Session Law

Identifying Information:L. 2002 ch. 027
Other Identifying Information:2002 Senate Bill 480
Tax Type:Other
Brief Description:An Act concerning retail electric suppliers; amending K.S.A. 66-104d, 66-1,176and 66-1,176b and repealing the existing sections.
Keywords:


Body:

CHAPTER 27

SENATE BILL No. 480

An Act concerning retail electric suppliers; amending K.S.A. 66-104d, 66-1,176

and 66-1,176b and repealing the existing sections.


Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 66-1,176 is hereby amended to read as follows: 66-

1,176. (a) Whenever a city proposes to annex land that is located within

the certified territory of a retail electric supplier, the city shall provide

notice to the retail electric supplier in the manner prescribed by K.S.A.

12-520a, and amendments thereto. All rights of a retail electric supplier

to provide electric service in an area annexed by a city shall terminate

180 days from the date of annexation, unless such electric supplier is then

holding a valid franchise for service in the area granted by the annexing

city. Such period of 180 days shall be extended to 210 days from the date

of annexation if a franchise is granted to the retail electric supplier pur-

suant to referendum conducted according to applicable franchise laws of

the state of Kansas within such period of 210 days. Whenever the city

annexes land that is located within the certified territory of a retail electric

supplier, the city shall negotiate for the issuance of a franchise agreement

pursuant to K.S.A. 12-2001, et seq., and amendments thereto, with a retail

electric supplier holding a certificate within the annexed area. Nothing

herein shall be construed to require a supplier holding both a certificate

of convenience and a franchise for the area annexed to obtain a new

franchise. The city shall have the final selection of which supplier receives

a franchise to operate within the annexed area. When making such selec-

tion, the city shall consider certain factors including, but not limited to:

(1) The public convenience and necessity; (2) rates of various suppliers;

(3) desires of the customer or customers to be served; (4) economic impact

on the suppliers; (5) economic impact on the customers of the suppliers;

(6) the utility's operational ability to serve the annexed area; (7) avoiding

the wasteful duplication of facilities; (8) avoiding unnecessary encum-

brance on the landscape; and (9) preventing the waste of materials and

natural resources. Within 30 days after the final decision of the city, any

supplier aggrieved thereby may file an appeal in the district court of the

county in which the annexed area is located to determine the reasonable-

ness of the final decision. In the event that an appeal of the decision is

filed in the district court, the retail electric supplier providing service at

the time of annexation shall continue to provide service until such time

as the appeal has been concluded. In the event service rights are termi-

nated pursuant to this section, the commission shall certify such annexed

area as a single certified territory to the supplier holding a franchise for

or then providing retail electric service in the city immediately prior to

the annexation.

(b) In the event the supplier holding a franchise or then providing

retail electric service does not effect the assumption of electric service to

the annexed area at the termination of the applicable 180-day or 210-day

period as provided in subsection (a), then the originally certified supplier

shall have the right to continue service to the annexed area and charge

its ordinary rates therefor until such supplier does assume service to the

annexed area. Such service shall be free of any franchise fee or other

compensation to the city or the electric supplier holding the franchise. If

the supplier holding a franchise has not assumed service to the annexed

area within 180 days following the applicable 180-day or 210-day period

provided in subsection (a), the city may require the originally certified

supplier to obtain a franchise in order to continue service to the annexed

area. Unless otherwise mutually agreed upon by the affected suppliers,

no assumption of electric service shall occur within 15 days following

notice to the originally certified supplier of the intended changeover time.

(c) Whenever the service rights of a retail electric supplier are ter-

minated pursuant to subsection (a), fair and reasonable compensation

shall be paid to such retail electric supplier by the supplier subsequently

authorized to provide electric service. Such compensation shall be an

amount mutually agreed upon by the affected suppliers or the sum of the

following:

(1) The depreciated replacement cost for the electric utility facilities

in the territory in which the service rights have been terminated pursuant

to subsection (a). As used in this paragraph, ``depreciated replacement

cost'' shall mean the original installed cost of the facilities, adjusted to

present value by utilizing a nationally recognized index of utility construc-

tion costs, less accumulated depreciation based on the book depreciation

rates of the selling utility as filed with and approved by the state corpo-

ration commission, which are in effect at the time of acquisition;

