386.800. Municipally owned electrical supplier, services outside boundaries prohibited--exceptions--annexation--negotiations, territorial agreements, regulations, procedure--fair and reasonable compen - Missouri Statutes

Municipally owned electrical supplier, services outside boundariesprohibited--exceptions--annexation--negotiations, territorialagreements, regulations, procedure--fair and reasonable compensationdefined--assignment of sole service territories--commissionjurisdiction.

386.800. 1. No municipally owned electric utility mayprovide electric energy at retail to any structure locatedoutside the municipality's corporate boundaries after July 11,1991, unless:

(1) The structure was lawfully receiving permanent servicefrom the municipally owned electric utility prior to July 11,1991; or

(2) The service is provided pursuant to an approvedterritorial agreement under section 394.312, RSMo;

(3) The service is provided pursuant to lawful municipalannexation and subject to the provisions of this section; or

(4) The structure is located in an area which waspreviously served by an electrical corporation regulated underchapter 386, and chapter 393, RSMo, and the electricalcorporation's authorized service territory was contiguous to orinclusive of the municipality's previous corporate boundaries,and the electrical corporation's ownership or operating rightswithin the area were acquired in total by the municipally ownedelectrical system prior to July 11, 1991. In the event that amunicipally owned electric utility in a city with a population ofmore than one hundred twenty-five thousand located in a county ofthe first class not having a charter form of government and notadjacent to any other county of the first class desires to servecustomers beyond the authorized service territory in an areawhich was previously served by an electrical corporationregulated under the provisions of chapter 386, and chapter 393,RSMo, as provided in this subdivision, the municipally ownedutility shall apply to the public service commission for an orderassigning nonexclusive service territories. The proposed servicearea shall be contiguous to the authorized service territorywhich was previously served by an electrical corporationregulated under the provisions of chapter 386, and chapter 393,RSMo, as a condition precedent to the granting of theapplication. The commission shall have one hundred twenty daysfrom the date of application to grant or deny the requestedorder. The commission may grant the order upon a finding thatgranting of the applicant's request is not detrimental to thepublic interest. In granting the applicant's request thecommission shall give due regard to territories previouslygranted to other electric suppliers.

2. Any municipally owned electric utility may extend,pursuant to lawful annexation, its service territory to includeany structure located within a newly annexed area which has notreceived permanent service from another supplier within ninetydays prior to the effective date of the annexation.

3. When a municipally owned electric utility desires toextend its service territory to include any structure locatedwithin a newly annexed area which has received permanent servicefrom another supplier within ninety days prior to the effectivedate of the annexation, it shall:

(1) Notify by publication in a newspaper of generalcirculation the record owner of said structure, and notify inwriting any affected electric supplier and the public servicecommission, within sixty days after the effective date of theannexation its desire to extend its service territory to includesaid structure; and

(2) Within six months after the effective date of theannexation receive the approval of the municipality's governingbody to begin negotiations pursuant to section 394.312, RSMo,with any affected electric supplier.

4. Upon receiving approval from the municipality'sgoverning body pursuant to subsection 3 of this section, themunicipally owned electric utility and the affected electricsupplier shall meet and negotiate in good faith the terms of theterritorial agreement and any transfers or acquisitions,including, as an alternative, granting the affected electricsupplier a franchise or authority to continue providing servicein the annexed area. In the event that the affected electricsupplier does not provide wholesale electric power to themunicipality, if the affected electric supplier so desires, theparties shall also negotiate, consistent with applicable law,regulations and existing power supply agreements, for powercontracts which would provide for the purchase of power by themunicipality from the affected electric supplier for an amount ofpower equivalent to the loss of any sales to customers receivingpermanent service at structures within the annexed areas whichare being sought by the municipally owned electric utility. Theparties shall have no more than one hundred eighty days from thedate of receiving approval from the municipality's governing bodywithin which to conclude their negotiations and file theirterritorial agreement with the commission for approval under theprovisions of section 394.312, RSMo. The time period fornegotiations allowed under this subsection may be extended for aperiod not to exceed one hundred eighty days by a mutualagreement of the parties and a written request with the publicservice commission.

