807 KAR 5:080. Procedural and filing
requirements and safeguards concerning nonregulated activities of utilities or
utility affiliates.
RELATES TO: KRS 278.010, 278.2201,
278.2203, 278.2205, 278.2207, 278.2213, 278.2215, 278.2219, 278.230, 278.260
STATUTORY AUTHORITY: KRS 278.040(3),
278.2201, 278.280(1)
NECESSITY, FUNCTION, AND CONFORMITY:
KRS 278.040(3) authorizes the commission to promulgate reasonable
administrative regulations to implement the provisions of KRS Chapter 278. KRS
278.280(1) authorizes the commission to establish proper practices to be
observed in regard to a utility’s practices and services. KRS 278.2201
prohibits a utility governed by KRS 278.2201 through 278.2219 from subsidizing
nonregulated activities performed by the utility or an affiliate and authorizes
the commission to promulgate administrative regulations to implement this
section. KRS 278.2205(3) requires a utility governed by KRS 278.2201 through
278.2219 to file with the commission a statement that its cost allocation manual
has been prepared and adopted, together with the manual. KRS 278.2205(4)
requires a utility governed by KRS 278.2201 through 278.2219 to amend its cost
allocation manual to reflect any material changes. KRS 278.230 requires a
utility to file with the commission any reports, schedules, classifications or
other information that the commission reasonably requires. KRS 278.2207
prescribes requirements for transactions between a utility governed by KRS
278.2201 through 278.2219 and its affiliate, and provides for deviations from
those requirements. KRS 278.2213(13) requires the commission to establish
specifications for a disclaimer to be used by an affiliate using the name,
trademark, brand or logo of a utility governed by KRS 278.2201 through 278.2219
and requires commission approval prior to the use of any disclaimer. KRS
278.2213(15) requires a utility governed by KRS 278.2201 through 278.2219 to
inform the commission of any new nonregulated activity within the time
specified by the commission. KRS 278.2213(17) authorizes the commission to
require a utility to file annual reports relating to its transactions with
affiliates. KRS 278.2219 authorizes the commission to grant a deviation from a
provision of KRS 278.2201 through 278.2213. This administrative regulation
prescribes procedures, filing requirements, and safeguards relating to
nonregulated activities of a utility or a utility affiliate.
Section 1. Definitions. For purposes
of this administrative regulation:
(1) "Affected utility"
means a utility not exempted by KRS 278.2215, or other law, from a requirement
of KRS 278.2201 through 278.2219.
(2) "Service agreement"
means an agreement between an affected utility and an affiliate or subsidiary
that delineates the activities, duties, pricing and accounting for transactions
between the parties.
Section 2. Annual Reports Relating to
a Nonregulated Activity of an Affected Utility or Its Affiliate. (1) An
affected utility shall file with the commission, by March 31 of each calendar
year, a report containing the following information:
(a) A description of each change in
the affected utility’s cost allocation manual during the preceding calendar
year that has not been previously reported;
(b) A report on the utility's
incidental nonregulated activity that describes the activity and provides
justification for reporting the nonregulated activity as an incidental
nonregulated activity, including:
1. Revenue per year or percentage of
total revenue per year of the activity reported as an incidental nonregulated
activity;
2. A calculation demonstrating the
manner in which the affected utility has determined the percentage of revenue
set forth in subparagraph 1 of this paragraph;
3. A full explanation as to why the
activity reported as an incidental nonregulated activity is reasonably related
to the affected utility’s regulated services; and
(c) A list of nonregulated affiliates
and a brief description of the activities in which each affiliate is involved,
except that an affected utility may meet the requirements of this paragraph for
a nonregulated affiliate that has not, within the reporting period, offered or
sold goods and services in the Commonwealth of Kentucky or entered into a
transaction with an affected utility by stating the name of the nonregulated affiliate
and the nature of its business.
