S.B. 32

1

ELECTRIC POWER FACILITIES
2 AMENDMENTS
3 2002 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Leonard M. Blackham
6 This act modifies provisions relating to thermal power facilities and makes them apply
7 instead to electric power facilities. The act expands application of those provisions to include
8 interlocal entities and modifies provisions relating to the requirements for agreements for
9 common facilities, the financing of common facilities, and the liability of public power
10 entities and power utilities. The act modifies definitions and makes conforming and
11 technical changes.
12 This act affects sections of Utah Code Annotated 1953 as follows:
13 ENACTS:
14 54-9-101, Utah Code Annotated 1953
15 RENUMBERS AND AMENDS:
16 54-9-102, (Renumbered from 54-9-1.5, as last amended by Chapter 241, Laws of Utah
17 1985)
18 54-9-103, (Renumbered from 54-9-2, as last amended by Chapter 241, Laws of Utah 1985)
19 54-9-104, (Renumbered from 54-9-3, as enacted by Chapter 21, Laws of Utah 1975)
20 54-9-105, (Renumbered from 54-9-4, as last amended by Chapter 241, Laws of Utah 1985)
21 54-9-106, (Renumbered from 54-9-5, as last amended by Chapter 9, Laws of Utah 2001)
22 54-9-107, (Renumbered from 54-9-6, as last amended by Chapter 241, Laws of Utah 1985)
23 REPEALS:
24 54-9-1, as last amended by Chapter 241, Laws of Utah 1985
25 Be it enacted by the Legislature of the state of Utah:
26 Section 1. Section 54-9-101 is enacted to read:
27 CHAPTER 9. ELECTRIC POWER FACILITIES ACT

28 54-9-101. Title.
29 This chapter is known as the "Electric Power Facilities Act."
30 Section 2. Section 54-9-102 , which is renumbered from Section 54-9-1.5 is renumbered
31 and amended to read:
32 [54-9-1.5]. 54-9-102. Definitions.
33 As used in this chapter:
34 [(1) "City" means a city of this state owning a system for the generation, transmission, or
35 distribution of electric power and energy for public or private use.]
36 [(2)] (1) "Common facilities" means all works and facilities necessary to the generation,
37 transmission, or distribution of electric power[, and energy by thermal means].
38 (2) "Interlocal entity" means a legal or administrative entity created under Section
39 11-13-5.5 .
40 (3) "Power utility":
41 (a) means [any of the following entities] a public agency, as defined in Section 11-13-3 ,
42 or other person engaged in generating, transmitting, [or] distributing, or marketing electric power
43 and energy[: a state, a political subdivision or agency of a state, or a cooperative or privately
44 owned electric utility company subject to regulation by the Public Service Commission of Utah
45 or comparable governmental body in their respective states.]; and
46 [(4) "Town" means a town of this state owning a system for the generation, transmission,
47 or distribution of electric power and energy for public or private use.]
48 (b) does not include a public power entity.
49 (4) "Public power entity" means a city, town, or interlocal entity that owns a system for
50 the generation, transmission, or distribution of electric power and energy for public or private use.
51 Section 3. Section 54-9-103 , which is renumbered from Section 54-9-2 is renumbered and
52 amended to read:
53 [54-9-2]. 54-9-103. Establishment of common facilities authorized --
54 Determination of needs -- Agreements -- Ownership interest.
55 (1) [In] (a) Notwithstanding Title 11, Chapter 13, Interlocal Cooperation Act, and
56 Subsection 11-14-1 (1)(k), and in addition to [the] all other powers [otherwise] conferred on [cities
57 and towns of this state, any city or town, irrespective of the provisions of Title 11, Chapter 13 or
58 Subsection 11-14-1 (1) (k):] public power entities, a public power entity may:

