AN ACT relating to municipal interlocal gas utilities.

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AN ACT relating to municipal interlocal gas utilities. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF KRS CHAPTER 96 IS CREATED TO 3
READ AS FOLLOWS: 4
(1) As used in this section, "municipal interlocal gas utility" means an interlocal 5
agency as defined in KRS 65.230 whose membership includes only city 6
governments for the sole purpose of operating a system for the construction, 7
acquisition, distribution, transmission, furnishing, or selling of natural gas. 8
(2) Notwithstanding any provision of law to the contrary, a municipal interlocal gas 9
utility shall not be subject to t he provisions or requirements of KRS Chapter 278, 10
the administrative regulations promulgated thereunder, or the regulatory 11
jurisdiction of the Public Service Commission for any purpose, except as provided 12
in KRS 278.495. 13
(3) A municipal interlocal gas utility may exercise the powers and authority provided 14
in this chapter and Section 2 of this Act, in addition to all other applicable 15
provisions of law. Notwithstanding any provision of law to the contrary, a 16
municipal interlocal gas utility shall also possess the following powers: 17
(a) The authority to define, enlarge, or reduce its service territory through the 18
official acts of its governing authority; 19
(b) Except as related to a city utility or another municipal interlocal gas utility, 20
the primary right to provide services, at retail or wholesale, to any 21
customers within its defined service territory, including the ability to be the 22
first provider for any new customers within its defined service territory; and 23
(c) The authority to acquire by eminent domain all or part of the plant of an 24
existing natural gas distribution system located wholly or partially within its 25
defined service territory pursuant to KRS Chapter 416. The valuatio n of the 26
plant or system acquired by eminent domain under this paragraph shall be 27
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its depreciated replacement cost plus the value of the underlying land if the 1
land was vacant. 2
(4) Except as related to a city utility or another municipal interlocal gas uti lity, a 3
municipal interlocal gas utility shall be exempt from: 4
(a) Subsections (2), (4), and (5) of Section 3 of this Act; 5
(b) Section 5 of this Act; and 6
(c) Section 6 of this Act. 7
Section 2. KRS 65.240 is amended to read as follows: 8
(1) Any powers, privileges, or authorities exercised or capable of exercise by a public 9
agency of this state may be exercised and enjoyed jointly with any other public 10
agency of this state, and jointly with any public agency of any other stat e or of the 11
United States to the extent that the laws of the United States permit such joint 12
exercise or enjoyment. Any agency of the state government when acting jointly 13
with any public agency may exercise and enjoy all of the powers, privileges and 14
authority conferred by KRS 65.210 to 65.300 upon a public agency. 15
(2) Any two (2) or more public agencies may enter into agreements with one another 16
for joint or cooperative action pursuant to [ the provisions of] KRS 65.210 to 17
65.300, including but not limited to for the sharing of revenues and physical assets. 18
Appropriate action by ordinance, resolution or otherwise pursuant to law, of the 19
governing bodies of the participating public agencies shall be necessary before any 20
such agreement may enter into force. 21
(3) Any public agency may enter into agreements with another public agency or 22
agencies pursuant to KRS 65.210 to 65.300 to acquire by purchase or lease, any real 23
or personal property, or any interest, right, easement, or privilege therein, outside of 24
its mun icipal or jurisdictional boundaries, in connection with the acquisition, 25
construction, operation, repair, or maintenance of any water, sewage, wastewater, 26
natural gas, or storm water facilities, notwithstanding any other provision of the 27
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Kentucky Revised S tatutes restricting, qualifying, or limiting their authority to do 1
so, except as set forth in KRS Chapter 278. 2
(4) A private institution of higher education and one (1) or more county school districts 3
or independent school districts may enter into agreemen ts under KRS 65.210 to 4
65.300 for the purposes of establishing and operating a program or facility, 5
including a center for child learning and study, designed to help one (1) or more 6
schools meet the goals set out in KRS 158.6451, or for the investment of f unds if 7
the Attorney General determines that the proposal is compatible with the United 8
