THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY BRUBAKER, EICHELBERGER, RAFFERTY, FERLO, STOUT, EARLL, O'PAKE, KASUNIC, BROWNE, PILEGGI AND ERICKSON, FEBRUARY 2, 2009

SENATOR CORMAN, APPROPRIATIONS, RE-REPORTED AS AMENDED, JULY 28, 2009  

AN ACT

Amending the act of February 1, 1966 (1965 P.L.1656, No.581),

entitled "An act concerning boroughs, and revising, amending

and consolidating the law relating to boroughs," further

providing for regulation of contracts; and providing for

additional contracting authority for electric power and

energy.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 1402(d) of the act of February 1, 1966

(1965 P.L.1656, No.581), known as The Borough Code, is amended

by adding a clause to read:

Section 1402.  Regulation of Contracts.--* * *

(d)  The contracts or purchases made by council, which shall

not require advertising, bidding or price quotations as

hereinbefore provided, are as follows:

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(6)  Those made relating to the purchase of electricity and

associated energy and related services with any of the

following:

(i)  A political subdivision.

(ii)  Another state.

(iii)  The Commonwealth or an agency thereof.

(iv)  The Federal Government.

(v)  A private corporation.

(vi)  An electric cooperative corporation under 15 Pa.C.S.

Ch. 73 (relating to electric cooperative corporations).

(vii)  A non-profit membership corporation whose membership

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consists of Pennsylvania boroughs and municipalities of another

state.

(vii)  A non-profit membership corporation. As used in this

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subclause, the term "non-profit membership corporation" means an

entity, the membership of which:

(A)  consists solely of Pennsylvania boroughs, such as a

consortium, buying group or municipal power agency under section

2471.2; or

(B)  consists of Pennsylvania boroughs and political

subdivisions of another state or states.

(viii)  An electric cooperative of another state.

Nothing in this clause shall prohibit council from engaging in

advertising, bidding or price quotations if the council

determines that the advertising, bidding or price quotations are

in the public interest.

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Section 2.  The act is amended by adding a section to read:

Section 2471.3.  Additional Contracting Authority for

Electric Power and Energy.--(a)  In addition to the authority

provided under section 2471, a borough that is a member of a

non-profit membership corporation may contract with the non-

profit membership corporation for the following:

(1)  The development of electric power and associated energy

including the conduct of investigations or studies necessary to

determine the feasibility and cost of additional sources and

supplies of electric power and associated energy.

(2)  The purchase, sale, exchange, interchange, wheeling,

pooling or transmission of electric power and associated energy

or the right to the capacity from sources and projects in this

Commonwealth or another state for a period not to exceed fifty

years.

(b)  A contract under subsection (a)(2) shall include the

purpose of the contract, the duration of the contract and

available procedures to terminate the contract subsequent to the

repayment of all indebtedness secured under the contract.

(c)  If a borough is a member of a non-profit membership

corporation, a contract under subsection (a)(2) may, if

specifically set forth in the contract, obligate the borough to:

(1)  take and pay for a minimum quantity of electric power

and associated energy if the power and energy is available for

delivery; or

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(2)  in connection with a project owned by the non-profit

membership corporation or in which the non-profit membership

corporation obtains an undivided ownership interest, to take or

pay for a minimum amount of electric power and energy.; or

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(3)  pay for electric power and energy only if utilized by

the borough.

(d)  (1)  The authority under subsection (c)(1) shall apply

whether or not the borough accepts delivery of the power and

energy.

(2)  The authority under subsection (c)(2) shall apply

notwithstanding the suspension, interruption, interference or

reduction or curtailment of the output of the project or the

electric power and energy contracted for, and whether or not:

(i)  The the electric power and energy is available for

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delivery to the borough.; or

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(ii)  The the borough accepts delivery of the electric power

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and energy.

(e)  No borough may be obligated under a take-or-pay or take-

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and-pay arrangement entered into with a non-profit membership

corporation in which the borough maintains membership unless

that obligation is expressly authorized by an act of the borough

council.

(e) (f)  A non-profit membership corporation shall not:

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(1)  condition membership in the non-profit membership

corporation on the inclusion of any take-or-pay or take-and-pay

obligations in a contract under subsection (a)(2); or

(2)  require take-or-pay or take-and-pay obligations in a

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contract with a borough unless the contract meets the criteria

of subsection (c)(1) or (2).

(2)  except as set forth in subsection (g), require take-or-

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pay or take-and-pay obligations in a contract with a borough

unless the contract meets the criteria of subsection (c)(1) or

(2).

(g)  The General Assembly finds and declares as follows:

(1)  A borough which is a member of a non-profit membership

corporation may enter into future power supply contracts,

contract renewals or contract extensions with the non-profit

membership corporation under subsection (c)(3):

(i)  with no take-or-pay or take-and-pay obligations as

permitted by subsection (c)(1) and (2); and

(ii)  without prejudice or discrimination as compared to any

other borough which chooses to enter into contracts permitted by

subsection (c)(1) and (2) with the non-profit membership

corporation.

(2)  In order to carry out clause (1), a non-profit

membership corporation which provides or offers electric power

and associated energy to a member borough in this Commonwealth

under subsection (a)(2) shall offer, to all of its member

boroughs in this Commonwealth, future power supply contract

terms, contract renewals or contract extensions under subsection

(c)(3) on a comparable and nondiscriminatory basis and with

similar terms and conditions to future power supply contract

terms, contract renewals or contract extensions that would be

appropriate under subsection (c)(3) which the non-profit

membership corporation contemporaneously offers to its members

in other states.

(f) (h)  All obligations under a contract under subsection

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(a)(2) shall be paid from revenues derived from the operation. 

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Payments of the borough's electric system, and payments shall be

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an operating expense of the borough's electric system.

(g) (i)  If explicitly set forth in a contract under

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subsection (a)(2), a borough may agree to assume, prorate or

otherwise, become liable for the obligations of another borough

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of this Commonwealth or of a municipality political subdivision 

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of another state that is a member of the non-profit membership

corporation if the borough or other municipality political

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subdivision defaults in the payment of its obligations for the

purchase of the electric power and associated energy. The

contract may include provisions to permit a borough to succeed

to the rights and interests of the defaulting borough or

municipality political subdivision to purchase electric power

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and associated energy. A borough's liability for the obligations

of a defaulting borough of this Commonwealth or a municipality 

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political subdivision of another state shall not exceed twenty-

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five percent of a borough's initial nominal entitlement to

electric power and associated energy under the contract.

(h) (j)  None of the obligations under the contract shall

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constitute a legal or equitable pledge, charge, lien or

encumbrance on any property of the borough or on any of its

income, receipts or revenues, except revenues of its electric

system. The full faith and credit and the taxing power of the

borough shall not be pledged for the payment of an obligation

under the contract.

(k)  The provisions of this section are intended to add to

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the powers and rights of a borough, and nothing in this section

shall be construed to limit either the general or specific

powers or rights of a borough set forth in this act.

(l)  As used in this section, the term "non-profit membership

corporation" means an entity the membership of which:

(1)  consists solely of Pennsylvania boroughs, such as a

consortium, buying group or municipal power agency under section

2471.2; or

(2)  consists of Pennsylvania boroughs and political

subdivisions of another state or states.

Section 3.  This act shall take effect in 60 days.