Bill Text: IA HF2307 | 2017-2018 | 87th General Assembly | Enrolled
Bill Title: A bill for an act relating to the sale or acquisition of certain utilities. (Formerly HSB 530.) Effective 7-1-18.
Spectrum: Committee Bill
Status: (Passed) 2018-03-21 - Signed by Governor. H.J. 652. [HF2307 Detail]
Download: Iowa-2017-HF2307-Enrolled.html
House File 2307 - Enrolled
HOUSE FILE
BY COMMITTEE ON COMMERCE
(SUCCESSOR TO HSB 530)
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A BILL FOR
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House File 2307
AN ACT
RELATING TO THE SALE OR ACQUISITION OF CERTAIN
UTILITIES.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
Section 1. NEW SECTION. 388.2A Procedure for disposal of
city utility by sale.
1. A proposal to discontinue a city utility and dispose of
such utility by sale, whether upon the council's own motion or
upon the receipt of a valid petition pursuant to section 388.2,
subsection 1, paragraph "b", shall not be submitted to the
voters of the city pursuant to section 388.2 at any
election unless the governing body of the city utility meets
the requirements of this section.
2. a. (1) The governing body of the city utility shall
determine the fair market value of the utility system after
obtaining two appraisals of the system's fair market value.
One appraisal shall be obtained from an independent appraiser
selected by the governing body, and the other appraisal shall
be obtained from an independent appraiser approved by the
Iowa utilities board. Both appraisals shall be conducted
in conformance with the uniform standards of professional
appraisal practice or substantially similar standards.
(2) Any appraisal obtained pursuant to this paragraph
shall consider the depreciated value of the capital assets
to be sold, the loss of future revenues to the city utility,
including the right to generate surpluses, and the cost of any
capital improvements reasonably necessary to provide adequate
service and facilities to the city utility's customers.
b. After considering the appraisals obtained pursuant to
paragraph "a", the governing body shall establish the city
utility's fair market value. The fair market value shall be
the greater of any of the following:
(1) The average of the two appraisals obtained pursuant to
paragraph "a".
(2) The depreciated value of the capital assets to be sold.
(3) The amount necessary to retire all of the city's
outstanding revenue and general obligations issued for purposes
of the city utility.
c. The governing body's determination of a city utility's
fair market value pursuant to this subsection shall not be
dispositive of the city utility's system price, which shall be
subject to negotiation by the governing body.
d. The governing body shall prepare an inventory of the
city utility's real and personal property, and a statement of
net position or balance sheet of the city utility, including
all assets, liabilities, outstanding revenue and general
obligations used to finance the city utility system.
e. The governing body shall prepare a financial information
statement of the city utility that includes current and
projected rate schedules for the next five fiscal years, as
well as the five most recent fiscal year revenue statements, if
such statements exist, and a projection of the city utility's
revenue statements for the next five fiscal years.
f. The governing body shall consider alternatives to
disposing of the city utility system by sale, including
entering into an agreement pursuant to chapter 28E, or into a
finance agreement, purchase agreement, or lease agreement with
another entity described in section 476.1, subsection 5.
g. (1) The governing body shall make available on its
internet site, at least sixty days prior to submitting a
proposal for election pursuant to section 388.2, a copy of each
item listed in paragraphs "a" through "f" of this subsection.
(2) If, at the time of posting information pursuant to
subparagraph (1), the governing body has received any offers or
appraisals of fair market value from any prospective purchasers
of the city utility system in connection with a proposal to
discontinue the city utility and dispose of such utility by
sale, then the governing body shall make available on its
internet site each offer and appraisal then in existence.
Proprietary information of a rate=regulated public utility
under chapter 476 that is exempt from disclosure pursuant to
section 22.7 may be withheld from disclosure on the governing
body's internet site. The governing body may continue to
receive new or revised offers or appraisals thereafter.
(3) The governing body shall make a good=faith effort to
provide, by regular mail to each property owner of the city and
each ratepayer of the city utility, a notice of the proposal to
dispose of the city utility by sale, a summary of the proposal,
a summary of the information described in subparagraphs (1) and
(2), and instructions for locating the information described
in subparagraphs (1) and (2) on the governing body's internet
site.