States Constitution as part of the review of the agreement provided in KRS 9
65.260(2), notwithstanding any other provision of the statutes restricting, qualifying 10
or limiting their authority to do so. 11
Section 3. KRS 96.5375 is amended to read as follows: 12
(1) Subject to the limitations of subsection (4) of this section and KRS 96.045 and 13
96.538, any city that owns and operates a municipa l system for the acquisition, 14
distribution, or transmission of natural gas may extend the system or construct a 15
new system, as authorized in KRS 96.170 and 96.542, to [into and] furnish and sell 16
natural gas to any person or entity within the boundaries of t he city or within any 17
territory outside of the city's boundaries. Municipal interlocal gas utilities shall 18
have the same authority to extend existing natural gas systems or construct new 19
systems to furnish and sell natural gas in territory inside or outsid e of their 20
constituent cities' boundaries. In exercising the authority provided by this 21
subsection, the city may install the necessary apparatus to provide natural gas 22
distribution or transmission service and may also condemn or otherwise acquire 23
rights-of-way as private utilities may do. The provisions of this subsection shall 24
apply to all cities of this Commonwealth transporting or distributing natural gas as 25
well as any board, commission, or agency thereof. 26
(2) (a) A city, other than a city of the first class or a consolidated local government, 27
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may acquire all or part of the entire plant of an existing natural gas 1
distribution system only under the same process and subject to the same 2
limitations established by KRS 96.580, 96.590, and 96.600 , and paragrap h 3
(b) of this subsection. 4
(b) Notwithstanding any provision of law to the contrary, when all or part of 5
the plant of an existing natural gas distribution system is acquired by 6
eminent domain pursuant to paragraph (a) of this subsection, the valuation 7
of the condemned plant or system shall be its depreciated replacement cost 8
plus the value of the underlying land if the land was vacant. 9
(3) No property owned or operated by an existing natural gas distribution system 10
located within the Commonwealth may be condemned by a city from another state. 11
(4) A natural gas utility, which, for purposes of this subsection, means a public, private 12
or municipally owned gas utility distributing or transporting natural gas to 13
customers within this Commonwealth, shall not: 14
(a) Extend its system for the purposes of furnishing or selling natural gas to any 15
person or entity that is currently being served by another natural gas utility; or 16
(b) Extend its system to furnish or sell natural gas to any person or entity when 17
there is another natural gas utility in closer proximity to the person or entity to 18
be served, unless the natural gas utility in closer proximity has declined to 19
provide service. 20
(5) [The provisions of ] Subsection (4) of this section shall only apply to extension of 21
service issues between a municipally owned natural gas utility servicing customers 22
located outside its municipal boundaries and a private or investor-owned natural gas 23
utility. As used in this section, [The term] "municipally owned" includes[shall 24
include] systems distributing or transporting natural gas that are owned by a city 25
from another state. 26
(6) As used in this section, "municipal interlocal gas utility" means an interlocal 27
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agency as defined in KRS 65.230 whose membership includes only city 1
governments for the sole purpose of operating a system for the construction, 2
acquisition, distribution, transmission, furnishing, or selling of natural gas. 3
Section 4. KRS 278.010 is amended to read as follows: 4
As used in KRS 278.01 0 to 278.450, 278.541 to 278.544, 278.546 to 278.5462, and 5
278.990, unless the context otherwise requires: 6
(1) "Corporation" includes private, quasipublic, and public corporations, and all boards, 7
agencies, and instrumentalities thereof, associations, join t-stock companies, and 8
business trusts; 9
(2) "Person" includes natural persons, partnerships, corporations, and two (2) or more 10
persons having a joint or common interest; 11
(3) "Utility" means any person except a regional wastewater commission established 12
pursuant to KRS 65.8905 and, for purposes of paragraphs (a), (b), (c), (d), and (f) of 13
this subsection, a city or municipal interlocal gas utility , who owns, controls, 14
operates, or manages any facility used or to be used for or in connection with: 15
(a) The generation, production, transmission, or distribution of electricity to or 16
