Subd. 1. Effective competition.

A company whose service has been determined by the commission to be subject to effective competition may:

1. (1) decrease the rate for that service effective without notice to its customers or the commission; and

2. (2) increase the rate for that service effective upon notice to its customers at least 30 days in advance of the increase.

   A company whose service is declared subject to effective competition is not subject to the requirements of section 237.07, subdivision 1, for that service.

Subd. 2. Emerging competition.

1. (a) A company may decrease the rate for a service subject to emerging competition that is listed in the price list, effective ten days after filing a new price list with the commission and the department, along with an incremental cost study demonstrating that the new price is above incremental cost. The commission shall prevent a proposed price reduction from going into effect or prospectively reinstate the original rate if the reduction has gone into effect if, after receiving a complaint or on its own motion, under section 237.081, the commission finds that the new rate is below incremental cost or that the new rate is not just and reasonable.

2. (b) A company may increase the rate for a service subject to emerging competition that is listed in the price list effective 30 days after notice is given to affected customers, the commission, and the department. The notice and new price list filing to the commission and the department for a rate increase must include an incremental cost study demonstrating that the proposed price is above incremental cost, unless a cost study for the service has been filed within the past three years and the company certifies that the cost study remains appropriate for setting rates. However, the commission may order a new cost study upon showing that the most recent cost study is inadequate.

   An interested party may file comments on the proposed rate increase within 30 days of the filing. If no party objects to the increase within that time, the rate is deemed approved. If an objection is filed, the rate increase must nonetheless be deemed approved unless within 60 days of the date of the filing the commission determines that the increase is potentially contrary to the public interest. In that event, the commission shall, within 60 days after the date of the filing, order that the rate increase is interim in nature and subject to refund. If interim rates are not ordered, the rate increase is not refundable. If a rate is subject to refund, the commission, after a contested case hearing or an expedited hearing under section 237.61, must make a final decision regarding the propriety of the rate increase within six months of the date the price change was filed, except that if a contested case hearing before an administrative law judge is required the commission shall make a final decision within ten months of the date the price change was filed. If the commission does not do so, the price change is deemed approved.

3. (c) If language describing a rate, term, or condition of service in a price list is changed without substantially altering the application of the price list, the change may take effect upon one-day notice to the commission.
4. (d) If a term or condition of service in a price list is changed in a way that results in a substantial change in the application of the price list, but the price is not changed, the change in the price list is effective at the same time as a price decrease under paragraph (a).
5. (e) If a new pricing plan is proposed for a service that is currently offered by a telephone company, the change in the price list is subject to the same schedules governing a price increase under paragraph (b). For purposes of this paragraph, a new pricing plan is a proposal that bundles rate elements for a service, alters the definition of the rate elements for a service, or includes increases for some rate elements and decreases for other rate elements.
6. (f) A telephone company may offer a new service to its customers ten days after it files a price list and incremental cost study for the service with the department and the commission.
7. (g) A telephone company may discontinue a telephone service that is subject to emerging competition, as long as the discontinuance is effective for that service throughout the state, effective 60 days after notice to the commission, the department, and affected customers, unless the commission, within 45 days of the notice, orders a hearing on it. If the commission orders a hearing, the commission shall make a final determination on the discontinuance within 180 days of the date that notice of the discontinuance was filed with the commission, except that if a contested case hearing before an administrative law judge is required the commission shall make a final decision within ten months of the date the notice of discontinuance was filed.
8. (h) A change in a price list not covered by paragraphs (a) to (f) must be reviewed according to the schedule prescribed for a price increase under paragraph (b).
9. (i) An incremental cost study required by this section, section 237.62, and 237.626, must be a long-run incremental cost study unless the commission has allowed the telephone company required to do the study to set rates based on a variable cost study. A telephone company may include a petition to file a variable cost study instead of a long-run incremental cost study with its notice of price change, notice of a promotion, or its filing of a new service. The commission shall grant the petition if the company demonstrates that a long-run incremental cost study is burdensome in relation to its annual revenue from the service involved, that the company has a low market share, that the service is no longer being offered to new customers, or if the company shows other good cause. A petition must be accompanied by a variable cost study. If the petition is denied, the company shall withdraw a filing made under this section.
10. (j) For purposes of this section and section 237.62, (1) long-run incremental cost means the change in total cost associated with a change in volume of the service, expressed on a per-unit basis, and (2) variable cost means the change in total cost, excluding fixed costs, associated with a change in volume of service, expressed on a per-unit basis.

Subd. 3. Discrimination.

No telephone company shall offer telecommunications service within the state upon terms or rates that are unreasonably discriminatory. No telephone company shall unreasonably limit its service offerings to particular geographic areas unless facilities necessary for the service are not available and cannot be made available at reasonable costs. The rates of a telephone company must be the same in all geographic locations of the state unless for good cause the commission approves different rates. A company that offers long-distance services shall charge uniform rates and charges on all long-distance routes and in all geographic areas in the state where it offers the services. However, a company may offer or provide volume discounts in connection with intrastate long-distance services and may pass through any state, municipal, or local taxes in the specific geographic areas from which the taxes originate. Nothing in this subdivision authorizes a telephone company to provide service outside of its authorized service area except as provided in section 237.16.

Subd. 4. Cost of service.

Prices or rates charged for competitive services must cover the incremental costs of providing the service. If a telephone company provides both local service and long-distance services, that company shall, in determining the cost of the long-distance service, include at least the same level of contribution to common and joint costs as is contained in the access charges to other telephone companies. The company may do so on an aggregate basis, instead of on a time or mileage band basis.

Subd. 5. Complaints.

Competitive services are subject to the complaint procedures of section 237.081. In a complaint proceeding, the company providing the service bears the burden of proving that the prices charged cover its incremental costs and a reasonable contribution to the common and joint costs of the company and are fair, just, and reasonable.

* NOTE: See section 237.5799