3. Upon the governing body meeting the requirements
of subsection 2, a city council may submit a proposal to
discontinue and dispose of a city utility pursuant to section
388.2.
4. If a proposal to discontinue and dispose of a city
utility is to be submitted to voters following the receipt
of a valid petition pursuant to section 388.2, subsection 1,
paragraph "b", the council shall submit the proposal at the next
general election, regular city election, or a special election
called for that purpose, within one hundred twenty days after
the governing body of the city utility meets the requirements
of subsection 2.
5. A proposal to discontinue and dispose of a city utility
by sale that is approved by the voters pursuant to section
388.2, subsection 2, paragraph "a", shall not require the
governing body or any purchasing entity to finalize a sale of
the city utility.
6. No action may be brought which questions the legality of
the election or the city and governing body's compliance with
this section, except as provided in section 57.1, within twenty
days of the canvass of votes for the election by the county
board of supervisors.
Sec. 2. Section 476.72, subsection 4, Code 2018, is amended
to read as follows:
4. "Public utility" means a gas or electric rate=regulated
public utility providing electric, gas, water, sanitary sewage,
or storm water drainage service, or any combination thereof.
Sec. 3. NEW SECTION. 476.84 Water, sanitary sewer, and
storm water utilities ==== acquisitions ==== advance ratemaking.
1. This section applies to the acquisition of water,
sanitary sewer, and storm water utilities by rate=regulated
public utilities. This section does not apply to the
acquisition of such utilities by non=rate=regulated entities
described in section 476.1, subsection 5.
2. a. A public utility shall not acquire, in whole or in
part, a water, sanitary sewer, or storm water utility with a
fair market value of five hundred thousand dollars or more
from a non=rate=regulated entity described in section 476.1,
subsection 5, unless the board first approves the acquisition.
In addition, if the utility to be acquired is a city utility,
then the public utility shall not acquire the city utility
until the city has first met the requirements of section
388.2A.
b. If a water, sanitary sewer, or storm water utility that
is the subject of an acquisition meets the requirements of
paragraph "a", then the acquiring public utility may apply to
the board, prior to the completion of the acquisition, for
advance approval of a proposed initial tariff for providing
service to customers of the acquired utility.
c. As part of its review of the proposed acquisition,
the board shall specify in advance, by order issued after a
contested case proceeding, the ratemaking principles that will
apply when the costs of the acquired utility are included in
regulated rates. The lesser of the sale price or the fair
market value of the acquired utility as established pursuant
to section 388.2A, subsection 2, shall be used in determining
the applicable ratemaking principles. In determining the
applicable ratemaking principles, the board shall not be
limited to traditional ratemaking principles or traditional
cost recovery mechanisms. Among the principles and mechanisms
the board may consider, the board has the authority to approve
ratemaking principles that provide for reasonable restrictions
upon the ability of the public utility to seek an increase
in specified regulated rates for a period of time after the
acquisition takes place.
d. In determining the applicable ratemaking principles,
the board shall find that the proposed acquisition will result
in just and reasonable rates to all customers of the public
utility, including but not limited to existing customers of the
public utility. In making this finding, the board may consider
any factor it reasonably concludes may affect future rates,
including but not limited to the price paid for the acquired
utility and the projected cost of reasonable and prudent
changes to the acquired utility in order to provide adequate
services and facilities to customers. The board shall consider
whether there are ratemaking principles that will result in
just and reasonable rates to all customers in determining
whether to approve or disapprove a proposed acquisition.
e. Upon the approval of a proposal for acquisition by
board order, the parties subject to the acquisition shall
have the option of either proceeding with such acquisition or
not, subject to any termination provisions contained in the
acquisition agreement.
f. Notwithstanding any provision of this chapter to the
contrary, the ratemaking principles established by the board
pursuant to this section shall be binding with regard to the
acquired utility in any subsequent rate proceeding.
LINDA UPMEYER
Speaker of the House
CHARLES SCHNEIDER
President of the Senate
I hereby certify that this bill originated in the House and
is known as House File 2307, Eighty=seventh General Assembly.
CARMINE BOAL
Chief Clerk of the House
Approved , 2018
KIM REYNOLDS
Governor
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