59 (i) plan, finance, construct, acquire, operate, own, and maintain an undivided interest in
60 common facilities; [may]
61 (ii) participate in and enter into agreements with one or more public power entities or
62 power utilities; and [may]
63 (iii) enter into contracts and agreements as may be necessary or appropriate for the joint
64 planning, financing, construction, operation, ownership, or maintenance of common facilities.
65 (b) (i) Before entering into an agreement providing for common facilities, the governing
66 body of [a city or town] each public power entity shall determine the needs of [a city or town] the
67 public power entity for electric power and energy based on engineering studies and reports.
68 (ii) In determining the future electric power and energy requirements of a [city] public
69 power entity, the governing body shall consider [the following]:
70 [(a)] (A) the [economics] economies and efficiencies of scale to be achieved in
71 constructing or acquiring common facilities for the generation and transmission of electric power
72 and energy;
73 [(b)] (B) the public power entity's need [of the city or town] for reserve and peaking
74 capacity, and to meet obligations under pooling and reserve sharing agreements reasonably related
75 to the needs of the [city or town] public power entity for power and energy [to which the city is or
76 may become a party];
77 [(c)] (C) the estimated useful life of the common facilities;
78 [(d)] (D) the estimated time necessary for the planning, financing, construction, and
79 acquisition of the common facilities and the [length of time in advance to obtain, acquire, or
80 construct] estimated timing of the need for an additional power supply; and
81 [(e)] (E) the reliability and availability of existing or alternate power supply sources and
82 the cost of those existing or alternate power supply sources.
83 (2) [the] (a) Each agreement providing for common facilities shall [not]:
84 (i) contain provisions not inconsistent with this chapter[, as] that the governing body of
85 the [city or town] public power entity determines to be in the interests of the [city or town. An
86 agreement shall be ratified by resolution of the governing body of the city or town and shall
87 include provisions relating to, but not limited to, the following] public power entity, including:
88 [(a)] (A) the purposes of the agreement;
89 [(b)] (B) the duration of the agreement;

90 [(c)] (C) the method of appointing or employing the personnel necessary in connection
91 with the common facilities;
92 [(d)] (D) the method of financing the common facilities, including the apportionment of
93 costs of construction and operation;
94 [(e)] (E) the ownership interests of the owners in the common facilities and other property
95 used or useful in connection with the common facilities and the procedures for disposition of [that]
96 the common facilities and other property when the agreement expires or is terminated or when the
97 common facilities are abandoned, decommissioned, or dismantled;
98 [(f) the prohibition or restriction of]
99 (F) any agreement of the parties prohibiting or restricting the alienation or partition of the
100 undivided interests of [a city or town] an owner in the common facilities[, which provision shall
101 not be subject to a law restricting covenants against alienation or partition];
102 [(g)] (G) the construction and repair of the common facilities, [which may include]
103 including, if the parties agree, a determination that a [city or town, person, firm, or corporation]
104 power utility or public power entity may construct or repair the common facilities as agent for all
105 parties to the agreement;
106 [(h)] (H) the administration, operation, and maintenance of the common facilities, [which
107 may include] including, if the parties agree, a determination that a [city or town, person, firm, or
108 corporation] power utility or public power entity may administer, operate, and maintain the
109 common facilities as agent for all parties to the agreement;
110 [(i)] (I) the creation of a committee of representatives of the parties to the agreement[,
111 which committee shall have powers regarding the construction and operation of the common
112 facilities as the agreement, not inconsistent with this chapter, may provide];
113 [(j)] (J) if the [city or town] parties agree, a provision that if any party defaults in the
114 performance or discharge of its obligations with respect to the common facilities, [that] the other
115 parties may perform or assume, pro rata or otherwise, the obligations of the defaulting [parties]
116 party and may, if the [city or town] defaulting party fails to remedy the default, succeed to the
117 rights and interests of the defaulting party [or parties] in the common facilities [as may be agreed
118 upon in the agreement];
119 [(k)] (K) provisions for indemnification of construction [and], operation, and
120 administration agents, for completion of construction, for handling emergencies, and for allocation

