Public Act 100-1151

SB3051 Enrolled LRB100 19159 SMS 34424 b

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois,

represented in the General Assembly:

Section 5. The Public Utilities Act is amended by adding

Section 9-210.6 as follows:

(220 ILCS 5/9-210.6 new)

Sec. 9-210.6. Continuation of Section 9-210.5 of this Act;

validation.

(a) The General Assembly finds and declares that:

(1) Public Act 100-751, which took effect on August 10,

2018, contained provisions that would have changed the

repeal date for Section 9-210.5 of this Act from June 1,

2018 to June 1, 2028.

(2) The Statute on Statutes sets forth general rules on

the repeal of statutes and the construction of multiple

amendments, but Section 1 of that Act also states that

these rules will not be observed when the result would be

"inconsistent with the manifest intent of the General

Assembly or repugnant to the context of the statute".

(3) This amendatory Act of the 100th General Assembly

manifests the intention of the General Assembly to extend

the repeal date for Section 9-210.5 of this Act and have

Section 9-210.5 of this Act, as amended by Public Act

100-751, continue in effect until June 1, 2028.

(b) Any construction of this Act that results in the repeal

of Section 9-210.5 of this Act on June 1, 2018 would be

inconsistent with the manifest intent of the General Assembly

and repugnant to the context of this Act.

(c) It is hereby declared to have been the intent of the

General Assembly that Section 9-210.5 of this Act shall not be

subject to repeal on June 1, 2018.

(d) Section 9-210.5 of this Act shall be deemed to have

been in continuous effect since August 9, 2013 (the effective

date of Public Act 98-213), and it shall continue to be in

effect, as amended by Public Act 100-751, until it is otherwise

lawfully amended or repealed. All previously enacted

amendments to the Section taking effect on or after August 9,

2013, are hereby validated.

(e) In order to ensure the continuing effectiveness of

Section 9-210.5 of this Act, that Section is set forth in full

and reenacted by this amendatory Act of the 100th General

Assembly. In this amendatory Act of the 100th General Assembly,

the base text of the reenacted Section is set forth as amended

by Public Act 100-751.

(f) All actions of the Commission or any other person or

entity taken in reliance on or pursuant to Section 9-210.5 are

hereby validated.

(g) Section 9-210.5 of this Act applies to all proceedings

pending on or filed on or before the effective date of this

amendatory Act of the 100th General Assembly.

Section 10. The Public Utilities Act is amended by

reenacting Section 9-210.5 as follows:

(220 ILCS 5/9-210.5)

Sec. 9-210.5. Valuation of water and sewer utilities.

(a) In this Section:

"Disinterested" means that the person directly

involved (1) is not a director, officer, or an employee of

the large public utility or the water or sewer utility or

its direct affiliates or subsidiaries for at least 12

months before becoming engaged under this Section; (2)

shall not derive a material financial benefit from the sale

of the water or sewer utility other than fees for services

rendered, and (3) shall not have a member of the person's

immediate family, including a spouse, parents or spouse's

parents, children or spouses of children, or siblings and

their spouses or children, be a director, officer, or

employee of either the large public utility or water or

sewer utility or the water or sewer utility or its direct

affiliates or subsidiaries for at least 12 months before

becoming engaged under this Section or receive a material

financial benefit from the sale of the water or sewer

utility other than fees for services rendered.

"District" means a service area of a large public

utility whose customers are subject to the same rate

tariff.

"Large public utility" means an investor-owned public

utility that:

(1) is subject to regulation by the Illinois

Commerce Commission under this Act;

(2) regularly provides water or sewer service to

more than 30,000 customer connections;

(3) provides safe and adequate service; and

(4) is not a water or sewer utility as defined in

this subsection (a).

"Next rate case" means a large public utility's first

general rate case after the date the large public utility

acquires the water or sewer utility where the acquired

water or sewer utility's cost of service is considered as

part of determining the large public utility's resulting

rates.

"Prior rate case" means a large public utility's

general rate case resulting in the rates in effect for the

large public utility at the time it acquires the water or

sewer utility.

"Utility service source" means the water or sewer

utility or large public utility from which the customer

receives its utility service type.

"Utility service type" means water utility service or

sewer utility service or water and sewer utility service.

"Water or sewer utility" means any of the following:

(1) a public utility that regularly provides water

or sewer service to 6,000 or fewer customer

connections;

(2) a water district, including, but not limited

to, a public water district, water service district, or

surface water protection district, or a sewer district

of any kind established as a special district under the

laws of this State that regularly provides water or

sewer service;

(3) a waterworks system or sewerage system

established under the Township Code that regularly

provides water or sewer service; or

(4) a water system or sewer system owned by a

municipality that regularly provides water or sewer

service; and

(5) any other entity that is not a public utility

that regularly provides water or sewer service.

