H.B. 60

             1     

INTERLOCAL ENTITY SERVICE PROHIBITION

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: R. Curt Webb

             5     
Senate Sponsor: ____________

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill amends provisions related to an interlocal entity.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines terms; and
             13          .    prohibits an interlocal entity that provides telecommunication service through a
             14      fiber optic network from constructing infrastructure or providing
             15      telecommunication service in locations outside the boundaries of its members.
             16      Money Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          This bill provides an immediate effective date.
             20          This bill provides revisor instructions.
             21      Utah Code Sections Affected:
             22      AMENDS:
             23           11-13-204 , as last amended by Laws of Utah 2010, Chapter 173
             24      Utah Code Sections Affected by Revisor Instructions:
             25           11-13-204 , as last amended by Laws of Utah 2010, Chapter 173
             26     
             27      Be it enacted by the Legislature of the state of Utah:


             28          Section 1. Section 11-13-204 is amended to read:
             29           11-13-204. Powers and duties of interlocal entities -- Additional powers of energy
             30      services interlocal entities -- Length of term of agreement and interlocal entity -- Notice to
             31      lieutenant governor -- Recording requirements -- Public Service Commission.
             32          (1) (a) An interlocal entity:
             33          (i) may:
             34          (A) adopt, amend, and repeal rules, bylaws, policies, and procedures for the regulation
             35      of its affairs and the conduct of its business;
             36          (B) sue and be sued;
             37          (C) have an official seal and alter that seal at will;
             38          (D) make and execute contracts and other instruments necessary or convenient for the
             39      performance of its duties and the exercise of its powers and functions;
             40          (E) acquire real or personal property, or an undivided, fractional, or other interest in
             41      real or personal property, necessary or convenient for the purposes contemplated in the
             42      agreement creating the interlocal entity and sell, lease, or otherwise dispose of that property;
             43          (F) directly or by contract with another:
             44          (I) own and acquire facilities and improvements or an undivided, fractional, or other
             45      interest in facilities and improvements;
             46          (II) construct, operate, maintain, and repair facilities and improvements; and
             47          (III) provide the services contemplated in the agreement creating the interlocal entity;
             48          (G) borrow money, incur indebtedness, and issue revenue bonds, notes, or other
             49      obligations and secure their payment by an assignment, pledge, or other conveyance of all or
             50      any part of the revenues and receipts from the facilities, improvements, or services that the
             51      interlocal entity provides;
             52          (H) offer, issue, and sell warrants, options, or other rights related to the bonds, notes, or
             53      other obligations issued by the interlocal entity; and
             54          (I) sell or contract for the sale of the services, output, product, or other benefits
             55      provided by the interlocal entity to:
             56          (I) public agencies inside or outside the state; and
             57          (II) with respect to any excess services, output, product, or benefits, any person on
             58      terms that the interlocal entity considers to be in the best interest of the public agencies that are


             59      parties to the agreement creating the interlocal entity; and
             60          (ii) may not levy, assess, or collect ad valorem property taxes.
             61          (b) An assignment, pledge, or other conveyance under Subsection (1)(a)(i)(G) may, to
             62      the extent provided by the documents under which the assignment, pledge, or other conveyance
             63      is made, rank prior in right to any other obligation except taxes or payments in lieu of taxes
             64      payable to the state or its political subdivisions.
             65          (2) An energy services interlocal entity:
             66          (a) except with respect to any ownership interest it has in facilities providing additional
             67      project capacity, is not subject to:
             68          (i) Part 3, Project Entity Provisions; or
             69          (ii) Title 59, Chapter 8, Gross Receipts Tax on Certain Corporations Not Required to
             70      Pay Corporate Franchise or Income Tax Act; and
             71          (b) may:
             72          (i) own, acquire, and, by itself or by contract with another, construct, operate, and
             73      maintain a facility or improvement for the generation, transmission, and transportation of
             74      electric energy or related fuel supplies;
             75          (ii) enter into a contract to obtain a supply of electric power and energy and ancillary
             76      services, transmission, and transportation services, and supplies of natural gas and fuels
             77      necessary for the operation of generation facilities;
             78          (iii) enter into a contract with public agencies, investor-owned or cooperative utilities,
             79      and others, whether located in or out of the state, for the sale of wholesale services provided by
             80      the energy services interlocal entity; and
             81          (iv) adopt and implement risk management policies and strategies and enter into
             82      transactions and agreements to manage the risks associated with the purchase and sale of
             83      energy, including forward purchase and sale contracts, hedging, tolling and swap agreements,
             84      and other instruments.
             85          (3) Notwithstanding Section 11-13-216 , an agreement creating an interlocal entity or
             86      an amendment to that agreement may provide that the agreement may continue and the
             87      interlocal entity may remain in existence until the latest to occur of:
             88          (a) 50 years after the date of the agreement or amendment;
             89          (b) five years after the interlocal entity has fully paid or otherwise discharged all of its


