Read the full stored bill text
House
File
2032
-
Introduced
HOUSE
FILE
2032
BY
VONDRAN
A
BILL
FOR
An
Act
establishing
procedures
for
system
enhancement
of
1
infrastructure,
including
for
development
of
ratemaking
2
principles
permitted
for
recovery
costs
of
certain
3
investments
in
infrastructure
by
water
and
wastewater
4
utilities.
5
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
6
TLSB
5582YH
(2)
91
sb/js
H.F.
2032
Section
1.
NEW
SECTION
.
476.59
System
enhancement
1
infrastructure.
2
1.
It
is
the
intent
of
the
general
assembly
to
authorize
3
alternative
ratemaking
mechanisms
to
develop
and
sustain
4
adequate
water
and
wastewater
treatment
facilities
within
the
5
state
to
ensure
resilient
water
supply
and
sanitation
services
6
for
Iowa
consumers
and
provide
economic
benefits
to
the
state.
7
The
commission
shall
not
be
bound
by
traditional
ratemaking
8
principles
or
traditional
cost
recovery
mechanisms
with
respect
9
to
system
enhancement
infrastructure.
10
2.
For
purposes
of
this
section:
11
a.
“Blanket-type
work
project
order”
means
an
agreement
12
between
an
eligible
utility
and
a
supplier
to
deliver
goods
or
13
services
at
a
set
price
on
a
recurring
basis
over
a
specified
14
time
period.
15
b.
“Eligible
utility”
means
an
investor-owned
public
16
utility
providing
water
or
wastewater
service
subject
to
rate
17
regulation
by
the
commission
pursuant
to
section
476.1.
18
c.
“Plan”
means
a
multiyear
plan
to
implement
system
19
enhancement
improvements.
20
d.
“Pretax
return”
means
the
revenues
necessary
to
21
accomplish
all
of
the
following:
22
(1)
Producing
net
operating
income
equal
to
the
utility’s
23
weighted
cost
of
capital
approved
in
the
utility’s
most
recent
24
rate
case
and
the
actual
embedded
cost
of
debt
at
the
time
the
25
filing
is
made
multiplied
by
investments
in
service
enhancement
26
improvements.
27
(2)
Paying
state
and
federal
income
taxes
applicable
to
28
income
under
subparagraph
(1).
29
e.
“Requirement”
means
any
decision
or
regulation
imposed
on
30
an
eligible
utility
by
a
local
government
unit,
a
state,
or
the
31
federal
government
in
connection
with
any
of
the
following:
32
(1)
The
federal
Water
Pollution
Control
Act,
33
U.S.C.
§1251
33
et
seq.
34
(2)
The
federal
Safe
Drinking
Water
Act,
42
U.S.C.
§300f
et
35
-1-
LSB
5582YH
(2)
91
sb/js
1/
9
H.F.
2032
seq.
1
(3)
Any
other
law,
order,
or
regulation
administered
by
2
the
United
States
environmental
protection
agency,
the
United
3
States
army
corps
of
engineers,
the
United
States
department
of
4
transportation,
or
the
Iowa
department
of
natural
resources.
5
(4)
Regulations
imposed
by
a
local
government
unit.
6
f.
“System
enhancement
charge”
means
a
charge
assessed
by
an
7
eligible
utility
to
recover
system
enhancement
costs.
8
g.
(1)
“System
enhancement
costs”
means
the
following
9
costs
associated
with
any
of
the
following
system
enhancement
10
improvements:
11
(a)
Depreciation
expenses,
including
any
such
expenses
12
incurred
prior
to
the
approval
of
a
plan
containing
the
13
applicable
system
enhancement
improvement.
14
(b)
Operation
and
maintenance
expenses.
15
(c)
Restoration
costs
incurred
to
restore
property
to
its
16
preconstruction
condition
other
than
those
already
capitalized
17
and
included
in
depreciation
expenses.
18
(d)
Property
taxes
to
be
paid
by
the
utility
based
upon
the
19
first
assessment
date
following
placement
in
service.
20
(e)
Pretax
return.
21
(2)
“System
enhancement
costs”
does
not
include
fines
22
or
penalties
assessed
against
or
imposed
on
a
utility
for
23
violating
laws,
regulations,
or
consent
decrees.
