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                                                      PRINTER'S NO. 2183



No. 1491 Session of 2008

           WOZNIAK AND BROWNE, JUNE 16, 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
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     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
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     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.

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