for the public, for compensation, for lights, heat, power, or other uses; 17
(b) The production, manufacture, storage, distribution, sale, or furnishing of 18
natural or manufactured gas, or a mixture of same, to or for the public, for 19
compensation, for light, heat, power, or other uses; 20
(c) The transporting or conveying of gas, crude oil, or other fluid substance by 21
pipeline to or for the public, for compensation; 22
(d) The diverting, d eveloping, pumping, impounding, distributing, or furnishing 23
of water to or for the public, for compensation; 24
(e) The transmission or conveyance over wire, in air, or otherwise, of any 25
message by telephone or telegraph for the public, for compensation; or 26
(f) The collection, transmission, or treatment of sewage for the public, for 27
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compensation, if the facility is a subdivision collection, transmission, or 1
treatment facility plant that is affixed to real property and is located in a 2
county containing a city o f the first class or is a sewage collection, 3
transmission, or treatment facility that is affixed to real property, that is 4
located in any other county, and that is not subject to regulation by a 5
metropolitan sewer district or any sanitation district create d pursuant to KRS 6
Chapter 220; 7
(4) "Retail electric supplier" means any person, firm, corporation, association, or 8
cooperative corporation, excluding municipal corporations, engaged in the 9
furnishing of retail electric service; 10
(5) "Certified territory" sh all mean the areas as certified by and pursuant to KRS 11
278.017; 12
(6) "Existing distribution line" shall mean an electric line which on June 16, 1972, is 13
being or has been substantially used to supply retail electric service and includes all 14
lines from the distribution substation to the electric consuming facility but does not 15
include any transmission facilities used primarily to transfer energy in bulk; 16
(7) "Retail electric service" means electric service furnished to a consumer for ultimate 17
consumption, but does not include wholesale electric energy furnished by an 18
electric supplier to another electric supplier for resale; 19
(8) "Electric-consuming facilities" means everything that utilizes electric energy from a 20
central station source; 21
(9) "Generation and transmission cooperative" or "G&T" means a utility formed under 22
KRS Chapter 279 that provides electric generation and transmission services; 23
(10) "Distribution cooperative" means a utility formed under KRS Chapter 279 that 24
provides retail electric service; 25
(11) "Facility" includes all property, means, and instrumentalities owned, operated, 26
leased, licensed, used, furnished, or supplied for, by, or in connection with the 27
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business of any utility; 1
(12) "Rate" means any individual or joint fare, toll, charge, rental, or other compensation 2
for service rendered or to be rendered by any utility, and any rule, regulation, 3
practice, act, requirement, or privilege in any way relating to such fare, toll, charge, 4
rental, or other compensation, and any schedule or tariff or part of a schedule or 5
tariff thereof; 6
(13) "Service" includes any practice or requirement in any way relating to the service of 7
any utility, including the voltage of electricity, the heat units and pressure of gas, 8
the purity, pressure, and quantity of wa ter, and in general the quality, quantity, and 9
pressure of any commodity or product used or to be used for or in connection with 10
the business of any utility, but does not include Voice over Internet Protocol (VoIP) 11
service; 12
(14) "Adequate service" means ha ving sufficient capacity to meet the maximum 13
estimated requirements of the customer to be served during the year following the 14
commencement of permanent service and to meet the maximum estimated 15
requirements of other actual customers to be supplied from th e same lines or 16
facilities during such year and to assure such customers of reasonable continuity of 17
service; 18
(15) "Commission" means the Public Service Commission of Kentucky; 19
(16) "Commissioner" means one (1) of the members of the commission; 20
(17) "Demand-side management" means any conservation, load management, or other 21
utility activity intended to influence the level or pattern of customer usage or 22
demand, including home energy assistance programs; 23
(18) "Affiliate" means a person that controls or that is controlled by, or is under common 24
control with, a utility; 25
(19) "Control" means the power to direct the management or policies of a person 26
through ownership, by contract, or otherwise; 27