24
h.
(1)
“System
enhancement
improvement”
means
a
water
25
or
wastewater
utility
plant
project
that
does
any
of
the
26
following:
27
(a)
Replaces
or
extends
the
useful
life
of
existing
28
infrastructure
that
is
at
the
end
of
its
useful
life
or
for
29
which
replacement
is
necessary
to
further
resiliency,
health,
30
safety,
or
environmental
protection
for
the
utility’s
customers
31
or
employees,
or
the
public.
32
(b)
Installs
new
utility
infrastructure
necessary
to
33
further
resiliency,
health,
safety,
or
environmental
protection
34
for
the
utility’s
customers
or
employees,
or
the
public.
35
-2-
LSB
5582YH
(2)
91
sb/js
2/
9
H.F.
2032
(c)
Installs
new
utility
infrastructure
necessary
to
comply
1
with
federal
or
state
requirements
pertaining
to
resilience,
2
health,
safety,
or
environmental
protection.
3
(d)
Relocates
utility
infrastructure
necessary
to
4
accommodate
public
improvement
projects
to
the
extent
the
5
relocation
costs
are
not
otherwise
reimbursed
through
the
6
public
improvement
project.
7
(2)
“System
enhancement
improvement”
does
not
include
a
8
water
or
wastewater
utility
plant
included
in
the
eligible
9
utility’s
rate
base
in
its
most
recent
general
rate
case.
10
3.
a.
Before
an
eligible
utility
may
seek
recovery
of
11
its
service
enhancement
costs
through
a
system
enhancement
12
charge
under
this
section,
it
must
first
obtain
approval
13
from
the
commission
of
a
plan
including
the
proposed
service
14
enhancement
improvement.
The
eligible
utility
must
file
with
15
the
commission
an
application
and
supporting
evidence
for
the
16
plan.
The
commission
shall
dismiss
an
application
to
approve
17
a
plan
if
the
commission
has
not
issued
a
final
order
in
a
18
general
rate
case
proceeding
under
section
476.6
involving
the
19
eligible
utility
for
the
same
type
of
utility
service
within
20
the
past
five
years.
21
b.
Evidence
supporting
an
application
to
approve
a
plan
22
shall
include
all
of
the
following:
23
(1)
Projected
annual
capital
expenditures
identified
24
by
major
categories
of
expenditures
of
service
enhancement
25
improvements
included
in
the
plan
if
such
information
is
26
reasonably
available
at
the
time
of
filing
the
application.
27
(2)
Estimated
operation
and
maintenance
costs
resulting
28
from
the
service
enhancement
improvements.
29
(3)
A
description
of
the
age,
condition,
or
other
similar
30
and
reasonably
available
information
about
the
existing
31
infrastructure
that
is
being
replaced
or
having
its
useful
life
32
extended,
if
applicable.
33
(4)
For
service
enhancement
improvements
included
in
the
34
plan
that
are
intended
to
comply
with
requirements:
35
-3-
LSB
5582YH
(2)
91
sb/js
3/
9
H.F.
2032
(a)
The
applicable
requirements,
including
any
consent
1
decrees
related
to
the
requirements.
2
(b)
A
narrative
describing
how
the
service
enhancement
3
improvement
enables
compliance
with
the
requirements.
4
(c)
Alternative
plans
for
compliance
considered
by
the
5
eligible
utility.
6
(5)
An
engineering
evaluation
and
report
identifying
the
7
system
enhancement
improvements
included
in
the
plan,
with
8
descriptions
of
project
objectives,
detailed
cost
estimates,
9
and
the
estimated
in-service
dates
for
each
system
enhancement
10
improvement.
11
(6)
Proposed
rate
schedules
establishing
a
system
12
enhancement
charge.
13
(7)
The
estimated
rate
impact
of
the
proposed
system
14
enhancement
charge.
15
c.
An
application
for
approval
of
a
plan
shall
be
a
16
contested
case.
The
commission
shall
issue
its
final
order
17
on
the
application
not
more
than
six
months
after
the
filing
18
of
the
petition.
