Citations Affected: IC 8-1.
Synopsis: Service areas of electricity suppliers. Modifies procedures
that must be followed when a municipally owned electric utility seeks
to change its assigned service area to include territory that has been
annexed by the municipality. Provides that the municipally owned
electric utility must pay additional severance damages to the incumbent
electricity suppliers in the annexed area based on electricity sold to
service accounts established in the annexed area during the five year
period beginning on the effective date of the annexation ordinance.
Provides that the severance payments must continue for each service
account for the five year period beginning on the date the service
account is established. Requires the utility regulatory commission
(IURC) to determine and enforce payment of severance damages when
the parties cannot agree on the amount of the damages. Requires the
IURC to approve a change in the boundaries of the assigned service
areas of electric utilities when the affected utilities mutually agree to
the change, unless the IURC determines after a public hearing that the
change would result in certain consequences.
Effective: July 1, 2002.
January 10, 2002, read first time and referred to Committee on Energy and Economic
Development.
January 14, 2002, reported favorably _ Do Pass.
A BILL FOR AN ACT to amend the Indiana Code concerning
utilities and transportation.
SECTION 1.
IC 8-1-2.3-6
, AS AMENDED BY P.L.217-1999,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2002]: Sec. 6. The boundaries of the assigned service areas of
electricity suppliers may not be changed except under any one (1) of
the following circumstances:
(1) If a municipality which owns and operates an electric utility
system and furnishes furnishing retail electric service to the
public annexes an area beyond the assigned service area of its
municipally owned electric utility, and the ordinance providing
for the annexation provides that the annexing city has developed
and adopted a fiscal plan and has established a definite policy to
furnish the territory to be annexed within a period of three (3) or
four (4) years governmental and proprietary services substantially
equivalent in standard and scope to the governmental and
proprietary services furnished by the annexing city to other areas
of the city regardless of topography, patterns of land utilization
and population density similar to the territory to be annexed, then
the municipally owned electric utility may petition the
commission to change the assigned service area of the
municipally owned electric utility to include the annexed area, A
municipally owned electric utility shall exercise its right to
petition the commission to change its assigned service area within
sixty (60) days after annexation becomes final or lose its right
under this subdivision. The commission shall rule on the petition
of the municipally owned electric utility within ninety (90) days
after its filing. If, upon notice and after hearing, the commission
decides that it is in the public convenience and necessity for the
municipally owned electric utility to render service to the annexed
area, it shall order the assigned service area of the municipally
owned electric utility to be changed to include the annexed area
with the right to serve and immediate possession to the
municipally owned electric utility. The commission order is
enforceable in court pending an appeal of that order. An appellant
from a court order enforcing a commission order under this
subsection shall not be entitled to a stay of the court order
pending appeal. In determining public convenience and necessity,
the commission shall give consideration to all relevant matters,
including but not limited to the following:
(A) Preference of owners, occupiers, and consumers in the
annexed area.
(B) Ability of the municipally owned electric utility to render
service after the assignment of service area.
(C) Other utility services to be supplied in the annexed area by
the municipality.
(D) Proximity and capability of the service repair facilities of
the electricity suppliers involved.
(E) Preference of local government officials.
However, this subdivision does not apply to incorporations,
consolidations, mergers, or annexations that are under
IC 36-4-3-4(a)(3), IC 36-4-3-4(b), IC 36-4-3-4(h), or
IC 36-4-3-4.1, or that are not contiguous under IC 36-4-3-13(b)
or IC 36-4-3-13(c). If any change in an assigned service area is
ordered by the commission, all of the electric utility property of
another electricity supplier which is devoted to retail electric
service within such additional assigned service area shall be
acquired at its then reproduction cost new depreciated value; in
addition, the acquiring electricity supplier shall pay severance
damages limited to, if applicable, the distribution and substation
facilities dedicated to and located within the annexed area or
relocated by reason of the annexation, or an amount equal to two
and one-half (2 1/2) times the previous year's gross electric sales
from the newly assigned service area, whichever is greater. If the
parties do not agree on the amount the acquiring electricity
supplier is to pay, then the commission shall determine said
amount and order its payment in accordance with this subsection.
