counsel under Sec. 51.006(a), document fees and services carefully and prepare detailed bills and scopes of work to support a reasonableness determination by the commission (Sec. 51.006(b)). Be prepared that reimbursement is discretionary to the extent deemed reasonable by the commission.
• Preserve standing-related arguments under Sec. 51.007, and prepare to participate in ratemaking proceedings with identified issues of local interest, recognizing the commission’s prerogative to determine standing in retail-service disputes or to consolidate municipalities on common issues (Sec. 51.007(b)).

Municipal fee pass-through mechanics: Utilities that pass through municipal fees should ensure billing systems can reflect municipal fee increases and prompt fee reductions (Sec. 51.009). Utilities that historically passed through municipal fees should document the pass-through practice and implement procedures to effectuate timely pass-through adjustments when municipalities change fee levels, consistent with Sec. 51.009(a)-(b).

Transaction reporting and timing (Sec. 51.010): For public utilities required to report under Sec. 14.101, file the report timely and prepare for commission investigation and a potential 180-day timeline for final order issuance (Sec. 51.010(a)). If representing a party opposing a reported transaction, recognize the 180-day statutory clock and consider procedural strategies to ensure the commission can complete its review within that period; if the commission does not act, the action will be deemed consistent with the public interest under Sec. 51.010(b).

Regulatory monitoring and rule conformity: Because multiple substantive elements depend on commission determinations and administrative rules (for example, LRIC, dominance, and basic-service classification), maintain active monitoring of PUC rulemakings and orders. Ensure legal and technical filings incorporate current administrative standards and that experts are engaged to produce necessary cost studies, market analyses, and technical evidence for commission proceedings.

Document business purpose for discounts and offers: When offering discounts, customer-specific contracts, or competitor-response deals permitted under Sec. 51.004(c), contemporaneously document the “reasonable business purpose” that justifies the offer and how it complies with referenced statutory sections and Chapter 304 (Sec. 51.004(c)-(d)). Keep records sufficient to rebut claims of undue preference, discrimination, or predation.

Prepare for commission-determined classifications and outcomes: Because the statute leaves several determinations to the commission (Secs. 51.002(1)(H), 51.002(2), 51.006(b)), structure compliance programs to support evidence-based participation in commission proceedings. Assemble legal, economic, and technical evidence in advance where possible, and plan for administrative advocacy and potential judicial review under Sec. 15.001 if commission orders are adverse (Sec. 51.008).

Coordinate with federal-status determinations: For entities near the boundary of federal-state classification (for example, providers of commercial mobile services), track federal FCC classifications and rulemakings because federal definitions referenced by the statute will affect state coverage (Secs. 51.002(10)(A)(iv), 51.003(5)).

In short, compliance requires mapping your entity and services against the statute’s definitions and exclusions, documenting cost and business-justification evidence for pricing, preparing to participate in commission proceedings where classification and dominance are at issue, and maintaining administrative and contractual records that demonstrate conformity with both state and cross-referenced federal and administrative standards.