A bill introduced this year at the Texas Legislature could have served as a blueprint for other states aiming to spell out the obligations of utilities delivering high-speed Internet access over the power grid.

Designed to encourage broadband service over the power lines, or so-called BPL, the bill introduced by Texas Sen. Troy Fraser passed in the Senate, but the House failed to vote on the bill before lawmakers adjourned this summer. Texas lawmakers won’t meet again for a regulator legislative session until 2007.

The Texas bill gave utilities the discretion to offer broadband service over the power grid, with no obligation to offer network access to other Internet service providers, says Brett Kilbourne, director of regulatory services and associate general counsel with the United Telecom Council and United Power Line Council. The legislation also insulated utilities from having to seek additional easements or rights-of-way.

Richard Keck, outside general counsel for the Power Line Communications Association, says one provision introduced in the Senate bill would have discouraged utilities from building BPL infrastructure. That provision stipulated that 40 percent of BPL revenue be allocated to the utility for meeting its revenue requirements in setting electric rates.

In theory, sales from the BPL operation could help lower consumers’ electric rates, which are heavily regulated.

But Keck says that would only have left the BPL operation with 60 cents out of every dollar to recover its investment. He says that’s not fair considering the phone companies and cable operators are not required to allocate a portion of their broadband revenue to their phone and cable operations.

“This industry is having a hard enough time getting out of the starting gates anyway,” says Keck, an attorney with the firm Duane Morris LLP. “This would completely dry up capital markets for this business.”

Kilbourne says Senate Bill 1748 was the first major piece of BPL legislation introduced by a state. He anticipates that other state lawmakers and public utility commissions, rather than Congress, will attempt to introduce BPL legislation and rules. “This will probably happen on a stateby- state basis,” he says.

California Public Utilities Commission spokeswoman Terrie Prosper confirmed the PUC is preparing to open BPL proceeding.

“We are aggressively working on a BPL proceeding,” she says. “President [Michael] Peevey and Commissioner [Susan] Kennedy are excited about this technology and the promise it holds for California.”

Regulators say the technology could fulfill two roles - functioning as a high-speed Internet wire into homes and supporting internal applications on the power grid, which could help utilities operate more efficiently.

A task force assembled by the National Association of Regulatory Utility Commissioners issued a report on BPL in February after studying the technology for more than a year. The report said BPL implementations likely would encounter such regulatory issues as rights-of-way, affiliate transactions and open access to the network.

“Since BPL is an integrated component of the electric distribution network, the task force believes that it will be primarily up to the individual states to tailor appropriate regulatory roadmaps and responses,” says task force member Tony Clark, president of the North Dakota Public Service Commission, in a press statement.

Madalyn Cafruny, director of communications with the American Public Power Association, which represents community-owned electric utilities, did not comment specifically on the Texas bill, but expressed concern about potential regulations. “We are very concerned about any state barriers that would be erected that could prevent our members from providing broadband services that their communities desire,” she says.

The American Radio Relay League (ARRL), representing amateur radio operators, has expressed different concerns over BPL. The ARRL wants to ensure any legislation or rules help prevent utilities from interfering with the airwaves used by hams.

ARRL North Texas Section Manager Tom Blackwell says Texas lawmakers turned a deaf ear to the concerns of amateur radio operators and others. “Those who opposed this [bill] and made phone calls, sent letters or e-mail or who made personal visits to the staff members or senators were summarily ignored,” he claims.