Utah House approves H.B. 364 to shift telecom regulation to price-cap model with rural protections

SALT LAKE CITY — The Utah House approved the first substitute of House Bill 364 on Feb. 24, sending to the Senate a plan to change how telephone service is regulated statewide. The measure passed 73–0 after extended floor debate and testimony from the Public Service Commission.

Representative Martin Stevens, sponsor of the bill, told colleagues the bill establishes a three‑stage transition: maintaining current regulation until May 1, 1997; then moving to a price‑cap/quality‑of‑service form of regulation with a three‑year freeze on noncompetitive residential rates; and requiring recurring reports from the Public Service Commission to the Legislature and governor on the industry’s status and recommendations. "In the first phase... the regulation will stay exactly the same as it is now," Stevens said during his presentation, and later explained the proposal "allows US West to lower their rates in competitive zones as competitors come in."

Commission testimony shaped floor debate. Commissioner Mason of the Public Service Commission said the agency had spent two years assessing the prospect of competition and had proposed an alternative, known in the debate as the "Connecticut approach," which would give the commission discretion to establish alternative forms of regulation. "We... started a process two years ago recognizing that competition was on its way in the telecommunications industry," Mason said, urging lawmakers the bill's compromise provisions and reporting requirements would allow course corrections if problems emerged.

Supporters said the bill is intended to protect residential customers as business subsidies erode and to provide regulatory guidance for new competitors. Opponents and some committee members said they worried about moving away from rate‑of‑return regulation and about limited time for floor debate. Representative Peterson voiced concern about voting without fully understanding the long‑term effects, noting the difficulty of making rapid judgments late in the session.

The bill contains opt‑out language intended to let small rural exchanges avoid terms that would make them economically nonviable, and it includes anti‑predatory‑pricing language to prevent incumbents from undercutting competitors. The House also added an amendment allowing the Public Service Commission to set the specific price index used under the new regime.

The House dissolved into a Committee of the Whole for a short informational hearing with the commission before resuming debate; that motion passed by division. After floor remarks emphasizing compromise and consumer protections, the House gave H.B. 364 final passage and referred it to the Senate for consideration.

What’s next: The Senate will consider the substitute bill. The Public Service Commission will be required to file periodic reports specified in the bill so the Legislature can review whether the regulatory changes are meeting consumer‑protection goals.