§37-4-30. Obtaining electric service under a private contract; definitions.

(a) No existing electric customer shall obtain electric service under a private contract for electric service without first giving written notice to the utility currently providing it retail electric service at least 45 days prior to the date on which the private contract for electric service is to become effective. In the event any utility currently providing service to the existing electric customer determines that it or its other electric customers will be adversely affected by the loss of the existing electric customer due to the private contract for electric service, it may, within 45 days of the date of the existing electric customer's written notice of a private contract for electric service, file a petition for review of the private contract for electric service as set forth below and service under such contract shall not be initiated until 45 days after such review has been completed and an order concerning such review has been issued by the Public Service Commission or a circuit court; provided, however, that if the utility currently providing electric service is a utility subject to the jurisdiction of the Public Service Commission, the existing electric customer may file with the secretary of said commission, and if the utility currently providing electric service is a utility exempt from or otherwise not subject to the jurisdiction of the Public Service Commission, the existing electric customer may file with the clerk of the circuit court in the judicial circuit in which the existing electric customer is located, a bond in the amount of the utility's estimate of the stranded costs associated with the transfer of the existing electric customer's service under the private contract for electric service as set forth below, with two or more sureties, to be approved by the Public Service Commission or by one of the judges of the circuit court, as the case may be, one of which may be a surety company, payable to the utility and conditioned to pay all stranded costs associated with the transfer of the existing electric customer's service under the private contract, as well as interest thereon for the period from the date of transfer of the existing electric customer's service under the private contract to the existing electric customer's payment of the stranded costs associated with the referenced transfer as such reasonable rate as the Public Service Commission or circuit court, as the case may be, shall determine, and upon the filing of the bond, service under the private contract for electric service may be initiated on the date on which the private contract for electric service is to become effective, or thereafter at the election of the existing electric customer, subject to the further orders of the Public Service Commission or circuit court, as the case may be, as set forth below.

In any such proceeding, upon the request of the existing electric customer or the utility, a protective order may be entered protecting the confidentiality of information in the private electric contract or the utility's contract with the existing electric customer, where it is asserted by the existing electric customer or the utility that the contract contains sensitive business information the disclosure of which may compromise competition or the proprietary rights of the existing electric customer, the proposed electric supplier, or the utility.

(i) If the utility currently providing electric service is a utility subject to the jurisdiction of the Public Service Commission, it may file a petition for review with the Public Service Commission and the existing electric customer shall be made a party to any such proceeding. The utility's petition for review shall state its estimate of the stranded cost associated with the transfer of the existing electric customer's service under the private contract for electric service. Upon filing of such petition, the existing electric customer seeking to enter into a private contract for electric service shall submit the contract to the Public Service Commission for its review in accordance with the requirements of this section. The Public Service Commission shall review the private contract for electric service to determine whether the contract is consistent with the public interest by determining whether the private contract for electric service will materially impair the ability of any utility currently providing service to the existing electric customer to provide efficient and reliable service at a reasonable cost to and for the public which it continues to serve. If the Public Service Commission determines that the private contract for electric service is not inconsistent with the public interest, it may approve the private contract, but to ensure that no utility or electric customer will be adversely affected, shall require the existing electric customer to reimburse any utility, for any and all reasonable stranded costs associated with the transfer of the existing electric customer's service under the private contract for electric service. In appropriate circumstances, the commission may allow, upon the posting of adequate security, payments by the existing electric customer of any and all reasonable stranded costs associated with the transfer over a period of up to five years with appropriate consideration to the utility for the time value of such method of payment. The Public Service Commission shall, within 90 days after the completion of the hearings and arguments, if any, and the filing of briefs, if any, in the review of a petition filed hereunder, or upon a rehearing thereof, decide the matter.

(ii) If the utility currently providing electric service is a utility exempt from or otherwise not subject to the jurisdiction of the Public Service Commission, it may file a petition for review with the circuit court in the judicial circuit in which the existing electric customer shall be made a party to any such proceeding. The utility's petition for review shall state its estimate of the stranded cost associated with the transfer of the existing electric customer's service under the private contract for electric service. Upon the filing of such petition, the existing electric customer seeking to enter into a private contract for electric service shall submit the contract to the circuit court for its review in accordance with the requirements of this section.

The circuit court shall review the proposed private contract for electric service to determine whether approval of the contract is consistent with the public interest. The proposed private contract for electric service shall not be consistent with the public interest if its approval and becoming effective would materially impair the ability of any utility currently providing service to the existing electric customer to provide efficient and reliable service at a reasonable cost to and for the public which it continues to serve. If the circuit court determines that the private contract for electric service is not inconsistent with the public interest, it shall approve the contract, but to ensure that no utility or electric customer will be adversely affected by approval of the proposed private contract for electric service, shall require the existing electric customer seeking approval of the proposed private contract for electric service to reimburse any utility for any and all reasonable stranded costs associated with the transfer of the existing electric customer's service under the private contract for electric service. In appropriate circumstances, the circuit court may allow, upon the posting of adequate security, payments by the existing electric customer of any and all reasonable stranded costs associated with the transfer over a period of up to five years with appropriate consideration to the utility for the time value of such method of payment.