(2) all reasonable and prudent costs of detaching the electric system

facilities to be sold and all reasonable and prudent costs of reintegrating

the remaining electric system facilities of the retail electric supplier whose

service rights are terminated pursuant to subsection (a);

(3) an amount equal to two times the gross revenues attributable to

the customers in the terminated territory during the 12 months next pre-

ceding the date of termination transfer of the service rights pursuant to

subsection (a); and

(4) an amount equal to the state and federal tax liability created by

the taxable income pursuant to the provisions of this paragraph and par-

agraphs (1), (2) and (3) by the retail electric supplier whose service rights

are terminated pursuant to subsection (a), calculated without regard to

any tax deductions or benefits not related to the sale of assets covered

herein.

(d) In the event that the parties are unable to agree upon an amount

of compensation to be paid pursuant to subsection (c), after 60 days fol-

lowing the date of termination of service rights either party may apply to

the district court having jurisdiction where any portion of the facilities

are located, for determination of compensation. Such determination shall

be made by the court sitting without a jury.

Sec. 2. K.S.A. 66-1,176b is hereby amended to read as follows: 66-

1,176b. (a) When the service rights of a retail electric supplier are ter-

minated by a city during the period in which a valid franchise is in effect

and the service rights are assumed by the terminating city, the governing

body of the city shall acquire from the terminated supplier the parts of

the local electric distribution system necessary to serve all customers

within the previously franchised area and the terminated supplier shall

sell the system to the governing body of such city for which it shall be

fairly compensated. Such compensation shall be an amount mutually

agreed upon by the affected parties or an amount determined by the

following formula:

(1) The depreciated replacement cost for the electric utility facilities

in the territory in which the service rights have been terminated. As used

in this paragraph, ``depreciated replacement cost'' means the original in-

stalled cost of the facilities, adjusted to present value by utilizing a na-

tionally recognized index of utility construction costs, less accumulated

depreciation based on the book depreciation rates of the selling utility,

as filed with and approved by the state corporation commission, which

are in effect at the time of acquisition;

(2) the depreciated replacement costs of the remaining proportion of

any take or pay power contracts or participation power agreements;

(3) the depreciated replacement cost for the electric utility facilities

outside the affected territory used in providing service to the formerly

franchised area. Such facilities shall include all generation facilities and

all transmission facilities throughout the terminated utility's integrated

system, the value of which shall be determined by the depreciated re-

placement cost formula in paragraph (1) multiplied by the percentage of

the terminated utility's total retail kilowatt-hour sales to customers in the

affected area during the 12 months next preceding the effective date of

the sale;

(4) all reasonable and prudent costs of detaching the electric system

facilities to be sold, including the reasonable costs of studies and inven-

tories made to determine the facility's value and all reasonable and pru-

dent costs of reintegrating the remaining electric system facilities of the

retail electric supplier whose service rights are terminated;

(5) an amount equal to two times the net revenues received during

the 12 months next preceding the date of termination of the service rights

from the customers within the affected area of the retail electric supplier

whose service rights are terminated. As used in this paragraph, ``net rev-

enues'' means the total revenues received by the terminated utility for

electric service within the affected area less franchise and sales taxes col-

lected; the cost of fuel or purchased power recovered in the revenues;

and labor, maintenance, administration and insurance. This number shall

be multiplied by the number of years remaining in any franchise contract;

and

(6) an amount equal to the state and federal tax liability created by

the taxable income pursuant to the provisions of this paragraph and par-

agraphs (1), (2), (3), (4) and (5) by the retail electric supplier whose serv-

ice rights are terminated, calculated without regard to any tax deductions

or benefits not related to the sale of assets covered herein.

(b) If the parties are unable to agree upon the amount of compen-

sation to be paid pursuant to this act after 60 days following the date of

termination of service rights, either party may apply to the district court

having jurisdiction where any portion of the facilities is located for de-

termination of compensation. Such determination shall be made by the

court sitting without a jury.

Sec. 3. K.S.A. 66-104d is hereby amended to read as follows: 66-

104d. (a) As used in this section, ``cooperative'' means any cooperative,

as defined by K.S.A. 17-4603, and amendments thereto, which has fewer

than 15,000 customers and which provides power principally at retail.

(b) Except as otherwise provided in subsection (f), a cooperative may

elect to be exempt from the jurisdiction, regulation, supervision and con-

trol of the state corporation commission by complying with the provisions

of subsection (c).

