(a) The authority may, and is encouraged to, implement an alternative form of regulation, including, but not limited to, price indexing, price regulation, cost indexing or price benchmarks, for noncompetitive and emerging competitive services provided by a telephone company. Any such alternative form of regulation shall be developed for, and tailored to, the individual company. A plan for such an alternative form of regulation may be filed by a telephone company or developed at the initiative of the authority. Prior to approval by the authority of any such plan, the noncompetitive and emerging competitive services provided by a telephone company shall continue to be regulated in accordance with the provisions of sections 16-19 and 16-19e. Upon approval by the authority of any such plan, the services to which the plan applies shall be regulated in accordance with the provisions of the plan, and the provisions of sections 16-19 and 16-19e shall not apply to such services.

(b) Upon the filing of a proposed plan for alternative regulation by a telephone company, the authority shall, after notice and hearing, issue a decision in which it approves, modifies or denies the proposed plan. The authority shall approve the proposed or modified plan only if it finds that such plan (1) includes a pricing methodology that reasonably ensures that customers and other telecommunications companies have access to the noncompetitive services of the telephone company at just and reasonable rates which reflect prudent and efficient management, and that such access is available on nondiscriminatory terms and conditions, (2) is designed to streamline, minimize the costs of and maximize the effectiveness of regulation for the telephone company, (3) encourages prudent infrastructure investment and improvements in productivity and service quality for noncompetitive services, (4) does not impede the continued development of competition for the noncompetitive services or disadvantage the provision of emerging competitive or competitive services by the telephone company, (5) ensures that the investment risk associated with the provision of competitive and emerging competitive services by the telephone company shall not be borne by customers of noncompetitive services, (6) notwithstanding the provisions of sections 16-19, 16-19e and 16-22 and subsection (a) of this section, includes a mechanism by which the authority may monitor the earnings of the affected company over a monitoring period, (7) is in the public interest, and (8) is consistent with the goals set forth in section 16-247a.

(c) During the monitoring period of an approved plan for an alternative form of regulation, the telephone company shall use any earnings in excess of a ceiling approved by the authority to offset the depreciation reserve deficiency of the company.

(d) Following the monitoring period, an approved plan for alternative regulation of a telephone company shall continue unless or until the authority (1) changes the form of regulation pursuant to an application filed by the company, or (2) determines that the plan does not continue to meet the criteria set forth in subsection (b) of this section. Upon such change or determination, the authority may order a different form of alternative regulation consistent with the criteria set forth in subsection (b) of this section. If the authority finds that competition has not developed or will not develop for certain services, the authority may apply traditional cost-based rate of return regulation to those noncompetitive services.

(e) The authority may modify a plan for an alternative form of regulation which it approved pursuant to this section and which is in effect if the authority determines such modification is required due to previously unforeseen circumstances, including, but not limited to, allowing the company to recover the reasonable costs of security of assets, facilities and equipment, both existing and foreseeable, that are incurred solely for the purpose of responding to security needs associated with the terrorist attacks on September 11, 2001, and the continuing war on terrorism.

(P.A. 94-83, S. 9, 16; P.A. 02-94, S. 3; P.A. 13-5, S. 16.)

History: P.A. 94-83 effective July 1, 1994; P.A. 02-94 amended Subsec. (e) to allow the department to modify a plan to allow the recovery of reasonable costs of security associated with the terrorist attacks on September 11, 2001, and the continuing war on terrorism; P.A. 13-5 replaced “department” with “authority”, effective May 8, 2013.