For its aid, in making the determinations required hereunder, as to both the public interest and the compensation to be paid a utility where a private contract for electric service is determined not to be inconsistent with the public interest, the circuit court shall, upon motion of any party, refer the case to a panel of three commissioners to be appointed by the court. Each commissioner shall be knowledgeable and experienced in the operations of electric utilities and shall meet the qualification requirements applicable to a master under Rule 53(a), Alabama Rules of Civil Procedure. The existing electric customer and the utility petitioning for relief may each submit a list of not less than three nor more than five nominees to be appointed as commissioners. The court shall, in the absence of exceptional circumstances, select one commissioner from the list submitted by the existing customer and one commissioner from the list submitted by the complaining utility. If one or both parties nominate no commissioners, the court may appoint a commissioner or commissioners, qualified under this section by knowledge and experience, of its own choosing. The two commissioners so appointed shall nominate a third commissioner qualified by knowledge and experience under this section. The court shall approve such nominee or shall appoint such other person qualified under this section as the court may determine to serve as the third commissioner. By agreement of the existing electric customer seeking approval of the private contract for electric service and the utility currently serving the customer, a single commissioner qualified under this section, jointly nominated by those parties and approved by the court, may serve instead of three commissioners.

The commissioners shall have all the powers vested in a master appointed under Rule 53, Alabama Rules of Civil Procedure, and shall conduct hearings, gather facts, and issue their report in a manner consistent with Rule 53 or its successor in purpose and effect.

At the close of the commissioners' examination and deliberations, the commissioners shall issue a report including their recommendations to the circuit court stating (1) whether the private contract for electric service would materially impair the existing utility's ability to provide efficient and reliable service to its other electric customers at a reasonable cost, and (2) if not, recommending the compensation and reimbursement to be made to any utility adversely affected by the loss of its existing customer by virtue of the private contract for electric service.

The parties shall have 30 days following the issuance of the commissioners' report, or such longer period as the court may grant upon cause shown, to examine the commissioners' report and submit to the court objections or exceptions thereto.

At the close of the 30-day period following issuance of the commissioners' report, and following a hearing upon such objections and exceptions, the commissioners' report shall be approved by the court and incorporated into its order, except insofar as the report's conclusions, or any material conclusion of the report, are clearly erroneous. In that event, the court may incorporate the report's recommendations, with modifications necessary to correct the errors, in its order; may refer the report to the commissioners for further deliberation, analysis, and recommendations, following the issuance of which the court may incorporate the commissioners' amended recommendations into its order; or the court may reject the entire report and resolve the issues as the objectives of this section may require.

Either party may appeal to the Supreme Court from the action or order of the circuit court under the same rules and in the same manner and under the same conditions as are or may be provided by law for appeals from circuit court as of right to the Supreme Court in other cases.

A commissioner under this section shall be compensated under the provisions of Rule 53(a), Alabama Rules of Civil Procedure, or its successor in purpose and effect.

Any commissioner acting hereunder and the circuit court, in determining the stranded costs associated with the transfer of the existing electric customer's service, at a minimum, may consider any guidelines, formulas, and methodologies or decisions accepted, utilized, or issued by the Public Service Commission in its evaluation of private contracts for electric service under subsection (a)(i) hereof.

(b) The term "private contract for electric service" shall mean and include any transfer of an existing electric customer's service to another utility, electric service provider, or any other entity, whether or not the utility, electric service provider, or any other entity is subject to the general jurisdiction of the Public Service Commission, where current service to the existing customer will be terminated or curtailed. The term "existing electric customer" shall mean and include any retail consumer of electric service at the premises to which electric service has previously been rendered by a utility, including a utility exempt from or otherwise not subject to the general jurisdiction of the Public Service Commission.

"Stranded costs" means all verifiable costs or obligations incurred by a utility in order to provide service to electric customers in the area served by the utility that cannot actually be recovered through mitigation upon the transfer of the existing electric customer to another supplier. These costs shall include, without limitation, such items as costs of investment in generating, transmission, and distribution facilities; obligations for purchased power, fuel, and transmission charges; costs of assets required to be capitalized under utility accounting principles or by regulatory order; and other fixed costs incurred by the utility to provide service.

(c) The term "private contract for electric service" shall not include any arrangement under which the electric generation source is wholly-owned, for federal income tax purposes, by the consumer of the electric service, a wholly-owned subsidiary of the electric consumer's parent company. Notwithstanding the foregoing, the Public Service Commission or the circuit court, as appropriate, may review an arrangement pursuant to this section when it determines that a transaction, viewed in its totality and regardless of structure, is a private contract for electric service because of the involvement of entities other than the electric consumer.

(d) The term "private contract for electric service" shall not include contracts or arrangements entered into earlier than May 6, 1996, or subsequent amendments, alterations, modifications, or extensions of such contracts or arrangements.

(e) The term "utility," solely for the purpose of this Section 37-4-30, shall include a utility providing retail service to, or in privity of contract with, the existing electric customer but shall also, in addition, include a utility, whether a distribution, transmission, or generation utility, providing wholesale or power supply service to the utility that is providing retail service or that is in privity of contract with the existing electric customer. The term "utility," solely for the purpose of this Section 37-4-30, shall also include a utility board for the operation of water, sewer, gas, and electric systems organized pursuant to the provisions of Section 11-50-310, et seq., an electric utility board organized pursuant to the provisions of Section 11-50-490, et seq., or an improvement authority organized pursuant to the provisions of Section 39-7-1, et seq.

(Acts 1996, No. 96-395, p. 486, §1.)