Read the full stored bill text
House
File
2581
-
Introduced
HOUSE
FILE
2581
BY
COMMITTEE
ON
COMMERCE
(SUCCESSOR
TO
HF
2032)
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:
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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.
“Requirement”
means
any
decision
or
regulation
imposed
on
21
an
eligible
utility
by
a
local
government
unit,
a
state,
or
the
22
federal
government
in
connection
with
any
of
the
following:
23
(1)
The
federal
Water
Pollution
Control
Act,
33
U.S.C.
§1251
24
et
seq.
25
(2)
The
federal
Safe
Drinking
Water
Act,
42
U.S.C.
§300f
et
26
seq.
27
(3)
Any
other
law,
order,
or
regulation
administered
by
28
the
United
States
environmental
protection
agency,
the
United
29
States
army
corps
of
engineers,
the
United
States
department
of
30
transportation,
the
Iowa
department
of
transportation,
or
the
31
Iowa
department
of
natural
resources.
32
(4)
Regulations
imposed
by
a
local
government
unit.
33
e.
“System
enhancement
charge”
means
a
charge
assessed
by
an
34
eligible
utility
to
recover
system
enhancement
costs.
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f.
(1)
“System
enhancement
costs”
means
the
following
1
costs
associated
with
any
of
the
following
system
enhancement
2
improvements:
3
(a)
Depreciation
expenses,
including
any
such
expenses
4
incurred
prior
to
the
approval
of
a
plan
containing
the
5
applicable
system
enhancement
improvement.
6
(b)
Operation
and
maintenance
expenses.
7
(c)
Restoration
costs
incurred
to
restore
property
to
its
8
preconstruction
condition
other
than
those
already
capitalized
9
and
included
in
depreciation
expenses.
10
(d)
Property
taxes
to
be
paid
by
the
utility
based
upon
the
11
first
assessment
date
following
placement
in
service.
12
(2)
“System
enhancement
costs”
does
not
include
fines
13
or
penalties
assessed
against
or
imposed
on
a
utility
for
14
violating
laws,
regulations,
or
consent
decrees.
15
g.
(1)
“System
enhancement
improvement”
means
a
water
16
or
wastewater
utility
plant
project
that
does
any
of
the
17
following:
18
(a)
Installs
new
utility
infrastructure
required
by
19
federal,
state,
or
local
requirements
pertaining
to
resilience,
20
health,
safety,
or
environmental
protection.
21
(b)
Relocates
utility
infrastructure
necessary
to
22
accommodate
public
improvement
projects
required
by
federal,
23
state,
or
local
jurisdictions
to
the
extent
the
relocation
24
costs
are
not
otherwise
reimbursed
through
the
public
25
improvement
project.
26
(2)
“System
enhancement
improvement”
does
not
include
a
27
water
or
wastewater
utility
plant
included
in
the
eligible
28
utility’s
rate
base
in
its
most
recent
general
rate
case.
29
3.
a.
Before
an
eligible
utility
may
seek
recovery
of
30
its
service
enhancement
costs
through
a
system
enhancement
31
charge
under
this
section,
it
must
first
obtain
approval
32
from
the
commission
of
a
plan
including
the
proposed
service
33
enhancement
improvement.
The
eligible
utility
must
file
with
34
the
commission
an
application
and
supporting
evidence
for
the
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plan.
The
commission
shall
dismiss
an
application
to
approve
1
a
plan
if
the
commission
has
not
issued
a
final
order
in
a
2
general
rate
case
proceeding
under
section
476.6
involving
the
3
eligible
utility
for
the
same
type
of
utility
service
within
4
the
past
five
years.
5
b.
Evidence
supporting
an
application
to
approve
a
plan
6
shall
include
all
of
the
following:
7
(1)
Projected
annual
capital
expenditures
identified
8
by
major
categories
of
expenditures
of
service
enhancement
9
improvements
included
in
the
plan.
10
(2)
Estimated
operation
and
maintenance
costs
resulting
11
from
the
service
enhancement
improvements.
12
(3)
A
description
of
the
age,
condition,
or
other
similar
13
and
reasonably
available
information
about
the
existing
14
infrastructure,
if
applicable.
15
(4)
The
applicable
requirements,
including
any
consent
16
decrees
and
conditions,
including
but
not
limited
to
completion
17
deadlines
related
to
the
requirements.
18
(5)
A
narrative
describing
how
the
service
enhancement
19
improvement
enables
compliance
with
the
requirements.
20
(6)
Alternative
plans
for
compliance
considered
by
the
21
eligible
utility.
22
(7)
An
engineering
evaluation
and
report
identifying
the
23
system
enhancement
improvements
included
in
the
plan,
with
24
descriptions
of
project
objectives,
detailed
cost
estimates,
25
and
the
estimated
in-service
dates
for
each
system
enhancement
26
improvement.
27
(8)
Any
blanket-type
work
order
and
its
associated
costs
28
proposed
to
implement
the
improvement.
29
(9)
Proposed
rate
schedules
establishing
a
system
30
enhancement
charge.
