Texas PUC Halves State USF Surcharge to 12%

Commissioners supported cutting in half the Texas USF surcharge, unanimously without discussion, at a livestreamed Texas Public Utility Commission meeting Thursday. The monthly TUSF fee will drop to 12% from 24% of intrastate telecom revenue on July 1, which is when the commission expects to complete arrearage and interest payments to rural local exchange carriers that it underpaid (see 2305040026). Texas RLEC groups sounded optimistic Thursday they would be repaid.

Commissioners voted by voice for the Texas USF item (docket 50796) as part of the PUC’s consent agenda. Last summer, the Texas PUC approved an increase of the revenue-based surcharge to 24% from 3.3% after a state court ruled commissioners violated the state’s constitution and utility and administrative procedure laws by choosing in June 2020 not to fully fund TUSF (see 2207140060). RLEC associations Texas Telephone Association (TTA) and the Texas Statewide Telephone Cooperative, Inc. (TSTCI) sued the PUC over the shortfall.

Thursday’s halving of the TUSF surcharge “was a routine matter of Commission business to ensure the Texas Universal Service Fund continues to meet its obligations,” a Texas PUC spokesperson emailed.

The Texas PUC underpaid RLECs for 21 months, beginning in January 2021 for the November 2020 reporting period. The PUC started paying in full again in October 2022 for the August 2022 reporting period.

The Texas commission “met its obligation” to make up the USF payments to RLECs, said TTA Executive Director Mark Seale: “Actually faster than we anticipated.” TTA has no problem with reducing the surcharge, he said. “Our customers have to pay into USF also.”

The commission's action pleased TSTCI, said Allen Hyer, the RLEC group’s president. “This reduction signifies that all withheld revenues will soon be paid in full, and that the PUC is setting an appropriate assessment rate to fully fund all obligations moving forward.” TSTCI hopes to work with the commission “to find reasonable and sustainable solutions for funding the TUSF moving forward,” added Hyer. “A sufficient and stable TUSF is vital for maintaining and expanding communications infrastructure” and for making service affordable.

AT&T supports reducing the fee since its customers pay it, said the carrier's spokesperson.

State legislators have been considering how best to subsidize phone and broadband services this session. The Texas House passed a constitutional amendment last month that would set up a broadband fund that could reduce pressure on state USF (see 2304270056). HJR-125 was referred May 3 to the Finance Committee. The legislature last week passed another bill to extend a Sept. 1 sunset on USF support for small telcos until Sept. 1, 2033 (see 2305030061).