| HOUSE AMENDED |
| PRIOR PRINTER'S NOS. 138, 1354, 1376 | PRINTER'S NO. 2179 |
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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY BRUBAKER, EICHELBERGER, RAFFERTY, FERLO, STOUT, EARLL, O'PAKE, KASUNIC, BROWNE, PILEGGI AND ERICKSON, FEBRUARY 2, 2009 |
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| AS REPORTED FROM COMMITTEE ON CONSUMER AFFAIRS, HOUSE OF REPRESENTATIVES, AS AMENDED, SEPTEMBER 14, 2010 |
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| AN ACT |
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1 | Amending the act of February 1, 1966 (1965 P.L.1656, No.581), |
2 | entitled "An act concerning boroughs, and revising, amending |
3 | and consolidating the law relating to boroughs," further |
4 | providing for regulation of contracts; and providing for |
5 | additional contracting authority for electric power and |
6 | energy. |
7 | The General Assembly of the Commonwealth of Pennsylvania |
8 | hereby enacts as follows: |
9 | Section 1. Section 1402(d) of the act of February 1, 1966 |
10 | (1965 P.L.1656, No.581), known as The Borough Code, is amended |
11 | by adding a clause to read: |
12 | Section 1402. Regulation of Contracts.--* * * |
13 | (d) The contracts or purchases made by council, which shall |
14 | not require advertising, bidding or price quotations as |
15 | hereinbefore provided, are as follows: |
16 | * * * |
17 | (6) Those made relating to the purchase of electricity and |
18 | associated energy and related services by a borough owning or | <-- |
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1 | operating electric generation or distribution facilities on the |
2 | effective date of this section with any of the following: |
3 | (i) A political subdivision. |
4 | (ii) Another state. |
5 | (iii) The Commonwealth or an agency thereof. |
6 | (iv) The Federal Government. |
7 | (v) A private corporation. |
8 | (vi) An electric cooperative corporation under 15 Pa.C.S. |
9 | Ch. 73 (relating to electric cooperative corporations). |
10 | (vii) A non-profit membership corporation. As used in this |
11 | subclause, the term "non-profit membership corporation" means an |
12 | entity, the membership of which: |
13 | (A) consists solely of Pennsylvania boroughs, such as a |
14 | consortium, buying group or municipal power agency under section |
15 | 2471.2; or |
16 | (B) consists of Pennsylvania boroughs and political |
17 | subdivisions of another state or states. |
18 | (viii) An electric cooperative of another state. |
19 | Nothing in this clause shall prohibit council from engaging in |
20 | advertising, bidding or price quotations if the council |
21 | determines that the advertising, bidding or price quotations are |
22 | in the public interest. |
23 | * * * |
24 | Section 2. The act is amended by adding a section to read: |
25 | Section 2471.3. Additional Contracting Authority for |
26 | Electric Power and Energy.--(a) In addition to the authority |
27 | provided under section 2471, a borough that, on the effective | <-- |
28 | date of this section, owns or operates electric generation or |
29 | distribution facilities and a borough that is a member of a non- |
30 | profit membership corporation may contract with the non-profit |
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1 | membership corporation for the following: |
2 | (1) The development of electric power and associated energy |
3 | including the conduct of investigations or studies necessary to |
4 | determine the feasibility and cost of additional sources and |
5 | supplies of electric power and associated energy. |
6 | (2) The purchase, sale, exchange, interchange, wheeling, |
7 | pooling or transmission of electric power and associated energy |
8 | or the right to the capacity from sources and projects in this |
9 | Commonwealth or another state for a period not to exceed fifty |
10 | years. |
11 | (b) A contract under subsection (a)(2) shall include the |
12 | purpose of the contract, the duration of the contract and |
13 | available procedures to terminate the contract subsequent to the |
14 | repayment of all indebtedness secured under the contract. |
15 | (c) If a borough is a member of a non-profit membership |
16 | corporation, a contract under subsection (a)(2) may, if |
17 | specifically set forth in the contract, obligate the borough to: |
18 | (1) take and pay for a minimum quantity of electric power |
19 | and associated energy if the power and energy is available for |
20 | delivery; |
21 | (2) in connection with a project owned by the non-profit |
22 | membership corporation or in which the non-profit membership |
23 | corporation obtains an undivided ownership interest, to take or |
24 | pay for a minimum amount of electric power and energy; or |
25 | (3) pay for electric power and energy only if utilized by |
26 | the borough. |
27 | (d) (1) The authority under subsection (c)(1) shall apply |
28 | whether or not the borough accepts delivery of the power and |
29 | energy. |
30 | (2) The authority under subsection (c)(2) shall apply |
