<section article="gpu" article_name="Public Utilities" number="6-101" title_number="6" title_name="Business Structure" subtitle_number="1" subtitle_name="Financing"> <level label="a"> <level label="1"> <text>This subsection:</text> <level label="i"> <text>applies only to corporations that operate in Maryland; and</text> </level> <level label="ii"> <text>does not apply to a transaction in which the capital stock of a telephone company is acquired by another entity with a greater than 50% ownership in common with the telephone company.</text> </level> </level> <level label="2"> <text>Except as provided in paragraph (4) of this subsection, a public service company shall obtain authorization from the Commission before the public service company:</text> <level label="i"> <text>assumes or guarantees an obligation or liability with respect to stocks, bonds, securities, notes, or other evidence of indebtedness of any person that is payable wholly or partly more than 12 months after the date of the assumption or guarantee;</text> </level> <level label="ii"> <text>issues stocks, bonds, securities, notes, or other evidence of indebtedness that is payable wholly or partly more than 12 months after the date issued; or</text> </level> <level label="iii"> <text>lends money to an affiliate, as defined in § 7–501 of this article, at rates or on terms that are significantly more favorable to the affiliate than the rates or terms that are otherwise commercially available to the affiliate.</text> </level> </level> <level label="3"> <text>An issuance under paragraph (2)(ii) of this subsection shall conform to §§ 6–102 and 6–103 of this subtitle.</text> </level> <level label="4"> <text>Prior authorization of the Commission is not required for an assumption or guarantee under paragraph (2)(i) of this subsection or an issuance under paragraph (2)(ii) of this subsection made by a gas company, electric company, or telephone company whose gross annual revenues, for the most recent calendar year for which data are available, are less than 3% of the total gross annual revenues of all public service companies in the State during the same calendar year, if the gas company, electric company, or telephone company:</text> <level label="i"> <text>provides prior written notice to the Commission of the transaction; and</text> </level> <level label="ii"> <text>obtains approval of the transaction from the entity in another state that regulates the gas company, electric company, or telephone company.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>Subject to the requirements of subsection (c) of this section, the Commission may authorize an act described under subsection (a)(2) of this section if the Commission finds that the act is consistent with the public convenience and necessity.</text> </level> <level label="2"> <text>Authorization under this subsection does not:</text> <level label="i"> <text>revive a lapsed franchise, validate an invalid franchise, or add to the powers and privileges in a franchise; or</text> </level> <level label="ii"> <text>waive a forfeiture.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>This subsection does not apply to the formation of a holding company by a public service company in a corporate reorganization that involves an exchange of stock of the public service company for stock in the holding company.</text> </level> <level label="2"> <text>In this subsection, a company controlling a public service company is deemed a public service company of the same class as the controlled public service company.</text> </level> <level label="3"> <text>Without prior authorization of the Commission, a public service company may not take, hold, or acquire any part of the capital stock of a public service company that:</text> <level label="i"> <text>operates in Maryland; and</text> </level> <level label="ii"> <text>is of the same class as the acquiring company.</text> </level> </level> <level label="4"> <level label="i"> <text>Except as provided in subparagraph (ii) of this paragraph, a stock corporation may not take, hold, or acquire more than 10% of the total capital stock of a public service company that operates in Maryland unless:</text> <level label="1"> <text>the stock is acquired as collateral security; and</text> </level> <level label="2"> <text>the Commission approves the acquisition.</text> </level> </level> <level label="ii"> <text>The Commission may authorize a public service company of the same class to take, hold, or acquire more than 10% of the total capital stock of a public service company that operates in Maryland.</text> </level> </level> <level label="5"> <text>A public service company may not be a party to a violation of this subsection.</text> </level> <level label="6"> <text>Notwithstanding paragraph (2) of this subsection, § 6–105 of this subtitle shall apply, and the provisions of this subsection do not apply, to the acquisition, ownership, or disposition of any capital stock or voting securities of a company that controls, directly or indirectly, a gas and electric company.</text> </level> <level label="7"> <text>Notwithstanding any other provision of this subsection, the Commission may authorize, in accordance with § 6–105 of this subtitle, the taking, holding, or acquiring of all or any part of the capital stock of a gas and electric company that operates in the State by a stock corporation or a public service company that is not of the same class as the gas and electric company.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-102" title_number="6" title_name="Business Structure" subtitle_number="1" subtitle_name="Financing"> <level label="a"> <text>This section applies only to public service companies that operate in Maryland.</text> </level> <level label="b"> <text>The Commission shall authorize a public service company to issue stocks, bonds, securities, notes, or other evidence of indebtedness, payable wholly or partly more than 12 months after the date of issuance, if the Commission finds that the issuance is reasonably required for the public service company to:</text> <level label="1"> <text>acquire property;</text> </level> <level label="2"> <text>construct, complete, extend, or improve its facilities;</text> </level> <level label="3"> <text>discharge or lawfully refund its obligations;</text> </level> <level label="4"> <text>maintain or improve service; or</text> </level> <level label="5"> <text>reimburse money, not secured by or obtained from the issuance, that is expended for a purpose described in item (1), (2), or (3) of this subsection within 5 years before the filing of an application with the Commission for the reimbursement.