The
commission
shall
approve
the
plan
19
and
authorize
the
system
enhancement
charge
for
the
system
20
enhancement
costs
resulting
from
the
plan
if
the
commission
21
finds
that
the
system
enhancement
plan
meets
all
of
the
22
following
criteria:
23
(1)
Consists
of
projects
that
are
service
enhancement
24
improvements,
except
any
removed
pursuant
to
paragraph
“d”
.
25
(2)
Includes
cost
estimates
that
enable
a
reasonable
26
assessment
of
the
costs
of
the
plan.
27
(3)
Will
result
in
rates
that
are
just
and
reasonable.
28
d.
The
commission
shall
not
disapprove
the
plan
on
the
basis
29
that
one
or
more
service
enhancement
improvements
within
the
30
plan
do
not
satisfy
paragraph
“e”
.
The
commission
may
approve
31
the
plan
subject
to
the
removal
of
the
service
enhancement
32
improvements
found
not
to
satisfy
paragraph
“e”
.
33
e.
An
eligible
utility
that
operates
both
a
water
and
34
wastewater
utility
may
establish
separate
plans
for
water
and
35
-4-
LSB
5582YH
(2)
91
sb/js
4/
9
H.F.
2032
wastewater
enhancement
plans
and
such
plans
may
be
presented
to
1
the
commission
through
different
petitions.
2
4.
a.
An
eligible
utility
with
one
or
more
plans
approved
3
under
subsection
3
may
file
with
the
commission
an
application
4
annually
setting
forth
rate
schedules
establishing
a
system
5
enhancement
charge,
which
may
thereafter
be
automatically
6
adjusted
and
include
a
reconciliation
of
revenues
collected
7
under
previous
system
enhancement
charges.
A
revenue
8
reconciliation
filing
will
be
filed
on
an
annual
basis
no
later
9
than
ninety
days
following
the
expiration
of
the
charge.
10
b.
The
system
enhancement
charge
shall
do
all
of
the
11
following:
12
(1)
Be
calculated
as
a
monthly
fixed
charge
based
upon
meter
13
size.
14
(2)
Not
include
recovery
of
any
system
enhancement
costs
15
recovered
by
the
eligible
utility
through
contributions
in
aid
16
of
construction.
17
(3)
Recover
system
enhancement
costs
incurred
prior
to
the
18
date
of
the
petition
and
not
previously
recovered
through
a
19
system
enhancement
charge.
20
(4)
Reflect
system
enhancement
costs
for
system
enhancement
21
improvements
placed
in
service
prior
to
the
date
the
22
application
is
filed.
23
(5)
Include
the
pretax
return
associated
with
the
accrued
24
asset
value
reflected
on
the
eligible
utility’s
books
and
25
records
as
of
the
date
of
the
petition
for
system
enhancement
26
improvements
with
a
projected
construction
period
of
more
than
27
twelve
months.
28
c.
The
application
filed
to
implement
the
system
enhancement
29
charge
shall
include
all
of
the
following:
30
(1)
A
breakdown
of
costs
for
each
service
enhancement
31
improvement
that
clearly
identifies
the
status
of
completion
of
32
such
project.
33
(2)
The
actual
costs
incurred,
the
projected
construction
34
timeline
for
projects
with
a
construction
period
of
more
than
35
-5-
LSB
5582YH
(2)
91
sb/js
5/
9
H.F.
2032
twelve
months,
and
the
in-service
or
estimated
in-service
1
dates
or
aggregate
information
capturing
service
enhancement
2
improvements
constructed
pursuant
to
blanket-type
work
project
3
orders
and
the
actual
annual
costs
of
the
replacement
programs
4
performed
pursuant
to
blanket-type
work
project
orders.
5
d.
Actual
costs
that
exceed
more
than
twenty-five
percent
of
6
the
projected
costs
set
forth
in
the
eligible
utility’s
plan
7
approved
under
this
section
require
specific
justification
by
8
the
eligible
utility
and
specific
approval
by
the
commission
9
before
being
authorized
in
the
next
general
rate
case
filed
by
10
the
eligible
utility
with
the
commission.
11
e.