             90      indebtedness;
             91          (c) five years after the interlocal entity has abandoned, decommissioned, or conveyed
             92      or transferred all of its interest in its facilities and improvements; or
             93          (d) five years after the facilities and improvements of the interlocal entity are no longer
             94      useful in providing the service, output, product, or other benefit of the facilities and
             95      improvements, as determined under the agreement governing the sale of the service, output,
             96      product, or other benefit.
             97          (4) (a) The governing body of each party to the agreement to approve the creation of an
             98      interlocal entity, including an electric interlocal entity and an energy services interlocal entity,
             99      under Section 11-13-203 shall:
             100          (i) within 30 days after the date of the agreement, jointly file with the lieutenant
             101      governor:
             102          (A) a copy of a notice of an impending boundary action, as defined in Section
             103      67-1a-6.5 , that meets the requirements of Subsection 67-1a-6.5 (3); and
             104          (B) if less than all of the territory of any Utah public agency that is a party to the
             105      agreement is included within the interlocal entity, a copy of an approved final local entity plat,
             106      as defined in Section 67-1a-6.5 ; and
             107          (ii) upon the lieutenant governor's issuance of a certificate of creation under Section
             108      67-1a-6.5 :
             109          (A) if the interlocal entity is located within the boundary of a single county, submit to
             110      the recorder of that county:
             111          (I) the original:
             112          (Aa) notice of an impending boundary action;
             113          (Bb) certificate of creation; and
             114          (Cc) approved final local entity plat, if an approved final local entity plat was required
             115      to be filed with the lieutenant governor under Subsection (4)(a)(i)(B); and
             116          (II) a certified copy of the agreement approving the creation of the interlocal entity; or
             117          (B) if the interlocal entity is located within the boundaries of more than a single
             118      county:
             119          (I) submit to the recorder of one of those counties:
             120          (Aa) the original of the documents listed in Subsections (4)(a)(ii)(A)(I)(Aa), (Bb), and


             121      (Cc); and
             122          (Bb) a certified copy of the agreement approving the creation of the interlocal entity;
             123      and
             124          (II) submit to the recorder of each other county:
             125          (Aa) a certified copy of the documents listed in Subsections (4)(a)(ii)(A)(I)(Aa), (Bb),
             126      and (Cc); and
             127          (Bb) a certified copy of the agreement approving the creation of the interlocal entity.
             128          (b) Upon the lieutenant governor's issuance of a certificate of creation under Section
             129      67-1a-6.5 , the interlocal entity is created.
             130          (c) Until the documents listed in Subsection (4)(a)(ii) are recorded in the office of the
             131      recorder of each county in which the property is located, a newly created interlocal entity may
             132      not charge or collect a fee for service provided to property within the interlocal entity.
             133          (5) Nothing in this section may be construed as expanding the rights of any
             134      municipality or interlocal entity to sell or provide retail service.
             135          (6) Except as provided in Subsection (7):
             136          (a) nothing in this section may be construed to expand or limit the rights of a
             137      municipality to sell or provide retail electric service; and
             138          (b) an energy services interlocal entity may not provide retail electric service to
             139      customers located outside the municipal boundaries of its members.
             140          (7) (a) An energy services interlocal entity created before July 1, 2003, that is
             141      comprised solely of Utah municipalities and that, for a minimum of 50 years before July 1,
             142      2010, provided retail electric service to customers outside the municipal boundaries of its
             143      members, may provide retail electric service outside the municipal boundaries of its members
             144      if:
             145          (i) the energy services interlocal entity:
             146          (A) enters into a written agreement with each public utility holding a certificate of
             147      public convenience and necessity issued by the Public Service Commission to provide service
             148      within an agreed upon geographic area for the energy services interlocal entity to be
             149      responsible to provide electric service in the agreed upon geographic area outside the municipal
             150      boundaries of the members of the energy services interlocal entity; and
             151          (B) obtains a franchise agreement, with the legislative body of the county or other


