00                SPONSOR SUBSTITUTE FOR SENATE BILL NO. 205                                                              
01 "An Act relating to the power of the Regulatory Commission of Alaska to adjust a rate                                   
02 charged or to be changed by a public utility that is a commercial enterprise operating                                  
03 for profit when the commission determines that the rate or a factor affecting that rate                                 
04 compensates for a utility's negligent conduct, recklessness, or intentional violation of a                              
05 law."                                                                                                                   
06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
07    * Section 1. AS 42.05.431(a) is amended to read:                                                                   
08            (a)  When the commission, after an investigation and hearing, finds that a rate                              
09       demanded, observed, charged, or collected by a public utility for a service subject to                            
10       the jurisdiction of the commission, or that a classification, rule, regulation, practice, or                      
11       contract affecting the rate, is unjust, unreasonable, unduly discriminatory or                                    
12       preferential, the commission shall determine a just and reasonable rate, classification,                          
13       rule, regulation, practice, or contract to be observed or allowed and shall establish it by                       

01       order. However, in an order established under this subsection that applies to a                               
02       public utility that is a commercial enterprise operating for profit, the commission                           
03       may not compensate the utility for its negligent conduct, recklessness, or                                    
04       intentional violation of the law. A municipality may covenant with bond purchasers                            
05       regarding rates of a municipally owned utility, and the covenant is valid and                                     
06       enforceable and is considered to be a contract with the holders from time to time of the                          
07       bonds. The financial covenants contained in mortgages and other debt instruments of                               
08       cooperative utilities organized under AS 10.25 are also valid and enforceable, and                                
09       rates set by the commission must be adequate to meet those covenants. However, a                                  
10       cooperative utility that is negotiating to enter a mortgage or other debt instrument that                         
11       provides for a times-interest-earned ratio (TIER) greater than the ratio the commission                           
12       most recently approved for that cooperative shall submit the mortgage or debt                                     
13       instrument to the commission before the instrument takes effect. The commission may                               
14       disapprove the instrument within 60 days after its submission. If the commission has                              
15       not acted within 60 days, the instrument is considered to be approved.