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(20) "CAM" means a cost allocation manual which is an indexed compila tion and 1
documentation of a company's cost allocation policies and related procedures; 2
(21) "Nonregulated activity" means the provision of competitive retail gas or electric 3
services or other products or services over which the commission exerts no 4
regulatory authority; 5
(22) "Nonregulated" means that which is not subject to regulation by the commission; 6
(23) "Regulated activity" means a service provided by a utility or other person, the rates 7
and charges of which are regulated by the commission; 8
(24) "USoA" means uniform system of accounts which is a system of accounts for 9
public utilities established by the FERC and adopted by the commission; 10
(25) "Arm's length" means the standard of conduct under which unrelated parties, each 11
party acting in its own best i nterest, would negotiate and carry out a particular 12
transaction; 13
(26) "Subsidize" means the recovery of costs or the transfer of value from one (1) class 14
of customer, activity, or business unit that is attributable to another; 15
(27) "Solicit" means to engage in or offer for sale a good or service, either directly or 16
indirectly and irrespective of place or audience; 17
(28) "USDA" means the United States Department of Agriculture; 18
(29) "FERC" means the Federal Energy Regulatory Commission; 19
(30) "SEC" means the Securities and Exchange Commission; 20
(31) "Commercial mobile radio services" has the same meaning as in 47 C.F.R. sec. 20.3 21
and includes the term "wireless" and service provided by any wireless real time two 22
(2) way voice communication device, including radio -telephone communications 23
used in cellular telephone service, persona l communications service, and the 24
functional or competitive equivalent of a radio -telephone communications line used 25
in cellular telephone service, a personal communications service, or a network radio 26
access line;[ and] 27
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(32) "Voice over Internet Protocol" or "VoIP" has the same meaning as in federal law ; 1
and 2
(33) "Municipal interlocal gas utility" means an interlocal agency as defined in KRS 3
65.230 whose membership includes only city governments for the sole purpose of 4
operating a system for the constructi on, acquisition, distribution, transmission, 5
furnishing, or selling of natural gas. 6
Section 5. KRS 96.045 is amended to read as follows: 7
(1) Except as provided in Section 1 of this Act, no municipality, in which there is 8
located an existing electric, water or gas public utility plant or facility shall 9
construct or cause to be constructed any similar utility plant or any similar public 10
utility facility duplicating such existing plant or facility or to obtain or acquire any 11
similar public utility plant or facility other than by the purchase of the existing plant 12
or facility or by the acquisition of such existing plant or facility by the exercise of 13
the power of eminent domain. 14
(2) As used in this section, "municipality" means any county, city, and municipal 15
corporation in the Commonwealth of Kentucky, and any board, commission or 16
agency thereof. 17
(3) Except for Section 1 of this Act, all laws and parts of laws in conflict herewith to 18
the extent of such conflict are repealed. 19
Section 6. KRS 96.538 is amended to read as follows: 20
(1) Any utility providing electric service in any area annexed, subsequent to June 16, 21
1960, by any municipality shall have the dominant right to co ntinue to provide 22
electric service in said area to consumers then being served and to new consumers 23
located nearer to its facilities than to the facilities of any other utility as all those 24
facilities were located immediately prior to annexation. 25
(2) Except as provided in Section 1 of this Act, any utility providing water, sewer or 26
gas service in any area annexed, subsequent to July 15, 1980, by any municipality 27
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shall have the dominant right to continue to provide water, sewer or gas service in 1
said area to consumers then being served and to new consumers located nearer to its 2
facilities than to the facilities of any other utility as all those facilities were located 3
immediately prior to annexation. 4
Section 7. The exempt ions granted in Sections 1 and 4 of this Act and the 5
authority granted in Sections 1, 2, and 3 of this Act shall apply retroactively to January 1, 6
2020, including with regard to any activities undertaken prior to the effective date of this 7
Act by an entity to which the exemption or authority is conferred under this Act. 8