Nebraska § 70-1010 - Modification of service areas; application; procedure; suppliers agreements; exception; transfer of customers and facilities; price; how computed; impairment of obligations prohibited.

§ 70-1010. Modification of service areas; application; procedure; suppliers agreements; exception; transfer of customers and facilities; price; how computed; impairment of obligations prohibited.

(1) The board shall have authority upon application by a supplier at any time to modify service areas or customers to be served as previously established. The same procedures as to notice, hearing, and decision shall be followed as in the case of an original application. Suppliers shall have authority by agreement to change service areas or customers to be served with the approval of the board. This section shall not apply to agreements referred to in subsection (2) of section 70-1002.

(2) In the event of a proposed transfer of customers and facilities from one supplier to another in accordance with this section or section 70-1008 or 70-1009, the parties shall attempt to agree upon the value of the certified service area and distribution facilities and customers being transferred. If the parties cannot agree upon the value, then the board shall determine the total economic impact on the selling supplier and establish the price accordingly based on, but not limited to, the following guidelines: The supplier acquiring the certified service area, distribution facilities, and customers shall purchase the electric distribution facilities of the supplier located within the affected area, together with the supplier's rights to serve within such area, for cash consideration which shall consist of (a) the current reproduction cost if the facilities being acquired were new, less depreciation computed on a straight-line basis at three percent per year not to exceed seventy percent, plus (b) an amount equal to the nonbetterment cost of constructing any facilities necessary to reintegrate the system of the supplier outside the area being transferred after detaching the portion to be sold, plus (c) an amount equal to two and one-half times the annual revenue received from power sales to existing customers of electric power within the area being transferred, except that for large commercial or industrial customers with peak demands of three hundred kilowatts or greater during the twelve months immediately preceding the date of filing with the board, the multiple shall be five times the net revenue, defined as gross power sales, less costs of wholesale power including facilities rental charges, received from power sales to large commercial or industrial customers with measured demand of three hundred kilowatts or greater during the twelve months immediately preceding the filing with the board for service area modification. After the board has determined the price in accordance with such guidelines, the acquiring supplier may acquire such distribution facilities and customers by payment of the established price within one year of the final order.

(3) Notwithstanding the provisions of sections 70-1008 to 70-1010, no transfer of facilities and customers shall be made or approved by the board if such transfer would impair the obligations of a power supplier to holders of its bonds or mortgages.

"Reintegration" for the purposes of this section means "to restore to unity after disintegration" and is distinct from any accompanying loss of revenue that might be associated with a loss of load following a transfer of electrical services under section 70-1008 and this section. In re Application of City of Neligh, 299 Neb. 517, 909 N.W.2d 73 (2018).

The plain meaning of "existing customer" under subsection (2)(c) of this section is a customer who is purchasing or has been purchasing electricity from a supplier of electricity at the time transfer of the service area becomes imminent. The proper date to determine valuation under this section is not the date of annexation, but, rather, the date on which the acquiring service provider firmly asserts its rights to acquire the service area by filing an application with the Nebraska Power Review Board to serve the newly annexed area. In re Application of City of North Platte, 257 Neb. 551, 599 N.W.2d 218 (1999).

Subsection (2) of this section clearly provides that the Nebraska Power Review Board shall determine economic impact on the selling supplier when a proposed transfer of customers and facilities from one supplier to another is involved and the parties are unable to agree upon the value of the certified service area, distribution facilities, and customers being transferred. In re Application of City of Grand Island, 247 Neb. 446, 527 N.W.2d 864 (1995).

In determining total economic impact on selling supplier, this section authorizes the Nebraska Power Review Board to consider factors other than those specifically named. In re Application of City of Lexington, 244 Neb. 62, 504 N.W.2d 532 (1993).

A service area is subject to modification at any time by procedure prescribed. City of Schuyler v. Cornhusker P. P. Dist., 181 Neb. 704, 150 N.W.2d 588 (1967).