Full Text of SB0515 102nd General Assembly
SB0515enr 102ND GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Public Utilities Act is amended by changing | 5 | | Section 9-210.5 as follows: | 6 | | (220 ILCS 5/9-210.5) | 7 | | (Section scheduled to be repealed on June 1, 2028) | 8 | | Sec. 9-210.5. Valuation of water and sewer utilities. | 9 | | (a) In this Section: | 10 | | "Disinterested" means that the person directly | 11 | | involved (1) is not a director, officer, or an employee of | 12 | | the large public utility or the water or sewer utility or | 13 | | its direct affiliates or subsidiaries for at least 12 | 14 | | months before becoming engaged under this Section; (2) | 15 | | shall not derive a material financial benefit from the | 16 | | sale of the water or sewer utility other than fees for | 17 | | services rendered, and (3) shall not have a member of the | 18 | | person's immediate family, including a spouse, parents or | 19 | | spouse's parents, children or spouses of children, or | 20 | | siblings and their spouses or children, be a director, | 21 | | officer, or employee of either the large public utility or | 22 | | water or sewer utility or the water or sewer utility or its | 23 | | direct affiliates or subsidiaries for at least 12 months |
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| 1 | | before becoming engaged under this Section or receive a | 2 | | material financial benefit from the sale of the water or | 3 | | sewer utility other than fees for services rendered. | 4 | | "District" means a service area of a large public | 5 | | utility whose customers are subject to the same rate | 6 | | tariff. | 7 | | "Large public utility" means an investor-owned public | 8 | | utility that: | 9 | | (1) is subject to regulation by the Illinois | 10 | | Commerce Commission under this Act; | 11 | | (2) regularly provides water or sewer service to | 12 | | more than 15,000 30,000 customer connections; | 13 | | (3) provides safe and adequate service; and | 14 | | (4) is not a water or sewer utility as defined in | 15 | | this subsection (a). | 16 | | "Next rate case" means a large public utility's first | 17 | | general rate case after the date the large public utility | 18 | | acquires the water or sewer utility where the acquired | 19 | | water or sewer utility's cost of service is considered as | 20 | | part of determining the large public utility's resulting | 21 | | rates. | 22 | | "Prior rate case" means a large public utility's | 23 | | general rate case resulting in the rates in effect for the | 24 | | large public utility at the time it acquires the water or | 25 | | sewer utility. | 26 | | "Utility service source" means the water or sewer |
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| 1 | | utility or large public utility from which the customer | 2 | | receives its utility service type. | 3 | | "Utility service type" means water utility service or | 4 | | sewer utility service or water and sewer utility service. | 5 | | "Water or sewer utility" means any of the following: | 6 | | (1) a public utility that regularly provides water | 7 | | or sewer service to 6,000 or fewer customer | 8 | | connections; | 9 | | (2) a water district, including, but not limited | 10 | | to, a public water district, water service district, | 11 | | or surface water protection district, or a sewer | 12 | | district of any kind established as a special district | 13 | | under the laws of this State that regularly provides | 14 | | water or sewer service; | 15 | | (3) a waterworks system or sewerage system | 16 | | established under the Township Code that regularly | 17 | | provides water or sewer service; or | 18 | | (4) a water system or sewer system owned by a | 19 | | municipality that regularly provides water or sewer | 20 | | service; and | 21 | | (5) any other entity that is not a public utility | 22 | | that regularly provides water or sewer service. | 23 | | (b) Notwithstanding any other provision of this Act, a | 24 | | large public utility that acquires a water or sewer utility | 25 | | may request that the Commission use, and, if so requested, the | 26 | | Commission shall use, the procedures set forth under this |
