5.20.010 Findings, determinations and declarations

The City Commission hereby finds, determines and declares that:

1. The continued growth, economic development and prosperity of the City and its residents requires the availability of secure, reliable and economic supplies of electricity at stable, economical and cost-based rates for all residential, commercial, industrial and other electric consumers within the City;
2. The restructuring of the electric utility industry in the State has exposed the City and residential, commercial, industrial and other electric consumers within the City to volatile and unstable market-based rates for electricity supply service; and
3. It is necessary, desirable and in the best interest of the City, its residents and all electricity consumers within the City for the City to establish and organize Electric City Power, Inc. (the “Corporation”) pursuant to the provisions of the Montana Nonprofit Corporation Act, Title 35, Chapter 2, Montana Code Annotated, as amended (the “Nonprofit Act”), to own, construct, finance, operate and maintain the properties, facilities, rights and interests comprising the City’s municipal electric utility established pursuant to Section 5.20.030, OCCGF, and to provide electricity supply services to consumers within and outside of the boundaries of the City at stable, cost-based rates, all for and on behalf of the City. (Ord. 2925, 2005; Ord. 2861, 2003)

5.20.020 Definitions

For the purposes of this ordinance, and in addition to the words and terms defined elsewhere in this ordinance, the following words and terms shall have the meanings ascribed to them in this section, except where the context clearly indicates different meaning:

“Acquisition, Acquire, Construction or Construct” shall mean, without limitation, construction, acquisition, operation, maintenance, testing, extending, renewing, relocating, removing, replacing, repairing and using electric facilities.

“Consumer” shall mean any person, firm, partnership, corporation, cooperative, organization, governmental agency or other form of legal entity currently or potentially receiving electric services within and/or outside the boundaries of the City.

“Electric Facilities” shall mean fuel sources; water supply; generation, transmission and distribution facilities and equipment; and all necessary or convenient facilities and appurtenances thereto whether the same be located above or below ground, or within and/or outside the boundaries of the City.

“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended.

“Municipal Electric Utility” shall mean:

1. The ownership, management and operation of electric facilities;
2. The provision of electricity supply services to the City and to industrial, commercial, residential and other electric consumers within and outside of the boundaries of the City;
3. The sale of electricity at wholesale or retail; and
4. All other services necessary, desirable, incidental or related thereto; all to the extent permitted by law.

“Revenue Bonds” shall mean bonds, notes or other evidences of indebtedness authorized by the City and issued by the Corporation which shall be payable from the revenues of the municipal electric utility.

“Services” shall mean electric power and energy in the form of generation services, transmission services, distribution services, sale services or marketing services within and/or outside the boundaries of the City.  

“Tax-Exempt Obligations” shall mean revenue bonds, the interest on which is excludable from the gross income of the holder pursuant to Section 103 of the Internal Revenue Code.  (Ord. 2925, 2005; Ord. 2861, 2003)

5.20.030 Establishment of municipal electric utility

In the exercise of the self-governing powers contained in its Charter and pursuant to applicable law, the City does hereby establish a municipal electric utility for the purpose of securing and providing reliable and economic long term supplies of electricity to the City, its residents and electric consumers. (Ord. 2925, 2005; Ord. 2861, 2003)

5.20.040 Organization of Electric City Power, Inc.

The organization and incorporation of the Corporation pursuant to the Nonprofit Act is hereby authorized and approved. The Articles of Incorporation and the Bylaws of the Corporation shall be approved by resolution of the City Commission, and shall be placed on file with the City Clerk. The City Manager is hereby authorized and directed to take all actions necessary to complete the incorporation of the Corporation pursuant to the Nonprofit Act. (Ord. 2925, 2005; Ord. 2861, 2003)

5.20.050 Purpose of the corporation

The Corporation shall own, operate and manage the municipal electric utility and shall operate for the primary purpose of securing and providing reliable, long-term supplies of electricity to the City, its residents and electric consumers. In furtherance of such purpose, the Corporation may acquire or construct electrical facilities, participate with others in the acquisition or construction of electrical facilities, may enter into contracts to secure supplies of electricity and related services and, in order to achieve economies of scale and other benefits, may own, acquire, construct or contract for long-term sources of electricity that are in excess of the present requirements of the City, its residents and consumers and may enter into contracts for the sale of electricity to any consumer outside of the City or any investor-owned, cooperative or municipal utility or other purchaser. (Ord. 2925, 2005; Ord. 2861, 2003)

5.20.060 Powers of the corporation; limitations

The Corporation shall have and exercise all powers conferred pursuant to the Nonprofit Act and its Articles of Incorporation that are necessary or desirable for the accomplishment of its purposes. Notwithstanding the foregoing,

1. the Corporation shall not issue or incur any bonds, notes or other evidences of indebtedness without the prior approval of the City Commission, and
2. the Corporation shall have no power to bind or create obligations of the City, and each bond, note or other evidence of indebtedness of the Corporation shall contain a statement to the effect that
   1. neither the City, the State, any agency, authority or instrumentality of the State or any municipality or local governmental unit is obligated to pay the principal thereof or interest thereon; and
   2. neither the faith and credit nor the taxing power of the City, the State, any agency, authority or instrumentality of the State or any municipality or local governmental unit is pledged or in any way obligated to pay the principal thereof or interest thereon. (Ord. 2925, 2005; Ord. 2861, 2003)

