§ 8-1.5-2-6.1 — Sale of nonsurplus property; ordinance adopted after March 28, 2016; approval of commission; terms and conditions; public interest determination; net original cost rate base; submission to voters

Indiana § 8-1.5-2-6.1

• Jurisdiction: Indiana
• Art. 1.5: MUNICIPAL UTILITIES
• Ch. 2: Transfer, Acquisition, and Improvement of Utilities by

Text

1. (a) This section applies to a municipality
that adopts an ordinance under section 5(d) of this chapter after March
28, 2016.
(b) Before a municipality may proceed to sell or otherwise dispose
of all or part of its nonsurplus utility property under an ordinance
adopted under section 5(d) of this chapter, the municipality and the
prospective purchaser must obtain the approval of the commission
under this section.
(c) As part of the sale or disposition of the property, the
municipality and the prospective purchaser may include terms and
conditions that the municipality and the prospective purchaser consider
to be equitable to the existing utility customers of:
(1) the municipality's municipally owned utility; and
(2) the prospective purchaser;
as applicable.
(d) The commission shall approve the sale or disposition of the
property according to the terms and conditions proposed by the
municipality and the prospective purchaser if the commission finds that
the sale or disposition according to the terms and conditions proposed
is in the public interest. For purposes of this section, the purchase price
of the municipality's nonsurplus utility property shall be considered
reasonable if it does not exceed the appraised value set forth in the
appraisal required under section 5 of this chapter.
(e) The following apply to the commission's determination under
subsection (d) as to whether the proposed sale or disposition according
to the proposed terms and conditions is in the public interest:
(1) If:
(A) the prospective purchaser petitions the commission under
IC 8-1-30.3-5(d); and
(B) the commission approves the prospective purchaser's
petition;
the proposed sale or disposition is considered to be in the public
interest.
(2) If subdivision (1) does not apply and subject to subsection (h),
the commission shall consider the extent to which the proposed
terms and conditions of the proposed sale or disposition would
require the existing utility customers of either the prospective
purchaser or the municipality's municipally owned utility, as
applicable, to pay rates that would subsidize utility service to the
other party's existing customers. For purposes of this subdivision,
the proposed terms and conditions will not result in rates that
would subsidize service to other customers if the amount to be
recorded as net original cost under subsection (f) is not greater
than two percent (2%) of the prospective purchaser's net original
cost rate base as determined in the prospective purchaser's most
recent general rate case, plus any adjustments to the rate base
under IC 8-1-31 and IC 8-1-31.7 that have occurred after the rate
case. If the amount to be recorded is greater than two percent
(2%), the commission shall proceed to determine whether:
(A) the proposed terms and conditions would result in a subsidy
described in this subdivision; and
(B) the subsidy would cause the proposed terms and conditions
of the proposed sale or disposition not to be in the public
interest.
The commission shall calculate the amount of the subsidy that
would result and shall set forth in an order under this section such
changes to the proposed terms and conditions as the commission
considers appropriate to address the subsidy. The prospective
purchaser and the municipality shall each have thirty (30) days
from the date of the commission's order setting forth the
commission's changes to either accept or reject the changes. If
either party rejects the commission's changes, the proposed sale
or disposition is considered not to be in the public interest.
(3) In reviewing the proposed terms and conditions of the
proposed sale or disposition under either subdivision (1) or (2),
the commission shall consider the financial, managerial, and
technical ability of the prospective purchaser to provide the utility
service required after the proposed sale or disposition.
(4) In reviewing the proposed terms and conditions of the
proposed sale or disposition under either subdivision (1) or (2),
the commission shall accept as reasonable the valuation of the
nonsurplus utility property determined through an appraisal and
review under section 5 of this chapter.
(f) As part of an order approving a sale or disposition of property
under this section, the commission shall, without regard to amounts
that may be recorded on the books and records of the municipality and
without regard to any grants or contributions previously received by the
municipality, provide that for ratemaking purposes, the prospective
purchaser shall record as the net original cost rate base an amount
equal to:
(1) the full purchase price;
(2) incidental expenses; and
(3) other costs of acquisition;
allocated in a reasonable manner among appropriate utility plant in
service accounts.
(g) The commission shall issue a final order under this section not
later than two hundred ten (210) days after the filing of the parties' case
in chief.
(h) In reviewing a proposed sale or disposition under subsection (e),
the commission shall determine whether the factors set forth in IC 8-1-30.3-5(d) are satisfied as applied to the proposed sale or disposition
of the municipality's nonsurplus municipally owned utility property for
purposes of section 5(m) of this chapter. If the commission determines
that the factors set forth in IC 8-1-30.3-5(d):
(1) are satisfied as applied to the proposed sale or disposition,
section 5(g) through 5(k) of this chapter does not apply to the
municipality's ordinance adopted under section 5(d) of this
chapter; or
(2) are not satisfied as applied to the proposed sale or disposition:
(A) section 5(g) through 5(k) of this chapter applies to the
municipality's ordinance adopted under section 5(d) of this
chapter; and
(B) the question as to whether the sale or disposition should be
made must be submitted to the voters of the municipality at a
special or general election if at least the number of the
registered voters of the municipality set forth in section 5(h) of
this chapter sign and present a petition to the legislative body
opposing the sale or disposition, in accordance with section
5(g) through 5(k) of this chapter.
However, notwithstanding this subsection, in reviewing a proposed sale
or disposition under subsection (e)(2), the commission may not
condition its approval of the proposed sale or disposition on whether
the factors set forth in IC 8-1-30.3-5(d) are satisfied or on any other
factors except those provided for in subsection (e)(2), (e)(3), and (e)(4).

Legislative History

As added by P.L.98-2016, SEC.10. Amended by P.L.64-2018, SEC.2; P.L.229-2019, SEC.9; P.L.61-2022, SEC.12.