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| 1 | | Section to establish the ratemaking rate base of that water or | 2 | | sewer utility at the time when it is acquired by the large | 3 | | public utility. | 4 | | (c) If a large public utility elects the procedures under | 5 | | this Section to establish the rate base of a water or sewer | 6 | | utility that it is acquiring, then 3 appraisals shall be | 7 | | performed. The average of these 3 appraisals shall represent | 8 | | the fair market value of the water or sewer utility that is | 9 | | being acquired. The appraisals shall be performed by 3 | 10 | | appraisers approved by the Commission's Executive Director or | 11 | | designee and engaged by either the water or sewer utility | 12 | | being acquired or by the large public utility. Each appraiser | 13 | | shall be engaged on reasonable terms approved by the | 14 | | Commission. Each appraiser shall be a disinterested person | 15 | | licensed as a State certified general real estate appraiser | 16 | | under the Real Estate Appraiser Licensing Act of 2002. | 17 | | Each appraiser shall: | 18 | | (1) be sworn to determine the fair market value of the | 19 | | water or sewer utility by establishing the amount for | 20 | | which the water or sewer utility would be sold in a | 21 | | voluntary transaction between a willing buyer and willing | 22 | | seller under no obligation to buy or sell; | 23 | | (2) determine fair market value in compliance with the | 24 | | Uniform Standards of Professional Appraisal Practice; | 25 | | (3) engage one disinterested engineer who is licensed | 26 | | in this State, and who may be the same engineer that is |
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| 1 | | engaged by the other appraisers, to prepare an assessment | 2 | | of the tangible assets of the water or sewer utility, | 3 | | which is to be incorporated into the appraisal under the | 4 | | cost approach; | 5 | | (4) request from the manager of the Accounting | 6 | | Department, if the water or sewer utility is a public | 7 | | utility that is regulated by the Commission, a list of | 8 | | investments made by the water or sewer utility that had | 9 | | been disallowed previously and that shall be excluded from | 10 | | the calculation of the large public utility's rate base in | 11 | | its next rate case; and | 12 | | (5) return their appraisal, in writing, to the water | 13 | | or sewer utility and large public utility in a reasonable | 14 | | and timely manner. | 15 | | If the appraiser cannot engage an engineer, as described | 16 | | in paragraph (3) of this subsection (c), within 30 days after | 17 | | the appraiser is engaged, then the Commission's Executive | 18 | | Director or designee shall recommend the engineer the | 19 | | appraiser should engage. The Commission's Executive Director | 20 | | or designee shall provide his or her recommendation within 30 | 21 | | days after he or she is officially notified of the appraiser's | 22 | | failure to engage an engineer and the appraiser shall promptly | 23 | | work to engage the recommended engineer. If the appraiser is | 24 | | unable to negotiate reasonable engagement terms with the | 25 | | recommended engineer within 15 days after the recommendation | 26 | | by the Commission's Executive Director or designee, then the |
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| 1 | | appraiser shall notify the Commission's Executive Director or | 2 | | designee and the process shall be repeated until an engineer | 3 | | is successfully engaged. | 4 | | (d) The lesser of (i) the purchase price or (ii) the fair | 5 | | market value determined under subsection (c) of this Section | 6 | | shall constitute the rate base associated with the water or | 7 | | sewer utility as acquired by and incorporated into the rate | 8 | | base of the district designated by the acquiring large public | 9 | | utility under this Section, subject to any adjustments that | 10 | | the Commission deems necessary to ensure such rate base | 11 | | reflects prudent and useful investments in the provision of | 12 | | public utility service. The reasonable transaction and closing | 13 | | costs incurred by the large public utility shall be treated | 14 | | consistent with the applicable accounting standards under this | 15 | | Act. The total amount of all of the appraisers' fees to be | 16 | | included in the transaction and closing costs shall not exceed | 17 | | the greater of $15,000 or 5% of the appraised value of the | 18 | | water or sewer utility being acquired. This rate base | 19 | | treatment shall not be deemed to violate this Act, including, | 20 | | but not limited to, any Sections in Articles VIII and IX of | 21 | | this Act that might be affected by this Section. Any | 22 | | acquisition of a water or sewer utility that affects the | 23 | | cumulative base rates of the large public utility's existing | 24 | | ratepayers in the tariff group into which the water or sewer | 25 | | utility is to be combined by less than (1) 2.5% at the time of | 26 | | the acquisition for any single acquisition completed under |
