56-231.16 - Organization; purpose.
§ 56-231.16. Organization; purpose.
A. Any number of natural persons not less than five may, by executing, filingand recording articles of incorporation as hereinafter set forth, form acooperative, either with or without capital stock, not organized forpecuniary profit, for the principal purpose of making energy, energyservices, and other utility services available at the lowest cost consistentwith sound economy and prudent management of the business of such cooperativeand such other purposes as its membership shall approve: (i) provided,however, that within its certificated service territory, no such cooperativeshall, prior to July 1, 2000, undertake or initiate any new program (a) tobuy or maintain an inventory of HVACR equipment or household appliances, (b)to install or service any such equipment or household appliances forcustomers, unless such service is not provided by the cooperative but by athird party individual, firm or corporation licensed to perform such service,(c) to sell HVACR equipment or household appliances to customers metered andbilled on residential rates, (d) to sell HVACR equipment to customers otherthan those metered and billed on residential rates except where such sale isan incidental part of providing other energy services or providingtraditional cooperative activities, (e) to sell or distribute propane or fueloil; sell, install or service propane or fuel oil equipment; or maintain orbuy an inventory of propane or fuel oil equipment for resale, or (f) to serveas a coordinator of nonelectric energy services or provide engineeringconsulting services except when such energy or engineering services are anincidental part of a marketing effort to provide other energy or engineeringservices or as a part of providing services that are traditional cooperativeactivities; (ii) provided further, that notwithstanding clause (i), suchcooperative may engage within its certificated service territory in any ofthe activities enumerated in clause (i) that (a) have received StateCorporation Commission approval prior to February 1, 1998, (b) suchcooperative is ordered or required to undertake by any jurisdictional courtor regulatory authority, (c) were lawfully undertaken prior to February 1,1998, (d) are specifically permitted by statute, or (e) are undertaken by anyother regulated public service company or its unregulated affiliate withinsuch cooperative's certificated service territory; and (iii) also providedthat such cooperative or its affiliate may not undertake such activities asare prohibited by clause (i) within the certificated service territory ofanother public service company unless such activities are undertaken by suchpublic service company or its unregulated affiliate within such cooperative'scertificated service territory. In addition, such cooperative may establishone or more subsidiaries to engage in any other business activities notprohibited by law; notwithstanding the foregoing, no such subsidiary mayengage in any business activities that the cooperatives are prohibited fromengaging in under this section. For purposes of determining whether acooperative is formed not for pecuniary profit, the establishment of one ormore affiliates thereof on a for-profit basis shall not disqualify suchentity from being formed as a cooperative pursuant to this article.
B. Nothing in this article shall be construed to authorize a cooperativeformed pursuant to this article, or any affiliate thereof, to engage, on anot-for-profit basis, within either the cooperative's certificated serviceterritory or in the certificated service territory of another public servicecompany, in the sale of products, the provision of services, or otherbusiness activity, except for regulated electric utility services,unregulated sales of electric power to its members within its certificatedservice territory, and traditional cooperative activities. However, if suchproducts or services are not currently provided by any person other than acooperative formed under or subject to this chapter or its affiliate and theCommission determines that no such other person is likely, within areasonable time, to effectively provide such products and services in suchterritory, an affiliate of a cooperative may provide such products orservices on a not-for-profit basis. The Commission shall also permit anaffiliate of a cooperative formed under or subject to this chapter to providesuch products or services on a not-for-profit basis upon a finding that theaffiliate will not receive the benefit of any federal income tax exemptionthat is not available to persons other than cooperatives and will not receivethe benefit of any federally guaranteed or subsidized financing that is notavailable to persons other than cooperatives; and provided further thatnothing in this subsection shall prohibit the continued operation of anybusiness activities of any not-for-profit cooperative or affiliate formed,operating, and actively providing products or services to customers on orbefore July 1, 1999.
(1999, c. 874; 2000, cc. 964, 989.)