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 (,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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