(b) Notwithstanding any other provision of this Act, a

large public utility that acquires a water or sewer utility may

request that the Commission use, and, if so requested, the

Commission shall use, the procedures set forth under this

Section to establish the ratemaking rate base of that water or

sewer utility at the time when it is acquired by the large

public utility.

(c) If a large public utility elects the procedures under

this Section to establish the rate base of a water or sewer

utility that it is acquiring, then 3 appraisals shall be

performed. The average of these 3 appraisals shall represent

the fair market value of the water or sewer utility that is

being acquired. The appraisals shall be performed by 3

appraisers approved by the Commission's Executive Director or

designee and engaged by either the water or sewer utility being

acquired or by the large public utility. Each appraiser shall

be engaged on reasonable terms approved by the Commission. Each

appraiser shall be a disinterested person licensed as a State

certified general real estate appraiser under the Real Estate

Appraiser Licensing Act of 2002.

Each appraiser shall:

(1) be sworn to determine the fair market value of the

water or sewer utility by establishing the amount for which

the water or sewer utility would be sold in a voluntary

transaction between a willing buyer and willing seller

under no obligation to buy or sell;

(2) determine fair market value in compliance with the

Uniform Standards of Professional Appraisal Practice;

(3) engage one disinterested engineer who is licensed

in this State, and who may be the same engineer that is

engaged by the other appraisers, to prepare an assessment

of the tangible assets of the water or sewer utility, which

is to be incorporated into the appraisal under the cost

approach;

(4) request from the manager of the Accounting

Department, if the water or sewer utility is a public

utility that is regulated by the Commission, a list of

investments made by the water or sewer utility that had

been disallowed previously and that shall be excluded from

the calculation of the large public utility's rate base in

its next rate case; and

(5) return their appraisal, in writing, to the water or

sewer utility and large public utility in a reasonable and

timely manner.

If the appraiser cannot engage an engineer, as described in

paragraph (3) of this subsection (c), within 30 days after the

appraiser is engaged, then the Commission's Executive Director

or designee shall recommend the engineer the appraiser should

engage. The Commission's Executive Director or designee shall

provide his or her recommendation within 30 days after he or

she is officially notified of the appraiser's failure to engage

an engineer and the appraiser shall promptly work to engage the

recommended engineer. If the appraiser is unable to negotiate

reasonable engagement terms with the recommended engineer

within 15 days after the recommendation by the Commission's

Executive Director or designee, then the appraiser shall notify

the Commission's Executive Director or designee and the process

shall be repeated until an engineer is successfully engaged.

(d) The lesser of (i) the purchase price or (ii) the fair

market value determined under subsection (c) of this Section

shall constitute the rate base associated with the water or

sewer utility as acquired by and incorporated into the rate

base of the district designated by the acquiring large public

utility under this Section, subject to any adjustments that the

Commission deems necessary to ensure such rate base reflects

prudent and useful investments in the provision of public

utility service. The reasonable transaction and closing costs

incurred by the large public utility shall be treated

consistent with the applicable accounting standards under this

Act. The total amount of all of the appraisers' fees to be

included in the transaction and closing costs shall not exceed

the greater of $15,000 or 5% of the appraised value of the

water or sewer utility being acquired. This rate base treatment

shall not be deemed to violate this Act, including, but not

limited to, any Sections in Articles VIII and IX of this Act

that might be affected by this Section. Any acquisition of a

water or sewer utility that affects the cumulative base rates

of the large public utility's existing ratepayers in the tariff

group into which the water or sewer utility is to be combined

by less than (1) 2.5% at the time of the acquisition for any

single acquisition completed under this Section or (2) 5% for

all acquisitions completed under this Section before the

Commission's final order in the next rate case shall not be

deemed to violate Section 7-204 or any other provision of this

Act.

In the Commission's order that approves the large public

utility's acquisition of the water or sewer utility, the

Commission shall issue its decision establishing (1) the

ratemaking rate base of the water or sewer utility; (2) the

district or tariff group with which the water or sewer utility

shall be combined for ratemaking purposes, if such combination

has been proposed by the large public utility; and (3) the

rates to be charged to customers in the water or sewer utility.

(e) If the water or sewer utility being acquired is owned

by the State or any political subdivision thereof, then the

water or sewer utility must inform the public of the terms of

its acquisition by the large public utility by (1) holding a

public meeting prior to the acquisition and (2) causing to be

published, in a newspaper of general circulation in the area

that the water or sewer utility operates, a notice setting

forth the terms of its acquisition by the large public utility

and options that shall be available to assist customers to pay

their bills after the acquisition.