             152      governmental entity for the geographic area in which the energy services interlocal entity
             153      provides service outside the municipal boundaries of its members; and
             154          (ii) each public utility described in Subsection (7)(a)(i)(A) applies for and obtains from
             155      the Public Service Commission approval of the agreement specified in Subsection (7)(a)(i)(A).
             156          (b) (i) The Public Service Commission shall, after a public hearing held in accordance
             157      with Title 52, Chapter 4, Open and Public Meetings Act, approve an agreement described in
             158      Subsection (7)(a)(ii) if it determines that the agreement is in the public interest in that it
             159      incorporates the customer protections described in Subsection (7)(c) and the franchise
             160      agreement described in Subsection (7)(a)(i)(B) provides a reasonable mechanism using a
             161      neutral arbiter or ombudsman for resolving potential future complaints by customers of the
             162      energy services interlocal entity.
             163          (ii) In approving an agreement, the Public Service Commission shall also amend the
             164      certificate of public convenience and necessity of any public utility described in Subsection
             165      (7)(a)(i) to delete from the geographic area specified in the certificate or certificates of the
             166      public utility the geographic area that the energy services interlocal entity has agreed to serve.
             167          (c) In providing retail electric service to customers outside of the municipal boundaries
             168      of its members, but not within the municipal boundaries of another municipality that grants a
             169      franchise agreement in accordance with Subsection (7)(a)(i)(B), an energy services interlocal
             170      entity shall comply with the following:
             171          (i) the rates and conditions of service for customers outside the municipal boundaries
             172      of the members shall be at least as favorable as the rates and conditions of service for similarly
             173      situated customers within the municipal boundaries of the members;
             174          (ii) the energy services interlocal entity shall operate as a single entity providing
             175      service both inside and outside of the municipal boundaries of its members;
             176          (iii) a general rebate, refund, or other payment made to customers located within the
             177      municipal boundaries of the members shall also be provided to similarly situated customers
             178      located outside the municipal boundaries of the members;
             179          (iv) a schedule of rates and conditions of service, or any change to the rates and
             180      conditions of service, shall be approved by the governing body of the energy services interlocal
             181      entity;
             182          (v) before implementation of any rate increase, the governing body of the energy


             183      services interlocal entity shall first hold a public meeting to take public comment on the
             184      proposed increase, after providing at least 20 days and not more than 60 days' advance written
             185      notice to its customers on the ordinary billing and on the Utah Public Notice Website, created
             186      by Section 63F-1-701 ; and
             187          (vi) the energy services interlocal entity shall file with the Public Service Commission
             188      its current schedule of rates and conditions of service.
             189          (d) The Public Service Commission shall make the schedule of rates and conditions of
             190      service of the energy services interlocal entity available for public inspection.
             191          (e) Nothing in this section:
             192          (i) gives the Public Service Commission jurisdiction over the provision of retail
             193      electric service by an energy services interlocal entity within the municipal boundaries of its
             194      members; or
             195          (ii) makes an energy services interlocal entity a public utility under Title 54, Public
             196      Utilities.
             197          (f) Nothing in this section expands or diminishes the jurisdiction of the Public Service
             198      Commission over a municipality or an association of municipalities organized under Title 11,
             199      Chapter 13, Interlocal Cooperation Act, except as specifically authorized by this section's
             200      language.
             201          (g) (i) An energy services interlocal entity described in Subsection (7)(a) retains its
             202      authority to provide electric service to the extent authorized by Sections 11-13-202 and
             203      11-13-203 and Subsections 11-13-204 (1) through (5).
             204          (ii) Notwithstanding Subsection (7)(g)(i), if the Public Service Commission approves
             205      the agreement described in Subsection (7)(a)(i), the energy services interlocal entity may not
             206      provide retail electric service to customers located outside the municipal boundaries of its
             207      members, except for customers located within the geographic area described in the agreement.
             208          (8) (a) As used in this Subsection (8):
             209          (i) "fiber optic network interlocal entity" means an interlocal entity that provides
             210      telecommunication service through a fiber optic network; and
             211          (ii) "member" means a city or town that is a party to the interlocal agreement creating
             212      the fiber optic network interlocal entity.
             213          (b) Subject to Subsection (8)(c), in locations outside the boundaries of its members, a


             214      fiber optic network interlocal entity may not:
             215          (i) construct infrastructure directly related to the operation of a fiber optic network; or
             216          (ii) provide telecommunication service.
             217          (c) Subsection (8)(b) does not apply to a contract to construct infrastructure or provide
             218      telecommunication service that was entered into before the effective date of this bill.
             219          (d) Notwithstanding Subsection (8)(b)(i), a fiber optic network interlocal entity may
             220      construct infrastructure necessary to connect the network between its members.
             221          Section 2. Effective date.
             222          If approved by two-thirds of all the members elected to each house, this bill takes effect
             223      upon approval by the governor, or the day following the constitutional time limit of Utah
             224      Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto,
             225      the date of veto override.
             226          Section 3. Revisor instructions.
             227          The Legislature intends that the Office of Legislative Research and General Counsel, in
             228      preparing the Utah Code database for publication, replace the phrase "the effective date of this
             229      bill" in Subsection 11-13-204 (8)(c) in this bill with the actual effective date of this bill.




Legislative Review Note
    as of 1-16-14 1:58 PM


Office of Legislative Research and General Counsel


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