according to the following procedures:
(A) The municipally owned electric utility shall file its
petition with the commission not later than sixty (60) days
after the annexation becomes effective. The petition must
include a certified copy of the annexation ordinance, which
serves as conclusive evidence that the area has been
lawfully annexed and is part of the municipality. After the
filing of a petition under this subdivision, the commission
shall promptly enter an order changing the assigned
service area facet maps of the municipally owned electric
utility and incumbent electricity suppliers to include the
annexed area within the assigned service area of the
municipally owned electric utility and giving the right to
serve and immediate possession to the municipally owned
electric utility. The commission order is enforceable in
court pending an appeal of that order. An appellant from
a court order enforcing a commission order under this
subdivision is not entitled to a stay of the court order
pending appeal. However, this subdivision does not apply
to incorporations, consolidations, mergers, or annexations
that are under
IC 36-4-3-4
(a)(3),
IC 36-4-3-4
(b),
IC 36-4-3-4
(h), or
IC 36-4-3-4.1
or that are not contiguous
under
IC 36-4-3-13
(b) or
IC 36-4-3-13
(c).
(B) Not later than thirty (30) days after filing a petition
under this subdivision, the municipally owned electric
utility shall determine for each affected incumbent
electricity supplier and pay to that supplier an amount not
less than the value of all the electric utility property of the
incumbent electricity supplier that is devoted to furnishing
retail electric service within the additional assigned service
area at its then reproduction cost new depreciated value.
In addition, the municipally owned electric utility shall pay
the incumbent electricity supplier severance damages in an
amount equal to:
(i) the value of the incumbent electricity supplier's
distribution and substation facilities dedicated to and
located within the annexed area or relocated by reason
of the annexation or an amount equal to two and
one-half (2 1/2) times the incumbent electricity supplier's
gross revenues from electricity sales in the annexed area
during the twelve (12) month period immediately
preceding the date the annexation ordinance became
effective, whichever is greater; plus
(ii) if additional permanent service locations or service
accounts are established in the annexed area during the
five (5) year period beginning on the effective date of the
annexation ordinance, one-tenth of one cent ($0.001) for
each kilowatt hour of electricity sold to each of those
permanent service locations or service accounts for sales
that occur during a five (5) year period beginning on the
date each service location or service account is
established, up to a maximum of one hundred seventy
thousand (170,000) kilowatt hours per service account or
service location for each monthly billing period.
However, the municipally owned electric utility is not
required to pay severance damages under item (ii) if, at the
time each annual payment otherwise would accrue, it is
purchasing all of its requirements for electric power and
energy, except for generation directly provided by the
municipally owned electric utility or by a customer, from
the incumbent electricity supplier. Severance damages
must be paid not later than thirty (30) days after the end of
each calendar year in which severance damages have
accrued. The municipally owned electric utility and
incumbent electricity suppliers shall cooperate to calculate
the amount of any severance damages and shall furnish to
each other all information and records reasonably
necessary for the determination and verification of
severance damages. If the municipally owned electric
utility and incumbent electricity suppliers cannot agree on
the amount of severance damages the municipally owned
electric utility is to pay, the commission shall determine the
amount and order payment in accordance with this clause.
Not later than twenty (20) days after making a payment,
the municipally owned electric utility shall certify to the
commission and to any affected incumbent electricity
supplier that it has paid the amounts required under this
clause.
after a public hearing, that the change would cause:
(A) duplication of electric utility facilities;
(B) waste of materials or resources; or
(C) uneconomic, inefficient, or inadequate electric service
to the public.
(3) In the case where a landowner owns a single tract of land
which that is intersected by the boundary lines of two (2) or more
assigned service areas, and retail electric service can best be
supplied by only one (1) electricity supplier, or in the case where
a customer or customers which are housed in a single structure or
which constitute a single governmental, industrial, or institutional
operation, and the electricity suppliers involved are unable to
agree which shall furnish the electric service, any of the electricity
suppliers may submit the matter to the commission for its
determination based upon public convenience and necessity. If,
after notice and hearing, the commission determines that one (1)
or more electricity suppliers are to supply the required retail
electric service and the boundaries of an assigned service area are
to be changed, the assigned service area maps of the electricity
suppliers shall be changed to reflect the new boundaries.