31
(10)
The
estimated
rate
impact
of
the
proposed
system
32
enhancement
charge.
33
c.
An
application
for
approval
of
a
plan
shall
be
a
34
contested
case.
The
commission
shall
issue
its
final
order
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on
the
application
not
more
than
ten
months
after
the
filing
1
of
the
petition.
When
reviewing
the
plan
and
corresponding
2
system
enhancement
charge,
the
commission
shall
make
reasonable
3
efforts
to
ensure
the
utility
is
in
compliance
with
the
4
requirements
as
supported
by
evidence
in
the
application
and
5
the
proceeding.
The
commission
may
consider
the
following
6
criteria:
7
(1)
Consists
of
projects
that
are
service
enhancement
8
improvements,
except
any
removed
pursuant
to
paragraph
“d”
.
9
(2)
Includes
cost
estimates
that
enable
a
reasonable
10
assessment
of
the
costs
of
the
plan.
11
(3)
Will
result
in
rates
that
are
just
and
reasonable.
12
d.
The
commission
shall
not
disapprove
the
plan
on
the
basis
13
that
one
or
more
service
enhancement
improvements
within
the
14
plan
do
not
satisfy
paragraph
“e”
.
The
commission
may
approve
15
the
plan
subject
to
the
removal
of
the
service
enhancement
16
improvements
found
not
to
satisfy
paragraph
“e”
.
17
e.
An
eligible
utility
that
operates
both
a
water
and
18
wastewater
utility
shall
establish
separate
plans
for
water
and
19
wastewater
enhancement
plans
and
such
plans
may
be
presented
to
20
the
commission
through
different
petitions.
21
4.
a.
An
eligible
utility
with
one
or
more
plans
22
approved
under
subsection
3
shall
file
with
the
commission
an
23
application
annually
setting
forth
rate
schedules
establishing
24
a
system
enhancement
charge,
which
may
thereafter
be
25
automatically
adjusted
and
include
a
reconciliation
of
revenues
26
collected
under
previous
system
enhancement
charges.
A
revenue
27
reconciliation
filing
will
be
filed
on
an
annual
basis
no
later
28
than
ninety
days
following
the
expiration
of
the
charge.
The
29
commission
shall
review
the
filing
to
ensure
compliance
with
30
previously
approved
filings.
31
b.
The
system
enhancement
charge
shall
do
all
of
the
32
following:
33
(1)
Be
calculated
as
a
monthly
fixed
charge
based
upon
meter
34
size.
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(2)
Not
include
recovery
of
any
system
enhancement
costs
1
recovered
by
the
eligible
utility
through
contributions
in
aid
2
of
construction.
3
(3)
Recover
system
enhancement
costs
incurred
prior
to
the
4
date
of
the
petition
and
not
previously
recovered
through
a
5
system
enhancement
charge.
6
(4)
Reflect
system
enhancement
costs
for
system
enhancement
7
improvements
placed
in
service
prior
to
the
date
the
8
application
is
filed.
9
c.
The
application
filed
to
implement
the
system
enhancement
10
charge
shall
include
all
of
the
following:
11
(1)
A
breakdown
of
costs
for
each
service
enhancement
12
improvement
that
clearly
identifies
the
status
of
completion
of
13
such
project.
14
(2)
The
actual
costs
incurred,
the
projected
construction
15
timeline
for
projects
with
a
construction
period
of
more
than
16
twelve
months,
and
the
in-service
or
estimated
in-service
17
dates
or
aggregate
information
capturing
service
enhancement
18
improvements
constructed
pursuant
to
blanket-type
work
project
19
orders
and
the
actual
annual
costs
of
the
replacement
programs
20
performed
pursuant
to
blanket-type
work
project
orders.
21
d.
The
commission
shall
not
authorize
an
adjustment
to
the
22
system
enhancement
charge
to
incorporate
system
enhancement
23
costs
incurred
since
the
date
of
prior
petition
filed
under
24
this
subsection
if
the
commission
has
not
issued
a
final
order
25
in
a
general
rate
case
proceeding
under
section
476.6
involving
26
the
eligible
utility
within
the
past
five
years.
27
5.
Publication
of
notice
of
an
eligible
utility’s
petitions
28
under
section
476.6,
subsection
2,
is
required.
29
6.
An
eligible
utility’s
system
enhancement
charge
approved
30
under
this
section
shall
reset
to
zero
upon
approval
of
31
new
basic
rates
and
charges
for
the
eligible
utility
by
the
32
commission
in
a
general
rate
case.
33
7.
The
commission
shall
adopt
rules
pursuant
to
chapter
17A
34
to
establish
procedures
to
implement
this
chapter.
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EXPLANATION
1
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
2
the
explanation’s
substance
by
the
members
of
the
general
assembly.
3
This
bill
establishes
procedures
for
system
enhancement
4
of
infrastructure,
including
the
development
of
ratemaking
5
principles
permitted
for
the
recovery
costs
of
certain
6
investments
in
infrastructure
by
water
and
wastewater
7
utilities.