5.20.070 Rates

The Board of Directors of the Corporation shall from time to time consider and recommend rates and charges for electricity supply and other services provided by the Corporation. Such rates and charges shall be designed to enable the Corporation to operate on a self-sufficient and self-sustaining basis and to produce revenues at all times sufficient to pay all operating, maintenance, debt service, repair and replacement costs of the Corporation and to provide reserves necessary or desirable for working capital, capital improvements and replacements and rate stabilization purposes. All rates and charges recommended by the Board of Directors of the Corporation shall be subject to the approval of the City Commission, by resolution adopted subsequent to notice and public hearing as required by Title 69, Chapter 7, Part 1, Montana Code Annotated, as amended. (Ord. 2925, 2005; Ord. 2861, 2003)

5.20.080 Rules of operation

The Board of Directors of the Corporation shall from time to time consider and recommend rules for operation of the municipal electric utility which shall contain, at a minimum, those requirements of good practice which can be normally expected for the operation of an electrical utility as required by Title 69, Chapter 7, Part 2, Montana Code Annotated, as amended. All rules of operation recommended by the Board of Directors shall be subject to approval by resolution of the City Commission. (Ord. 2925, 2005; Ord. 2861, 2003)

5.20.090 Availability of rules and schedule of rates, charges and classifications

A schedule of rates, charges or classifications imposed upon or otherwise payable by the customers served by the municipal electric utility and a copy of the rules established for the operation of the municipal electric utility shall be kept and maintained at the principal office of the Corporation and in the City Clerk’s Office and the same shall be made available to public inspection at any time during regular office hours. (Ord. 2925, 2005; Ord. 2861, 2003)

5.20.100 Revenue bonds; tax-exempt obligations

The City Commission may from time to time authorize the issuance of revenue bonds by the Corporation on behalf of the City to acquire or construct electric facilities. By enactment of this ordinance, the City has approved the creation and organization of the Corporation, the purposes and activities of the Corporation, and in general, the issuance of revenue bonds by the Corporation to acquire and construct electric facilities. However, no revenue bonds shall be issued by the Corporation unless the City Commission shall first adopt (within one year prior to the issuance of such revenue bonds) a resolution approving the issuance of such revenue bonds and the purposes for which such revenue bonds are to be issued. In the event that such revenue bonds are to be issued as tax exempt obligations, the City and the Corporation shall comply with the requirements of Revenue Procedure 82-26, 1982-1 C.B. 476, or any successor thereto, and all such tax-exempt obligations shall comply with the following requirements:

1. All of the original proceeds and investment proceeds of the tax-exempt obligations, except for a de minimis amount of less than $5,000 that is included in the issue solely for the purpose of rounding the dollar amount of the issue, shall be used to provide tangible real or tangible personal property. Notwithstanding any other provision of this ordinance to the contrary, the Corporation may not finance the acquisition or construction of electric facilities with the proceeds of a tax-exempt obligation unless such electric facilities are located within the geographic boundaries of, or have a substantial connection with, the City.
2. Before tax-exempt obligations may be issued to acquire or construct electric facilities, the City shall first adopt a resolution stating that it will accept title to the electric facilities financed by such tax-exempt obligations, including any additions to such electric facilities, when the tax-exempt obligations financing such electric facilities are discharged.
3. The tax-exempt obligations of the Corporation are issued on behalf of the City and unencumbered fee title to the electric facilities (including any additions to such electric facilities) and exclusive possession and use of the electric facilities (including any additions to such electric facilities) shall vest solely in the City without demand or further action on the City’s part when the tax-exempt obligations financing such electric facilities are discharged. Tax-exempt obligations are discharged when
   1. cash is available at the place of payment on the date that the tax-exempt obligations are due (whether at maturity or upon prior call for redemption) and
   2. interest ceases to accrue on the tax-exempt obligations.
4. The City shall have the right at any time to obtain unencumbered fee title and exclusive possession of all electric facilities financed by the tax-exempt obligations, and any additions to such electric facilities, by
   1. placing into escrow an amount that will be sufficient to defease the tax exempt obligations financing such electric facilities, and
   2. paying reasonable costs incident to the defeasance. However, the City, at any time before it defeases such tax-exempt obligations, shall not agree or otherwise be obligated to convey any interest in the financed electric facilities to any person (including the United States of America or its agencies or instrumentalities) for any period extending beyond or beginning after the City defeases such tax-exempt obligations. In addition, except as may be provided in an ordinance approving a particular issue of tax-exempt obligations, the City shall not agree or otherwise be obligated to convey a fee interest in the electric facilities financed with any tax-exempt obligation issued by the Corporation to any person before the defeasance or within 90 days after the City defeases the tax-exempt obligations financing such electric facilities. (Ord. 2925, 2005; Ord. 2861, 2003)

5.20.110 Transitional provisions

The City Manager (or designee) is hereby authorized and directed to assign and transfer to the Corporation (insofar as is practicable and at such time and in such manner as he shall determine) all licenses, permits, contracts, agreements and other instruments heretofore entered into by the City in connection with or relating to the municipal electric utility. (Ord. 2925, 2005; Ord. 2861, 2003)

5.20.120 Removal of directors; sale or dissolution of corporation

A vote of four-fifths of the members of the City Commission shall be required in order to:

1. Remove any Director of the Corporation;
2. Approve the dissolution of the Corporation;
3. Approve the sale of all or a substantial portion of the assets of the Corporation; or
4. Approve an amendment to this Chapter that reduces the aforesaid number of members of the City Commission required for vote to take any of the actions described in 1 through 3 of this Section. (Ord. 2925, 2005)