GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 1991
CHAPTER 888
The General Assembly of North Carolina enacts:
Section 1. G.S. 159B-2 reads as rewritten:
"§ 159B-2. Legislative findings and purposes.
The General Assembly hereby finds and determines that:
A critical situation exists with respect to the present and future supply of electric power and energy in the State of North Carolina;
The public utilities operating in the State have sustained greatly increased capital and operating costs;
Such public utilities have found it necessary to postpone or curtail construction of planned generation and transmission facilities serving the consumers of electricity in the State, increasing the ultimate cost of such facilities to the public utilities, and that such postponements and curtailments will have an adverse effect on the provision of adequate and reliable electric service in the State;
The above conditions have occurred despite substantial increases in electric rates;
In the absence of further material increases in electric rates, additional postponements and curtailments in the construction of additional generation and transmission facilities may occur, thereby impairing those utilities' ability to continue to provide an adequate and reliable source of electric power and energy in the State;
Seventy-two municipalities in the State have for many years owned and operated systems for the distribution of electric power and energy to customers in their respective service areas and are empowered severally to engage in the generation and transmission of electric power and energy;
Such municipalities owning electric distribution systems have an obligation to provide their inhabitants and customers an adequate, reliable and economical source of electric power and energy in the future;
In order to achieve the economies and efficiencies made possible by the proper planning, financing, sizing and location of facilities for the generation and transmission of electric power and energy which are not practical for any municipality acting alone, and to insure an adequate, reliable and economical supply of electric power and energy to the people of the State, it is desirable for the State of North Carolina to authorize municipal electric systems to jointly plan, finance, develop, own and operate electric generation and transmission facilities appropriate to their needs in order to provide for their present and future power requirements for all uses without supplanting or displacing the service at retail of other electric suppliers operating in the State; and
The joint planning, financing, development, ownership and operation of electric generation and transmission facilities by municipalities which own electric distribution systems and the issuance of revenue bonds for such purposes as provided in this Chapter is for a public use and for public and municipal purposes and is a means of achieving economies, adequacy and reliability in the generation of electric power and energy and in the meeting of future needs of the State and its inhabitants.
In addition to the authority granted municipalities to
jointly plan, finance, develop, own and operate electric generation and
transmission facilities by Article 2 of this Chapter and the other powers
granted in said Article 2, and in addition and supplemental to powers otherwise
conferred on municipalities by the laws of this State for interlocal
cooperation, it is desirable for the State of North Carolina to authorize
municipalities to form joint municipal assistance agencies which shall be
empowered to provide aid and assistance to municipalities in the construction,
ownership, maintenance, expansion and operation of their electric systems,
and to empower joint agencies authorized herein to provide aid and assistance
to municipalities or joint municipal assistance agencies in the development and
implementation of integrated resource planning, including, but not limited to,
the evaluation of resources, generating facilities, alternative energy
resources, conservation and load management programs, transmission and
distribution facilities, and purchase power options, and in the development,
construction and operation of supply-side and demand-side resources, and
in such other ways in addition to exercising such other powers as
hereinafter provided to joint municipal assistance agencies and joint
agencies. In order to provide maximum economies and efficiencies to
municipalities and the consuming public in the generation and transmission of
electric power and energy contemplated by Article 2 of this Chapter, it is also
desirable that the joint municipal assistance agencies authorized herein be
empowered to act as provided in Article 3 of this Chapter and that such agency
or agencies be empowered to act for and on behalf of any one or more
municipalities, as requested, with respect to the construction, ownership,
maintenance, expansion and operation of their electric systems; and that the
joint agencies authorized herein be empowered to act as provided in Article 2
of this Chapter and that such agency or agencies be empowered to act for and on
behalf of any one or more municipalities or joint municipal assistance
agencies, in each case as requested, with respect to the integrated resource
planning and development, construction, and operation of supply-side and
demand-side options described above."
Sec. 2. G.S. 159B-11 reads as rewritten:
"§ 159B-11. General powers of joint agencies; prerequisites to undertaking projects.