5. For purposes of this section, the term "fair andreasonable compensation" shall mean the following:

(1) The present-day reproduction cost, new, of theproperties and facilities serving the annexed areas, lessdepreciation computed on a straight-line basis; and

(2) An amount equal to the reasonable and prudent cost ofdetaching the facilities in the annexed areas and the reasonableand prudent cost of constructing any necessary facilities toreintegrate the system of the affected electric supplier outsidethe annexed area after detaching the portion to be transferred tothe municipally owned electric utility; and

(3) Four hundred percent of gross revenues less grossreceipts taxes received by the affected electric supplier fromthe twelve-month period preceding the approval of themunicipality's governing body under the provisions of subdivision(2) of subsection 3 of this section, normalized to produce arepresentative usage from customers at the subject structures inthe annexed area; and

(4) Any federal, state and local taxes which may beincurred as a result of the transaction, including the recaptureof any deduction or credit; and

(5) Any other costs reasonably incurred by the affectedelectric supplier in connection with the transaction.

6. In the event the parties are unable to reach an agreementunder subsection 4 of this section, within sixty days after theexpiration of the time specified for negotiations, themunicipally owned electric utility may apply to the commissionfor an order assigning exclusive service territories within theannexed area and a determination of the fair and reasonablecompensation amount to be paid to the affected electric supplierunder subsection 5 of this section. Applications shall be madeand notice of such filing shall be given to all affected partiespursuant to the rules and regulations of the commission governingapplications for certificates of public convenience andnecessity. Unless otherwise ordered by the commission for goodcause shown, the commission shall rule on such applications notlater than one hundred twenty days after the application isproperly filed with the secretary of the commission. Thecommission shall hold evidentiary hearings to assign serviceterritory between affected electric suppliers inside the annexedarea and to determine the amount of compensation due any affectedelectric supplier for the transfer of plant, facilities orassociated lost revenues between electric suppliers in theannexed area. The commission shall make such determinationsbased on findings of what best serves the public interest andshall issue its decision by report and order. Review of suchcommission decisions shall be governed by sections 386.500 to386.550. The payment of compensation and transfer of title andoperation of the facilities shall occur within ninety days afterthe order and any appeal therefrom becomes final unless the orderprovides otherwise.

7. In reaching its decision under subsection 6 of thissection, the commission shall consider the following factors:

(1) Whether the acquisition or transfers sought by themunicipally owned electric utility within the annexed area fromthe affected electric supplier are, in total, in the publicinterest, including consideration of rate disparities between thecompeting electric suppliers and issues of unjust ratediscrimination among customers of a single electric supplier ifthe rates to be charged in the annexed areas are lower than thosecharged to other system customers; and

(2) The fair and reasonable compensation to be paid by themunicipally owned electric utility, to the affected electricsupplier with existing system operations within the annexed area,for any proposed acquisitions or transfers; and

(3) Any effect on system operation, including, but notlimited to, loss of load and loss of revenue; and

(4) Any other issues upon which the municipally ownedelectric utility and the affected electric supplier mightotherwise agree, including, but not limited to, the valuationformulas and factors contained in subsections 4, 5 and 6, of thissection, even if the parties could not voluntarily reach anagreement thereon under those subsections.

8. The commission is hereby given all necessary jurisdictionover municipally owned electric utilities and rural electriccooperatives to carry out the purposes of this section consistentwith other applicable law; provided, however, the commissionshall not have jurisdiction to compel the transfer of customersor structures with a connected load greater than one thousandkilowatts. The commission shall by rule set appropriate fees tobe charged on a case-by-case basis to municipally owned electricutilities and rural electric cooperatives to cover all necessarycosts incurred by the commission in carrying out its duties underthis section.

(L. 1991 S.B. 221)

Effective 7-11-91