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1 | notwithstanding the suspension, interruption, interference or |
2 | reduction or curtailment of the output of the project or the |
3 | electric power and energy contracted for, and whether or not: |
4 | (i) the electric power and energy is available for delivery |
5 | to the borough; or |
6 | (ii) the borough accepts delivery of the electric power and |
7 | energy. |
8 | (e) No borough may be obligated under a take-or-pay or take- |
9 | and-pay arrangement entered into with a non-profit membership |
10 | corporation in which the borough maintains membership unless |
11 | that obligation is expressly authorized by an act of the borough |
12 | council. |
13 | (f) A non-profit membership corporation shall not: |
14 | (1) condition membership in the non-profit membership |
15 | corporation on the inclusion of any take-or-pay or take-and-pay |
16 | obligations in a contract under subsection (a)(2); or |
17 | (2) except as set forth in subsection (g), require take-or- |
18 | pay or take-and-pay obligations in a contract with a borough |
19 | unless the contract meets the criteria of subsection (c)(1) or |
20 | (2). |
21 | (g) A borough which is a member of a non-profit membership |
22 | corporation may enter into future power supply contracts, |
23 | contract renewals or contract extensions with the non-profit |
24 | membership corporation under subsection (c)(3): |
25 | (1) with no take-or-pay or take-and-pay obligations as |
26 | permitted by subsection (c)(1) and (2); and |
27 | (2) without prejudice or discrimination as compared to any |
28 | other borough which chooses to enter into contracts permitted by |
29 | subsection (c)(1) and (2) with the non-profit membership |
30 | corporation. |
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1 | (h) In order to carry out subsection (g), a non-profit |
2 | membership corporation which provides or offers electric power |
3 | and associated energy to a member borough in this Commonwealth |
4 | under subsection (a)(2) shall offer, to all of its member |
5 | boroughs in this Commonwealth, future power supply contract |
6 | terms, contract renewals or contract extensions under subsection |
7 | (c)(3) on a comparable and nondiscriminatory basis and with |
8 | similar terms and conditions to future power supply contract |
9 | terms, contract renewals or contract extensions that would be |
10 | appropriate under subsection (c)(3) which the non-profit |
11 | membership corporation contemporaneously offers to its members |
12 | in other states. |
13 | (i) All obligations under a contract under subsection (a)(2) |
14 | shall be paid from revenues derived from the operation of the |
15 | borough's electric system, and payments shall be an operating |
16 | expense of the borough's electric system. |
17 | (j) If explicitly set forth in a contract under subsection |
18 | (a)(2), a borough may agree to assume, prorate or otherwise |
19 | become liable for the obligations of another borough of this |
20 | Commonwealth or of a political subdivision of another state that |
21 | is a member of the non-profit membership corporation if the |
22 | borough or other political subdivision defaults in the payment |
23 | of its obligations for the purchase of the electric power and |
24 | associated energy. The contract may include provisions to permit |
25 | a borough to succeed to the rights and interests of the |
26 | defaulting borough or political subdivision to purchase electric |
27 | power and associated energy. A borough's liability for the |
28 | obligations of a defaulting borough of this Commonwealth or a |
29 | political subdivision of another state shall not exceed twenty- |
30 | five percent of a borough's initial nominal entitlement to |
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1 | electric power and associated energy under the contract. |
2 | (k) None of the obligations under the contract shall |
3 | constitute a legal or equitable pledge, charge, lien or |
4 | encumbrance on any property of the borough or on any of its |
5 | income, receipts or revenues, except revenues of its electric |
6 | system. The full faith and credit and the taxing power of the |
7 | borough shall not be pledged for the payment of an obligation |
8 | under the contract. |
9 | (l) The provisions of this section are intended to add to |
10 | the powers and rights of a borough, and nothing in this section |
11 | shall be construed to limit either the general or specific |
12 | powers or rights of a borough set forth in this act. |
13 | (m) As used in this section, the term "non-profit membership |
14 | corporation" means an entity the membership of which: |
15 | (1) consists solely of Pennsylvania boroughs, such as a |
16 | consortium, buying group or municipal power agency under section |
17 | 2471.2; or |
18 | (2) consists of Pennsylvania boroughs and political |
19 | subdivisions of another state or states. |
20 | Section 3. This act shall take effect immediately. |
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