When an area in which electric service is being furnished at wholesale or retail by a supplier of electricity, including municipal corporations, public or governmental agencies, and electric cooperatives, is incorporated as a city or town or is annexed to an existing incorporated city or town, the city or town or, with the consent of the governing body of such city or town, an electrical utility furnishing electricity in that city or town by franchise, contract, permit, or other consent, has the right to acquire the property of a supplier of electricity brought within corporate limits upon a finding by the commission pursuant to subsection (B) of Section 58-27-650 that inadequate, undependable, or unreasonably discriminatory service is being provided and upon payment of just compensation. The supplier of electricity having property or facilities in areas incorporated as a city or town or annexed into an existing city or town has the right to compel the city or town or an electrical utility operating in that city or town pursuant to a franchise, contract, permit, or other consent to purchase the facilities and properties and to compel the payment of just compensation. The city or town may not elect to purchase or give its consent to a purchase by another supplier of electricity until the commission has ruled upon adequacy of service, and it has first given ten days' written notice to the Office of Regulatory Staff and the suppliers concerned of its intention to purchase or consent to the purchase of property situate within the limits of the municipality used for providing electric service in the municipality.
Within ten days after notice is given that the right to acquire or sell the facilities and properties is exercised, the parties shall each select a representative in order to reach an agreement on just compensation. The selling supplier shall make its pertinent books and records available to the representative of the purchasing supplier. If the representatives are unable to agree on just compensation within a period of sixty days, they shall jointly request the resident judge of the judicial circuit in which the facilities and properties to be purchased are situate to submit a list of five disinterested persons from which the selection of an arbiter must be made. The resident judge shall submit the list within five days after receipt of a request. Within five days after receipt of the list from the resident judge, the representatives of the parties shall meet, and each party has alternate strikes, the first strike to be chosen by lot, until one person remains on the list, and this person is the arbiter, whose expenses and fee for service rendered, as assessed by him against either or both parties, are subject to review by the resident judge. The arbiter shall give each representative an opportunity to be heard, and his decision on just compensation, including reasonable expenses, engineers' and attorneys' fees justifiably incurred by the selling supplier as allowed by the arbiter, is final and binding on the parties.
If either party fails to act during the time limitation set forth above for the accomplishment of a particular step within this procedure without the consent of the other party, then the party failing to act forfeits his rights in the selection of an arbiter and his rights to be heard by the arbiter.
For the purposes of this section, "just compensation" consists of the total of the following:
(a) Reproduction cost, new, of the facilities being acquired, less depreciation on a straight-line basis;
(b) Cost of reintegrating the system of the selling supplier after detaching the portion to be sold (including allowance for idle substation, transmission, and generation capacity caused in the remaining portion of the system or of any supplying systems, the cost of which is borne in whole or in part by the selling system);
(c) An additional amount, in recognition of the loss of revenue of greater than average value, equivalent to two and one-half times the gross revenue derived by the selling supplier from the consumers on the lines being acquired during the twelve months next preceding the first of the month in which notice of purchase was given the selling supplier.
The total sum paid by an electrical utility or municipality under the provisions of this section for acquisition of facilities is the original cost of the facilities to be entered on its books and records for all accounting purposes, including rate making.
HISTORY: 1962 Code Section 24-76; 1963 (53) 495; 1984 Act No. 431, Section 5, eff June 6, 1984; 2006 Act No. 318, Section 191, eff May 24, 2006.
Editor's Note
Section 57 of 1987 Act No. 173 (codified as Section 58-27-690) provides that this section shall not be modified, abridged, or repealed by 1987 Act No. 173.