Establishes uniform rates for water and sewer services for residential use based exclusively on metered consumption.

A1026

ASSEMBLY, No. 1026

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman WAYNE P. DEANGELO

District 14 (Mercer and Middlesex)

SYNOPSIS

���� Establishes uniform rates for water and sewer
services for residential use based exclusively on metered consumption.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act

concerning water and sewer rates for residential
use and amending various parts of the statutory law.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� Section 8 of P.L.1946,
c.138 (C.40:14A-8) is amended to read as follows:

���� 8.��� (a)� Every sewerage
authority is hereby authorized to charge and collect rents, rates, fees or
other charges (in
[
this
act
]

P.L.1946,
c.138 (C.40:14A-1 et seq.),
sometimes referred to as "service
charges") for direct or indirect connection with, or the use or services
of, the sewerage system.� Such service charges may be charged to and collected
from any person contracting for such connection or use or services or from the
owner or occupant, or both of them, of any real property which directly or
indirectly is or has been connected with the system or from or on which
originates or has originated sewage or other wastes which directly or
indirectly have entered or may enter the sewerage system, and the owner of any
such real property shall be liable for and shall pay such service charges to
the sewerage authority at the time when and the place where such service
charges are due and payable.

���� (b)� Rents, rates, fees and
charges
for commercial use of sewerage services
, which may be payable
periodically, being in the nature of use or service charges, shall as nearly as
the sewerage authority shall deem practicable and equitable be uniform
throughout the district for the same type, class and amount of use or service
of the sewerage system
[
,
except as permitted by section 1 of P.L.1994, c.78 (C.40:14A-8.2),
]
and may be
based or computed either on the consumption of water on or in connection with
the real property
[
,
making due allowance for commercial use of water,
]
or on the number and kind of
water outlets on or in connection with the real property, or on the number and
kind of plumbing or sewerage fixtures or facilities on or in connection with
the real property, or on the number of persons
[
residing or
]
working on or
otherwise connected or identified with the real property, or on the capacity of
the improvements on or connected with the real property, or on any other
factors determining the type, class and amount of use or service of the
sewerage system, or on any combination of any such factors, and may give weight
to the characteristics of the sewage and other wastes and any other special
matter affecting the cost of treatment and disposal thereof, including chlorine
demand, biochemical oxygen demand, concentration of solids and chemical
composition.�
Rents, rates, fees, and charges for residential use of
sewerage services shall be uniform throughout the district for the same type,
class, and amount of use or service of the sewerage system, except as permitted
by section 1 of P.L.1994, c.78 (C.40:14A-8.2), and shall be based or computed
on the metered consumption of water on or in connection with the real property;
provided, however, that a residential customer with a separate account for
outdoor water or sewerage services shall not be charged sewerage disposal fees
for water obtained from an outdoor source or recorded by a meter dedicated to
the outdoor account.� A sewerage authority may establish a tiered system of
rates, through which the authority may charge residential customers different
rates based upon the total metered units of water consumed on or in connection
with the real property in a billing cycle.
� In addition to any such
periodic service charges, a separate charge in the nature of a connection fee
or tapping fee, in respect of each connection of any property with the sewerage
system, may be imposed upon the owner or occupant of the property so connected.�
Such connection charges shall be uniform within each class of users, except as
provided by section 2 of P.L.2005, c.29 (C.40:14A-8.30) and except as provided
by section 2 of P.L.2005, c.173 (C.40:14A-8.4), and the amount thereof shall
not exceed the actual cost of the physical connection, if made by the
authority, plus an amount computed in the following manner to represent a fair
payment toward the cost of the system:

���� (1)� The amount representing
all debt service, including but not limited to sinking funds, reserve funds,
the principal and interest on bonds, and the amount of any loans and interest
thereon, paid by the sewerage authority to defray the capital cost of developing
the system as of the end of the immediately preceding fiscal year of the
authority shall be added to all capital expenditures made by the authority not
funded by a bond ordinance or debt for the development of the system as of the
end of the immediately preceding fiscal year of the authority.�

���� (2)� Any gifts, contributions
or subsidies to the authority received from, and not reimbursed or reimbursable
to any federal, State, county or municipal government or agency or any private
person, and that portion of amounts paid to the authority by a public entity
under a service agreement or service contract which is not repaid to the public
entity by the authority, shall then be subtracted.

���� (3)� The remainder shall be
divided by the total number of service units served by the authority at the end
of the immediately preceding fiscal year of the authority, and the results
shall then be apportioned to each new connector according to the number of service
units attributed to that connector, to produce the connector's contribution to
the cost of the system.� In attributing service units to each connector, the
estimated average daily flow of sewage for the connector shall be divided by
the average daily flow of sewage for the average single family residence in the
authority's district to produce the number of service units to be attributed.