Each joint agency shall have all of the rights and powers necessary or convenient to carry out and effectuate the purposes and provisions of this Chapter, including, but without limiting the generality of the foregoing, the rights and powers:
(1) To adopt bylaws for the regulation of the affairs and the conduct of its business, and to prescribe rules, regulations and policies in connection with the performance of its functions and duties;
(2) To adopt an official seal and alter the same at pleasure;
(3) To acquire and maintain an administrative building or office at such place or places as it may determine, which building or office may be used or owned alone or together with any other joint agency or agencies, joint municipal assistance agency, municipalities, corporations, associations or persons under such terms and provisions for sharing costs and otherwise as may be determined:
(4) To sue and be sued in its own name, and to plead and be impleaded;
(5) To receive, administer and comply with the conditions and requirements respecting any gift, grant or donation of any property or money;
(6) To acquire by purchase, lease, gift, or otherwise, or to obtain options for the acquisition of, any property, real or personal, improved or unimproved, including an interest in land less than the fee thereof;
(7) To sell, lease, exchange, transfer or otherwise dispose of, or to grant options for any such purposes with respect to, any real or personal property or interest therein;
(8) To pledge, assign, mortgage or otherwise grant a security interest in any real or personal property or interest therein, including the right and power to pledge, assign or otherwise grant a security interest in any money, rents, charges or other revenues and any proceeds derived by the joint agency from the sales of property, insurance or condemnation awards.
(9) To issue bonds of the joint agency for the purpose of providing funds for any of its corporate purposes;
(10) To study, plan, finance, construct, reconstruct, acquire, improve, enlarge, extend, better, own, operate and maintain one or more projects, either individually or jointly with one or more municipalities in this State or any state contiguous to this State owning electric distribution facilities or with any political subdivisions, agencies or instrumentalities of any state contiguous to this State or with other joint agencies created pursuant to this Chapter, and to pay all or any part of the costs thereof from the proceeds of bonds of the joint agency or from any other funds made available to the joint agency;
(11) To authorize the construction, operation or maintenance of any project or projects by any person, firm or corporation, including political subdivisions and agencies of any state, or of the United States;
(12) To acquire by private negotiated purchase or lease or otherwise an existing project, a project under construction, or other property, either individually or jointly, with one or more municipalities in this State or any state contiguous to this State owning electric distribution facilities or with any political subdivisions, agencies or instrumentalities of any state contiguous to this State or with other joint agencies created pursuant to this Chapter; to acquire by private negotiated purchase or lease or otherwise any facilities for the development, production, manufacture, procurement, handling, storage, fabrication, enrichment, processing or reprocessing of fuel of any kind or any facility or rights with respect to the supply of water, and to enter into agreements by private negotiation or otherwise, for a period not exceeding fifty (50) years, for the development, production, manufacture, procurement, handling, storage, fabrication, enrichment, processing or reprocessing of fuel of any kind or any facility or rights with respect to the supply of water; no provisions of law with respect to the acquisition, construction or operation of property by other public bodies shall be applicable to any agency created pursuant to this Chapter unless the legislature shall specifically so state;
(13) To dispose of by private negotiated sale or lease, or otherwise an existing project, a project under construction, or other property either individually or jointly with one or more municipalities in this State or any state contiguous to this State owning electric distribution facilities or with any political subdivisions, agencies or instrumentalities of any state contiguous to this State or with other joint agencies created pursuant to this Chapter; to dispose of by private negotiated sale or lease, or otherwise any facilities for the development, production, manufacture, procurement, handling, storage, fabrication, enrichment, processing or reprocessing of fuel of any kind or any facility or rights with respect to the supply of water; no provisions of law with respect to the disposition of property by other public bodies shall be applicable to an agency created pursuant to this Chapter unless the legislature shall specifically so state;
(14) To fix, charge and collect rents, rates, fees and charges for electric power or energy and other services, facilities and commodities sold, furnished or supplied through any project;
(15) To generate, produce, transmit, deliver, exchange, purchase, or sell for resale only, electric power or energy, and to enter into contracts for any or all such purposes;
(16) To negotiate and enter into contracts for the purchase, sale, exchange, interchange, wheeling, pooling, transmission or use of electric power and energy with any municipality in this State or any other state owning electric distribution facilities or with any political subdivisions, agencies or instrumentalities of any other state or with other joint agencies created pursuant to this Chapter, any electric membership corporation, any public utility, and any state, federal or municipal agency which owns electric generation, transmission or distribution facilities in this State or any other state;
