District Electric Corporations.

Ala. Code tit. 11, tit. 2, ch. 50, art. 16

in effect

Ala. Code § 11-50-520 Definitions.

11-50-520. Definitions. The following words and phrases and others importing the same meaning, where used in this chapter, shall be given the following respective interpretations and meanings: (1) THE CORPORATION. Any corporation organized under this chapter. (2) APPLICANTS. Those persons who organize the corporation. (3) POWER DISTRICT. The territory proposed to be served by the corporation as specified in its certificate of incorporation as originally filed or any amendment thereto made pursuant to the provisions of this chapter. (4) MUNICIPALITY or MUNICIPALITIES. Any city or town incorporated under the laws of Alabama. (5) COUNTY or COUNTIES. Any county organized under the laws of Alabama. (6) GOVERNING BODY. Whenever used in relation to any municipality, the city or town council, city commission or the body or board, by whatsoever name known, having charge of the governing of a municipality, and shall be held to include the mayor or other chief executive officer of the municipality in any case where the concurrence or approval of such officer is required by the law governing such municipality for the adoption of any municipal resolution provided for in this chapter. (7) CERTIFICATE OF INCORPORATION or CERTIFICATE. The certificate of incorporation of the corporation. (8) BOARD. The board of directors of the corporation, as duly constituted and when acting as a board. (9) DIRECTOR or DIRECTORS. The members of the board. (10) UTILITY or UTILITIES. Any plant, works, system, facilities, or properties, together with all parts thereof and appurtenances thereto, including contract and franchise rights, used and useful primarily for the production, transmission, or distribution of electric energy. (11) BONDS. Any bonds, notes, warrants, or other evidences of obligations issued by the corporation. (Acts 1943, No. 158, p. 142.)

Ala. Code § 11-50-521 Authority to Incorporate.

11-50-521. Authority to Incorporate. Any number of natural persons, not less than three and each of whom shall meet the requirements provided in this chapter, may organize a corporation not for pecuniary profit by proceeding according to the provisions of this chapter. Such corporation shall be organized for the benefit of the municipalities located within the confines of the power district and for the purpose of promoting and encouraging the fullest possible use of electric energy within the power district by making such electric energy available to the public within the power district at the lowest cost consistent with sound economy and prudent management of the business of the corporation. Each such person shall be an elector and property owner in one of the municipalities located within the territory proposed to be included in the power district upon organization of the corporation, and no two shall be from the same municipality. All or parts of not less than three counties shall be included in the power district upon organization of the corporation, and such counties must be so located that each of said counties shall be connected with one or more of the others thereof and so that the area within the power district shall constitute one body. (Acts 1943, No. 158, p. 142, §1.)

Ala. Code § 11-50-522 Procedure for Incorporation.

11-50-522. Procedure for Incorporation. The corporation may be organized in the following manner: The applicants shall file an application with the governing body of each municipality located within the territory described in the application (which shall be the same territory as shall be described in the certificate of incorporation) seeking permission from each such municipality to organize the corporation. There shall be described generally in such application the boundaries of the territory proposed to be included in the power district upon organization of the corporation, but there shall not be included therein any territory served by an existing utility unless consent to the inclusion in the power district of the territory served by such existing utility shall be given by the owner of each such existing utility in such territory. If the governing body of each municipality in such territory shall, by appropriate resolution duly adopted, determine it to be advantageous that the corporation be formed and shall find that the applicants and the application meet the requirements hereinabove provided and shall further grant permission to the applicants to proceed with the organization of the corporation, then the applicants may thereafter execute a certificate of incorporation which shall set forth the following: The names of the applicants together with recitals stating the municipalities of their respective residences and that they are electors and property owners in the municipalities of their respective residences; a recital that the applicants desire to cause a corporation to be formed pursuant to the provisions of this chapter; a description of the power district and a recital that there is not any existing utility within the territory embraced therein or, if there is an existing utility in the power district, the name of each existing utility therein together with a recital that the original consent of the owner of each such utility to the inclusion in the power district of the territory served by such existing utility is attached as an exhibit to the certificate; the name of each municipality located within said territory; a recital that the governing body of each municipality located within the territory proposed to be served by the corporation has by appropriate resolution duly granted permission to organize the corporation; a recital that copies of such resolutions, duly certified by the clerks of the respective municipalities under their respective seals are attached as exhibits to the certificates; the name of the corporation; the location of the principal office of the corporation; and the period, if any, for the duration of the corporation. The certificate shall be sworn to by each applicant before an officer authorized by the laws of Alabama to take acknowledgments to deeds. The certificate shall be presented to the Secretary of State of Alabama who shall thereupon examine the same and, if he finds that the name proposed for the corporation is not identical with that of a person or other corporation in this state or so nearly similar thereto as to lead to confusion and uncertainty, and if he finds that the matters required in this section to be set out in the certificate are contained therein and the said exhibits are attached thereto, he shall receive and file the application and record it in an appropriate book of record in his office. The corporation shall thereupon be organized under the name stated in the certificate and shall constitute a public nonprofit corporation for the benefit of the municipalities located within the confines of such power district and for the purposes and with the powers and duties stated in this chapter. (Acts 1943, No. 158, p. 142, §2.)