121 of output of the common facilities among the parties to the agreement according to the ownership
122 interests of the parties;
123 [(l)] (L) methods for amending and terminating the agreement; and
124 [(m)] (M) any other matter, not inconsistent with this chapter, determined by the parties
125 to the agreement to be necessary and proper[, not inconsistent with this chapter.];
126 [(3) Agreements providing for common facilities shall]
127 (ii) clearly disclose the [cities' or towns'] ownership interest[.] of each party;
128 (iii) provide for an equitable method of allocating operation, repair, and maintenance costs
129 of the common facilities; and
130 (iv) be approved or ratified by resolution of the governing body of the public power entity.
131 (b) A provision under Subsection (2)(a)(i)(F) in an agreement providing for common
132 facilities under this Subsection (2) is not subject to any law restricting covenants against alienation
133 or partition.
134 (c) Each committee created under Subsection (2)(a)(i)(I) in an agreement providing for
135 common facilities under this Subsection (2) shall have the powers, not inconsistent with this
136 chapter, regarding the construction and operation of the common facilities that the agreement
137 provides.
138 (d) (i) The [cities' or towns'] ownership interest [shall be in] of a public power entity in the
139 common facilities may not be less than the proportion [to] of the funds or the value of property
140 supplied by it for the acquisition, construction, and operation of the common [facility] facilities.
141 [The city or town]
142 (ii) Each public power entity shall own and control [a like percentage] the same proportion
143 of the electrical output [thereof. The agreement shall provide for an equitable method of allocating
144 operation and maintenance costs of the common facility] from the common facilities as its
145 ownership interest in them.
146 (3) Notwithstanding any other provision of this chapter, an interlocal entity may not act
147 in a manner inconsistent with any provision of the agreement under Section 11-13-5.5 under which
148 it was created.
149 Section 4. Section 54-9-104 , which is renumbered from Section 54-9-3 is renumbered and
150 amended to read:
151 [54-9-3]. 54-9-104. Joint owners to supply materials -- Arrange for own

152 financing -- Share in costs and taxes.
153 (1) The joint owners of the common [facility must] facilities shall supply the materials and
154 make the payments provided for in the agreement.
155 (2) Each owner shall arrange its own funding and financing and be responsible for all the
156 costs, interest, and payments required in connection with its share of the funding for the planning,
157 acquisition, construction, operation, repairs, and improvements, and each participant shall pay its
158 share of taxes or charges in lieu of taxes in connection with the common [facility] facilities.
159 (3) (a) Notwithstanding any other provision of this section, a public power entity may
160 finance its funding share with one or more other owners through a financing agent, as long as no
161 public power entity is liable for more than its proportionate share of the debt service with respect
162 to the financing.
163 (b) A public power entity that is an owner may serve as the financing agent.
164 Section 5. Section 54-9-105 , which is renumbered from Section 54-9-4 is renumbered and
165 amended to read:
166 [54-9-4]. 54-9-105. Limitations on liability.
167 (1) (a) Each [city or town] public entity and power utility shall be liable only for its own
168 acts, omissions, and obligations with respect to the planning, financing, construction, acquisition,
169 administration, operation, ownership, repair, or maintenance of the common facilities and [shall]
170 may not be jointly or severally liable for the acts, omissions, or obligations of others.
171 (b) Subsection (1)(a) may not be construed to:
172 (i) affect the liability of a public power entity or power utility with respect to its
173 contractual obligations, including a contractual obligation to indemnify a construction, operation,
174 or administrative agent for the common facilities; or
175 (ii) affect an immunity or other protection that may be available to a public power entity
176 or power utility under applicable law.
177 (2) No money, materials, or other contribution supplied by a [city or town shall] public
178 power entity may be credited or otherwise applied to the account of any other [participant] owner
179 in the common facilities, nor [shall] may the undivided share of a [city or town] public power
180 entity be charged, directly or indirectly, with any debt or obligation of any other [participant]
181 owner or be subject to any lien as a result thereof.
182 (3) No action in connection with [a] common [facility shall] facilities may be binding upon