(17) To make and execute contracts and other instruments necessary or convenient in the exercise of the powers and functions of the joint agency under this Chapter, including contracts with persons, firms, corporations and others;
(18) To apply to the appropriate agencies of the State, the United States or any state thereof, and to any other proper agency for such permits, licenses, certificates or approvals as may be necessary, and to construct, maintain and operate projects in accordance with such licenses, permits, certificates or approvals, and to obtain, hold and use such licenses, permits, certificates and approvals in the same manner as any other person or operating unit of any other person;
(19) To employ engineers, architects,
attorneys, real estate counselors, appraisers, financial advisors and such
other consultants and employees as may be required in the judgment of the joint
agency and to fix and pay their compensation from funds available to the joint
agency therefor and to select and retain subject to approval of the Local
Government Commission the financial consultants, underwriters and bond
attorneys to be associated with the issuance of any bonds and to pay for
services rendered by underwriters, financial consultants or bond attorneys out
of the proceeds of any such issue with regard to which the services were
performed; and
(19a) To purchase power and energy, and services and facilities relating to the utilization of power and energy, from any source on behalf of its members and other customers and to furnish, sell, lease, exchange, transfer, or otherwise dispose of, or to grant options for any such purposes with respect to the same, to its members and other customers in such amounts, with such characteristics, for such periods of time and under such terms and conditions as the board of commissioners of the joint agency shall determine;
(19b) To provide aid and assistance to municipalities, and to act for or on behalf of any municipality, in any activity related to the development and implementation of integrated resource planning, including, but not limited to, the evaluation of resources, generating facilities, alternative energy resources, conservation and load management programs, transmission and distribution facilities, and purchased power options, and related to the development, construction and operation of supply-side and demand-side resources, and to do such other acts and things as provided in Article 3 of this Chapter as if the joint agency were a joint municipal assistance agency, and to carry out the powers granted in this Chapter in relation thereto; to provide aid and assistance to any joint municipal assistance agency in the exercise of its respective powers and functions; and
(20) To do all acts and things necessary, convenient or desirable to carry out the purposes, and to exercise the powers granted to the joint agency therein.
No joint agency shall undertake any project required to be financed, in whole or in part, with the proceeds of bonds without the approval of a majority of its members. Before undertaking any project, a joint agency shall, based upon engineering studies and reports, determine that such project is required to provide for the projected needs for power and energy of its members from and after the date the project is estimated to be placed in normal and continuous operation and for a reasonable period of time thereafter. Prior to or simultaneously with granting a certificate of public convenience and necessity for any such project the North Carolina Utilities Commission, in a proceeding instituted pursuant to G.S. 159B-24 of this Chapter, shall approve such determination. In determining the future power requirements of the members of a joint agency, there shall be taken into account the following:
(1) The economies and efficiencies to be achieved in constructing on a large scale facilities for the generation and transmission of electric power and energy;
(2) Needs of the joint agency for reserve and peaking capacity and to meet obligations under pooling and reserve-sharing agreements reasonably related to its needs for power and energy to which the joint agency is or may become a party;
(3) The estimated useful life of such project;
(4) The estimated time necessary for the planning, development, acquisition, or construction of such project and the length of time required in advance to obtain, acquire or construct additional power supply for the members of the joint agency;
(5) The reliability and availability of existing alternative power supply sources and the cost of such existing alternative power supply sources.
A determination by the joint agency approved by the North Carolina Utilities Commission based upon appropriate findings of the foregoing matters shall be conclusive as to the appropriateness of a project to provide the needs of the members of a joint agency for power and energy unless a party to the proceeding aggrieved by the determination of said Commission shall file notice of appeal pursuant to Article 5 of Chapter 62 of the General Statutes of North Carolina.
Nothing herein contained shall prevent a joint agency from undertaking studies to determine whether there is a need for a project or whether such project is feasible."
Sec. 3. G.S. 159B-12 reads as rewritten:
"§ 159B-12. Sale of capacity and output by a joint agency; other contracts with a joint agency.