(2) A copy of each service agreement
existing on the effective date of KRS 278.2201 through 278.2219 and remaining
in effect shall be filed as an attachment to the annual report required by this
subsection. After the initial filing, an affected utility shall file only new
or amended service agreements with the annual report.
Section 3. Filing of the Cost
Allocation Manual and Amendments. (1) An affected utility shall file a copy of
a new cost allocation manual or a new amendment to its cost allocation manual
within:
(a) Sixty (60) days of a material
change in matters required to be included in the cost allocation manual; or
(b) Ninety (90) days of engaging in a
new nonregulated activity that is not classified as an incidental nonregulated
activity pursuant to KRS 278.2203(4).
(2) If an affected utility files a
new cost allocation manual or an amendment to a cost allocation manual, it
shall include with its filing a cover letter containing a brief description of
the activity or material change in circumstance that necessitates the filing of
the cost allocation manual or amendment.
(3) An affected utility filing under
this section shall include in its filing all documents and information required
by 807 KAR 5:001, Section 14, except that only one (1) copy of the cost
allocation manual shall be filed.
Section 4. Notice of Establishment of
New Nonregulated Activity. (1) Within ten (10) days of establishing a new
nonregulated activity, an affected utility shall file with the commission a
written notice that:
(a) Briefly describes the new
nonregulated activity; and
(b) States whether the new
nonregulated activity is proposed to be classified as an incidental
nonregulated activity.
(2) If a new nonregulated activity is
proposed to be classified as an incidental nonregulated activity, an affected
utility shall include in the notice required by subsection (1) of this section
the information required by Section 2 (1)(b) of this administrative regulation.
Section 5. Petition for Deviation.
(1) To request a deviation pursuant to KRS 278.2219, an affected utility shall
file with the commission the following documents and information:
(a) All documents and information
required by 807 KAR 5:001, Section 14;
(b) An original and five (5) copies
of the petition;
(c) All documents and information
required by KRS 278.2219;
(d) A full description of the reasons
that compliance with the requirements from which deviation is sought is
impractical or unreasonable.
(2) To request a deviation from KRS
278.2207, an affected utility shall file with the commission the following
documents and information:
(a) All documents and information
required by 807 KAR 5:001, Section 14;
(b) An original and five (5) copies
of the petition;
(c) All documents and information
required by KRS 278.2219;
(d) The proposed price of services or
products proposed by the affected utility or nonregulated affiliate;
(e) A detailed calculation
demonstrating the manner in which the affected utility or nonregulated
affiliate has determined the proposed price of services or products;
(f) An explanation of the reasons the
affected utility believes that the proposed price of services and products is
in the public interest; and
(g) A statement demonstrating good cause
for the requested deviation.
Section 6. Disclaimer to be Employed
When an Affiliate of an Affected Utility Uses the Utility’s Name, Trademark,
Brand, or Logo. The disclaimer used by an affiliate of an affected utility
shall comply with the following requirements:
(1) The disclaimer shall state that
"(affiliate’s name) is not the same company as (utility’s name).
(Affiliate’s name) is not regulated by the Kentucky Public Service Commission.
You do not have to buy (the affiliate’s) (products or services, as applicable)
in order to continue to receive quality regulated services from the
utility.";
(2) If an affiliate of an affected
utility uses the utility’s name, trademark, brand, or logo in a print format,
the disclaimer shall appear in capital letters on the first page or at the
first point where the utility’s name, trademark, logo or brand appears;
(3) If an affiliate of an affected
utility uses the utility’s name, trademark, brand, or logo in a televised
format, the disclaimer shall appear at the first point at which the utility’s
name, trademark, logo, or brand appears; and
(4) If an affiliate of an affected
utility uses the utility’s name in an audio format, the disclaimer shall be
spoken at the close of the advertisement. (28 Ky.R. 204; Am. 640; 1395; eff.
12-19-2001; TAm 1-30-2013.)