The
commission
shall
not
authorize
an
adjustment
to
the
12
system
enhancement
charge
to
incorporate
system
enhancement
13
costs
incurred
since
the
date
of
prior
petition
filed
under
14
this
subsection
if
the
commission
has
not
issued
a
final
order
15
in
a
general
rate
case
proceeding
under
section
476.6
involving
16
the
eligible
utility
within
the
past
five
years.
17
5.
System
enhancement
costs
incurred
prior
to
the
18
commission’s
approval
of
a
plan
shall
be
eligible
for
recovery
19
through
a
subsequent
system
enhancement
charge,
provided
the
20
associated
system
enhancement
improvements
are
included
in
a
21
plan
approved
by
the
commission.
A
utility
may
defer
such
22
system
enhancement
costs
for
recovery
through
the
utility’s
23
next
approved
system
enhancement
charge.
24
6.
A
petition
to
implement
or
change
a
system
enhancement
25
charge
may
include
changes
or
updates
to
any
information
26
provided
in
the
system
enhancement
plan,
provided
that
the
27
utility
has
a
reasonable
expectation
that
the
changes
or
28
updates
will
occur
during
the
time
the
plan
is
effective.
29
Project
changes
may
include
but
shall
not
be
limited
to
30
additions,
replacements,
or
deferral
projects
that
otherwise
31
qualify
as
service
enhancement
improvements.
32
7.
Publication
of
notice
of
an
eligible
utility’s
petitions
33
under
section
476.6,
subsection
2,
is
not
required.
34
8.
An
eligible
utility’s
system
enhancement
charge
approved
35
-6-
LSB
5582YH
(2)
91
sb/js
6/
9
H.F.
2032
under
this
section
shall
reset
to
zero
upon
approval
of
1
new
basic
rates
and
charges
for
the
eligible
utility
by
the
2
commission
in
a
general
rate
case
in
which
the
eligible
utility
3
adds
the
system
enhancement
improvements
to
its
rate
base.
4
EXPLANATION
5
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
6
the
explanation’s
substance
by
the
members
of
the
general
assembly.
7
This
bill
establishes
procedures
for
system
enhancement
8
of
infrastructure,
including
the
development
of
ratemaking
9
principles
permitted
for
the
recovery
costs
of
certain
10
investments
in
infrastructure
by
water
and
wastewater
11
utilities.
The
bill
states
the
intent
of
the
general
12
assembly
that
these
mechanisms
be
available
to
support
the
13
development
and
sustainability
of
adequate
and
resilient
water
14
and
wastewater
treatment
facilities,
and
provides
that
the
15
commission
is
not
bound
by
traditional
ratemaking
principles
16
when
evaluating
system
enhancement
infrastructure.
17
The
bill
defines
terms,
including
“system
enhancement
costs”
18
and
“system
enhancement
improvement”.
System
enhancement
19
costs
include
depreciation
expenses,
operation
and
maintenance
20
expenses,
restoration
costs,
property
taxes,
and
pretax
21
return,
but
exclude
fines
and
penalties.
System
enhancement
22
improvements
include
a
water
or
wastewater
utility
plant
23
project
that
replaces
or
extends
the
useful
life
of
existing
24
infrastructure;
installs
new
infrastructure
necessary
25
to
support
resiliency,
health,
safety,
or
environmental
26
protection;
constructs
infrastructure
necessary
to
comply
27
with
federal
or
state
requirements;
or
relocates
utility
28
infrastructure
necessary
to
accommodate
public
improvement
29
projects
when
the
relocation
costs
are
not
reimbursed.
Utility
30
plants
included
in
an
eligible
utility’s
most
recent
rate
base
31
are
excluded
from
the
definition.
32
The
bill
requires
an
eligible
utility
to
obtain
commission
33
approval
of
a
plan
before
seeking
recovery
of
system
34
enhancement
costs
through
a
system
enhancement
charge.
The
35
-7-
LSB
5582YH
(2)
91
sb/js
7/
9
H.F.
2032
bill
requires
the
commission
to
dismiss
an
application
for
a
1
plan
if
the
utility
has
not
received
a
final
order
in
a
general
2
rate
case
for
the
same
type
of
utility
service
within
the
3
previous
five
years.