</text> </level> </level> <level label="c"> <level label="1"> <text>The Commission may authorize a public service company to issue stocks, bonds, securities, notes, or other evidence of indebtedness, payable wholly or partly more than 12 months after the date of issuance, for the public service company to:</text> <level label="i"> <text>conform the aggregate capitalization of the public service company to the value of its property; or</text> </level> <level label="ii"> <text>subject to paragraph (2) of this subsection, pay a dividend in shares of the public service company’s own stock.</text> </level> </level> <level label="2"> <text>An order of the Commission authorizing an issuance under paragraph (1)(ii) of this subsection shall state that:</text> <level label="i"> <text>concurrently with the issuance, the public service company shall transfer from surplus to capital an amount that the Commission determines under paragraph (3) of this subsection; and</text> </level> <level label="ii"> <text>a sum equal to the amount to be transferred has been expended from income or other money in the treasury of the public service company not secured by, obtained from, or reimbursed by the issuance of stocks, bonds, notes, or other evidence of indebtedness of the public service company for a purpose described in subsection (b)(1), (2), or (3) of this section.</text> </level> </level> <level label="3"> <text>The amount that the Commission determines under paragraph (2)(i) of this subsection may not be less than:</text> <level label="i"> <text>the aggregate par value of the stock whose issuance is to be authorized; or</text> </level> <level label="ii"> <text>if the stock has no par value, the capital value of the stock.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>An authorization by the Commission under subsection (b) or (c) of this section shall be by order.</text> </level> <level label="2"> <text>The order shall specify:</text> <level label="i"> <text>the amount of the issuance authorized; and</text> </level> <level label="ii"> <text>the purpose under subsection (b) or (c) of this section for which the issuance is reasonably required.</text> </level> </level> </level> <level label="e"> <level label="1"> <text>Notwithstanding subsections (b), (c), (d), and (g) of this section, the Commission may approve the issuance of stocks, bonds, securities, notes, or other evidence of indebtedness in connection with the organization of a new public service company by the purchaser of the franchise or property of a public service company sold under judicial proceedings, mortgage, or deed of trust.</text> </level> <level label="2"> <text>An issuance that the Commission approves under this subsection shall be in the amount that the Commission considers necessary fully to protect the rights and equities of the holders of the securities of the predecessor company.</text> </level> </level> <level label="f"> <text>A public service company’s application for authorization under this section of long–term debt in excess of $1,000,000 shall include a copy of any restrictive covenant attached to the debt.</text> </level> <level label="g"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, this section does not prevent a public service company from issuing, without the prior consent of the Commission, notes that are:</text> <level label="i"> <text>for proper corporate purposes;</text> </level> <level label="ii"> <text>not otherwise in violation of the law; and</text> </level> <level label="iii"> <text>payable at periods totaling not more than 12 months after the date of issuance.</text> </level> </level> <level label="2"> <text>Except as authorized under subsection (b) or (c) of this section, notes issued under paragraph (1) of this subsection may not be refunded directly or indirectly, wholly or partly, by an evidence of indebtedness running for more than 12 months.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-103" title_number="6" title_name="Business Structure" subtitle_number="1" subtitle_name="Financing"> <level label="a"> <text>This section applies only to public service companies that operate in Maryland.</text> </level> <level label="b"> <level label="1"> <text>A public service company may not:</text> <level label="i"> <text>capitalize or issue bonds against or as lien on a contract for consolidation, merger, or lease; or</text> </level> <level label="ii"> <text>except as provided in paragraph (2) of this subsection, capitalize a franchise or the right to own a franchise.</text> </level> </level> <level label="2"> <text>A public service company may capitalize a franchise or right to own a franchise in an amount not exceeding the amount, exclusive of any tax or annual charge, actually paid to the State or a political subdivision as consideration for the grant of the franchise or right.</text> </level> </level> <level label="c"> <text>The stated capital, as determined under Title 2, Subtitle 3 of the Corporations and Associations Article, of a public service company formed by a merger or consolidation of corporations may not exceed, solely by virtue of the merger or consolidation, the stated capital of the corporations merged or consolidated plus any additional sum paid in cash.</text> </level> <level label="d"> <level label="1"> <text>This subsection does not apply to the capitalization of a franchise to be a public service company.</text> </level> <level label="2"> <text>Notwithstanding any other provision of this article, the Commission may approve the capitalization of tangible and intangible property of:</text> <level label="i"> <text>a newly chartered public service company; or</text> </level> <level label="ii"> <text>a public service company organized or reorganized by the purchaser of the franchise and property of its predecessor at a sale under judicial proceedings, mortgage, or deed of trust.</text> </level> </level> <level label="3"> <text>Capitalization under paragraph (2) of this subsection shall be in the amount and form that the Commission considers reasonably necessary to enable the public service company to obtain the capital necessary to establish itself as a going concern.