���� The connection fee shall be
recomputed at the end of each fiscal year of the authority, after a public
hearing is held in the manner prescribed in subsection (c) of this section.�
The revised connection fee may be imposed upon those who subsequently connect
in that fiscal year to the system.� The combination of such connection fee or
tapping fee and the aforesaid periodic service charges shall meet the
requirements of subsection (c) hereof.

���� (c)�� The sewerage authority
shall prescribe and from time to time when necessary revise a schedule of
service charges, which shall comply with the terms of any contract of the
sewerage authority and in any event shall be such that the revenues of the
sewerage authority will at all times be adequate to pay all expenses of
operation and maintenance of the sewerage system, including reserves,
insurance, extensions, and replacements, and to pay punctually the principal of
and interest on any bonds and to maintain such reserves or sinking funds
therefor as may be required by the terms of any contract of the sewerage
authority or as may be deemed necessary or desirable by the sewerage
authority.� Said schedule shall thus be prescribed and from time to time
revised by the sewerage authority after public hearing thereon which shall be
held by the sewerage authority at least 20 days after notice of the proposed
adjustment is mailed to the clerk of each municipality serviced by the
authority and publication of notice of the proposed adjustment of the service
charges and of the time and place of the public hearing in at least two
newspapers of general circulation in the area serviced by the authority. The
sewerage authority shall provide evidence at the hearing showing that the
proposed adjustment of the service charges is necessary and reasonable, and
shall provide the opportunity for cross-examination of persons offering such
evidence, and a transcript of the hearing shall be made and a copy thereof
shall be available upon request to any interested party at a reasonable fee.
The sewerage authority shall likewise fix and determine the time or times when
and the place or places where such service charges shall be due and payable and
may require that such service charges shall be paid in advance for periods of
not more than one year.� A copy of such schedule of service charges in effect
shall at all times be kept on file at the principal office of the sewerage
authority and shall at all reasonable times be open to public inspection.

���� (d)� Any county sewerage
authority may establish sewerage regions in portions of the district.� Rents,
rates, fees and charges which may be payable periodically, being in the nature
of use or service charges, shall as nearly as the sewerage authority shall deem
practicable and equitable, be uniform throughout the district for the same
type, class and amount of use or service of the sewerage systems, except as
permitted by section 1 of P.L.1994,

c.78 (C.40:14A-8.2), and shall
meet all other requirements of subsection (b) hereof.

(cf: P.L.2005, c.173, s.1)

���� 2.��� Section 21 of P.L.1957,
c.183 (C.40:14B-21) is amended to read as follows:

���� 21.� a.� Every municipal
authority is hereby authorized to charge and collect rents, rates, fees or
other charges (in
[
this
act
]

P.L.1957,
c.183 (C.40:14B-1 et seq.),
sometimes referred to as "water service
charges") for direct or indirect connection with, or the use, products or
services of, the water system, or for sale of water or water supply services,
water supply facilities or products.� Such water service charges may be charged
to and collected from any person contracting for such connection or use,
products or services or for such sale or from the owner or occupant, or both of
them, of any real property which directly or indirectly is or has been connected
with the water system or to which directly or indirectly has been supplied or
furnished such use, products or services of the water system or water or water
supply services, water supply facilities or products, and the owner of any such
real property shall be liable for and shall pay such water service charges to
the municipal authority at the time when and place where such water service
charges are due and payable.� Such rents, rates, fees and charges
for
commercial use of water services
shall as nearly as the municipal authority
shall deem practicable and equitable be uniform throughout the district for the
same type, class and amount of use, products or services of the water system
[
, except as
permitted by section 1 of P.L.1992, c.215 (C.40:14B-22.2),
]
and may be
based or computed either on the consumption of water on or in connection with
the real property, or on the number and kind of water outlets on or in
connection with the real property, or on the number and kind of plumbing
fixtures or facilities on or in connection with the real property, or on the
number of persons
[
residing
or
]

working on or otherwise connected or identified with the real property, or on
the capacity of the improvements on or connected with the real property, or on
any other factors determining the type, class and amount of use, products or
services of the water system supplied or furnished, or on any combination of
such factors, and may give weight to the characteristics of the water or water
services, facilities or products and, as to service outside the district, any
other matter affecting the cost of supplying or furnishing the same, including
the cost of installation of necessary physical properties.�
Rents, rates,
fees, and charges for residential use of water services shall be uniform
throughout the district for the same type, class, and amount of use, products,
or services of the water system, except as permitted by section 1 of P.L.1992,
c.215 (C.40:14B-22.2), and shall be based or computed on the metered
consumption of water on or in connection with the real property.� A municipal
authority may establish a tiered system of rates, through which the authority may
charge different rates based upon the total metered units of water consumed on
or in connection with the real property in a billing cycle.

