Assigned to NRE                                                                                                                     FOR COMMITTEE

 


 

 

 


ARIZONA STATE SENATE

Fifty-Fourth Legislature, Second Regular Session

 

FACT SHEET FOR S.B. 1460

 

electric cooperatives; broadband service

Purpose

            Authorizes the formation of an electric cooperative nonprofit membership corporation (electric cooperative) or a nonprofit electric generation and transmission cooperative (generation and transmission cooperative) for the purposes of providing broadband service. Prescribes requirements for the cooperative in providing broadband service on property.

Background

            Statute authorizes the formation of different types of cooperative membership organizations, which are governed by articles of incorporation and are formed for a specific purpose. Statute prescribes requirements and duties for each type of cooperative.

            An electric cooperative may be established by five or more individuals for any of the following purposes: 1) supplying, purchasing, marketing, selling, transmitting or distributing electric energy to persons and promoting and extending the use of electric energy; 2) providing services related or incidental to supplying, providing or transmitting electric energy; 3) engaging in activities designed to promote rural economic development; and 4) engagement in activities for any lawful purpose (A.R.S. Title 10, Chapter 19, Article 2)

            A generation and transmission cooperative may be established by two or more electric utilities, including any corporation, governmental agency or political subdivision, for the purpose of: 1) producing and generating, purchasing, marketing, selling or transmitting electric energy; and 2) providing related services or services relating to any other lawful purpose (A.R.S. Title 10, Chapter 19, Article 4).

            There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

Electric Cooperatives

1.      Adds, to allowed purposes for the formation of an electric cooperative, directly or through an affiliate, providing broadband service to areas in which the cooperative provides electric energy services.

2.      Adds, to the prescribed powers of an electric cooperative, directly or through an affiliate, constructing, operating, maintaining, leasing and licensing fiber optic cables and other facilities to provide broadband service over, under, across, on or along real property, personal property, rights-of-way, easements and licenses and other property rights that are owned, held or used by the cooperative, including easement or other property rights owned, held or used by the cooperative to provide electricity or other services.

Generation and Transmission Cooperatives

3.      Adds, to allowed purposes for the formation of a generation and transmission cooperative, directly or through an affiliate, providing broadband service to areas in which the cooperative provides electric energy services.

4.      Adds, to the prescribed powers of a generation and transmission cooperative, directly or through an affiliate, constructing, operating, maintaining, leasing and licensing fiber optic cables and other facilities to provide broadband service over, under, across, on or along real property, personal property, rights-of-way, easement and licenses and other property rights owned, held or used by the generation and transmission cooperative, including easement or other property rights that are owned, held or used by the cooperative to provide electricity or other services.

Property Owner Compensation

5.      Entitles a property owner compensation from the cooperative, if a cooperative, directly or through its affiliate, by expanding the use of an existing easement or other property right that is owned, held or used by the cooperative to provide electricity or other services, reduces the fair market value of the property owner’s property.

6.      Requires the property owner to commence an action in the Superior Court for compensation based on diminution in value (DIV) within 18 months after the cooperative notifies the property owner of the expanded use for broadband service and deems the expanded use fully vested in the cooperative and its affiliation without compensation if an action is not commenced within 18 months.

7.      Requires an electric cooperative or its affiliate to provide written notice to a property owner before an excavation required to install fiber optic cable or other underground broadband facilities.

8.      Prohibits, if the electric cooperative or its affiliate fails to provide the required notice, the cooperative or its affiliate from proceeding with an excavation until notice is provided and specifies that failure to provide notice does not invalidate or prevent the cooperative or its affiliate from expanding other allowed use of the easement or property right.

9.      Directs, in an action for just compensation based on a claim of expanded use for broadband services, the court or jury to ascertain and assess the DIV of the property based on the difference between the fair market value of the entire parcel immediately before and after the expanded use.

10.  Deems evidence of revenues or profits derived from or the rental value of an assembled communications corridor as not admissible in determining fair market value, in an action for just compensation based on a claim of expanded use for broadband services.

11.  Deems the expanded use for broadband service as fully vested in the cooperative and its affiliate, and the expanded use as running with the land upon payment of just compensation.

12.  Prohibits class action against a cooperative or its affiliate in any action for just compensation based on a claim of expanded use for broadband service.

13.  Requires an excavation notice to include:

a)   the name and mailing address of the electric cooperative or its affiliate;

b)   the mailing address, telephone number and email address for a representative of the electric cooperative or its affiliate;

c)   a summary statement describing the activities to be conducted during the excavation; and

d)   the approximate start and end dates for the excavation.

14.  Declares a notice of expanded use for broadband service that is provided by a cooperative to a property owner effective if sent by first class mail to the last known address of the property owner, by a printed insertion in the property owner’s electric bill or by other commonly used publication or communication channels used by the cooperative.

15.  Specifies that actions for just compensation include trespass, inverse condemnation and other similar causes of action.

16.  Specifies that this legislation does not prohibit a cooperative or its affiliate from reaching an agreement with a property owner for a claim waiver or from acquiring the right to use the property for broadband service by other lawful means.

17.  Specifies that an excavation notice is not required before an electric cooperative or its affiliate uses an easement or other property right that includes an excavation authorization for purposes of providing service.

Miscellaneous

18.  Defines affiliate as a person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with another person.

19.  Defines broadband service as providing access and transport to the internet, computer processing, information storage or protocol conversion at a download rate of at least 25 megabits per second (mbps) and at an upload rate of at least 3 mpbs.

20.  Makes technical and conforming changes.

21.  Becomes effective on the general effective date.

Prepared by Senate Research

February 10, 2020

KN/gs