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-104" title_number="6" title_name="Business Structure" subtitle_number="1" subtitle_name="Financing"> <text>Any contract, assignment, transfer, or agreement for transfer or purchase of stock in violation of the provisions of this article is void.</text> </section> <section article="gpu" article_name="Public Utilities" number="6-105" title_number="6" title_name="Business Structure" subtitle_number="1" subtitle_name="Financing"> <level label="a"> <text>In this section, “affiliate” has the meaning stated in § 7–501 of this article.</text> </level> <level label="b"> <level label="1"> <text>The General Assembly finds that:</text> <level label="i"> <text>existing legislation requires the approval by the Commission of the acquisition by one public service company of another public service company’s stocks and obligations, but does not require the Commission’s approval of these acquisitions by persons not engaged in the public utility business in the State; and</text> </level> <level label="ii"> <text>an attempt by a person not engaged in the public utility business in the State to acquire the power to exercise any substantial influence over the policies and actions of a public service company that provides electricity or gas in the State could result in harm to the customers of the public service company, including the degradation of utility services, higher rates, weakened financial structure, and diminution of utility assets.</text> </level> </level> <level label="2"> <text>The General Assembly declares that it is the policy of the State to regulate acquisitions by persons that are not engaged in the public utility business in the State of the power to exercise any substantial influence over the policies and actions of a public service company that provides electricity or gas in the State in order to prevent unnecessary and unwarranted harm to the customers of the public service company.</text> </level> </level> <level label="c"> <text>This section applies to the acquisition of an electric company, gas and electric company, or a gas company that operates in Maryland.</text> </level> <level label="d"> <level label="1"> <text>A gas and electric company, at the same time as a filing by the company or within 10 days after receipt by the company, shall provide the Commission with a copy of any document regarding the acquisition of voting securities of the gas and electric company or any company that owns or controls the gas and electric company, filed or received by the company, that is filed with:</text> <level label="i"> <text>the Securities and Exchange Commission;</text> </level> <level label="ii"> <text>the Federal Energy Regulatory Commission;</text> </level> <level label="iii"> <text>the Nuclear Regulatory Commission;</text> </level> <level label="iv"> <text>the Department of Justice;</text> </level> <level label="v"> <text>the Federal Trade Commission; or</text> </level> <level label="vi"> <text>any successor agency.</text> </level> </level> <level label="2"> <text>The Commission shall provide the gas and electric company with the same confidentiality and other protections provided by the federal agency with which the filing was made.</text> </level> </level> <level label="e"> <level label="1"> <text>Without prior authorization from the Commission, a person may not acquire, directly or indirectly, the power to exercise any substantial influence over the policies and actions of an electric company, gas and electric company, or gas company, if the person would become an affiliate of the electric company, gas and electric company, or gas company as a result of the acquisition.</text> </level> <level label="2"> <text>For the purposes of this subsection, a person may not be considered to have acquired, directly or indirectly, the power to exercise any substantial influence over the policies and actions of a gas and electric company if the person:</text> <level label="i"> <text>after any acquisition of voting interests of a company that owns or controls a gas and electric company, directly or indirectly, owns, controls, or has the right to vote, or direct the voting of, not more than 20% of the outstanding voting interests of a company that owns or controls a gas and electric company; and</text> </level> <level label="ii"> <text>does not have the right to designate more than 20% of the board of directors or other governing body of a company that owns or controls a gas and electric company.</text> </level> </level> <level label="3"> <text>Paragraph (2) of this subsection may not be construed to apply to the acquisition of any voting interests of a gas and electric company.</text> </level> <level label="4"> <text>If a person that acquires voting securities of a company that owns or controls a gas and electric company after the acquisition actually exercises substantial influence over the policies and actions of a gas and electric company, the Commission may order compliance with, and take any actions authorized by, other provisions of this article with respect to the gas and electric company.</text> </level> </level> <level label="f"> <text>An application for authorization under subsection (e) of this section must include detailed information regarding:</text> <level label="1"> <text>the applicant’s identity and financial ability;</text> </level> <level label="2"> <text>the background of the key personnel associated with the applicant;</text> </level> <level label="3"> <text>the source and amounts of funds or other consideration to be used in the acquisition;</text> </level> <level label="4"> <text>the applicant’s compliance with federal law in carrying out the acquisition;</text> </level> <level label="5"> <text>whether the applicant or the key personnel associated with the applicant have violated any State or federal statutes regulating the activities of public service companies;</text> </level> <level label="6"> <text>all documents relating to the transaction giving rise to the application;</text> </level> <level label="7"> <text>the applicant’s experience in operating public service companies providing electricity;</text> </level> <level label="8"> <text>the applicant’s plan for operating the public service company;</text> </level> <level label="9"> <text>how the acquisition will serve the customers of the public service company in the public interest, convenience, and necessity; and</text> </level> <level label="10"> <text>any other information that the Commission may specify by regulation or order.