Request By:
W. Pelham McMurry, Esq.
P.O. Box 148
Citizens Bank Building
Paducah, Kentucky 42001
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in response to your letter raising a question concerning KRS 278.047 and its applicability to a municipally owned electric utility organized and operating pursuant to KRS 96.550 to 96.900, the Kentucky "T.V.A. Act. " In your opinion KRS 278.047(1), requiring that the rates charged for services by municipally owned electric utilities shall not be increased except after a public hearing following reasonable notice thereof, does not apply to a municipally owned electric utility operating under the Kentucky "T.V.A. Act. "
KRS 278.047 was enacted in 1976 by the Kentucky General Assembly, regular session (H.B. 842, 1976 Acts, Chapter 88, An act relating to the regulation of public utilities) . In OAG 76-318, copy enclosed, we said that KRS 278.047(2) applies not only to all municipally owned electric utilities but to all municipally owned public utilities. KRS 278.047(2) was amended by the Special Session of the 1976 Kentucky General Assembly (H.B. 3, An act relating to municipal electric utilities) by the insertion of the word "electric" between the words "owned" and "utilities." A photostatic copy of the bill is enclosed. Thus, the legislative intent is to limit the requirement set forth in KRS 278.047(2) to municipally owned electric utilities rather than all municipally owned public utilities.
In support of your argument that KRS 278.047 does not apply to a municipally owned electric utility operating under the Kentucky "T.V.A. Act, " you first cite KRS 96.560, originally enacted in 1942 and last amended in 1966. That section includes statements such as "KRS 96.550 to 96.900 are intended to be the complete law of the state with respect to municipalities acquiring electric plants after June 1, 1942, and the complete law of this state with respect to the operation of electric plants acquired by any municipality after June 1, 1942." The fact is, however, that other statutory provisions exist concerning the acquisition and operation of electric plants by cities and, thus, the "T.V.A. Act" is not the complete law of the state. See, for example, KRS 96.520 et seq. (Electric Plants in Cities of the Second to Sixth Class, amended in 1970 and 1976).
You also cite KRS 96.880, providing in part that it is not necessary for any municipality proceeding under KRS 96.550 to 96.900 to obtain any certificate of convenience and necessity, license, permit, or other authorization, from any board, commission, or other agency in Kentucky in order to acquire, maintain and operate any electric plant. KRS 96.880 also states that neither the Public Service Commission nor any other board or commission shall, unless expressly authorized, have jurisdiction over an electric plant operating under the "T.V.A. Act. "
In our opinion KRS 278.047 is not an attempt to vest jurisdiction over municipally operated electric plants in the Public Service Commission. Furthermore, some of the confusion regarding this statute may have arisen because of its placement in KRS Chapter 278 rather than, for example, in KRS Chapter 96 (Utilities in Cities). The Public Service Commission does not have jurisdiction over municipally owned, controlled, operated or managed electric utilities [KRS 278.010(3)(a)]. The hearing required by KRS 278.047 is not a hearing before the Public Service Commission but merely a hearing on the local level. The issue here is not one of jurisdiction or the acquisition of jurisdiction by the Public Service Commission over municipally owned electric utilities, but merely a requirement that a public hearing be held (on the local level) before a municipally owned electric utility increases its rates charged for service.
Therefore, in our opinion, KRS 278.047(1) does not give the Public Service Commission jurisdiction over municipally owned, controlled, operated or managed electric utilities but it does require that all municipally owned electric utilities hold a public hearing on the local level following reasonable notice before the rates charged for services are increased. This required hearing prior to a rate increase, as the most recent expression of legislative intent, applies to all municipally owned electric utilities, including those organized and operated pursuant to KRS 96.550 to 96.900, the Kentucky "T.V.A. Act. "