§ 26.10.065. Utility Revenue Distribution to the General Government Budget.

A.

If a municipal utility has or is anticipated to have net income accruing from its operations in any year, a portion of the net income may be pledged by inclusion in the respective municipal utility and general government budgets for the subsequent year. The pledged amount shall be described as "Utility Revenue Distribution from (name of utility)." The Assembly shall hold a public hearing as part of the annual budget process on the proposed Utility Revenue Distribution and use of funds. Payment of any approved and budgeted Utility Revenue Distribution shall be made in two equal payments on or before the 15th calendar day of August and October of such subsequent year only after the income has been collected by the municipality pursuant to lawful authority and the annual audit has been completed. The amount of Utility Revenue Distribution for the subsequent year:

1.

Shall initially be proposed by the utility, which shall provide a signed report to the Assembly that documents:

a.

The utility's achieved return on equity, and any shortfalls of achieved returns, as compared with approved or target returns;

b.

The effect of the proposed distribution on the utility's current and future capital structure, in light of planned expenditures; and

c.

How the proposed distribution is consistent with prudent, business-like operation of the utility;

2.

May not exceed 75 percent of the utility's change in net position for the prior year before payment of a dividend, unless:

a.

A greater percentage is necessary to:

i.

Prevent the utility from increasing its equity-capitalization percentage, defined in terms of the ratio of the utility's equity to its total book value, above 65 percent; or

ii.

Enable the utility to reduce its equity-capitalization percentage into a range that the RCA has ordered is reasonable for that utility; and

b.

The utility provides to the Assembly in writing a justification for why the utility's equity-capitalization percentage is excessive, or absent payment of the recommended distribution would become excessive, and should be reduced.

3.

Shall be zero if:

a.

The utility's change in net position for the prior year is negative;

b.

The utility's equity-capitalization percentage is less than 30 percent;

c.

The utility's bond rating is below investment grade; or

d.

The utility is subject to an order of the Regulatory Commission of Alaska to cease the payment of dividends; and

4.

Shall be approved by the Assembly.

B.

Any unfunded pension liability applicable to any utility shall be excluded from the calculation of the Utility Revenue Distribution to be paid by any utility.

C.

Any federal subsidy received with respect to the Build America Bonds issued in 2009 for any utility shall be excluded from the calculation of the utility's gross revenues.

(AO No. 94-76A; AO No. 78-9; AO No. 85-200; AO No. 2014-57(S), § 5, 5-20-14; AO No. 2017-97 , § 1, 1-1-18)