House Bill 1663

(As Passed the House)

AN ACT TO AMEND SECTION 77-3-43, MISSISSIPPI CODE OF 1972, TO AUTHORIZE THE PUBLIC SERVICE COMMISSION TO ALLOW THE RECOVERY IN RATES OF REASONABLE COSTS FOR FIRE PROTECTION INFRASTRUCTURE UPON PETITION BY UTILITY WATER SYSTEMS; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 77-3-43, Mississippi Code of 1972, is amended as follows:

77-3-43. (1) In regulating the rates of any public utility subject to the provisions of this chapter, the commission shall, on hearing after reasonable notice, ascertain and fix the rate base of the property of the public utility in such manner as to be fair both to the public utility and to the consumer when the same is relevant or material to the exercise of the jurisdiction of the commission. The commission shall make readjustments from time to time, and ascertain the cost of all new construction, extensions and additions to the property of every public utility. In arriving at such rate base, the commission shall give due consideration to: (a) the reasonable original costs of the property used and useful, or to be used and useful within a reasonable time after the test period; (b) the portion of the cost which has been consumed by previous use recovered by depreciation expense; (c) the allowance for funds used during construction, not to exceed on borrowed funds the true net interest cost of such funds, computed according to the actuarial method, and, on the equity component thereof, a rate of return granted on common equity in the last rate proceedings before the commission, or if such rate has not been established within the preceding three (3) years, then the average rate of return actually earned on equity during the preceding three (3) years; (d) any other elements deemed by the commission to be material in determining the rate base for rate-making purposes.

(2) Valuations of property of such a public utility for rate-making purposes shall not include property purchased, labor supplied or services rendered by any firm or corporation owned or controlled in whole or in part, directly or indirectly, by such public utility, or which owns or controls in whole or in part, directly or indirectly, such public utility, unless such firm or corporation permits the commission to have access to such of the books and records of such firm or corporation as may be necessary in the opinion of the commission to enable the commission to determine whether such labor, materials, property or services rendered were supplied at reasonable prices. The rate base shall not include property donated to such utility without any consideration nor shall operating expenses include depreciation of such donated property.

(3) Whenever the commission is required in administering this chapter to find the value of gas in the field where produced, such value shall be determined as the amount paid therefor by the public utility in the field pursuant to arm's length contract; and in the absence of such arm's length contract, the fair market value of such gas as a commodity in the field.

(4) The commission, in its discretion, when requested by petition of a rate-jurisdictional public utility providing water service as defined in Section 77-3-3(d)(iv), may allow to be recovered in rates the reasonable costs of used and useful facilities deemed necessary for fire protection. Such facilities include fire hydrants, transmission and distribution mains, storage facilities, pumping equipment or other facilities associated with the provision of adequate water production, storage and distribution for fire protection.

SECTION 2. This act shall take effect and be in force from and after July 1, 2002.