Bill Text: IA HF473 | 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.(Formerly HF 56; See HF 2101.)
Spectrum: Committee Bill
Status: (Introduced - Dead) 2024-02-19 - Withdrawn. H.J. 316. [HF473 Detail]
Download: Iowa-2023-HF473-Introduced.html
House
File
473
-
Introduced
HOUSE
FILE
473
BY
COMMITTEE
ON
COMMERCE
(SUCCESSOR
TO
HF
56)
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:
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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
three
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
8
to
be
acquired
is
a
city
utility,
then
the
public
utility
9
shall
not
acquire
the
city
utility
until
the
city
has
first
10
met
certified
completion
of
the
requirements
of
section
388.2A
11
sections
362.3,
364.2,
364.7,
384.84,
388.2,
388.2A,
and
388.6
.
12
A
certified
completion
submitted
pursuant
to
this
paragraph
13
shall
contain
an
affirmation
that
the
city
that
is
the
subject
14
of
the
acquisition
has
timely
and
substantially
complied
in
15
relation
to
the
acquisition
with
the
applicable
provisions
of
16
sections
362.3,
364.2,
364.7,
384.84,
388.2,
388.2A,
and
388.6.
17
b.
If
a
water,
sanitary
sewer,
or
storm
water
utility
that
18
is
the
subject
of
an
acquisition
meets
the
requirements
of
19
paragraph
“a”
,
then
the
acquiring
public
utility
may
apply
to
20
the
board,
prior
to
the
completion
of
the
acquisition,
for
21
advance
approval
of
a
proposed
initial
tariff
for
providing
22
service
to
customers
of
the
acquired
utility.
23
c.
As
part
of
its
review
of
the
proposed
acquisition,
24
the
board
shall
specify
in
advance,
by
order
issued
after
a
25
contested
case
proceeding,
the
ratemaking
principles
that
will
26
apply
when
the
costs
of
the
acquired
utility
are
included
in
27
regulated
rates.
The
lesser
of
the
sale
price
or
the
fair
28
market
value
of
the
acquired
utility
as
established
pursuant
29
to
section
388.2A,
subsection
2
,
shall
be
used
in
determining
30
the
applicable
ratemaking
principles.
In
determining
the
31
applicable
ratemaking
principles,
the
board
shall
not
be
32
limited
to
traditional
ratemaking
principles
or
traditional
33
cost
recovery
mechanisms.
Among
the
principles
and
mechanisms
34
the
board
may
consider,
the
board
has
the
authority
to
approve
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ratemaking
principles
that
provide
for
reasonable
restrictions
1
upon
the
ability
of
the
public
utility
to
seek
an
increase
2
in
specified
regulated
rates
for
a
period
of
time
after
the
3
acquisition
takes
place.
The
final
order
including
the
rate
4
base
and
approving
the
acquisition
shall
consider
reasonable
5
and
customary
closing
costs,
the
cost
of
appraisals,
and
6
regulatory
and
legal
expenses
incurred
in
connection
with
the
7
acquisition.
8
d.
In
determining
the
applicable
ratemaking
principles,
9
the
board
shall
find
that
the
proposed
acquisition
will
result
10
in
just
and
reasonable
rates
to
all
customers
of
the
public
11
utility,
including
but
not
limited
to
existing
customers
of
12
the
public
utility.
In
making
this
finding,
the
board
may
13
consider
any
factor
it
reasonably
concludes
may
affect
future
14
rates,
including
but
not
limited
to
the
price
paid
for
the
15
acquired
utility
and
the
projected
cost
of
reasonable
and
16
prudent
changes
to
investments
in
the
acquired
utility
in
order
17
to
provide
adequate
safe
and
reliable
services
and
facilities
18
to
customers.
The
board
shall
consider
whether
there
are
19
ratemaking
principles
that
will
result
in
just
and
reasonable
20
rates
to
all
customers
in
determining
whether
to
approve
or
21
disapprove
a
proposed
acquisition.
22
e.