(c) To be exempt under subsection (b), a cooperative shall poll its

members as follows:

(1) An election under this subsection may be called by the board of

trustees or shall be called not less than 180 days after receipt of a valid

petition signed by not less than 10% of the members of the cooperative.

(2) The proposition for deregulation shall be presented to a meeting

of the members, the notice of which shall set forth the proposition for

deregulation and the time and place of the meeting. Notice to the mem-

bers shall be written and delivered not less than 21 nor more than 45

days before the date of the meeting.

(3) If the cooperative mails information to its members regarding the

proposition for deregulation other than notice of the election and the

ballot, the cooperative shall also include in such mailing any information

in opposition to the proposition that is submitted by petition signed by

not less than 1% of the cooperative's members. All expenses incidental

to mailing the additional information, including any additional postage

required to mail such additional information, must be paid by the sig-

natories to the petition.

(4) If the proposition for deregulation is approved by the affirmative

vote of not less than a majority of the members voting on the proposition,

the cooperative shall notify the state corporation commission in writing

of the results within 10 days after the date of the election.

(5) Voting on the proposition for deregulation shall be by mail ballot.

(d) A cooperative exempt under this section may elect to terminate

its exemption in the same manner as prescribed in subsection (c).

(e) An election under subsection (c) or (d) may be held not more

often than once every two years.

(f) Nothing in this section shall be construed to affect the single cer-

tified service territory of a cooperative or the authority of the state cor-

poration commission, as otherwise provided by law, over a cooperative

with regard to service territory, charges for transmission services, sales of

power for resale, wire stringing and transmission line siting, pursuant to

K.S.A. 66-131, 66-183, 66-1,170 et seq. or 66-1,177 et seq., and amend-

ments thereto.

(g) (1) Notwithstanding a cooperative's election to be exempt under

this section, the commission shall investigate all rates, joint rates, tolls,

charges and exactions, classifications and schedules of rates of such co-

operative if there is filed with the commission, not more than one year

after a change in such cooperative's rates, joint rates, tolls, charges and

exactions, classifications or schedules of rates, a petition signed by not

less than 5% of all the cooperative's customers or 3% of the cooperative's

customers from any one rate class. If, after investigation, the commission

finds that such rates, joint rates, tolls, charges or exactions, classifications

or schedules of rates are unjust, unreasonable, unjustly discriminatory or

unduly preferential, the commission shall have the power to fix and order

substituted therefor such rates, joint rates, tolls, charges and exactions,

classifications or schedules of rates as are just and reasonable.

(2) The cooperative's rates, joint rates, tolls, charges and exactions,

classifications or schedules of rates complained of shall remain in effect

subject to change or refund pending the state corporation commission's

investigation and final order.

(3) Any customer of a cooperative wishing to petition the commission

pursuant to subsection (g)(1) may request from the cooperative the

names, addresses and rate classifications of all the cooperative's customers

or of the cooperative's customers from any one or more rate classes. The

cooperative, within 21 days after receipt of the request, shall furnish to

the customer the requested names, addresses and rate classifications and

may require the customer to pay the reasonable costs thereof.

(h) (1) If a cooperative is exempt under this section, not less than 10

days' notice of the time and place of any meeting of the board of trustees

at which rate changes are to be discussed and voted on shall be given to

all members of the cooperative and such meeting shall be open to all

members.

(2) Violations of subsection (h)(1) shall be subject to civil penalties

and enforcement in the same manner as provided by K.S.A. 75-4320 and

75-4320a, and amendments thereto, for violations of K.S.A. 75-4317 et

seq. and amendments thereto.

(i) (1) Any cooperative exempt under this section shall maintain a

schedule of rates and charges at the cooperative headquarters and shall

make copies of such schedule of rates and charges available to the general

public during regular business hours.

(2) Any cooperative which fails, neglects or refuses to maintain such

copies of schedule of rates and charges under this subsection shall be

subject to a civil penalty of not more than $500.

Sec. 4. K.S.A. 66-104d, 66-1,176 and 66-1,176b are hereby repealed.

Sec. 5. This act shall take effect and be in force from and after its

publication in the statute book.

Approved April 4, 2002.


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Date Composed: 10/10/2002 Date Modified: 10/10/2002