KRS § 278.020 — KY Code / Title XXIV / Chapter 278 / Section 278.020
278.020 Certificate of convenience and necessity required for construction provision of utility service or of utility -- Exceptions -- Approval required for acquisition or transfer of ownership -- Public hearing on proposed transmission line -- Limitations upon approval of application to transfer control of utility or to abandon or cease provision of services -- Hearing -- Severability of provisions
Status: in_force

278.020 Certificate of convenience and necessity required for construction

provision of utility service or of utility -- Exceptions -- Approval required for

acquisition or transfer of ownership -- Public hearing on proposed

transmission line -- Limitations upon approval of application to transfer

control of utility or to abandon or cease provision of services -- Hearing --

Severability of provisions.

(1) (a) No person, partnership, public or private corporation, or combination thereof

shall commence providing utility service to or for the public or begin the

construction of any plant, equipment, property, or facility for furnishing to the

public any of the services enumerated in KRS 278.010, except:

1. Retail electric suppliers for service connections to electric-consuming

facilities located within its certified territory;

2. Ordinary extensions of existing systems in the usual course of business;

or

3. A water district created under KRS Chapter 74 or a water association

formed under KRS Chapter 273 that undertakes a waterline extension or

improvement project if the water district or water association is a Class

A or B utility as defined in the uniform system of accounts established

by the commission according to KRS 278.220 and:

a. The water line extension or improvement project will not cost

more than five hundred thousand dollars ($500,000); or

b. The water district or water association will not, as a result of the

water line extension or improvement project, incur obligations

requiring commission approval as required by KRS 278.300.

In either case, the water district or water association shall not, as a result

of the water line extension or improvement project, increase rates to its

customers;

until that person has obtained from the Public Service Commission a

certificate that public convenience and necessity require the service or

construction.

(b) Upon the filing of an application for a certificate, and after any public hearing

which the commission may in its discretion conduct for all interested parties,

the commission may issue or refuse to issue the certificate, or issue it in part

and refuse it in part, except that the commission shall not refuse or modify an

application submitted under KRS 278.023 without consent by the parties to

the agreement.

(c) The commission, when considering an application for a certificate to construct

a base load electric generating facility, may consider the policy of the General

Assembly to foster and encourage use of Kentucky coal by electric utilities

serving the Commonwealth.

(d) The commission, when considering an application for a certificate to construct

an electric transmission line, may consider the interstate benefits expected to

be achieved by the proposed construction or modification of electric

transmission facilities in the Commonwealth.

(e) Unless exercised within one (1) year from the grant thereof, exclusive of any

delay due to the order of any court or failure to obtain any necessary grant or

consent, the authority conferred by the issuance of the certificate of

convenience and necessity shall be void, but the beginning of any new

construction or facility in good faith within the time prescribed by the

commission and the prosecution thereof with reasonable diligence shall

constitute an exercise of authority under the certificate.

(2) For the purposes of this section, construction of any electric transmission line of one

hundred thirty-eight (138) kilovolts or more and of more than five thousand two

hundred eighty (5,280) feet in length shall not be considered an ordinary extension

of an existing system in the usual course of business and shall require a certificate

of public convenience and necessity. However, ordinary extensions of existing

systems in the usual course of business not requiring such a certificate shall include:

(a) The replacement or upgrading of any existing electric transmission line; or

(b) The relocation of any existing electric transmission line to accommodate

construction or expansion of a roadway or other transportation infrastructure;

or

(c) An electric transmission line that is constructed solely to serve a single

customer and that will pass over no property other than that owned by the

customer to be served.

(3) Prior to granting a certificate of public convenience and necessity to construct

facilities to provide the services set forth in KRS 278.010(3)(f), the commission

shall require the applicant to provide a surety bond, or a reasonable guaranty that the

applicant shall operate the facilities in a reasonable and reliable manner for a period

of at least five (5) years. The surety bond or guaranty shall be in an amount

sufficient to ensure the full and faithful performance by the applicant or its

successors of the obligations and requirements of this chapter and of all applicable

federal and state environmental requirements. However, no surety bond or guaranty

shall be required for an applicant that is a water district or water association or for

an applicant that the commission finds has sufficient assets to ensure the continuity

of sewage service.

(4) No utility shall exercise any right or privilege under any franchise or permit, after

the exercise of that right or privilege has been voluntarily suspended or

discontinued for more than one (1) year, without first obtaining from the

commission, in the manner provided in subsection (1) of this section, a certificate of

convenience and necessity authorizing the exercise of that right or privilege.

(5) No utility shall apply for or obtain any franchise, license, or permit from any city or

other governmental agency until it has obtained from the commission, in the manner

provided in subsection (1) of this section, a certificate of convenience and necessity

showing that there is a demand and need for the service sought to be rendered.