183 [any city or town] a public power entity unless authorized or approved by or under a resolution
184 or ordinance of its governing body.
185 Section 6. Section 54-9-106 , which is renumbered from Section 54-9-5 is renumbered and
186 amended to read:
187 [54-9-5]. 54-9-106. Funding -- Power sales contracts -- Fee in lieu of ad valorem
188 property taxes -- Bond issues -- Outlay declared for public purpose.
189 (1) A [city or town] public power entity participating in common facilities under [authority
190 contained in] this chapter may furnish money and provide property, both real and personal, and,
191 in addition to any other authority now existing, may issue and sell, either at public or privately
192 negotiated sale, general obligation bonds or revenue bonds, pledging either the revenues of its
193 entire electric system or only its interest or share of the revenues derived from the common
194 facilities in order to pay its respective share of the costs of the planning, financing, acquisition,
195 [and] construction, repair, and replacement of common facilities.
196 (2) (a) Capacity or output derived by a [city or town] public power entity from its
197 ownership share of common facilities not then required by the [city or town] public power entity
198 for its own use and for the use of its customers may be sold or exchanged [by the city or town] for
199 a consideration, for a period, and upon other terms and conditions as may be determined by the
200 parties prior to the sale and as embodied in a power sales contract [entered into by the city or town;
201 and any].
202 (b) Any revenues arising under [the] a power sales contract under Subsection (2)(a) may
203 be pledged by the [city or town] public power entity to the payment of revenue bonds issued to pay
204 its respective share of the costs of the common facilities.
205 (c) Each power sales contract entered into by a [city or town] public power entity with a
206 [consumer which] purchaser that is not exempt by Article XIII, Sec. 2, Utah Constitution, for the
207 sale or exchange to the [consumer] purchaser of capacity or output derived by the [city or town]
208 public power entity from its ownership share of common facilities shall contain a provision for
209 payment of an annual fee to the [city or town] public power entity by the [consumer] purchaser in
210 lieu of ad valorem property taxes based upon the taxable value of the percentage of the ownership
211 share of the [city or town] public power entity in the common facilities which is used to produce
212 the capacity or output that is sold or exchanged by the [city or town] public power entity to or with
213 [consumer] the purchaser, which fee in lieu of ad valorem property taxes shall be paid over by the

214 [city or town] public power entity to the county treasurer for distribution as per distribution of
215 other ad valorem tax revenues.
216 (3) [Any city or town] A public power entity acquiring or owning an undivided interest
217 in common facilities may contract with a county or counties to pay, solely from the revenues
218 derived from the interest of the [city or town] public power entity in the common facilities, to the
219 county or counties in which the common facilities are located, an annual fee in lieu of ad valorem
220 property taxes based upon the taxable value of the percentage of the ownership share of the [city
221 or town] public power entity in the common facilities, which fee in lieu of ad valorem property
222 taxes shall be paid over by the [city or town] public power entity to the county treasurer of the
223 county or counties in which the common facilities are located for distribution as per distribution
224 of other ad valorem tax revenues.
225 (4) (a) Bonds issued by a city or town shall be issued under the applicable provisions of
226 Title 11, Chapter 14, Utah Municipal Bond Act, [and of Title 55, Chapter 3, Public Works
227 Program,] authorizing the issuance of bonds for the acquisition and construction of electric public
228 utility properties by cities or towns.
229 (b) Bonds or other debt instruments issued by an interlocal entity shall be issued under
230 Title 11, Chapter 13, Interlocal Cooperation Act, or other applicable law.
231 [(4)] (5) All moneys paid or property supplied by [any city or town] a public power entity
232 for the purpose of carrying out powers conferred by this chapter are declared to be for a public
233 purpose[; but before a city or cities, town or towns, or power utility undertakes the construction
234 of transmission facilities in which it or they have a common ownership interest, the city or cities,
235 town or towns, or power utility shall, if the construction results in a duplication, in whole or part,
236 of existing transmission in purpose or function, before construction endeavor to attain the
237 equivalent capacity for a comparable term and comparable cost by purchase or contract with the
238 duplicated facility. If the contract cannot be executed within six months from the date the city or
239 cities, town or towns, or power utility request to contract with the owner of the duplicated facility,
240 then the city or cities, town or towns, or power utility may proceed to construct the proposed
241 transmission facilities notwithstanding the duplication].
242 Section 7. Section 54-9-107 , which is renumbered from Section 54-9-6 is renumbered and
243 amended to read:
244 [54-9-6]. 54-9-107. Disposition of proceeds and revenues.

245 All monies belonging to [cities or towns] a public power entity in connection with common
246 facilities, including the proceeds of the sale of bonds and the revenues arising from the operation
247 of [a] common [facility,] facilities:
248 (1) may be deposited in a bank or trust company doing business within or without the state
249 [of Utah]; and
250 (2) shall be accounted for and disbursed in accordance with applicable law and the
251 provisions of the resolution or indenture authorizing the issuance of [such] the bonds.
252 Section 8. Repealer.
253 This act repeals:
254 Section 54-9-1, Legislative purpose.




Legislative Review Note
as of 11-29-01 3:33 PM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

Committee Note

The Public Utilities and Technology Interim Committee recommended this bill.