4
The
bill
requires
an
application
for
approval
of
a
plan
5
to
include
projected
annual
capital
expenditures,
estimated
6
operation
and
maintenance
costs,
a
description
of
the
age
or
7
condition
of
infrastructure
to
be
replaced
or
have
its
useful
8
life
extended,
applicable
legal
or
regulatory
requirements
9
and
any
consent
decrees,
a
description
of
how
proposed
10
improvements
enable
compliance,
alternative
compliance
options
11
considered,
an
engineering
evaluation
and
report
identifying
12
system
enhancement
improvements
along
with
cost
estimates
and
13
estimated
in-service
dates,
proposed
rate
schedules
for
the
14
system
enhancement
charge,
and
the
estimated
rate
impact
of
the
15
charge.
16
The
bill
requires
the
application
to
be
a
contested
case,
and
17
the
commission
must
issue
a
final
order
within
six
months
of
18
filing.
The
bill
requires
the
commission
to
approve
the
plan
19
if
the
commission
determines
that
the
plan
consists
of
system
20
enhancement
improvements,
includes
cost
estimates
that
allow
21
reasonable
assessment,
and
will
result
in
rates
that
are
just
22
and
reasonable.
23
The
bill
restricts
the
commission
from
disapproving
a
24
plan
on
the
basis
of
one
or
more
service
enhancements,
but
25
allows
the
commission
to
approve
plans
subject
to
removal
of
26
the
service
enhancement
improvements
that
do
not
satisfy
the
27
criteria.
28
The
bill
allows
a
utility
providing
both
water
and
29
wastewater
service
to
submit
separate
plans
for
each
service.
30
Following
approval
of
a
plan,
the
bill
permits
an
eligible
31
utility
to
file
an
annual
application
to
establish
or
adjust
a
32
system
enhancement
charge.
The
charge
must
be
calculated
as
33
a
fixed
monthly
charge
based
on
meter
size,
shall
not
include
34
recovery
of
costs
recovered
through
contributions
in
aid
of
35
-8-
LSB
5582YH
(2)
91
sb/js
8/
9
H.F.
2032
construction,
must
recover
system
enhancement
costs
incurred
1
prior
to
filing
that
have
not
been
previously
recovered,
must
2
reflect
costs
for
system
enhancement
improvements
placed
3
in
service
before
the
filing
date,
and
must
include
the
4
pretax
return
associated
with
improvements
with
a
projected
5
construction
period
exceeding
12
months.
6
The
bill
requires
the
annual
application
to
include
a
7
breakdown
of
costs
for
each
improvement
with
a
project’s
status
8
of
completion,
and
actual
costs
incurred.
If
actual
costs
9
exceed
projected
costs
by
more
than
25
percent,
the
eligible
10
utility
must
specifically
justify
the
cost
overrun
and
obtain
11
specific
commission
approval
before
the
costs
may
be
authorized
12
in
the
utility’s
next
general
rate
case.
13
The
bill
prohibits
the
commission
from
authorizing
an
14
adjustment
to
a
system
enhancement
charge
if
the
utility
has
15
not
received
a
final
order
in
a
general
rate
case
within
the
16
previous
five
years.
17
The
bill
authorizes
an
eligible
utility
to
defer
system
18
enhancement
costs
incurred
prior
to
commission
approval
of
19
a
plan
for
recovery
through
a
subsequent
system
enhancement
20
charge,
provided
the
associated
improvements
are
included
in
21
an
approved
plan.
The
bill
further
authorizes
an
eligible
22
utility,
when
filing
a
petition
to
implement
or
change
a
system
23
enhancement
charge,
to
update
information
from
the
plan
and
24
to
include
project
additions,
replacements,
or
deferrals
that
25
otherwise
qualify
as
system
enhancement
improvements
and
that
26
the
utility
reasonably
expects
to
occur
while
the
plan
is
27
effective.
28
The
bill
exempts
petitions
under
the
bill
from
the
29
publication
of
notice
requirements.
The
bill
requires
a
system
30
enhancement
charge
to
reset
to
zero
upon
approval
of
new
basic
31
rates
and
charges
for
the
eligible
utility
in
a
general
rate
32
case
in
which
the
system
enhancement
improvements
are
included
33
in
the
utility’s
rate
base.
34
-9-
LSB
5582YH
(2)
91
sb/js
9/
9