PRINTER'S NO. 4386
No. 2774 Session of 2008
INTRODUCED BY DENLINGER, BOYD, CALTAGIRONE, CLYMER, CREIGHTON, CUTLER, FAIRCHILD, GEIST, GEORGE, GINGRICH, GOODMAN, HALUSKA, HERSHEY, MOYER, ROCK, SONNEY AND STERN, SEPTEMBER 19, 2008
REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, SEPTEMBER 19, 2008
AN ACT 1 Amending the act of February 1, 1966 (1965 P.L.1656, No.581), 2 entitled "An act concerning boroughs, and revising, amending 3 and consolidating the law relating to boroughs," further 4 providing for regulation of contracts; and providing for 5 additional contracting authority for electric power and 6 energy. 7 The General Assembly of the Commonwealth of Pennsylvania 8 hereby enacts as follows: 9 Section 1. Section 1402(d) of the act of February 1, 1966 10 (1965 P.L.1656, No.581), known as The Borough Code, is amended 11 by adding a clause to read: 12 Section 1402. Regulation of Contracts.--* * * 13 (d) The contracts or purchases made by council, which shall 14 not require advertising, bidding or price quotations as 15 hereinbefore provided, are as follows: 16 * * * 17 (6) Those made relating to the purchase of electricity and 18 associated energy and related services with any of the 19 following:
1 (i) A political subdivision. 2 (ii) Another state. 3 (iii) The Commonwealth or an agency thereof. 4 (iv) The Federal Government. 5 (v) A private corporation. 6 (vi) An electric cooperative corporation under 15 Pa.C.S. 7 Ch. 73 (relating to electric cooperative corporations). 8 (vii) A non-profit membership corporation whose membership 9 consists of Pennsylvania boroughs and municipalities of another 10 state. 11 (viii) An electric cooperative of another state. 12 Nothing in this clause shall prohibit council from engaging in 13 advertising, bidding or price quotations if the council 14 determines that the advertising, bidding or price quotations are 15 in the public interest. 16 * * * 17 Section 2. The act is amended by adding a section to read: 18 Section 2471.3. Additional Contracting Authority for 19 Electric Power and Energy.--(a) In addition to the authority 20 provided under section 2471, a borough that is a member of a 21 non-profit membership corporation may contract with the non- 22 profit membership corporation for the following: 23 (1) The development of electric power and associated energy 24 including the conduct of investigations or studies necessary to 25 determine the feasibility and cost of additional sources and 26 supplies of electric power and associated energy. 27 (2) The purchase, sale, exchange, interchange, wheeling, 28 pooling or transmission of electric power and associated energy 29 or the right to the capacity from sources and projects in this 30 Commonwealth or another state for a period not to exceed fifty 20080H2774B4386 - 2 -
1 years. 2 (b) A contract under subsection (a)(2) shall include the 3 purpose of the contract, the duration of the contract and 4 available procedures to terminate the contract subsequent to the 5 repayment of all indebtedness secured under the contract. 6 (c) If a borough is a member of a non-profit membership 7 corporation, a contract under subsection (a)(2) may, if 8 specifically set forth in the contract, obligate the borough to: 9 (1) take and pay for a minimum quantity of electric power 10 and associated energy if the power and energy is available for 11 delivery; or 12 (2) in connection with a project owned by the non-profit 13 membership corporation or in which the non-profit membership 14 corporation obtains an undivided ownership interest, to take or 15 pay for a minimum amount of electric power and energy. 16 (d) (1) The authority under subsection (c)(1) shall apply 17 whether or not the borough accepts delivery of the power and 18 energy. 19 (2) The authority under subsection (c)(2) shall apply 20 notwithstanding the suspension, interruption, interference or 21 reduction or curtailment of the output of the project or the 22 electric power and energy contracted for, and whether or not: 23 (i) The electric power and energy is available for delivery 24 to the borough. 25 (ii) The borough accepts delivery of the electric power and 26 energy. 27 (e) A non-profit membership corporation shall not: 28 (1) condition membership in the non-profit membership 29 corporation on the inclusion of any take-or-pay or take-and-pay 30 obligations in a contract under subsection (a)(2); or 20080H2774B4386 - 3 -
1 (2) require take-or-pay or take-and-pay obligations in a 2 contract with a borough unless the contract meets the criteria 3 of subsection (c)(1) or (2). 4 (f) All obligations under a contract under subsection (a)(2) 5 shall be paid from revenues derived from the operation. Payments 6 shall be an operating expense of the borough's electric system. 7 (g) If explicitly set forth in a contract under subsection 8 (a)(2), a borough may agree to assume, prorate or otherwise, the 9 obligations of another borough of this Commonwealth or of a 10 municipality of another state that is a member of the non-profit 11 membership corporation if the borough or other municipality 12 defaults in the payment of its obligations for the purchase of 13 the electric power and associated energy. The contract may 14 include provisions to permit a borough to succeed to the rights 15 and interests of the defaulting borough or municipality to 16 purchase electric power and associated energy. A borough's 17 liability for the obligations of a defaulting borough of this 18 Commonwealth or a municipality of another state shall not exceed 19 twenty-five percent of a borough's initial nominal entitlement 20 to electric power and associated energy under the contract. 21 (h) None of the obligations under the contract shall 22 constitute a legal or equitable pledge, charge, lien or 23 encumbrance on any property of the borough or on any of its 24 income, receipts or revenues, except revenues of its electric 25 system. The full faith and credit and the taxing power of the 26 borough shall not be pledged for the payment of an obligation 27 under the contract. 28 Section 3. This act shall take effect in 60 days. H8L08DMS/20080H2774B4386 - 4 -