</text> </level> </level> <level label="g"> <level label="1"> <text>The Commission promptly shall:</text> <level label="i"> <text>examine and investigate each application received under this section; and</text> </level> <level label="ii"> <text>undertake any proceedings necessary or convenient to review the application in accordance with Title 3 of this article and issue an order concerning the acquisition.</text> </level> </level> <level label="2"> <text>The Commission shall consider the following factors in considering an acquisition under this section:</text> <level label="i"> <text>the potential impact of the acquisition on rates and charges paid by customers and on the services and conditions of operation of the public service company;</text> </level> <level label="ii"> <text>the potential impact of the acquisition on continuing investment needs for the maintenance of utility services, plant, and related infrastructure;</text> </level> <level label="iii"> <text>the proposed capital structure that will result from the acquisition, including allocation of earnings from the public service company;</text> </level> <level label="iv"> <text>the potential effects on employment by the public service company;</text> </level> <level label="v"> <text>the projected allocation of any savings that are expected to the public service company between stockholders and rate payers;</text> </level> <level label="vi"> <text>issues of reliability, quality of service, and quality of customer service;</text> </level> <level label="vii"> <text>the potential impact of the acquisition on community investment;</text> </level> <level label="viii"> <text>affiliate and cross–subsidization issues;</text> </level> <level label="ix"> <text>the use or pledge of utility assets for the benefit of an affiliate;</text> </level> <level label="x"> <text>jurisdictional and choice–of–law issues;</text> </level> <level label="xi"> <text>whether it is necessary to revise the Commission’s ring fencing and code of conduct regulations in light of the acquisition; and</text> </level> <level label="xii"> <text>any other issues the Commission considers relevant to the assessment of acquisition in relation to the public interest, convenience, and necessity.</text> </level> </level> <level label="3"> <level label="i"> <text>If the Commission finds that the acquisition is consistent with the public interest, convenience, and necessity, including benefits and no harm to consumers, the Commission shall issue an order granting the application.</text> </level> <level label="ii"> <text>The Commission may condition an order authorizing the acquisition on the applicant’s satisfactory performance or adherence to specific requirements.</text> </level> </level> <level label="4"> <text>If the Commission does not find that the acquisition is consistent with the public interest, convenience, and necessity, including benefits and no harm to consumers, the Commission shall issue an order denying the application.</text> </level> <level label="5"> <text>The applicant bears the burden of showing that granting the acquisition is consistent with the public interest, convenience, and necessity, including benefits and no harm to consumers.</text> </level> <level label="6"> <level label="i"> <text>Except as provided in subparagraph (ii) of this paragraph, the Commission shall issue an order with respect to the application no later than 180 days after the filing of the application for authorization.</text> </level> <level label="ii"> <text>Unless the Commission finds, based on good cause, that the 180–day period should be extended for an additional 45 days, failure of the Commission to issue an order within the 180–day period shall be considered to be an approval of the acquisition by the Commission.</text> </level> </level> </level> <level label="h"> <text>Nothing in this section prohibits dissemination by any party of information concerning the acquisition if the dissemination does not otherwise conflict with federal or State law.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-106" title_number="6" title_name="Business Structure" subtitle_number="1" subtitle_name="Financing"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Affiliate” has the meaning stated in § 7–501 of this article.</text> </level> <level label="3"> <text>“Investor–owned electric company” means an electric company that is not a municipal electric utility or an electric cooperative.</text> </level> </level> <level label="b"> <text>For purposes of this section, a person is considered to have acquired, directly or indirectly, the power to exercise substantial influence over the policies or actions of an investor–owned electric company if the person:</text> <level label="1"> <text>after any acquisition of voting interests, directly or indirectly owns, controls, or has the right to vote, or direct the voting of, at least 20% of the voting interests of the investor–owned electric company or an entity that owns or controls the investor–owned electric company;</text> </level> <level label="2"> <text>has the right to designate at least 20% of the board of directors or other governing body of the investor–owned electric company or an entity that owns or controls the investor–owned electric company; or</text> </level> <level label="3"> <text>is found by the Commission, directly or indirectly, or through one or more intermediaries, to have substantial influence over the policies or actions of an investor–owned electric company.</text> </level> </level> <level label="c"> <text>A person may not acquire, directly or indirectly, the power to exercise substantial influence over the policies or actions of an investor–owned electric company if the person would become an affiliate of each investor–owned electric company in the State as a result of the acquisition.</text> </level> <level label="d"> <text>The Commission may adopt regulations to implement this section.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-201" title_number="6" title_name="Business Structure" subtitle_number="2" subtitle_name="Reporting Requirements"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management or policies of a person.