Ala. Code § 11-50-523 Amendment of Certificate of Incorporation.

11-50-523. Amendment of Certificate of Incorporation. Whenever the board shall deem it desirable to amend the certificate, it may do so in the following manner: The board shall adopt a resolution declaring the proposed amendment to be desirable and specifying the matters of such amendment and providing for the filing with the Secretary of State of such amendment. In the event the proposed amendment provides for the addition of territory to be served by the corporation, the resolution shall describe generally the boundaries of such additional territory, which shall not include any territory served by an existing utility unless consent to the inclusion in the proposed amendment of the territory served by the existing utility shall be given by the owner of each utility in such additional territory. Following the adoption of such resolution, the officers of the corporation designated by the board for such purpose shall than execute a report of such amendment which shall set forth the following: The name of the corporation; a recital as to the original organization of the corporation and any prior amendments thereto; a recital as to the desire to amend the certificate and specifying the matters of such amendments; a recital that authorization for the filing of such report had been granted by a resolution of the board duly adopted and that a copy of such resolution, certified by the secretary of the corporation under its seal, is attached as an exhibit to such report; and, in the event the amendment proposes to add additional territory to the power district as then constituted, the boundaries of such additional territory shall be generally described with either a recital that there is no existing utility in such additional territory or a recital giving the name of the owner of each existing utility in such additional territory and stating that the original evidence of the consent of the owner of each such utility to the inclusion of such additional territory in the power district is attached as an exhibit to such report. The report of the amendment shall be sworn to by the persons executing the same in behalf of the corporation before an officer authorized by the laws of Alabama to take acknowledgments to deeds. Such report shall be presented to the Secretary of State of Alabama who shall thereupon examine the same and, if he finds that the matters required in this section to be set out in such report are contained therein and any exhibit therein referred to is attached thereto, he shall thereupon file such report and shall record it with the certificate, whereupon the certificate shall thereupon and thereby be amended as provided in such report. (Acts 1943, No. 158, p. 142, §3.)

Ala. Code § 11-50-524 Corporate Powers.