(f) The large public utility may recommend the district or

tariff group of which the water or sewer utility shall, for

ratemaking purposes, become a part after the acquisition, or

may recommend a lesser rate for the water or sewer utility. If

the large public utility recommends a lesser rate, it shall

submit to the Commission its proposed rate schedule and the

proposed final tariff group for the acquired water or sewer

utility. The Commission's approved district or tariff group or

rates shall be consistent with the large public utility's

recommendation, unless such recommendation can be shown to be

contrary to the public interest.

(g) From the date of acquisition until the date that new

rates are effective in the acquiring large public utility's

next rate case, the customers of the acquired water or sewer

utility shall pay the approved then-existing rates of the

district or tariff group as ordered by the Commission, or some

lesser rates as recommended by the large public utility and

approved by the Commission under subsection (f); provided,

that, if the application of such rates of the large public

utility to customers of the acquired water or sewer utility

using 54,000 gallons annually results in an increase to the

total annual bill of customers of the acquired water or sewer

utility, exclusive of fire service or related charges, then the

large public utility's rates charged to the customers of the

acquired water or sewer utility shall be uniformly reduced, if

any reduction is required, by the percent that results in the

total annual bill, exclusive of fire services or related

charges, for the customers of the acquired water or sewer

utility using 54,000 gallons being equal to 1.5% of the latest

median household income as reported by the United States Census

Bureau for the most applicable community or county. For each

customer of the water or sewer utility with potable water usage

values that cannot be reasonably obtained, a value of 4,500

gallons per month shall be assigned. These rates shall not be

deemed to violate this Act including, but not limited to,

Section 9-101 and any other applicable Sections in Articles

VIII and IX of this Act. The Commission shall issue its

decision establishing the rates effective for the water or

sewer utility immediately following an acquisition in its order

approving the acquisition.

(h) In the acquiring large public utility's next rate case,

the water or sewer utility and the district or tariff group

ordered by the Commission and their costs of service may be

combined under the same rate tariff. This rate tariff shall be

based on allocation of costs of service of the acquired water

or sewer utility and the large public utility's district or

tariff group ordered by the Commission and utilizing a rate

design that does not distinguish among customers on the basis

of utility service source or type. This rate tariff shall not

be deemed to violate this Act including, but not limited to,

Section 9-101 of this Act. In the acquiring large public

utility's 2 rate cases after an acquisition, but in no

subsequent rate case, the large public utility may file a rate

tariff for a water or sewer utility acquired under this Section

that establishes lesser rates than the district or tariff group

into which the water or sewer utility is to be combined. Those

lesser rates shall not be deemed to violate Section 7-204 or

any other provision of this Act if they affect the cumulative

base rates of the large public utility's existing rate payers

in the district or tariff by less than 2.5%.

(i) Any post-acquisition improvements made by the large

public utility in the water or sewer utility shall accrue a

cost for financing set at the large public utility's determined

rate for allowance for funds used during construction,

inclusive of the debt, equity, and income tax gross up

components, after the date on which the expenditure was

incurred by the large public utility until the investment has

been in service for a 4-year period or, if sooner, until the

time the rates are implemented in the large public utility's

next rate case.

Any post-acquisition improvements made by the large public

utility in the water or sewer utility shall not be depreciated

for ratemaking purposes from the date on which the expenditure

was incurred by the large public utility until the investment

has been in service for a 4-year period or, if sooner, until

the time the rates are implemented in the large public

utility's next rate case.

(j) This Section shall be exclusively applied to large

public utilities in the voluntary and mutually agreeable

acquisition of water or sewer utilities. Any petitions filed

with the Commission related to the acquisitions described in

this Section, including petitions seeking approvals or

certificates required by this Act, shall be deemed approved

unless the Commission issues its final order within 11 months

after the date the large public utility filed its initial

petition. This Section shall only apply to utilities providing

water or sewer service and shall not be construed in any manner

to apply to electric corporations, natural gas corporations, or

any other utility subject to this Act.

(k) Nothing in this Section shall prohibit a party from

declining to proceed with an acquisition or be deemed as

establishing the final purchase price of an acquisition.

(l) In the Commission's order that approves the large

utility's acquisition of the water or sewer utility, the

Commission shall address each aspect of the acquisition

transaction for which approval is required under the Act.

(m) Any contractor or subcontractor that performs work on a

water or sewer utility acquired by a large public utility under

this Section shall be a responsible bidder as described in

Section 30-22 of the Illinois Procurement Code. The contractor

or subcontractor shall submit evidence of meeting the

requirements to be a responsible bidder as described in Section

30-22 to the water or sewer utility. Any new water or sewer

facility built as a result of the acquisition shall require the

contractor to enter into a project labor agreement. The large

public utility acquiring the water or sewer utility shall offer

employee positions to qualified employees of the acquired water

or sewer utility.

(n) This Section is repealed on June 1, 2028.

(Source: P.A. 100-751, eff. 8-10-18.)