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278.2203 Cost allocation of regulated and nonregulated activity.
(1)
(2)
(3)
(4)
(5)
A utility that engages in a nonregulated activity shall identify all costs of the
nonregulated activity and report the costs in accordance with the guidelines in
the USoA and the cost allocation methods described in subsection (2) of this
section.
In allocating costs between regulated and nonregulated activities, a utility shall
utilize one (1) of the following cost allocation methods:
(a) The fully distributed cost method; or
(b) A cost allocation method recognized or mandated by the rules of the SEC
promulgated pursuant to 15 U.S.C. sec. 79, et seq., or promulgated by
the FERC or by the USDA.
A utility's compliance with federal cost allocation methods shall constitute
compliance with the provisions of KRS 278.010 to 278.450.
Notwithstanding subsections (1) to (3) of this section, a utility may report an
incidental nonregulated activity as a regulated activity if:
(a) The revenue from the aggregate total of the utility's nonregulated
incidental activities does not exceed the lesser of two percent (2%) of the
utility's total revenue or one million dollars ($1,000,000) annually; and
(b) The nonregulated activity is reasonably related to the utility's regulated
activity.
Nothing contained in this section shall be construed as requiring a utility to
violate any cost allocation methods required to be employed under any service
agreement validly existing as of July 14, 2000, for the term of the existing
agreement, except where the commission makes the determination that a
service agreement was executed for the purpose of avoiding provisions of KRS
278.010 to 278.450.
Effective:July 14, 2000
History: Created 2000 Ky. Acts ch. 511, sec. 3, effective July 14, 2000.
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