KRS 279.120: Persons with whom corporation may do business -- Conditions for

acquisition of new base load generating facility.

(1) Except as provided in subsections (2), (3), and (4) of this section, corporations

formed under this chapter shall supply electric ene rgy, furnish services, and sell

personal property, except that transferred in part payment for other personal

property, to their members only.

(2) Except as provided in subsections (3), (4), and (5) of this section and in KRS

279.125, any corporation forme d under this chapter may supply electric energy,

furnish services and sell property, to the extent of not more than forty -nine percent

(49%) of its total business, to nonmembers of the corporation, including any federal

agency, any state, and any county, city or political subdivision.

(3) A corporation formed under this chapter may sell and lease back any part or all of

its property free of the restrictions contained in subsections (1) and (2) of this

section, or any other section of the Kentucky Revised St atutes except that such sale

shall be subject to KRS 279.140.

(4) A corporation formed under this chapter on or before December 31, 2005, may

supply electric energy to a nonmember of the corporation free of the restrictions

contained in subsections (1) and (2) of this section only if:

(a) The hourly amount of electric energy supplied is produced by a generator

owned or leased by the corporation; and

(b) The hourly amount of electric energy supplied was previously used by a

member of the corporation, which i s also a corporation formed under this

chapter on or before December 31, 2005, to provide electric service to a retail

customer with an annual hourly peak electric energy requirement of more than

two hundred (200) megawatts.

(5) A sale of electric energy a uthorized by subsection (4) of this section shall be

considered member business for purposes of subsection (2) of this section.

(6) A corporation formed under this chapter that is supplying electric energy to a

nonmember of the corporation under subsection s (4) and (5) of this section may

acquire a new base load generating facility for its system by purchase, lease, or

construction only if, at the time the corporation enters into a binding commitment

for the acquisition of the new base load generating facil ity, the number of

megawatts the corporation is supplying to nonmembers of the corporation is forty -

nine percent (49%) or less of the total number of megawatts that the corporation is

supplying to all persons.