(6) No person shall acquire or transfer ownership of, or control, or the right to control,

any utility under the jurisdiction of the commission by sale of assets, transfer of

stock, or otherwise, or abandon the same, without prior approval by the

commission. The commission shall grant its approval if the person acquiring the

utility has the financial, technical, and managerial abilities to provide reasonable

service.

(7) No individual, group, syndicate, general or limited partnership, association,

corporation, joint stock company, trust, or other entity (an "acquirer"), whether or

not organized under the laws of this state, shall acquire control, either directly or

indirectly, of any utility furnishing utility service in this state, without having first

obtained the approval of the commission. Any acquisition of control without prior

authorization shall be void and of no effect. As used in this subsection, the term

"control" means the possession, directly or indirectly, of the power to direct or cause

the direction of the management and policies of a utility, whether through the

ownership of voting securities, by effecting a change in the composition of the

board of directors, by contract or otherwise. Control shall be presumed to exist if

any individual or entity, directly or indirectly, owns ten percent (10%) or more of

the voting securities of the utility. This presumption may be rebutted by a showing

that ownership does not in fact confer control. Application for any approval or

authorization shall be made to the commission in writing, verified by oath or

affirmation, and be in a form and contain the information as the commission

requires. The commission shall approve any proposed acquisition when it finds that

the same is to be made in accordance with law, for a proper purpose and is

consistent with the public interest. The commission may make investigation and

hold hearings in the matter as it deems necessary, and thereafter may grant any

application under this subsection in whole or in part and with modification and

upon terms and conditions as it deems necessary or appropriate. The commission

shall grant, modify, refuse, or prescribe appropriate terms and conditions with

respect to every such application within sixty (60) days after the filing of the

application therefor, unless it is necessary, for good cause shown, to continue the

application for up to sixty (60) additional days. The order continuing the application

shall state fully the facts that make continuance necessary. In the absence of that

action within that period of time, any proposed acquisition shall be deemed to be

approved.

(8) Subsection (7) of this section shall not apply to any acquisition of control of any:

(a) Utility which derives a greater percentage of its gross revenue from business

in another jurisdiction than from business in this state if the commission

determines that the other jurisdiction has statutes or rules which are applicable

and are being applied and which afford protection to ratepayers in this state

substantially equal to that afforded such ratepayers by subsection (7) of this

section;

(b) Utility by an acquirer who directly, or indirectly through one (1) or more

intermediaries, controls, or is controlled by, or is under common control with,

the utility, including any entity created at the direction of such utility for

purposes of corporate reorganization; or

(c) Utility pursuant to the terms of any indebtedness of the utility, provided the

issuance of indebtedness was approved by the commission.

(9) In a proceeding on an application filed pursuant to this section, any interested

person, including a person over whose property the proposed transmission line will

cross, may request intervention, and the commission shall, if requested, conduct a

public hearing in the county in which the transmission line is proposed to be

constructed, or, if the transmission line is proposed to be constructed in more than

one county, in one of those counties. The commission shall issue its decision no

later than ninety (90) days after the application is filed, unless the commission

extends this period, for good cause, to one hundred twenty (120) days. The

commission may utilize the provisions of KRS 278.255(3) if, in the exercise of its

discretion, it deems it necessary to hire a competent, qualified and independent firm

to assist it in reaching its decision. The issuance by the commission of a certificate

that public convenience and necessity require the construction of an electric

transmission line shall be deemed to be a determination by the commission that, as

of the date of issuance, the construction of the line is a prudent investment.

(10) The commission shall not approve any application under subsection (6) or (7) of

this section for the transfer of control of a utility described in KRS 278.010(3)(f)

unless the commission finds, in addition to findings required by those subsections,

that the person acquiring the utility has provided evidence of financial integrity to

ensure the continuity of sewage service in the event that the acquirer cannot

continue to provide service.

(11) The commission shall not accept for filing an application requesting authority to

abandon facilities that provide services as set forth in KRS 278.010(3)(f) or to cease

providing services unless the applicant has provided written notice of the filing to

the following:

(a) Kentucky Division of Water;

(b) Office of the Attorney General; and

(c) The county judge/executive, mayor, health department, planning and zoning

commission, and public sewage service provider of each county and each city

in which the utility provides utility service.

(12) The commission may grant any application requesting authority to abandon

facilities that provide services as set forth in KRS 278.010(3)(f) or to cease

providing services upon terms and conditions as the commission deems necessary

or appropriate, but not before holding a hearing on the application and no earlier

than ninety (90) days from the date of the commission's acceptance of the

application for filing, unless the commission finds it necessary for good cause to act

upon the application earlier.

(13) If any provision of this section or the application thereof to any person or

circumstance is held invalid, the invalidity shall not affect other provisions or

applications of this section which can be given effect without the invalid provision

or application, and to that end the provisions are declared to be severable.