807 KAR 5:080. Procedural and filing requirements and safeguards concerning nonregulated activities of utilities or utility affiliates

Link to law: http://www.lrc.ky.gov/kar/807/005/080.htm
Published: 2015

      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.)
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