</text> </level> <level label="c"> <text>“Financing lease” means a lease that, during the noncancelable lease period:</text> <level label="1"> <text>covers at least 75% of the economic life of the property; or</text> </level> <level label="2"> <text>has terms that assure the lessor of a full recovery of the fair market value that would normally be represented by the lessor’s investment of the property at the start of the lease and a reasonable return on the use of the assets invested, subject only to limited risk in the realization of the residual interest in the property and the credit risks generally associated with secured loans.</text> </level> </level> <level label="d"> <text>“Joint venture” means a joint business arrangement between a public service company and another person for mutual benefit, with the understanding that each will share in the profits and losses and have a voice in management.</text> </level> <level label="e"> <text>“Long-term debt” means a debt due at least 1 year after the date of indebtedness.</text> </level> <level label="f"> <text>“Parent” means:</text> <level label="1"> <text>every firm, holding company, or other person that ultimately controls a public service company; or</text> </level> <level label="2"> <text>any intermediary entity that controls a public service company.</text> </level> </level> <level label="g"> <text>“Person” includes an individual, corporation, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity.</text> </level> <level label="h"> <text>“Short-term debt” means a debt due within 1 year after the date of indebtedness.</text> </level> <level label="i"> <text>“SIC code and short title” means a 4-digit industry Standard Industrial Classification code and short title listed in the most recent Standard Industrial Classification manual published by the Office of Management and Budget of the Executive Office of the President.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-202" title_number="6" title_name="Business Structure" subtitle_number="2" subtitle_name="Reporting Requirements"> <level label="a"> <text>The Commission may classify the public service companies under its jurisdiction.</text> </level> <level label="b"> <text>Two public service companies are of the same class, if they are both:</text> <level label="1"> <text>common carrier companies;</text> </level> <level label="2"> <text>electric companies;</text> </level> <level label="3"> <text>gas companies;</text> </level> <level label="4"> <text>gas and electric companies;</text> </level> <level label="5"> <text>sewage disposal companies;</text> </level> <level label="6"> <text>telegraph companies;</text> </level> <level label="7"> <text>telephone companies; or</text> </level> <level label="8"> <text>water companies.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-203" title_number="6" title_name="Business Structure" subtitle_number="2" subtitle_name="Reporting Requirements"> <text>The Commission may:</text> <level label="1"> <text>establish a uniform system of records for each class of public service company; and</text> </level> <level label="2"> <text>prescribe the manner and form in which a public service company shall keep records and enter particular items.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-204" title_number="6" title_name="Business Structure" subtitle_number="2" subtitle_name="Reporting Requirements"> <text>The Commission shall prescribe a system, a form of records, and a form of annual report for public service companies that conform as nearly as possible to the system and forms that any corresponding federal regulatory unit requires for public service companies of the same class in interstate commerce.</text> </section> <section article="gpu" article_name="Public Utilities" number="6-205" title_number="6" title_name="Business Structure" subtitle_number="2" subtitle_name="Reporting Requirements"> <level label="a"> <level label="1"> <text>This subsection does not apply to railroads.</text> </level> <level label="2"> <text>Except as provided in subsection (b) of this section, each public service company shall file with the Commission an annual report containing information on its corporate structure, affiliations of its officers and directors, and debt holdings.</text> </level> <level label="3"> <level label="i"> <text>Notwithstanding any specific reporting requirements in this subtitle, the Commission may prescribe the contents of the annual report to be filed by a public service company whose gross annual revenues for the most recent calendar year for which data are available are less than 0.003% of the total gross annual revenues of all public service companies in the State during the same calendar year.</text> </level> <level label="ii"> <text>A small rural electric cooperative described in § 7-502(a) of this article may satisfy the reporting requirement by submitting to the Commission a copy of a report including the required information that the small rural electric cooperative submits to the rural utilities service.</text> </level> </level> </level> <level label="b"> <text>Unless otherwise directed by the Commission, a public service company is not required to comply with subsection (a) of this section if the public service company is:</text> <level label="1"> <text>a common carrier; or</text> </level> <level label="2"> <text>a telephone company whose rates are not regulated by the Commission under Title 4 of this article.</text> </level> </level> <level label="c"> <text>The president, treasurer, or general manager of a public service company shall verify the company’s annual report under oath.</text> </level> <level label="d"> <text>The Commission may:</text> <level label="1"> <text>require a public service company to submit reports and information that the Commission reasonably desires;</text> </level> <level label="2"> <text>prescribe the form, contents, and deadlines for the reports and information; and</text> </level> <level label="3"> <text>require amendments or corrections to the reports within a set period.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-206" title_number="6" title_name="Business Structure" subtitle_number="2" subtitle_name="Reporting Requirements"> <level label="a"> <text>A public service company shall file its annual report with the Commission within the time the Commission sets after the end of the year that the report covers.</text> </level> <level label="b"> <level label="1"> <text>The Commission shall provide each public service company with a blank form of an annual report in time to allow the public service company to comply with subsection (a) of this section.