Any municipality which is a member of the joint agency may contract to buy from the joint agency power and energy for its present or future requirements, including the capacity and output of one of more specified projects. As the creation of a joint agency is an alternative method whereby a municipality may obtain the benefits and assume the responsibilities of ownership in a project, any such contract may provide that the municipality so contracting shall be obligated to make the payments required by the contract whether or not a project is completed, operable or operating and notwithstanding the suspension, interruption, interference, reduction or curtailment of the output of a project or the power and energy contracted for, and that such payments under the contract shall not be subject to any reduction, whether by offset or otherwise, and shall not be conditioned upon the performance or nonperformance of the joint agency or any other member of the joint agency under the contract or any other instrument. Any contract with respect to the sale or purchase of capacity or output of a project entered into between a joint agency and its member municipalities may also provide that if one or more of such municipalities shall default in the payment of its or their obligations with respect to the purchase of said capacity or output, then in that event the remaining member municipalities which are purchasing capacity and output under the contract shall be required to accept and pay for and shall be entitled proportionately to and may use or otherwise dispose of the capacity or output which was to be purchased by the defaulting municipality.
Notwithstanding the provisions of any other law to the contrary, any such contract with respect to the sale or purchase of capacity, output, power or energy from a project may extend for a period not exceeding 50 years from the date a project is estimated to be placed in normal continuous operation. Notwithstanding the provisions of any law to the contrary, including, but not limited to, the provisions of G.S. 159B-44(13), any contract between a joint agency and a municipality or a joint municipal assistance agency (or between a municipality and a joint municipal assistance agency) to provide aid and assistance in the development and implementation of integrated resource planning, and the development, construction, and operation of supply-side and demand-side resources, and any contract providing for payments by any municipality directly to any joint agency (or indirectly to any joint agency through a joint municipal assistance agency) or by any joint municipal assistance agency to any joint agency for the provision of aid and assistance in the development and implementation of integrated resource planning, and the development, construction, and operation of supply-side and demand-side resources, may extend for a period not exceeding 30 years; provided, that any such contract in respect of a capital project to be used by or for the benefit of a municipality shall be subject to the prior approval of the Local Government Commission of North Carolina. In reviewing any such contract for approval, said Local Government Commission shall consider the municipality's debt management procedures and policies, whether the municipality is in default with respect to its debt service obligations and such other matters as said Local Government Commission may believe to have a bearing on whether the contract should be approved. Notwithstanding the provisions of any law to the contrary, the execution and effectiveness of any such contracts with respect to the sale or purchase of capacity, output, power or energy from a project, or of any contracts with respect to the purchase or disposition of power and energy and services and facilities related to the utilization of power and energy, or of any contracts with a municipality or joint municipal assistance agency to provide aid and assistance in the development and implementation of integrated resource planning, and the development, construction, and operation of supply-side and demand-side resources, shall not be subject to any authorizations or approvals by the State or any agency, commission or instrumentality or political subdivision thereof except as in this Chapter specifically required and provided.
Payments by a municipality under any contract for the purchase of capacity, output, or power or energy or services and facilities related to the utilization of power and energy, from a joint agency, and payments by any municipality directly to any joint agency (or indirectly to any joint agency through a joint municipal assistance agency) under any contract or contracts to provide aid and assistance in the development and implementation of integrated resource planning, and the development, construction, and operation of supply-side and demand-side resources, shall be made solely from the revenues derived from the ownership and operation of the electric system of said municipality and any obligation under such contract shall not constitute a legal or equitable pledge, charge, lien, or encumbrance upon any property of the municipality or upon any of its income, receipts, or revenues, except the revenues of its electric system, and neither the faith and credit nor the taxing power of the municipality are, or may be, pledged for the payment of any obligation under any such contract. A municipality shall be obligated to fix, charge and collect rents, rates, fees and charges for electric power and energy and other services, facilities and commodities sold, furnished or supplied through its electric system sufficient to provide revenues adequate to meet its obligations under any such contract and to pay any and all other amounts payable from or constituting a charge and lien upon such revenues, including amounts sufficient to pay the principal of and interest on general obligation bonds heretofore or hereafter issued by the municipality for purposes related to its electric system.
Payments by any joint municipal assistance agency to any joint agency under any contract or contracts to provide aid and assistance in the development and implementation of integrated resource planning, and the development, construction, and operation of supply-side and demand-side resources, shall be made solely from the sources specified in such contract or contracts and no other, and any obligation under such contract shall not constitute a legal or equitable pledge, charge, lien, or encumbrance upon any property of the joint municipal assistance agency or upon any of its income, receipts, or revenues, except such sources so specified, or upon any property of any municipality with which the joint municipal assistance agency contracts or upon any of such municipality's income, receipts, or revenues except the revenues of such municipality's electric system. A joint municipal assistance agency shall be obligated to fix, charge and collect rents, rates, fees, and charges for providing aid and assistance sufficient to provide revenues adequate to meet its obligations under such contract.
