66-1,176. Termination of service rights in annexed areas; right to serve existing customers, when; compensation for termination of service rights.
66-1,176
66-1,176. Termination of service rights in annexedareas; right toserve existing customers, when; compensation for termination of servicerights.(a) Whenever a city proposes to annex land that is located within thecertified territory of a retail electric supplier, the city shall providenotice to the retailelectric supplier in the manner prescribed by K.S.A. 12-520a, and amendmentsthereto. Allrights ofaretail electric supplier to provide electric service inan area annexed by a city shall terminate 180 days from the date ofannexation, unless suchelectric supplier isthen holding a valid franchise for service in the area granted by theannexing city. Such period of180 days shall be extendedto 210 days from the date of annexation if a franchiseis granted to the retail electric supplier pursuant to referendum conductedaccording to applicable franchise laws of the state of Kansas within suchperiod of 210 days.Whenever the city annexes land that is located within the certifiedterritory of a retail electric supplier, the city shall negotiate for theissuance of a franchiseagreement pursuant to K.S.A. 12-2001, et seq., and amendmentsthereto, with aretail electric supplier holding a certificate within the annexed area. Nothingherein shall be construed to require a supplier holding both a certificate ofconvenience and a franchise for the area annexed to obtain a new franchise. Thecity shall have the final selection of which supplier receives a franchise tooperate within the annexed area. When making such selection, the city shallconsider certain factors including, but not limited to: (1) The publicconvenience and necessity; (2) rates of various suppliers; (3) desires of thecustomer or customers to be served; (4) economic impact on the suppliers; (5)economic impact on the customers of the suppliers; (6) the utility'soperational ability to serve the annexed area; (7) avoiding the wastefulduplication of facilities; (8) avoiding unnecessary encumbrance on thelandscape; and (9) preventing the waste of materials and natural resources.Within30 days after the final decision of the city, anysupplier aggrieved thereby may file an appeal in the district court of thecounty in which the annexed area is located to determine the reasonableness ofthe final decision. In the event that an appeal of the decision is filed in thedistrict court, the retail electric supplier providing service at the time ofannexation shall continue to provide service until such time as the appeal hasbeen concluded.In the event servicerights are terminatedpursuant to this section, the commission shall certify such annexed areaas a single certified territory to the supplier holding a franchise foror then providing retail electric service in the city immediately priorto the annexation.
(b) In the event the supplier holding a franchise or then providingretail electric service does not effect the assumption of electric serviceto the annexed area at the termination of the applicable 180-day or 210-dayperiod as provided in subsection (a), then the originally certifiedsupplier shall have the right to continue service to the annexed area andcharge its ordinary rates therefor until such supplier does assume serviceto the annexed area. Such service shall be free of any franchise fee orother compensation to the city or the electric supplier holding thefranchise. If the supplier holding a franchise has not assumed service tothe annexed area within 180 days following the applicable 180-day or210-day period provided in subsection (a), the city may require theoriginally certified supplier to obtain a franchise in order to continueservice to the annexed area. Unless otherwise mutually agreed upon by theaffectedsuppliers, no assumption of electric service shall occur within 15 daysfollowing notice to the originally certified supplier of the intendedchangeover time.
(c) Whenever the service rights of a retail electric supplier areterminated pursuant to subsection (a), fair and reasonable compensationshall be paid to such retail electric supplier by the supplier subsequentlyauthorized to provide electric service. Such compensation shall be anamount mutually agreed upon by the affected suppliers or the sum of thefollowing:
(1) The depreciated replacement cost for the electric utility facilities intheterritory in which the service rights have been terminated pursuant tosubsection (a). As used in this paragraph, "depreciated replacement cost"shall mean the original installed cost of the facilities, adjusted topresent value by utilizing a nationally recognized index of utilityconstruction costs, less accumulated depreciation based on thebook depreciation rates of the selling utility as filed with and approvedby the state corporation commission, which are in effect at the time ofacquisition;
(2) all reasonable and prudent costs of detaching the electric systemfacilities to be sold and all reasonable and prudent costs of reintegratingthe remaining electric system facilities of the retail electric supplierwhose service rights are terminated pursuant to subsection (a);
(3) an amount equal to two times the gross revenues attributable tothecustomers in the terminated territory during the 12months next preceding the date of transfer of theservicepursuant to subsection (a); and
(4) an amount equal to the state and federal tax liability created bythe taxable income pursuant to the provisions of this paragraph andparagraphs (1), (2) and(3) by the retail electric supplier whose service rights are terminatedpursuant to subsection (a), calculated without regard to any tax deductionsor benefits not related to the sale of assets covered herein.
(d) In the event that the parties are unable to agree upon an amountof compensation to be paid pursuant to subsection (c), after 60 daysfollowing the date of termination of service rights either party may applyto the district court having jurisdiction where any portion of thefacilities are located, for determination of compensation. Suchdetermination shall be made by the court sitting without a jury.
History: L. 1976, ch. 284, § 7;L. 1986, ch. 249, § 3;L. 1987, ch. 257, § 3;L. 2002, ch. 27, § 1; July 1.