00                            HOUSE BILL NO. 267                                                                          
01 "An Act relating to the regulation of small water utilities and small wastewater utilities;                             
02 and permitting the Regulatory Commission of Alaska to require certain public facilities                                 
03 to acquire water or wastewater utility service from certain public utilities."                                          
04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
05    * Section 1.  AS 42.05.441(b) is amended to read:                                                                  
06            (b)  Except as provided in (d) of this section, in [IN] determining the value                            
07       for rate-making purposes of public utility property used and useful in rendering                                  
08       service to the public, the commission shall be guided by acquisition cost or, if lower,                           
09       the original cost of the property to the person first devoting it to public service, less                         
10       accrued depreciation, plus materials and supplies and a reasonable allowance for cash                             
11       working capital when required.                                                                                    
12    * Sec. 2.  AS 42.05.441 is amended by adding a new subsection to read:                                             
13            (d)  For rate-making purposes, in determining the value to a water or                                        
14       wastewater utility of property that is used and useful in rendering service to the public,                        

01       that was owned by a municipality or other state or federal agency or political                                    
02       subdivision, and that is being valued by the commission for rate-making purposes for                              
03       the first time, the commission shall be guided by the lower of                                                    
04                 (1)  the original cost of the property at the time it was first devoted to                              
05       public service, less accrued depreciation; or                                                                     
06                 (2)  the value of the public utility property set out in an agreement                                   
07       between the utility and the municipality or other state or federal agency or political                            
08       subdivision; in the case of property that was owned by a municipality, the commission                             
09       shall be guided by the value in an agreement only if the agreement has been approved                              
10       by the voters of the municipality in an election.                                                                 
11    * Sec. 3.  AS 42.05.471 is amended by adding a new subsection to read:                                             
12            (c)  In a rate proceeding, the commission shall accept as just and reasonable for                            
13       rate-making purposes an allowance of annual or accrued depreciation established                                   
14       under this section on utility property directly or indirectly contributed to the utility by                       
15       a customer or others if the public utility property has been valued by the commission                             
16       under AS 42.05.441(d) or when the commission determines that the allowance of                                     
17       depreciation is necessary for capital replacement.                                                                
18    * Sec. 4.  AS 42.05 is amended by adding a new section to read:                                                    
19            Sec. 42.05.635.  Use of services of certain water or wastewater public                                     
20       utilities.  (a)  When the commission determines that it is in the public interest, the                          
21       commission shall require a state-funded public facility to acquire water or wastewater                            
22       service from a public utility subject to rate regulation under this chapter the service                           
23       territory of which includes the public facility.                                                                  
24            (b)  The commission shall adopt regulations to implement this section.                                       
25    * Sec. 5.  AS 42.05.711(b) is amended to read:                                                                     
26            (b)  Except as otherwise provided in this subsection and in (o) of this section,                         
27       public utilities owned and operated by a political subdivision of the state, or electric                          
28       operating entities established as the instrumentality of two or more public utilities                             
29       owned and operated by political subdivisions of the state, are exempt from this                                   
30       chapter, other than AS 42.05.221 - 42.05.281 and 42.05.385.  However,                                             
31                 (1)  the governing body of a political subdivision may elect to be                                      

01       subject to this chapter; and                                                                                      
02                 (2)  a utility or electric operating entity that is owned and operated by a                             
03       political subdivision and that directly competes with another utility or electric                                 
04       operating entity is subject to this chapter and any other utility or electric operating                           
05       entity owned and operated by the political subdivision is also subject to this chapter.                           
06    * Sec. 6.  AS 42.05.711(g) is amended to read:                                                                     
07            (g)  Except as provided in (o) of this section, a [A] utility, other than a                              
08       telephone or electric utility, that does not gross $150,000 annually may elect to be                              
09       exempt from the provisions of this chapter other than AS 42.05.221 - 42.05.281 under                              
10       the procedure described in AS 42.05.712.                                                                          
11    * Sec. 7.  AS 42.05.711 is amended by adding a new subsection to read:                                             
12            (o)  Except as provided in (d) of this section, a public water or wastewater                                 
13       utility serving 500 or fewer customers that receives grants or other economic                                     
14       assistance from or through the state is subject to regulation under this chapter                                  
15       beginning on January 1, 2005.