SB3051 EnrolledLRB100 19159 SMS 34424 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Public Utilities Act is amended by adding
5Section 9-210.6 as follows:
 
6    (220 ILCS 5/9-210.6 new)
7    Sec. 9-210.6. Continuation of Section 9-210.5 of this Act;
8validation.
9    (a) The General Assembly finds and declares that:
10        (1) Public Act 100-751, which took effect on August 10,
11    2018, contained provisions that would have changed the
12    repeal date for Section 9-210.5 of this Act from June 1,
13    2018 to June 1, 2028.
14        (2) The Statute on Statutes sets forth general rules on
15    the repeal of statutes and the construction of multiple
16    amendments, but Section 1 of that Act also states that
17    these rules will not be observed when the result would be
18    "inconsistent with the manifest intent of the General
19    Assembly or repugnant to the context of the statute".
20        (3) This amendatory Act of the 100th General Assembly
21    manifests the intention of the General Assembly to extend
22    the repeal date for Section 9-210.5 of this Act and have
23    Section 9-210.5 of this Act, as amended by Public Act

 

 

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1    100-751, continue in effect until June 1, 2028.
2    (b) Any construction of this Act that results in the repeal
3of Section 9-210.5 of this Act on June 1, 2018 would be
4inconsistent with the manifest intent of the General Assembly
5and repugnant to the context of this Act.
6    (c) It is hereby declared to have been the intent of the
7General Assembly that Section 9-210.5 of this Act shall not be
8subject to repeal on June 1, 2018.
9    (d) Section 9-210.5 of this Act shall be deemed to have
10been in continuous effect since August 9, 2013 (the effective
11date of Public Act 98-213), and it shall continue to be in
12effect, as amended by Public Act 100-751, until it is otherwise
13lawfully amended or repealed. All previously enacted
14amendments to the Section taking effect on or after August 9,
152013, are hereby validated.
16    (e) In order to ensure the continuing effectiveness of
17Section 9-210.5 of this Act, that Section is set forth in full
18and reenacted by this amendatory Act of the 100th General
19Assembly. In this amendatory Act of the 100th General Assembly,
20the base text of the reenacted Section is set forth as amended
21by Public Act 100-751.
22    (f) All actions of the Commission or any other person or
23entity taken in reliance on or pursuant to Section 9-210.5 are
24hereby validated.
25    (g) Section 9-210.5 of this Act applies to all proceedings
26pending on or filed on or before the effective date of this

 

 

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1amendatory Act of the 100th General Assembly.
 
2    Section 10. The Public Utilities Act is amended by
3reenacting Section 9-210.5 as follows:
 
4    (220 ILCS 5/9-210.5)
5    Sec. 9-210.5. Valuation of water and sewer utilities.
6    (a) In this Section:
7        "Disinterested" means that the person directly
8    involved (1) is not a director, officer, or an employee of
9    the large public utility or the water or sewer utility or
10    its direct affiliates or subsidiaries for at least 12
11    months before becoming engaged under this Section; (2)
12    shall not derive a material financial benefit from the sale
13    of the water or sewer utility other than fees for services
14    rendered, and (3) shall not have a member of the person's
15    immediate family, including a spouse, parents or spouse's
16    parents, children or spouses of children, or siblings and
17    their spouses or children, be a director, officer, or
18    employee of either the large public utility or water or
19    sewer utility or the water or sewer utility or its direct
20    affiliates or subsidiaries for at least 12 months before
21    becoming engaged under this Section or receive a material
22    financial benefit from the sale of the water or sewer
23    utility other than fees for services rendered.
24        "District" means a service area of a large public

 

 

