Bill Text: IA SSB1097 | 2023-2024 | 90th General Assembly | Introduced
Bill Title: A bill for an act relating to the acquisition of water, sanitary sewer, and storm water utilities by rate-regulated public utilities.(See SF 2181.)
Spectrum: Committee Bill
Status: (Introduced) 2024-01-30 - Committee report approving bill, renumbered as SF 2181. [SSB1097 Detail]
Download: Iowa-2023-SSB1097-Introduced.html
Senate
Study
Bill
1097
-
Introduced
SENATE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
COMMERCE
BILL
BY
CHAIRPERSON
BROWN)
A
BILL
FOR
An
Act
relating
to
the
acquisition
of
water,
sanitary
sewer,
1
and
storm
water
utilities
by
rate-regulated
public
2
utilities.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
TLSB
1317XC
(1)
90
es/rn
S.F.
_____
Section
1.
Section
476.84,
subsection
2,
Code
2023,
is
1
amended
to
read
as
follows:
2
2.
a.
A
public
utility
shall
not
acquire,
in
whole
or
in
3
part,
a
water,
sanitary
sewer,
or
storm
water
utility
with
4
a
fair
market
value
purchase
price
of
five
hundred
thousand
5
million
dollars
or
more
from
a
non-rate-regulated
entity
6
described
in
section
476.1,
subsection
4
,
unless
the
board
7
first
approves
the
acquisition.
In
addition,
if
the
utility
to
8
be
acquired
is
a
city
utility,
then
the
public
utility
shall
9
not
acquire
the
city
utility
until
the
city
has
first
met
10
certified
completion
of
the
requirements
of
section
388.2A
.
11
b.
If
a
water,
sanitary
sewer,
or
storm
water
utility
that
12
is
the
subject
of
an
acquisition
meets
the
requirements
of
13
paragraph
“a”
,
then
the
acquiring
public
utility
may
apply
to
14
the
board,
prior
to
the
completion
of
the
acquisition,
for
15
advance
approval
of
a
proposed
initial
tariff
for
providing
16
service
to
customers
of
the
acquired
utility.
17
c.
As
part
of
its
review
of
the
proposed
acquisition,
18
the
board
shall
specify
in
advance,
by
order
issued
after
a
19
contested
case
proceeding,
the
ratemaking
principles
that
will
20
apply
when
the
costs
of
the
acquired
utility
are
included
in
21
regulated
rates.
The
lesser
of
the
sale
price
or
the
fair
22
market
value
of
the
acquired
utility
as
established
pursuant
23
to
section
388.2A,
subsection
2
,
shall
be
used
in
determining
24
the
applicable
ratemaking
principles.
In
determining
the
25
applicable
ratemaking
principles,
the
board
shall
not
be
26
limited
to
traditional
ratemaking
principles
or
traditional
27
cost
recovery
mechanisms.
Among
the
principles
and
mechanisms
28
the
board
may
consider,
the
board
has
the
authority
to
approve
29
ratemaking
principles
that
provide
for
reasonable
restrictions
30
upon
the
ability
of
the
public
utility
to
seek
an
increase
31
in
specified
regulated
rates
for
a
period
of
time
after
the
32
acquisition
takes
place.
The
final
order
including
the
rate
33
base
and
approving
the
acquisition
shall
consider
reasonable
34
and
customary
closing
costs,
the
cost
of
appraisals,
and
35
-1-
LSB
1317XC
(1)
90
es/rn
1/
3
S.F.
_____
regulatory
and
legal
expenses
incurred
in
connection
with
the
1
acquisition.
2
d.
In
determining
the
applicable
ratemaking
principles,
3
the
board
shall
find
that
the
proposed
acquisition
will
result
4
in
just
and
reasonable
rates
to
all
customers
of
the
public
5
utility,
including
but
not
limited
to
existing
customers
of
6
the
public
utility.
In
making
this
finding,
the
board
may
7
consider
any
factor
it
reasonably
concludes
may
affect
future
8
rates,
including
but
not
limited
to
the
price
paid
for
the
9
acquired
utility
and
the
projected
cost
of
reasonable
and
10
prudent
changes
to
investments
in
the
acquired
utility
in
order
11
to
provide
adequate
safe
and
reliable
services
and
facilities
12
to
customers.
The
board
shall
consider
whether
there
are
13
ratemaking
principles
that
will
result
in
just
and
reasonable
14
rates
to
all
customers
in
determining
whether
to
approve
or
15
disapprove
a
proposed
acquisition.
16
e.
If
the
acquisition
involves
a
utility
that
is
an
at-risk
17
system
as
defined
in
section
455B.199D
,
the
board
shall
18
issue
a
final
order
on
an
application
for
approval
of
the
19
acquisition
within
one
hundred
twenty
days
from
the
filing
of
20
the
application.
For
all
other
acquisitions,
the
board
shall
21
issue
an
order
within
one
hundred
eighty
days
of
the
filing
22
date
of
the
application.
23
f.
Upon
the
approval
of
a
proposal
for
acquisition
by
24
board
order,
the
parties
subject
to
the
acquisition
shall
25
have
the
option
of
either
proceeding
with
such
acquisition
or
26
not,
subject
to
any
termination
provisions
contained
in
the
27
acquisition
agreement.
28
g.
Notwithstanding
any
provision
of
this
chapter
to
the
29
contrary,
the
ratemaking
principles
established
by
the
board
30
pursuant
to
this
section
shall
be
binding
with
regard
to
the
31
acquired
utility
in
any
subsequent
rate
proceeding.
32
EXPLANATION
33
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
34
the
explanation’s
substance
by
the
members
of
the
general
assembly.
35
-2-
LSB
1317XC
(1)
90
es/rn
2/
3
S.F.
_____
This
bill
relates
to
the
acquisition
of
water,
sanitary
1
sewer,
and
storm
water
utilities
by
rate-regulated
public
2
utilities.
3
The
bill
increases
the
threshold
amount
requiring
utilities
4
board
(board)
approval
from
$500,000
to
$5
million
when
a
5
public
utility
is
acquiring
a
water,
sanitary
sewer,
or
storm
6
water
utility.
The
bill
modifies
city
utility
acquisition
to
7
include
that
the
city
must
first
certify
completion
of
the
8
requirements
of
Code
section
388.2A,
including
an
appraisal
9
for
the
fair
market
value
of
the
utility
system,
discussion
10
of
alternatives
of
the
sale
of
the
utility
system,
and
a
city
11
council
proposal
for
the
sale.
Current
law
requires
that
the
12
city
meets
the
requirements,
but
not
certifies
compliance.
13
The
bill
provides
that
the
rate
base
in
the
final
order
14
approving
an
acquisition
shall
include
reasonable
and
customary
15
closing
costs,
the
cost
of
appraisals,
and
regulatory
and
legal
16
expenses
incurred
in
connection
with
the
acquisition.
17
The
bill
provides
that
the
board
shall
issue
a
final
order
18
within
120
days
of
the
filing
of
an
application
for
the
19
acquisition
of
an
at-risk
utility
system,
or
an
order
within
20
180
days
for
all
other
acquisitions.
Current
law
provides
that
21
the
board
shall
issue
a
final
order
within
120
days
of
filing
22
the
application
for
a
utility
that
is
an
at-risk
system.
23
-3-
LSB
1317XC
(1)
90
es/rn
3/
3