11-50-524. Corporate Powers. (a) The corporation shall be entitled to all the exemptions provided by the general laws of Alabama and of the United States for municipal corporations. To carry out its purposes, the corporation shall have the following specific powers, but no enumeration of powers granted in this chapter shall be construed to impair or limit any general grant of power contained in this chapter nor to limit any such grant to a power or powers of the same class or classes as those enumerated: (1) To have succession by its corporate name perpetually unless dissolved and unless a shorter period of time shall be specified in the certificate; (2) To sue and be sued and to prosecute and defend; (3) To have and to use a corporate seal and to alter the same at will; (4) To acquire by purchase or lease and to operate, maintain, extend, and improve any utility within the power district, including any real and personal properties and any contract and franchise rights in connection therewith, provided that it shall not do any such acts in any territory served by an existing utility without the consent of such existing utility; (5) To acquire by purchase the entire stock of any private corporation owning and operating a utility within the power district, but only as a step in the acquisition of title to such utility, and any such private corporation shall be dissolved immediately upon acquisition of such stock by the corporation, and all properties and assets of such utility shall thereupon be conveyed to the corporation; (6) To generate, purchase, sell, and deliver, at wholesale or retail, to any person, firm, or corporation, whether public or private, and to any government or governmental agency, within the power district, electric light and power service and any other service, commodity, or facility which may be produced or furnished in connection therewith; (7) To exercise the power of eminent domain for the purpose of acquiring additional property so as to extend within the limits of the power district the lines of any utility owned by it, but not for the purpose of acquiring an existing utility or any part of an existing utility; (8) To use and occupy any public highway, street, way, or place located within the power district which may be reasonably necessary to be used or occupied for the maintenance and operation of any utility or part thereof owned by the corporation, all without any franchise, consent, or permit except such as may be required by the Constitution of Alabama; (9) To make and enter into contracts without restriction except as may be limited in this chapter or by the Constitution and laws of Alabama; (10) To incur obligations and, as evidence of any such obligations, to issue its bonds; (11) To refund any bonds issued by it; (12) As security for the payment of the principal of and interest on any bonds issued by it, to pledge all or any part of its revenue and to execute mortgages and deeds of trust covering all or any part of its properties and its contract and franchise rights, including any and all after-acquired properties and rights, with such covenants and conditions contained therein as the board may deem advisable; (13) To sell, lease, or exchange any part of its properties and the rights applicable thereto which shall not be essential to the continued operation of any utility operated by it; provided, that the consent thereto shall have been granted by the trustee under any mortgage or deed of trust covering the properties so sold, leased, or exchanged if such mortgage or deed of trust requires such consent; (14) To sell, lease or exchange its properties and rights in part, provided that the consent thereto shall have been granted by the trustee under any mortgage or deed of trust covering the properties so sold, leased or exchanged if such mortgage or deed of trust requires such consent; (15) To sell, lease, or exchange any of its properties and rights in part, provided that the consent thereto shall have been granted by the trustee under any mortgage or deed of trust covering the properties so sold, leased, or exchanged if such mortgage or deed of trust requires such consent, and consent thereto shall also have been granted by the governing body of each municipality within the limits of which or within the police jurisdiction of which any of the properties proposed to be sold, leased, or exchanged shall be located; (16) To fix and collect rates and charges for any services rendered by or from any utility owned or operated by it as provided in this chapter; (17) To employ officers, employees, and attorneys and to fix their compensation and duties, who shall hold office for such terms and on such conditions as the board may prescribe, but no officer or employee of the corporation shall be a director of the corporation or an elective officer of any municipality located within the power district; and (18) To exercise all additional powers necessary or convenient to perform its functions and carry out the purposes of the corporation which are capable of being delegated by the Legislature. (b) The corporation shall not be subject, either in its organization or in the exercise of any of its powers, to any jurisdiction by the Alabama Public Service Commission. (Acts 1943, No. 158, p. 142, §4.)

Ala. Code § 11-50-525 Board of Directors.

11-50-525. Board of Directors. The government of the corporation shall be vested in the board, which may by resolution exercise or provide for the exercise of all the powers of the corporation. The board shall be composed of one director from each municipality located in the power district having a population of 1,000 or more inhabitants according to the last or any future federal census, whose election shall be certified to the corporation by the clerk of such municipality as hereinafter provided. The governing body of each such municipality having such population may elect a director from such municipality. The election of each such director shall be certified to the corporation by the clerk of the municipality whose governing body shall make such election, as and when any such election shall be so made. The directors so certified shall constitute the board, and a majority thereof at any time existing shall constitute a quorum of the board for the transaction of business. The directors shall elect a chairman from their number. The board may adopt all bylaws it may deem advisable respecting its organization and meetings and the management of the affairs of the corporation. Each director shall hold office for one year from the date of his election and thereafter until his successor shall be elected, and he may succeed himself, but he may be removed at any time without cause by the governing body by whom he was elected. Should any director die while serving as such, or should his term of office expire or should he resign or be removed therefrom, he shall be succeeded for his unexpired term by a successor elected by the governing body of the same municipality. Each director must be a resident of and an elector and property owner in the municipality by whose governing body he was elected, but no director shall be an elective officer of such municipality. Each director of the corporation shall receive compensation from the corporation for his services as director at the rate of $10.00 for each day he shall attend meetings of the board or for each day he shall be engaged upon business of the corporation, not to exceed in the aggregate the sum of $500.00 in any one year, and he shall also be entitled to be reimbursed for actual and necessary expenses incurred by him in the performance of his duties. All proceedings had and done by the board shall be transcribed by the secretary of the corporation and retained in a substantially bound book. Copies of such proceedings, when certified by the secretary of the corporation under the seal of the corporation, shall be received in all courts as prima facie evidence of the matters and things therein certified. (Acts 1943, No. 158, p. 142, §5.)

Ala. Code § 11-50-526 Bonds - Sale or Issuance Generally.