(1)
In
determining
the
applicable
ratemaking
principles,
23
the
board
shall
require
the
public
utility
to
submit
a
purchase
24
agreement
for
the
acquisition
and
shall
find
that
the
purchase
25
agreement
includes
terms,
conditions,
requirements,
and
other
26
provisions
applicable
to
the
system
to
be
acquired
that
are
in
27
substantial
compliance
with
the
requirements
in
sections
362.3,
28
364.2,
364.7,
384.84,
388.2,
388.2A,
and
388.6.
29
(2)
The
purchase
agreement
shall
include
a
term
allowing
30
the
parties
thirty
days,
after
final
approval
of
the
ratemaking
31
principles,
to
terminate
the
purchase
agreement
without
32
penalty.
33
e.
f.
If
the
acquisition
involves
a
utility
that
is
an
34
at-risk
system
as
defined
in
section
455B.199D
,
the
board
shall
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473
issue
a
final
order
on
an
application
for
approval
of
the
1
acquisition
within
one
hundred
twenty
days
from
the
filing
of
2
the
application.
For
all
other
acquisitions,
the
board
shall
3
issue
an
order
within
one
hundred
eighty
days
of
the
filing
4
date
of
the
application.
5
f.
g.
Upon
the
approval
of
a
proposal
for
acquisition
6
by
board
order,
the
parties
subject
to
the
acquisition
shall
7
have
the
option
of
either
proceeding
with
such
acquisition
or
8
not,
subject
to
any
termination
provisions
contained
in
the
9
acquisition
agreement.
10
g.
h.
Notwithstanding
any
provision
of
this
chapter
to
the
11
contrary,
the
ratemaking
principles
established
by
the
board
12
pursuant
to
this
section
shall
be
binding
with
regard
to
the
13
acquired
utility
in
any
subsequent
rate
proceeding.
14
EXPLANATION
15
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
16
the
explanation’s
substance
by
the
members
of
the
general
assembly.
17
This
bill
relates
to
the
acquisition
of
water,
sanitary
18
sewer,
and
storm
water
utilities
by
rate-regulated
public
19
utilities.
20
The
bill
increases
the
threshold
amount
requiring
utilities
21
board
(board)
approval
from
$500,000
to
$3
million
when
a
22
public
utility
is
acquiring
a
water,
sanitary
sewer,
or
storm
23
water
utility.
The
bill
modifies
city
utility
acquisition
to
24
include
that
the
city
must
first
certify
completion
of
the
25
requirements
of
Code
sections
362.3
(regarding
publication
of
26
notices),
364.2
(regarding
vesting
power
of
franchises),
364.7
27
(regarding
disposal
of
property),
384.84
(regarding
rate
and
28
charges,
billing,
and
contracts),
388.2
(regarding
submission
29
to
voters),
388.2A
(regarding
the
procedure
for
disposal
of
a
30
city
utility
by
sale),
and
388.6
(regarding
discrimination
in
31
rates).
Current
law
requires
that
the
city
meet
requirements
32
of
Code
section
388.2A,
but
not
certify
compliance.
33
The
bill
provides
that
the
rate
base
in
the
final
order
34
approving
an
acquisition
shall
include
reasonable
and
customary
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closing
costs,
the
cost
of
appraisals,
and
regulatory
and
legal
1
expenses
incurred
in
connection
with
the
acquisition.
2
The
bill
provides
that
the
board
shall
require
a
public
3
utility
to
submit
a
purchase
agreement
for
the
acquisition
and
4
shall
find
the
purchase
agreement
includes
terms,
conditions,
5
requirements,
and
other
provisions
applicable
to
the
system
6
sought
to
be
acquired
and
the
public
utility
shall
be
in
7
compliance
with
specified
provisions
in
determining
applicable
8
ratemaking
principles.
The
purchase
agreement
shall
include
9
a
term
allowing
the
parties
30
days
after
final
approval
of
10
the
ratemaking
principles
to
terminate
the
purchase
agreement
11
without
penalty.
12
The
bill
provides
that
the
board
shall
issue
a
final
order
13
within
120
days
of
the
filing
of
an
application
for
the
14
acquisition
of
an
at-risk
utility
system,
or
an
order
within
15
180
days
for
all
other
acquisitions.
Current
law
provides
that
16
the
board
shall
issue
a
final
order
within
120
days
of
filing
17
the
application
for
a
utility
that
is
an
at-risk
system.
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