Any municipality which is a member of a joint agency may furnish the joint agency with money derived solely from the ownership and operation of its electric system or facilities and provide the joint agency with personnel, equipment and property, both real and personal. Any municipality may also provide any services to a joint agency.
Any member of a joint agency may contract for, advance or contribute funds derived solely from the ownership and operation of its electric system or facilities to a joint agency as may be agreed upon by the joint agency and the member, and the joint agency shall repay such advances or contributions from proceeds of bonds, from operating revenues or from any other funds of the joint agency, together with interest thereon as may be agreed upon by the member and the joint agency."
Sec. 4. G.S. 159B-17(c) reads as rewritten:
"(c) Any pledge of
revenues, securities or other moneys made by a municipality or municipality,
joint agency or joint municipal assistance agency pursuant to this
Chapter shall be valid and binding from the date the pledge is made. The
revenues, securities, and other moneys so pledged and then held or thereafter
received by the municipality or municipality, joint agency or
joint municipal assistance agency or any fiduciary shall immediately be
subject to the lien of the pledge without any physical delivery thereof or
further act, and the lien of the pledge shall be valid and binding as against
all parties having claims of any kind in tort, contract, or otherwise against
the municipality or municipality, joint agency or joint
municipal assistance agency without regard to whether such parties have
notice thereof. The resolution or trust agreement or any financing statement,
continuation statement or other instrument by which a pledge of revenues,
securities or other moneys is created need not be filed or recorded in any
manner."
Sec. 5. G.S. 159B-18 reads as rewritten:
"§ 159B-18.
Trust funds. funds; investment authority.
(a) Notwithstanding any other provisions of law to the contrary, all moneys received pursuant to the authority of this Chapter, whether as proceeds from the sale of bonds or as revenues, shall be deemed to be trust funds to be held and applied solely as provided in this Chapter. The resolution authorizing the bonds of any issue or the trust agreement securing such bonds may provide that any of such moneys may be temporarily invested and reinvested pending the disbursements thereof in such securities and other investments as shall be provided in such resolution or trust agreement, and shall provide that any officer with whom, or any bank or trust company with which, such moneys shall be deposited shall act as trustee of such moneys and shall hold and apply the same for the purposes hereof, subject to such regulation as this Chapter and such resolution or trust agreement may provide.
(b) Any moneys received pursuant to the authority of this Chapter and any other moneys available to a joint agency for investment may be invested:
(1) As provided in subsection (a) of this section;
(2) As provided in G.S. 159-30;
(3) In mortgage-backed pass-through securities guaranteed by the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Federal National Mortgage Association, which securities shall mature or be redeemable at the option of the holder within 10 years from the date of investment;
(4) In direct or indirect obligations which are collateralized by or represent beneficial ownership interests in mortgage-backed pass-through securities guaranteed by the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Federal National Mortgage Association, which obligations shall mature or be redeemable at the option of the holder within 10 years from the date of investment; and
(5) In direct or indirect obligations, trust certificates, or other similar instruments which are (i) guaranteed by the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Federal National Mortgage Association, and (ii) collateralized by or represent beneficial ownership interests in mortgage-backed pass-through securities which are guaranteed by the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Federal National Mortgage Association, including but not limited to Real Estate Mortgage Investment Conduit Certificates, and which obligation, trust certificates or other similar instruments shall mature or be redeemable at the option of the holder within 10 years from the date of investment."
Sec. 6. Section 5 of this act is intended to provide additional and alternative methods for investment and shall be regarded as supplemental and additional to powers conferred by any other laws, and shall not be regarded as being in derogation of any powers now existing.
Sec. 7. Beginning January 1, 1994, and annually thereafter, each joint agency operating under the authority of Chapter 159B of the General Statutes shall file a report with the Joint Legislative Utility Review Committee describing the activities of the joint agency carried out pursuant to the authority granted by Sections 1 through 4 of this act. The report shall cover the preceding calendar year. Each joint agency shall file such additional reports as the Joint Legislative Utility Review Committee shall request.
Sec. 8. This act is effective upon ratification.
In the General Assembly read three times and ratified this the 8th day of July, 1992.
James C. Gardner
President of the Senate
Daniel Blue, Jr.
Speaker of the House of Representatives