11-50-526. Bonds - Sale or Issuance Generally. The corporation may issue bonds at any time and from time to time as the board may determine to be most advantageous for the purpose of paying the purchase price of and all expenses incurred in connection with the acquisition of any properties or other assets of the corporation and for the purpose of furnishing adequate working capital for the corporation. Such bonds shall be revenue bonds payable solely out of the revenues derived from the operation of all or any part of any utility owned by the corporation as may be provided at the time of the authorization of such bonds. All bonds shall be signed by such officer or officers as the board may direct, but the facsimile of any signature may be impressed on any interest coupons in lieu of the original signature. The bonds shall be in such form, whether registered or bearer, shall be in such denominations, shall bear such dates and have such maturities not exceeding 40 years from their respective dates, may be in one or more series, shall contain such provisions not inconsistent herewith, shall bear such rate or rates of interest payable and evidenced in such manner, shall be payable at such place or places and shall be subject to such terms of redemption with or without premium, all as may be provided by resolution of the board. The bonds shall be sold at public sale in such manner and at such price or prices and at such time or times and after such notice or notices as may be determined by the board to be most advantageous, provided that the interest cost to maturity of the money received for any issue of bonds so sold shall not exceed six percent per annum compounded semiannually; provided further, that the provisions of this sentence shall not apply to bonds payable within less than one year and limited to an aggregate principal amount not exceeding $5,000.00, which may be sold at private sale at such times and in such manner as may be determined by the board to be most advantageous. Any bonds issued and any obligations incurred by the corporation may be refunded either by sale of refunding bonds or by exchange of such refunding bonds for a like principal amount of the bonds and obligations proposed to be refunded thereby. Any such refunding may be effected either before or after the maturity of the bonds or obligations proposed to be refunded thereby. Pending the preparation or execution of definitive bonds, interim receipts or temporary bonds may be delivered to the purchaser thereof. (Acts 1943, No. 158, p. 142, §6.)

Ala. Code § 11-50-527 Bonds - Consent of Department of Finance.

11-50-527. Bonds - Consent of Department of Finance. No bonds of the corporation shall be issued until consent of such issuance shall have been given by the Department of Finance of the State of Alabama. Such consent shall be granted only after a public hearing and after a petition requesting such consent has been duly filed by the corporation with the director of said department more than five days prior to such public hearing. Such petition shall specify the plan or program of the corporation and the use to which it proposes to put the proceeds from such bonds, if they are to be sold, and shall specify the plan under which such bonds are to be issued if they are to be issued in exchange for outstanding bonds. Such petition shall furnish such other information as may be necessary fully to advise said department as to the purpose and description of and security for the bonds and as may be required by the rules of said department. Said department shall grant such consent only after it finds that the issuance of the bonds so proposed would serve some public need and would be in the public interest. It shall be unlawful for the corporation to use the proceeds of sale of any of the bonds contrary to the plans and purposes presented to said department in obtaining such consent. The corporation applying for such consent is authorized to pay such fees as shall be lawfully assessed against it by said department in connection with the granting of such petition. (Acts 1943, No. 158, p. 142, §7.)

Ala. Code § 11-50-528 Bonds - Nature of Obligations.

11-50-528. Bonds - Nature of Obligations. All bonds issued by the corporation and all interest coupons appertaining thereto shall possess all the qualities of negotiable instruments. All bonds issued by the corporation shall be issued in anticipation of its revenues and shall be payable solely out of such of its revenues as may be designated by the board and shall not create a debt of the corporation. None of the municipalities located in the power district shall at any time or in any manner be liable for any obligations or bonds of the corporation, nor shall the same be construed to be an indebtedness of or against any such municipality. (Acts 1943, No. 158, p. 142, §8.)

Ala. Code § 11-50-529 Bonds - Rights and Remedies of Bondholders.