</text> </level> <level label="2"> <text>Unless the Commission notifies a public service company of a proposed change at least 6 months before the start of the year for which an annual report is due, the Commission may not change the form of the annual report in a way that requires the public service company to change the manner or form of its record keeping.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-207" title_number="6" title_name="Business Structure" subtitle_number="2" subtitle_name="Reporting Requirements"> <text>In addition to any other information that the Commission requires, the annual report of a public service company shall state:</text> <level label="1"> <text>the amount and kind of:</text> <level label="i"> <text>authorized capital stock;</text> </level> <level label="ii"> <text>capital stock issued and outstanding;</text> </level> <level label="iii"> <text>authorized bonded indebtedness; and</text> </level> <level label="iv"> <text>bonds and other evidence of indebtedness issued and outstanding;</text> </level> </level> <level label="2"> <text>receipts and expenditures for the year reported;</text> </level> <level label="3"> <text>the amount paid as dividends and interest on bonds or other evidence of indebtedness;</text> </level> <level label="4"> <text>the amount of salary paid to each officer, by name, and the amount paid as wages to employees;</text> </level> <level label="5"> <text>the location of the public service company’s plants with a full description of each plant and franchise, stating in detail how each franchise was acquired; and</text> </level> <level label="6"> <text>when applicable:</text> <level label="i"> <text>a monthly compilation of expenditures that were the basis for any fuel rate adjustment; and</text> </level> <level label="ii"> <text>an annual recapitulation of the information required under item (i) of this item.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-208" title_number="6" title_name="Business Structure" subtitle_number="2" subtitle_name="Reporting Requirements"> <level label="a"> <text>A public service company shall list in its annual report the name and address, basis of control, and principal business activities of:</text> <level label="1"> <text>the public service company; and</text> </level> <level label="2"> <text>each:</text> <level label="i"> <text>parent;</text> </level> <level label="ii"> <text>subsidiary of the public service company;</text> </level> <level label="iii"> <text>organization the public service company controls; and</text> </level> <level label="iv"> <text>joint venture in excess of $1,000,000 in which the public service company is involved.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>For each principal business activity described in subsection (a) of this section, a public service company shall list and describe by SIC code and short title each industry in which the public service company’s activities generated, during the reporting year, at least 10% of gross revenues or $5,000,000.</text> </level> <level label="2"> <text>The public service company shall compile the list described under paragraph (1) of this subsection in order of significance relative to the total activities of the public service company, based on the percentage of gross revenues generated within each industry.</text> </level> </level> <level label="c"> <text>For each corporation, partnership, or other business organization in which a public service company owns more than 5% of the outstanding voting securities or other ownership interests, the public service company shall, in its annual report:</text> <level label="1"> <text>list the corporation, partnership, or other business organization; and</text> </level> <level label="2"> <text>indicate the percentage that the public service company owns.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-209" title_number="6" title_name="Business Structure" subtitle_number="2" subtitle_name="Reporting Requirements"> <level label="a"> <level label="1"> <text>A public service company shall list in its annual report the name and address of:</text> <level label="i"> <text>each principal officer, director, trustee, or partner of the public service company and its parent; and</text> </level> <level label="ii"> <text>each individual exercising functions similar to that of a director, trustee, or partner on behalf of the public service company and its parent.</text> </level> </level> <level label="2"> <text>For each individual described in paragraph (1) of this subsection, the public service company shall list:</text> <level label="i"> <text>the title and position with the public service company and any parent;</text> </level> <level label="ii"> <text>the title and position with any subsidiary of the public service company and any other company, firm, or organization that the public service company controls;</text> </level> <level label="iii"> <text>the principal occupation or business affiliation, if different than that provided in item (i) or (ii) of this paragraph; and</text> </level> <level label="iv"> <text>each affiliation with any other business or financial organization, firm, or partnership doing business with the public service company.</text> </level> </level> </level> <level label="b"> <text>In its annual report, a public service company shall:</text> <level label="1"> <text>list each contract, agreement, or other business arrangement exceeding an aggregate value of $1,000,000 between the public service company and any business or financial organization, firm, or partnership listed under subsection (a)(2)(iii) and (iv) of this section;</text> </level> <level label="2"> <text>except for compensation related to a position with the public service company, list each contract, agreement, or other business arrangement with a value exceeding $2,500 entered into during the reporting year between the public service company and each officer and director listed in subsection (a) of this section;</text> </level> <level label="3"> <text>for each contract, agreement, or other business arrangement described in paragraph (1) or (2) of this subsection, identify the parties, amounts, dates, and product or service involved; and</text> </level> <level label="4"> <text>list the professional services performed for the public service company by each firm, partnership, or organization with which an officer or director of the public service company is affiliated.