Sec. 17. (a) A corporation shall furnish reasonably adequate services and facilities. The charge made by any corporation for any service rendered or to be rendered, either directly or in connection therewith, shall be nondiscriminatory, reasonable, and just, and every discriminatory, unjust, or unreasonable charge for the service is prohibited.

(b) A reasonable and just charge for service within the meaning of this section are charges that produce sufficient revenue:

(1) to pay all legal and other necessary expense incident to the operation of its system, to include maintenance cost, operating charges, upkeep, depreciation and amortization, repairs, and interest charges on bonds or other obligations;

(2) to provide a sinking fund for the liquidation of bonds or other evidences of indebtedness;

(3) to provide adequate funds to be used as working capital, as well as funds for making extensions and replacements (to the extent not provided for through depreciation);

(4) to meet reasonable financial agreements entered into by the corporation in the process of securing capital; and

(5) for the payment of any taxes that may be assessed against the corporation or its property.

(c) The purpose of this section is to ensure that the charges produce an income sufficient to maintain the corporation property in a sound physical and financial condition to render adequate and efficient service. Any rate too low to meet the requirements of this section is unlawful.

(d) Revenues and receipts not needed for the purposes of this section shall be returned to the members on an equitable basis, either in cash or in abatement of current charges for energy, as the board may decide.

(e) As used in subsections (g) and (h), "financial assistance" means:

(1) a loan or loan guarantee; or

(2) a lien accommodation provided to secure a loan made by another lender;

that is made by the Rural Electrification Administration of the United States Department of Agriculture (REA).

(f) As used in subsections (g) and (h), "REA borrower" means a corporation created under this chapter that is the recipient of financial assistance.

(g) In determining rates under this section, once the commission determines that property of an REA borrower is reasonably necessary for the provision of electric service and has been placed in service, the commission shall approve rates to be charged by the REA borrower sufficient to enable the REA borrower to:

(1) satisfy its reasonable expenses and obligations; and

(2) repay the full amount of any financial assistance and the interest thereon.

(h) So long as there remains any unpaid portion of any financial assistance associated with the property of an REA borrower determined under subsection (g) to be reasonably necessary and placed in service, the rates of the REA borrower shall be set at a level sufficient to repay the financial assistance, regardless of any change in the regulatory status of the property, including, without limitation, the full or partial retirement of the property or any other change in the status of the property as reasonably necessary or used and useful.

(i) Subsections (g) and (h) do not apply to a corporation that is not created under this chapter, whether or not the rates of the corporation are set by the commission under this section.

Formerly: Acts 1935, c.175, s.17. As amended by P.L.121-1987, SEC.2; P.L.109-1989, SEC.4; P.L.74-1991, SEC.2; P.L.1-1992, SEC.31.