NOTE:  As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

 

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F I S C A L   I M P A C T   R E P O R T

 

 

 

SPONSOR:

Sanchez, M.

 

DATE TYPED:

02/26/03

 

HB

 

 

SHORT TITLE:

Telecommunications Performance Assurance Fund

 

SB

775

 

 

ANALYST:

Padilla

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

Indeterminate--see narrative

 

 

Recurring

New Fund – Performance Assurance Plan Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

 

 

 

 

Indeterminate-- see narrative

 

Recurring

New Fund – Performance Assurance Plan Fund

 

(Indeterminate)

 

Recurring

General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

 

SOURCES OF INFORMATION

 

LFC Files

 

Responses Received From

Public Regulation Commission

Attorney General’s Office

 

SUMMARY

 

     Synopsis of Bill

 

Senate Bill 775 adds a new section to the New Mexico Telecommunications Act to create a special, non-reverting fund in the state treasury called the “Performance Assurance Plan Fund.”  The fund would be administered by the PRC and financed by payments from telecommunications companies that are subject to a “performance assurance plan.”  The fund would be used by the PRC to administer and audit the performance assurance plan of the telecommunications company. 

 

     Significant Issues

 

1.  The New Mexico telecommunications company currently subject to a performance assurance plan is Qwest.  Qwest’s performance assurance plan (“QPAP”) springs from its pursuit of 271 approval from the Federal Communications Commission.  That approval will allow Qwest to re-enter the interstate long-distance market.  The QPAP is a method to ensure customers and regulatory authorities of Qwest’s commitments to performance in key areas.  If Qwest fails to provide adequate service to competitive local exchange carriers (CLECs), Qwest will make “Tier 1” payments directly to those carriers. 

 

This bill concerns what are called “Tier 2” payments.  Tier 2 payments will be made directly to states when Qwest’s performance with respect to overall measurements is deficient. 

 

2.  This bill would allow the PRC to use the Tier 2 payments specifically for administration of the QPAP.  The PRC reports the fund would allow for the following activities:

 

·        Wholesale performance oversight

·        Participation in region-wide oversight and wholesale dispute resolution

·        State-specific dispute resolution proceedings

·        Audits required by the QPAP

 

3.  The PRC believes that without this new fund, it may not be able to pay for its share of the costs of monitoring the QPAP.

 

FISCAL IMPLICATIONS

 

This bill would appropriate any money in the Performance Assurance Plan Fund to the PRC.  If this bill is not enacted, Qwest’s Tier 2 payments will go into the general fund.  The PRC could not estimate what Qwest’s payments might be.  The payments will be affected by the volume of wholesale activity from CLECs and Qwest’s ability to meet its performance targets.  Although the payments will likely be recurring, they will fluctuate from month to month. 

 

The PRC estimates that New Mexico’s cost to participate in the multi-state collaborative effort for post-271 QPAP monitoring will be approximately $20.0 a year.  This activity is only a part of what the new fund would be used for.

 

The AGO believes the costs of the PRC’s efforts to monitor the QPAP should be borne by the cost-causer, in this case Qwest.  This bill would create the means to allow the cost-causer to bear the costs.

 

Continuing Appropriations

 

This bill creates a new fund and provides for continuing appropriations.  The LFC objects to including continuing appropriation language in the statutory provisions for newly created funds.  Earmarking reduces the ability of the legislature to establish spending priorities.

 

LP/njw