§24A05. Additional contracting authority.

(a) Additional contracting authority.--In addition to the authority provided under section 24A02 (relating to general powers), a borough that, on October 27, 2010, owned or operated electric generation or distribution facilities and a borough that is a member of a nonprofit membership corporation may contract with the nonprofit membership corporation for the following:

(1) The development of electric power and associated energy, including the conduct of investigations or studies necessary to determine the feasibility and cost of additional sources and supplies of electric power and associated energy.

(2) The purchase, sale, exchange, interchange, wheeling, pooling or transmission of electric power and associated energy or the right to the capacity from sources and projects in this Commonwealth or another state for a period not to exceed 50 years.

(b) Contract requirements.--A contract under subsection (a)(2) shall include the purpose of the contract, the duration of the contract and available procedures to terminate the contract subsequent to the repayment of all indebtedness secured under the contract.

(c) Minimum quantity of electric power and energy.--If a borough is a member of a nonprofit membership corporation, a contract under subsection (a)(2) may, if specifically set forth in the contract, obligate the borough to:

(1) Take and pay for a minimum quantity of electric power and associated energy if the power and energy are available for delivery.

(2) In connection with a project owned by the nonprofit membership corporation or in which the nonprofit membership corporation obtains an undivided ownership interest, take or pay for a minimum amount of electric power and energy.

(3) Pay for electric power and energy only if utilized by the borough.

(d) Applicability of minimum requirements.--

(1) The authority under subsection (c)(1) shall apply whether or not the borough accepts delivery of the power and energy.

(2) The authority under subsection (c)(2) shall apply notwithstanding the suspension, interruption, interference or reduction or curtailment of the output of the project or the electric power and energy contracted for and whether or not:

(i) the electric power and energy is available for delivery to the borough; or

(ii) the borough accepts delivery of the electric power and energy.

(e) Take-or-pay or take-and-pay arrangements.--No borough may be obligated under a take-or-pay or take-and-pay arrangement entered into with a nonprofit membership corporation in which the borough maintains membership unless that obligation is expressly authorized by an act of the council.

(f) Restrictions.--A nonprofit membership corporation shall not:

(1) Condition membership in the nonprofit membership corporation on the inclusion of any take-or-pay or take-and-pay obligations in a contract under subsection (a)(2).

(2) Except as set forth in subsection (g), require take-or-pay or take-and-pay obligations in a contract with a borough unless the contract meets the criteria of subsection (c)(1) or (2).

(g) Future contracts.--A borough that is a member of a nonprofit membership corporation may enter into future power supply contracts, contract renewals or contract extensions with the nonprofit membership corporation under subsection (c)(3):

(1) with no take-or-pay or take-and-pay obligations as permitted by subsection (c)(1) and (2); and

(2) without prejudice or discrimination as compared to any other borough which chooses to enter into contracts permitted by subsection (c)(1) and (2) with the nonprofit membership corporation.

(h) Future power supply contract terms.--In order to carry out subsection (g), a nonprofit membership corporation which provides or offers electric power and associated energy to a member borough in this Commonwealth under subsection (a)(2) shall offer, to all of its member boroughs in this Commonwealth, future power supply contract terms, contract renewals or contract extensions under subsection (c)(3) on a comparable and nondiscriminatory basis and with similar terms and conditions to future power supply contract terms, contract renewals or contract extensions that would be appropriate under subsection (c)(3) which the nonprofit membership corporation contemporaneously offers to its members in other states.

(i) Payments.--All obligations under a contract under subsection (a)(2) shall be paid from revenues derived from the operation of the borough's electric system, and payments shall be an operating expense of the borough's electric system.

(j) Obligations of other entities.--If explicitly set forth in a contract under subsection (a)(2), a borough may agree to assume, prorate or otherwise become liable for the obligations of another borough of this Commonwealth or of a political subdivision of another state that is a member of the nonprofit membership corporation if the borough or other political subdivision defaults in the payment of its obligations for the purchase of the electric power and associated energy. The contract may include provisions to permit a borough to succeed to the rights and interests of the defaulting borough or political subdivision to purchase electric power and associated energy. A borough's liability for the obligations of a defaulting borough of this Commonwealth or a political subdivision of another state shall not exceed 25% of a borough's initial nominal entitlement to electric power and associated energy under the contract.

(k) Pledge of borough property prohibited.--None of the obligations under the contract may constitute a legal or equitable pledge, charge, lien or encumbrance on any property of the borough or on any of its income, receipts or revenues, except revenues of its electric system. The full faith and credit and the taxing power of the borough shall not be pledged for the payment of an obligation under the contract.

(l) Construction.--This section is intended to add to the powers and rights of a borough, and nothing in this section may be construed to limit either the general or specific powers or rights of a borough set forth in this title.

(m) Definition.--As used in this section, the term "nonprofit membership corporation" means an entity the membership of which:

(1) consists solely of Pennsylvania boroughs, such as a consortium, buying group or municipal power agency under section 24A04 (relating to municipal power agencies); or

(2) consists of Pennsylvania boroughs and political subdivisions of another state or states.