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-210" title_number="6" title_name="Business Structure" subtitle_number="2" subtitle_name="Reporting Requirements"> <level label="a"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, a public service company shall describe in its annual report each long-term debt of the public service company exceeding $1,000,000, including:</text> <level label="i"> <text>the name and address of the creditor;</text> </level> <level label="ii"> <text>the character of the debt;</text> </level> <level label="iii"> <text>the nature of any security;</text> </level> <level label="iv"> <text>the date of origin of the debt;</text> </level> <level label="v"> <text>the date of maturity of the debt;</text> </level> <level label="vi"> <text>the total amount of the debt;</text> </level> <level label="vii"> <text>the rate of interest; and</text> </level> <level label="viii"> <text>the total amount of interest to be paid.</text> </level> </level> <level label="2"> <text>If the long-term debt is in the form of bonds, debentures, or other widely held debt, the public service company shall list the name and address of the trustee, if available, in place of the name and address of the creditor.</text> </level> </level> <level label="b"> <text>In its annual report, a public service company shall:</text> <level label="1"> <text>except for the accounts payable of the public service company, describe each short–term debt, including:</text> <level label="i"> <text>the name and address of the creditor;</text> </level> <level label="ii"> <text>the character of the debt;</text> </level> <level label="iii"> <text>the period of the debt;</text> </level> <level label="iv"> <text>the rate of interest;</text> </level> <level label="v"> <text>the total amount of the debt;</text> </level> <level label="vi"> <text>the nature of any security; and</text> </level> <level label="vii"> <text>the date the debt was paid or shall be paid;</text> </level> </level> <level label="2"> <text>describe, if involving aggregate payments exceeding $1,000,000, each financing lease, equipment trust, conditional sales contract, or major liability related to the capital assets of the public service company; and</text> </level> <level label="3"> <text>provide a copy of any restrictive covenant attached to the debt described in item (1) or (2) of this subsection.</text> </level> </level> <level label="c"> <text>In its annual report, a public service company shall, if available:</text> <level label="1"> <text>list the name and address of each holder of more than 5% of each issue reported under this section; and</text> </level> <level label="2"> <text>identify the holder as a bank, broker, holding company, individual, or other person.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-301" title_number="6" title_name="Business Structure" subtitle_number="3" subtitle_name="Acquisition of Water Companies and Sewage Disposal Companies"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Acquiring entity” means:</text> <level label="1"> <text>a water company or a sewage company that is acquiring a selling utility as the result of a voluntary arm’s length transaction between the buyer and seller; or</text> </level> <level label="2"> <text>another person that:</text> <level label="i"> <text>is acquiring a selling utility as the result of a voluntary arm’s length transaction between the buyer and seller; and</text> </level> <level label="ii"> <text>has applied to the Commission, directly or through an affiliate, for authority to operate as a public service company in the State.</text> </level> </level> </level> <level label="c"> <text>“Affiliate” has the meaning stated in § 7–501 of this article.</text> </level> <level label="d"> <text>“Construction allowance” means an accounting practice that recognizes the capital costs, including debt and equity funds that are used to finance the construction costs of an improvement to a selling utility’s assets by an acquiring entity.</text> </level> <level label="e"> <text>“Fair market value” means the average of the two utility valuation expert appraisals conducted under § 6–304 of this subtitle.</text> </level> <level label="f"> <text>“Selling utility” means a water company or a sewage disposal company or any other water service or sewage disposal service provider in the State, including any State, county, or municipal water service provider or sewage disposal service provider that is being purchased by an acquiring entity as the result of a voluntary arm’s length transaction between the buyer and seller.</text> </level> <level label="g"> <text>“Utility valuation expert” or “expert” means a person hired by an acquiring public utility and selling utility for the purpose of conducting an economic valuation of the selling utility to determine its fair market value.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-302" title_number="6" title_name="Business Structure" subtitle_number="3" subtitle_name="Acquisition of Water Companies and Sewage Disposal Companies"> <text>This subtitle applies to the sale and acquisition, including all tangible assets, of public and private water service providers and sewage disposal service providers with fewer than 400,000 customers.</text> </section> <section article="gpu" article_name="Public Utilities" number="6-303" title_number="6" title_name="Business Structure" subtitle_number="3" subtitle_name="Acquisition of Water Companies and Sewage Disposal Companies"> <level label="a"> <text>Without prior authorization of the Commission, a person may not acquire a controlling interest in any State, county, municipal, or similar not–for–profit water service or sewage disposal service provider, for the purpose of converting the provider into a water company or sewage disposal company.</text> </level> <level label="b"> <text>The Commission may authorize an acquisition under subsection (a) of this section if the Commission finds that the acquisition is consistent with the public convenience and necessity.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-304" title_number="6" title_name="Business Structure" subtitle_number="3" subtitle_name="Acquisition of Water Companies and Sewage Disposal Companies"> <level label="a"> <text>On agreement by both the acquiring entity and the selling utility, the fair market value of the selling utility shall be determined in accordance with this section.