11-50-529. Bonds - Rights and Remedies of Bondholders. In addition to all other remedies available under this chapter or by law, any holder of any bonds issued by the corporation, including the trustee under any mortgage or deed of trust executed as security therefor, shall have the right, subject to any contractual limitations and to the prior or superior rights of others: (1) By mandamus or other suit, action or proceeding to enforce his rights against the corporation and the board and its officers, including the right to require the fixing and collection of uniform schedules of rates and charges adequate to carry out any agreement made by the corporation as to, or pledge of, the revenues of the corporation, and to require the corporation and the board and its officers to carry out any other agreements with the holders of such bonds and the trustee; (2) By civil action to enjoin any acts or things which may be unlawful or in violation of the rights of the holders of the bonds or of such trustee; (3) By civil action to obtain the appointment of a receiver of the corporation and of any utility owned or operated by it or any part or parts thereof, which receiver shall have all the powers of a receiver, including the right to enter upon and take possession of all or any part of the property of the corporation, including all franchise and other rights in connection with any thereof, and to operate and maintain the same and, under the jurisdiction of such court, to fix and collect revenues arising therefrom in such manner as the corporation might itself do. All moneys coming into the hands of the receiver shall be deposited in a separate account or accounts and applied in accordance with the orders of such court. No such mortgage shall be subject to foreclosure to the extent that the physical properties covered thereby shall be sold thereunder. (Acts 1943, No. 158, p. 142, §9.)

Ala. Code § 11-50-530 Rates and Charges for Services Rendered.

11-50-530. Rates and Charges for Services Rendered. The rates and charges for the services rendered by or from any utility owned or operated by the corporation shall at all times be reasonable for the services so rendered and as low as consistent with good service and prudent management, but shall be sufficient to pay all expenses necessary for the operation of its properties and the maintenance thereof in good operating condition, the payment of the principal of and interest on all bonds issued by it and the creation and maintenance of such reserves for improvements, new construction, depreciation, and contingencies as the board may from time to time prescribe in the exercise of sound judgment and prudent management. In the event the revenues of the corporation shall be in excess of those necessary for said purposes, the corporation shall reduce its said rates and charges as the board may prescribe. All schedules of such rates and charges shall be uniform throughout the power district. (Acts 1943, No. 158, p. 142, §10.)

Ala. Code § 11-50-531 Exemption from Taxation.

11-50-531. Exemption from Taxation. All bonds and the income therefrom issued by the corporation and all mortgages and deeds of trust executed as security therefor and all properties of the corporation of every kind and character shall be exempt from all taxation in the State of Alabama. Any such mortgage or deed of trust shall be admitted to record in the office of the judge of probate of any county in this state without the payment of any tax upon the debt secured thereby or any other fee or charge except the costs of recording the instrument at the rate fixed by law. (Acts 1943, No. 158, p. 142, §11.)

Ala. Code § 11-50-532 Dissolution.

11-50-532. Dissolution. When all obligations incurred by the corporation and all bonds issued by it shall have been paid in full or provision for payment thereof shall have been made by appropriate, segregation and deposit of funds sufficient for such purposes, then and in such event the corporation may be dissolved by resolution adopted by vote of a majority of the board, which resolution shall set out the plan of dissolution and shall designate three directors who shall act as trustees in dissolution of the corporation. A copy of such resolution, duly certified by the secretary of the corporation under its seal, shall be filed with the Secretary of State, and, if it shows compliance with the foregoing requirements, it shall be recorded by the Secretary of State with the certificate of incorporation. Upon such filing and recording the corporation shall thereupon stand dissolved, and the trustees in dissolution named in such resolution shall thereupon proceed to wind up the business and affairs of the corporation, including the carrying out of the plan of dissolution as specified in such resolution and the conveyance or distribution to the municipalities specified in such plan of the properties and assets of the corporation. Such plan shall provide that the local distribution system (not including transmission lines or generating facilities or like facilities) owned by the corporation and located within the corporate limits of a municipality and within the police jurisdiction of any such municipality shall be conveyed to such municipality and shall provide for sale of the assets of the corporation then remaining and the distribution of the proceeds of such sale among the municipalities in the power district in direct proportion to the net operating income of the corporation derived from the unit of any utility located in such municipalities. (Acts 1943, No. 158, p. 142, §12.)

Ala. Code § 11-50-533 Municipal Aid.

11-50-533. Municipal Aid. Any municipality incorporated under the laws of Alabama which is situated within the territorial limits of any power district proposed to be served by any public nonprofit corporation now or hereafter organized under the laws of Alabama for the purpose of acquiring and operating facilities for the production, transmission, and distribution of electricity and related service within a power district composed of all or parts of any three or more connecting counties shall have the power to advance funds to such corporation for the purpose of paying the preliminary organization and administration expenses of such corporation. Any funds so advanced shall be repayable within such time, not exceeding one year from the date of such advancement, and on such terms as may be provided by the governing body of such municipality and agreed to by such corporation. (Acts 1943, No. 159, p. 152.)

Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026