The
bill
states
the
intent
of
the
general
8
assembly
that
these
mechanisms
be
available
to
support
the
9
development
and
sustainability
of
adequate
and
resilient
water
10
and
wastewater
treatment
facilities,
and
provides
that
the
11
commission
is
not
bound
by
traditional
ratemaking
principles
12
when
evaluating
system
enhancement
infrastructure.
13
The
bill
defines
terms,
including
“system
enhancement
costs”
14
and
“system
enhancement
improvement”.
System
enhancement
15
costs
include
depreciation
expenses,
operation
and
maintenance
16
expenses,
restoration
costs,
and
property
taxes,
but
exclude
17
fines
and
penalties.
System
enhancement
improvements
include
18
a
water
or
wastewater
utility
plant
project
that
constructs
19
infrastructure
necessary
to
comply
with
federal,
state,
20
or
local
requirements
or
relocates
utility
infrastructure
21
necessary
to
accommodate
required
public
improvement
projects
22
when
the
relocation
costs
are
not
reimbursed.
Utility
plants
23
included
in
an
eligible
utility’s
most
recent
rate
base
are
24
excluded
from
the
definition.
25
The
bill
requires
an
eligible
utility
to
obtain
commission
26
approval
of
a
plan
before
seeking
recovery
of
system
27
enhancement
costs
through
a
system
enhancement
charge.
The
28
bill
requires
the
commission
to
dismiss
an
application
for
a
29
plan
if
the
utility
has
not
received
a
final
order
in
a
general
30
rate
case
for
the
same
type
of
utility
service
within
the
31
previous
five
years.
32
The
bill
requires
an
application
for
approval
of
a
plan
33
to
include
projected
annual
capital
expenditures,
estimated
34
operation
and
maintenance
costs,
a
description
of
the
age
or
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condition
of
the
existing
infrastructure,
applicable
legal
or
1
regulatory
requirements
and
any
consent
decrees,
a
description
2
of
how
proposed
improvements
enable
compliance,
alternative
3
compliance
options
considered,
an
engineering
evaluation
and
4
report
identifying
system
enhancement
improvements
along
with
5
cost
estimates
and
estimated
in-service
dates,
any
blanket-type
6
work
order
and
its
associated
proposed
cost,
proposed
rate
7
schedules
for
the
system
enhancement
charge,
and
the
estimated
8
rate
impact
of
the
charge.
9
The
bill
requires
the
application
to
be
a
contested
case,
10
and
the
commission
must
issue
a
final
order
within
10
months
11
of
filing.
The
bill
requires
the
commission,
when
reviewing
12
the
plan
and
corresponding
system
enhancement
charge,
to
make
13
reasonable
efforts
to
ensure
that
the
utility
is
in
compliance
14
with
the
requirements
and
allows
the
commission
to
consider
if
15
the
plan
consists
of
system
enhancement
improvements,
includes
16
cost
estimates
that
allow
reasonable
assessment,
and
will
17
result
in
rates
that
are
just
and
reasonable.
18
The
bill
restricts
the
commission
from
disapproving
a
19
plan
on
the
basis
of
one
or
more
service
enhancements,
but
20
allows
the
commission
to
approve
plans
subject
to
removal
of
21
the
service
enhancement
improvements
that
do
not
satisfy
the
22
criteria.
23
The
bill
requires
a
utility
providing
both
water
and
24
wastewater
service
to
submit
separate
plans
for
each
service.
25
Following
approval
of
a
plan,
the
bill
requires
an
eligible
26
utility
to
file
an
annual
application
to
establish
or
adjust
a
27
system
enhancement
charge.
The
charge
must
be
calculated
as
28
a
fixed
monthly
charge
based
on
meter
size,
shall
not
include
29
recovery
of
costs
recovered
through
contributions
in
aid
of
30
construction,
must
recover
system
enhancement
costs
incurred
31
prior
to
filing
that
have
not
been
previously
recovered,
and
32
must
reflect
costs
for
system
enhancement
improvements
placed
33
in
service
before
the
filing
date.
34
The
bill
requires
the
annual
application
to
include
a
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breakdown
of
costs
for
each
improvement
with
a
project’s
status
1
of
completion,
and
actual
costs
incurred.
2
The
bill
prohibits
the
commission
from
authorizing
an
3
adjustment
to
a
system
enhancement
charge
if
the
utility
has
4
not
received
a
final
order
in
a
general
rate
case
within
the
5
previous
five
years.
6
The
bill
requires
petitions
under
the
bill
to
follow
7
publication
of
notice
requirements.
The
bill
requires
a
system
8
enhancement
charge
to
reset
to
zero
upon
approval
of
new
basic
9
rates
and
charges
for
the
eligible
utility
in
a
general
rate
10
case
in
which
the
system
enhancement
improvements
are
included
11
in
the
utility’s
rate
base.
12
The
bill
authorizes
the
commission
to
adopt
rules
13
establishing
procedures
to
implement
the
bill.
14
-8-
LSB
5582HV
(3)
91
sb/js
8/
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