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1    utility whose customers are subject to the same rate
2    tariff.
3        "Large public utility" means an investor-owned public
4    utility that:
5            (1) is subject to regulation by the Illinois
6        Commerce Commission under this Act;
7            (2) regularly provides water or sewer service to
8        more than 30,000 customer connections;
9            (3) provides safe and adequate service; and
10            (4) is not a water or sewer utility as defined in
11        this subsection (a).
12        "Next rate case" means a large public utility's first
13    general rate case after the date the large public utility
14    acquires the water or sewer utility where the acquired
15    water or sewer utility's cost of service is considered as
16    part of determining the large public utility's resulting
17    rates.
18        "Prior rate case" means a large public utility's
19    general rate case resulting in the rates in effect for the
20    large public utility at the time it acquires the water or
21    sewer utility.
22        "Utility service source" means the water or sewer
23    utility or large public utility from which the customer
24    receives its utility service type.
25        "Utility service type" means water utility service or
26    sewer utility service or water and sewer utility service.

 

 

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1        "Water or sewer utility" means any of the following:
2            (1) a public utility that regularly provides water
3        or sewer service to 6,000 or fewer customer
4        connections;
5            (2) a water district, including, but not limited
6        to, a public water district, water service district, or
7        surface water protection district, or a sewer district
8        of any kind established as a special district under the
9        laws of this State that regularly provides water or
10        sewer service;
11            (3) a waterworks system or sewerage system
12        established under the Township Code that regularly
13        provides water or sewer service; or
14            (4) a water system or sewer system owned by a
15        municipality that regularly provides water or sewer
16        service; and
17            (5) any other entity that is not a public utility
18        that regularly provides water or sewer service.
19    (b) Notwithstanding any other provision of this Act, a
20large public utility that acquires a water or sewer utility may
21request that the Commission use, and, if so requested, the
22Commission shall use, the procedures set forth under this
23Section to establish the ratemaking rate base of that water or
24sewer utility at the time when it is acquired by the large
25public utility.
26    (c) If a large public utility elects the procedures under

 

 

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1this Section to establish the rate base of a water or sewer
2utility that it is acquiring, then 3 appraisals shall be
3performed. The average of these 3 appraisals shall represent
4the fair market value of the water or sewer utility that is
5being acquired. The appraisals shall be performed by 3
6appraisers approved by the Commission's Executive Director or
7designee and engaged by either the water or sewer utility being
8acquired or by the large public utility. Each appraiser shall
9be engaged on reasonable terms approved by the Commission. Each
10appraiser shall be a disinterested person licensed as a State
11certified general real estate appraiser under the Real Estate
12Appraiser Licensing Act of 2002.
13    Each appraiser shall:
14        (1) be sworn to determine the fair market value of the
15    water or sewer utility by establishing the amount for which
16    the water or sewer utility would be sold in a voluntary
17    transaction between a willing buyer and willing seller
18    under no obligation to buy or sell;
19        (2) determine fair market value in compliance with the
20    Uniform Standards of Professional Appraisal Practice;
21        (3) engage one disinterested engineer who is licensed
22    in this State, and who may be the same engineer that is
23    engaged by the other appraisers, to prepare an assessment
24    of the tangible assets of the water or sewer utility, which
25    is to be incorporated into the appraisal under the cost
26    approach;

 

 

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1        (4) request from the manager of the Accounting
2    Department, if the water or sewer utility is a public
3    utility that is regulated by the Commission, a list of
4    investments made by the water or sewer utility that had
5    been disallowed previously and that shall be excluded from
6    the calculation of the large public utility's rate base in
7    its next rate case; and
8        (5) return their appraisal, in writing, to the water or
9    sewer utility and large public utility in a reasonable and
10    timely manner.
11    If the appraiser cannot engage an engineer, as described in
12paragraph (3) of this subsection (c), within 30 days after the
13appraiser is engaged, then the Commission's Executive Director
14or designee shall recommend the engineer the appraiser should
15engage. The Commission's Executive Director or designee shall
16provide his or her recommendation within 30 days after he or
17she is officially notified of the appraiser's failure to engage
18an engineer and the appraiser shall promptly work to engage the
19recommended engineer. If the appraiser is unable to negotiate
20reasonable engagement terms with the recommended engineer
21within 15 days after the recommendation by the Commission's
22Executive Director or designee, then the appraiser shall notify
23the Commission's Executive Director or designee and the process
24shall be repeated until an engineer is successfully engaged.
25    (d) The lesser of (i) the purchase price or (ii) the fair
26market value determined under subsection (c) of this Section