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| 1 | | this Section or (2) 5% for all acquisitions completed under | 2 | | this Section before the Commission's final order in the next | 3 | | rate case shall not be deemed to violate Section 7-204 or any | 4 | | other provision of this Act. | 5 | | In the Commission's order that approves the large public | 6 | | utility's acquisition of the water or sewer utility, the | 7 | | Commission shall issue its decision establishing (1) the | 8 | | ratemaking rate base of the water or sewer utility; (2) the | 9 | | district or tariff group with which the water or sewer utility | 10 | | shall be combined for ratemaking purposes, if such combination | 11 | | has been proposed by the large public utility; and (3) the | 12 | | rates to be charged to customers in the water or sewer utility. | 13 | | (e) If the water or sewer utility being acquired is owned | 14 | | by the State or any political subdivision thereof, then the | 15 | | water or sewer utility must inform the public of the terms of | 16 | | its acquisition by the large public utility by (1) holding a | 17 | | public meeting prior to the acquisition and (2) causing to be | 18 | | published, in a newspaper of general circulation in the area | 19 | | that the water or sewer utility operates, a notice setting | 20 | | forth the terms of its acquisition by the large public utility | 21 | | and options that shall be available to assist customers to pay | 22 | | their bills after the acquisition. | 23 | | (f) The large public utility may recommend the district or | 24 | | tariff group of which the water or sewer utility shall, for | 25 | | ratemaking purposes, become a part after the acquisition, or | 26 | | may recommend a lesser rate for the water or sewer utility. If |
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| 1 | | the large public utility recommends a lesser rate, it shall | 2 | | submit to the Commission its proposed rate schedule and the | 3 | | proposed final tariff group for the acquired water or sewer | 4 | | utility. The Commission's approved district or tariff group or | 5 | | rates shall be consistent with the large public utility's | 6 | | recommendation, unless such recommendation can be shown to be | 7 | | contrary to the public interest. | 8 | | (g) From the date of acquisition until the date that new | 9 | | rates are effective in the acquiring large public utility's | 10 | | next rate case, the customers of the acquired water or sewer | 11 | | utility shall pay the approved then-existing rates of the | 12 | | district or tariff group as ordered by the Commission, or some | 13 | | lesser rates as recommended by the large public utility and | 14 | | approved by the Commission under subsection (f); provided, | 15 | | that, if the application of such rates of the large public | 16 | | utility to customers of the acquired water or sewer utility | 17 | | using 54,000 gallons annually results in an increase to the | 18 | | total annual bill of customers of the acquired water or sewer | 19 | | utility, exclusive of fire service or related charges, then | 20 | | the large public utility's rates charged to the customers of | 21 | | the acquired water or sewer utility shall be uniformly | 22 | | reduced, if any reduction is required, by the percent that | 23 | | results in the total annual bill, exclusive of fire services | 24 | | or related charges, for the customers of the acquired water or | 25 | | sewer utility using 54,000 gallons being equal to 1.5% of the | 26 | | latest median household income as reported by the United |
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| 1 | | States Census Bureau for the most applicable community or | 2 | | county. For each customer of the water or sewer utility with | 3 | | potable water usage values that cannot be reasonably obtained, | 4 | | a value of 4,500 gallons per month shall be assigned. These | 5 | | rates shall not be deemed to violate this Act including, but | 6 | | not limited to, Section 9-101 and any other applicable | 7 | | Sections in Articles VIII and IX of this Act. The Commission | 8 | | shall issue its decision establishing the rates effective for | 9 | | the water or sewer utility immediately following an | 10 | | acquisition in its order approving the acquisition. | 11 | | (h) In the acquiring large public utility's next rate | 12 | | case, the water or sewer utility and the district or tariff | 13 | | group ordered by the Commission and their costs of service may | 14 | | be combined under