</text> </level> <level label="b"> <text>The acquiring entity and the selling utility shall each be responsible for hiring a utility valuation expert to conduct an appraisal of the selling utility to determine the fair market value of the selling utility.</text> </level> <level label="c"> <text>Each utility valuation appraisal shall be completed in accordance with the Uniform Standards of Professional Appraisal Practice.</text> </level> <level label="d"> <level label="1"> <text>The acquiring entity and the selling utility shall engage the services of the same licensed engineer to conduct an assessment of the tangible assets of the selling utility.</text> </level> <level label="2"> <text>The assessment shall be incorporated into the appraisals under subsection (c) of this section.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-305" title_number="6" title_name="Business Structure" subtitle_number="3" subtitle_name="Acquisition of Water Companies and Sewage Disposal Companies"> <text>A utility valuation expert may not:</text> <level label="1"> <text>derive any material financial benefit from the sale of the selling utility other than fees for services rendered; or</text> </level> <level label="2"> <text>be an immediate family member of a director, an officer, or an employee of either the acquiring entity or the selling utility within 12 months before the date of hiring to perform an appraisal under this subtitle.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-306" title_number="6" title_name="Business Structure" subtitle_number="3" subtitle_name="Acquisition of Water Companies and Sewage Disposal Companies"> <level label="a"> <level label="1"> <text>Reasonable transaction and closing costs incurred by the acquiring entity shall be included in the rate making rate base of the acquiring entity.</text> </level> <level label="2"> <text>Fees paid to utility valuation experts may be included in the transaction and closing costs associated with acquisition by the acquiring entity.</text> </level> <level label="3"> <text>Unless the Commission finds just cause to authorize additional fees, fees eligible for inclusion may not exceed 5% of the fair market value of the selling utility or $50,000 if the actual fees paid exceed 5% of the fair market value.</text> </level> </level> <level label="b"> <text>As of the closing date of the acquisition, the rate making rate base of the selling utility, including additions under subsection (a) of this section, shall be the lesser of:</text> <level label="1"> <text>the purchase price negotiated by the acquiring entity and selling utility; or</text> </level> <level label="2"> <text>the fair market value of the selling utility.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-307" title_number="6" title_name="Business Structure" subtitle_number="3" subtitle_name="Acquisition of Water Companies and Sewage Disposal Companies"> <level label="a"> <text>If an acquiring entity and the selling utility agree to use the process outlined in § 6–304 of this subtitle, the acquiring entity shall include in its application for Commission approval of the acquisition:</text> <level label="1"> <text>copies of the two appraisals performed by the utility valuation experts under § 6–304 of this subtitle;</text> </level> <level label="2"> <text>the purchase price of the selling utility as agreed to by the acquiring entity and the selling utility;</text> </level> <level label="3"> <text>the rate making rate base of the selling utility determined in accordance with this subtitle;</text> </level> <level label="4"> <text>the transaction and closing costs incurred by the acquiring entity that will be included in its rate base; and</text> </level> <level label="5"> <text>a tariff containing a schedule of rates, service charges, and any additional fees to be incurred by the customers of the selling utility at or immediately after the closing date of acquisition.</text> </level> </level> <level label="b"> <level label="1"> <text>Subject to paragraph (2) of this subsection, the Commission shall issue a final order on an application submitted under this subtitle within 180 days after the filing date of a complete application under subsection (a) of this section.</text> </level> <level label="2"> <text>The Commission may extend a proceeding under this subtitle for an additional 30 days if the Commission finds that the proceedings cannot be completed within the initial suspension period.</text> </level> <level label="3"> <text>After the expiration of 180 days under paragraph (1) of this subsection and any extension under paragraph (2) of this subsection, if the Commission has not entered a final order, the application shall be deemed approved.</text> </level> </level> <level label="c"> <text>If the Commission issues an order approving the application for acquisition, the order shall include:</text> <level label="1"> <text>the rate making rate base of the selling utility, as determined under this subtitle; and</text> </level> <level label="2"> <text>any conditions of approval that the Commission requires.</text> </level> </level> <level label="d"> <text>The tariff submitted under subsection (a)(5) of this section shall remain in effect until new rates are approved for the acquiring entity in a base rate case proceeding.</text> </level> <level label="e"> <text>An appraisal conducted under this subtitle is presumed to be valid unless substantial evidence demonstrates a failure to adhere to the requirements of § 6–304 or § 6–305 of this subtitle.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="6-308" title_number="6" title_name="Business Structure" subtitle_number="3" subtitle_name="Acquisition of Water Companies and Sewage Disposal Companies"> <level label="a"> <text>The cost of an improvement that an acquiring entity places in service after the acquisition shall accrue a construction allowance after the date the cost was incurred until the earlier of:</text> <level label="1"> <text>3 years after the improvement is placed in service; or</text> </level> <level label="2"> <text>the date the improvement is included in the acquiring entity’s next base rate case.</text> </level> </level> <level label="b"> <text>Depreciation on an acquiring entity’s improvements after the acquisition shall be deferred for book and rate making purposes.</text> </level> </section>