 

 

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1shall constitute the rate base associated with the water or
2sewer utility as acquired by and incorporated into the rate
3base of the district designated by the acquiring large public
4utility under this Section, subject to any adjustments that the
5Commission deems necessary to ensure such rate base reflects
6prudent and useful investments in the provision of public
7utility service. The reasonable transaction and closing costs
8incurred by the large public utility shall be treated
9consistent with the applicable accounting standards under this
10Act. The total amount of all of the appraisers' fees to be
11included in the transaction and closing costs shall not exceed
12the greater of $15,000 or 5% of the appraised value of the
13water or sewer utility being acquired. This rate base treatment
14shall not be deemed to violate this Act, including, but not
15limited to, any Sections in Articles VIII and IX of this Act
16that might be affected by this Section. Any acquisition of a
17water or sewer utility that affects the cumulative base rates
18of the large public utility's existing ratepayers in the tariff
19group into which the water or sewer utility is to be combined
20by less than (1) 2.5% at the time of the acquisition for any
21single acquisition completed under this Section or (2) 5% for
22all acquisitions completed under this Section before the
23Commission's final order in the next rate case shall not be
24deemed to violate Section 7-204 or any other provision of this
25Act.
26    In the Commission's order that approves the large public

 

 

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1utility's acquisition of the water or sewer utility, the
2Commission shall issue its decision establishing (1) the
3ratemaking rate base of the water or sewer utility; (2) the
4district or tariff group with which the water or sewer utility
5shall be combined for ratemaking purposes, if such combination
6has been proposed by the large public utility; and (3) the
7rates to be charged to customers in the water or sewer utility.
8    (e) If the water or sewer utility being acquired is owned
9by the State or any political subdivision thereof, then the
10water or sewer utility must inform the public of the terms of
11its acquisition by the large public utility by (1) holding a
12public meeting prior to the acquisition and (2) causing to be
13published, in a newspaper of general circulation in the area
14that the water or sewer utility operates, a notice setting
15forth the terms of its acquisition by the large public utility
16and options that shall be available to assist customers to pay
17their bills after the acquisition.
18    (f) The large public utility may recommend the district or
19tariff group of which the water or sewer utility shall, for
20ratemaking purposes, become a part after the acquisition, or
21may recommend a lesser rate for the water or sewer utility. If
22the large public utility recommends a lesser rate, it shall
23submit to the Commission its proposed rate schedule and the
24proposed final tariff group for the acquired water or sewer
25utility. The Commission's approved district or tariff group or
26rates shall be consistent with the large public utility's

 

 

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1recommendation, unless such recommendation can be shown to be
2contrary to the public interest.
3    (g) From the date of acquisition until the date that new
4rates are effective in the acquiring large public utility's
5next rate case, the customers of the acquired water or sewer
6utility shall pay the approved then-existing rates of the
7district or tariff group as ordered by the Commission, or some
8lesser rates as recommended by the large public utility and
9approved by the Commission under subsection (f); provided,
10that, if the application of such rates of the large public
11utility to customers of the acquired water or sewer utility
12using 54,000 gallons annually results in an increase to the
13total annual bill of customers of the acquired water or sewer
14utility, exclusive of fire service or related charges, then the
15large public utility's rates charged to the customers of the
16acquired water or sewer utility shall be uniformly reduced, if
17any reduction is required, by the percent that results in the
18total annual bill, exclusive of fire services or related
19charges, for the customers of the acquired water or sewer
20utility using 54,000 gallons being equal to 1.5% of the latest
21median household income as reported by the United States Census
22Bureau for the most applicable community or county. For each
23customer of the water or sewer utility with potable water usage
24values that cannot be reasonably obtained, a value of 4,500
25gallons per month shall be assigned. These rates shall not be
26deemed to violate this Act including, but not limited to,

