KRS 278.290: Valuation of utility property in connection with rates, service or issuance

of securities -- Unit rate base.

(1) Subject to the provisions of subsection (2) of this section, the commission may

ascertain and fix the value of the whole or any part of th e property of any utility in

so far as the value is material to the exercise of the jurisdiction of the commission,

and may make revaluations from time to time and ascertain the value of all new

construction, extensions and additions to the property of the utility. In fixing the

value of any property under this subsection, the commission shall give due

consideration to the history and development of the utility and its property, original

cost, cost of reproduction as a going concern, capital structure, and other elements

of value recognized by the law of the land for rate-making purposes.

(2) The commission shall not value or revalue the property of any utility unless the

valuation or revaluation is necessary or advisable in order to determine the legality

or reasonableness of any rate or service or of the issuance of securities, and then

only after an investigation affecting the rate, service or securities has been instituted

by the commission upon complaint or application or upon its own motion, and a

hearing has been held on reasonable notice.

(3) In any rate investigation where the utility serves two (2) or more municipalities, the

commission may, in computing the rate of return on the property used and useful,

take as the base for the computation the valuation of the system as a whole, but may

make a differential in the case of an individual municipality in proportion to the

increased cost of service, if the utility can show that such a differential should be

allowed.