the same rate tariff. This rate tariff shall | 15 | | be based on allocation of costs of service of the acquired | 16 | | water or sewer utility and the large public utility's district | 17 | | or tariff group ordered by the Commission and utilizing a rate | 18 | | design that does not distinguish among customers on the basis | 19 | | of utility service source or type. This rate tariff shall not | 20 | | be deemed to violate this Act including, but not limited to, | 21 | | Section 9-101 of this Act. In the acquiring large public | 22 | | utility's 2 rate cases after an acquisition, but in no | 23 | | subsequent rate case, the large public utility may file a rate | 24 | | tariff for a water or sewer utility acquired under this | 25 | | Section that establishes lesser rates than the district or | 26 | | tariff group into which the water or sewer utility is to be |
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| 1 | | combined. Those lesser rates shall not be deemed to violate | 2 | | Section 7-204 or any other provision of this Act if they affect | 3 | | the cumulative base rates of the large public utility's | 4 | | existing rate payers in the district or tariff by less than | 5 | | 2.5%. | 6 | | (i) Any post-acquisition improvements made by the large | 7 | | public utility in the water or sewer utility shall accrue a | 8 | | cost for financing set at the large public utility's | 9 | | determined rate for allowance for funds used during | 10 | | construction, inclusive of the debt, equity, and income tax | 11 | | gross up components, after the date on which the expenditure | 12 | | was incurred by the large public utility until the investment | 13 | | has been in service for a 4-year period or, if sooner, until | 14 | | the time the rates are implemented in the large public | 15 | | utility's next rate case. | 16 | | Any post-acquisition improvements made by the large public | 17 | | utility in the water or sewer utility shall not be depreciated | 18 | | for ratemaking purposes from the date on which the expenditure | 19 | | was incurred by the large public utility until the investment | 20 | | has been in service for a 4-year period or, if sooner, until | 21 | | the time the rates are implemented in the large public | 22 | | utility's next rate case. | 23 | | (j) This Section shall be exclusively applied to large | 24 | | public utilities in the voluntary and mutually agreeable | 25 | | acquisition of water or sewer utilities. Any petitions filed | 26 | | with the Commission related to the acquisitions described in |
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| 1 | | this Section, including petitions seeking approvals or | 2 | | certificates required by this Act, shall be deemed approved | 3 | | unless the Commission issues its final order within 11 months | 4 | | after the date the large public utility filed its initial | 5 | | petition. This Section shall only apply to utilities providing | 6 | | water or sewer service and shall not be construed in any manner | 7 | | to apply to electric corporations, natural gas corporations, | 8 | | or any other utility subject to this Act. | 9 | | (k) Nothing in this Section shall prohibit a party from | 10 | | declining to proceed with an acquisition or be deemed as | 11 | | establishing the final purchase price of an acquisition. | 12 | | (l) In the Commission's order that approves the large | 13 | | utility's acquisition of the water or sewer utility, the | 14 | | Commission shall address each aspect of the acquisition | 15 | | transaction for which approval is required under the Act. | 16 | | (m) Any contractor or subcontractor that performs work on | 17 | | a water or sewer utility acquired by a large public utility | 18 | | under this Section shall be a responsible bidder as described | 19 | | in Section 30-22 of the Illinois Procurement Code. The | 20 | | contractor or subcontractor shall submit evidence of meeting | 21 | | the requirements to be a responsible bidder as described in | 22 | | Section 30-22 to the water or sewer utility. Any new water or | 23 | | sewer facility built as a result of the acquisition shall | 24 | | require the contractor to enter into a project labor | 25 | | agreement. The large public utility acquiring the water or | 26 | | sewer utility shall offer employee positions to qualified |
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| 1 | | employees of the acquired water or sewer utility. | 2 | | (n) This Section is repealed on June 1, 2028.
| 3 | | (Source: P.A. 100-751, eff. 8-10-18; 100-1151, eff. 6-1-19 .)
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