 

 

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1Section 9-101 and any other applicable Sections in Articles
2VIII and IX of this Act. The Commission shall issue its
3decision establishing the rates effective for the water or
4sewer utility immediately following an acquisition in its order
5approving the acquisition.
6    (h) In the acquiring large public utility's next rate case,
7the water or sewer utility and the district or tariff group
8ordered by the Commission and their costs of service may be
9combined under the same rate tariff. This rate tariff shall be
10based on allocation of costs of service of the acquired water
11or sewer utility and the large public utility's district or
12tariff group ordered by the Commission and utilizing a rate
13design that does not distinguish among customers on the basis
14of utility service source or type. This rate tariff shall not
15be deemed to violate this Act including, but not limited to,
16Section 9-101 of this Act. In the acquiring large public
17utility's 2 rate cases after an acquisition, but in no
18subsequent rate case, the large public utility may file a rate
19tariff for a water or sewer utility acquired under this Section
20that establishes lesser rates than the district or tariff group
21into which the water or sewer utility is to be combined. Those
22lesser rates shall not be deemed to violate Section 7-204 or
23any other provision of this Act if they affect the cumulative
24base rates of the large public utility's existing rate payers
25in the district or tariff by less than 2.5%.
26    (i) Any post-acquisition improvements made by the large

 

 

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1public utility in the water or sewer utility shall accrue a
2cost for financing set at the large public utility's determined
3rate for allowance for funds used during construction,
4inclusive of the debt, equity, and income tax gross up
5components, after the date on which the expenditure was
6incurred by the large public utility until the investment has
7been in service for a 4-year period or, if sooner, until the
8time the rates are implemented in the large public utility's
9next rate case.
10    Any post-acquisition improvements made by the large public
11utility in the water or sewer utility shall not be depreciated
12for ratemaking purposes from the date on which the expenditure
13was incurred by the large public utility until the investment
14has been in service for a 4-year period or, if sooner, until
15the time the rates are implemented in the large public
16utility's next rate case.
17    (j) This Section shall be exclusively applied to large
18public utilities in the voluntary and mutually agreeable
19acquisition of water or sewer utilities. Any petitions filed
20with the Commission related to the acquisitions described in
21this Section, including petitions seeking approvals or
22certificates required by this Act, shall be deemed approved
23unless the Commission issues its final order within 11 months
24after the date the large public utility filed its initial
25petition. This Section shall only apply to utilities providing
26water or sewer service and shall not be construed in any manner

 

 

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1to apply to electric corporations, natural gas corporations, or
2any other utility subject to this Act.
3    (k) Nothing in this Section shall prohibit a party from
4declining to proceed with an acquisition or be deemed as
5establishing the final purchase price of an acquisition.
6    (l) In the Commission's order that approves the large
7utility's acquisition of the water or sewer utility, the
8Commission shall address each aspect of the acquisition
9transaction for which approval is required under the Act.
10    (m) Any contractor or subcontractor that performs work on a
11water or sewer utility acquired by a large public utility under
12this Section shall be a responsible bidder as described in
13Section 30-22 of the Illinois Procurement Code. The contractor
14or subcontractor shall submit evidence of meeting the
15requirements to be a responsible bidder as described in Section
1630-22 to the water or sewer utility. Any new water or sewer
17facility built as a result of the acquisition shall require the
18contractor to enter into a project labor agreement. The large
19public utility acquiring the water or sewer utility shall offer
20employee positions to qualified employees of the acquired water
21or sewer utility.
22    (n) This Section is repealed on June 1, 2028.
23(Source: P.A. 100-751, eff. 8-10-18.)