���� Every municipal authority that
furnishes water supply services or operates water supply facilities shall
establish a rate structure that provides for uniform water service charges for
water supply service and fire protection systems.

���� No municipal authority may
impose standby fees or charges for any fire protection system to a residential
customer served by a water service line of two inches or less in diameter.

���� Nothing in this section shall
preclude a municipal authority from requiring separate dedicated service lines
for fire protection.� A municipal authority may require that fire service lines
be metered.� Nothing in this section shall alter the liability for maintenance
and repair of service lines which exists on the effective date of P.L.2003,
c.278.

���� b.��� In addition to any such
water service charges, a separate charge in the nature of a connection fee or
tapping fee, in respect of each connection of any property with the water
system, may be imposed upon the owner or occupant of the property so connected.�
Such connection charges shall be uniform within each class of users, except as
provided by section 5 of P.L.2005, c.29 (C.40:14B-22.3) and except as provided
by section 5 of P.L.2005, c.173 (C.40:14B-22.4), and the amount thereof
shall not exceed the actual cost of the physical connection, if made by the
authority, plus an amount computed in the following manner to represent a fair
payment toward the cost of the system:

���� (1)� The amount representing
all debt service, including but not limited to sinking funds, reserve funds,
the principal and interest on bonds, and the amount of any loans and interest
thereon, paid by a municipal authority to defray the capital cost of developing
the system as of the end of the immediately preceding fiscal year of the
authority shall be added to all capital expenditures made by the authority not
funded by a bond ordinance or debt for the development of the system as of the
end of the immediately preceding fiscal year of the authority.

���� (2)� Any gifts, contributions
or subsidies to the authority received from, and not reimbursed or reimbursable
to any federal, State, county or municipal government or agency or any private
person, and that portion of amounts paid to the authority by a public entity
under a service agreement or service contract which is not repaid to the public
entity by the authority, shall then be subtracted.

���� (3)� The remainder shall be
divided by the total number of service units served by the authority at the end
of the immediately preceding fiscal year of the authority, and the results
shall then be apportioned to each new connector according to the number of service
units attributed to that connector, to produce the connector's contribution to
the cost of the system.� In attributing service units to each connector, the
estimated average daily flow of water for the connector shall be divided by the
average daily flow of water to the average single family residence in the
authority's district, to produce the number of service units to be attributed.

���� c.��� The connection fee shall
be recomputed at the end of each fiscal year of the authority, after a public
hearing is held in the manner prescribed in section 23 of P.L.1957, c.183
(C.40:14B-23).� The revised connection fee may be imposed upon those who subsequently
connect in that fiscal year to the system.� The combination of such connection
fee or tapping fee and the aforesaid water service charges all meet the
requirements of section 23 of P.L.1957, c.183 (C.40:14B-23).

���� d.��� The foregoing
notwithstanding, no municipal authority shall impose any charges or fees in
excess of the cost of water actually used for any sprinkler system required to
be installed in any residential health care facility pursuant to the
"Health Care Facilities Planning Act," P.L.1971, c.136 (C.26:2H-1 et
seq.) and regulations promulgated thereunder or in any rooming or boarding
house pursuant to the "Rooming and Boarding House Act of 1979,"
P.L.1979, c.496 (C.55:13B-1 et al.) and regulations promulgated thereunder.�
Nothing herein shall preclude any municipal authority from charging for the
actual cost of water main connections, except as provided by section 5 of
P.L.2005, c.29 (C.40:14B-22.3) and except as provided by section 5 of P.L.2005,
c.173 (C.40:14B-22.4).

(cf: P.L.2005, c.173, s.3)

���� 3.��� Section 22 of P.L.1957,
c.183 (C.40:14B-22) is amended to read as follows:

���� 22.� Every municipal authority
is hereby authorized to charge and collect rents, rates, fees or other charges
(in
[
this
act
]

P.L.1957,
c.183 (C.40:14B-1 et seq.),
sometimes referred to as "sewerage service
charges") for direct or indirect connection with, or the use or services
of, the sewerage system.� Such sewerage service charges may be charged to and
collected from any person contracting for such connection or use or services or
from the owner or occupant, or both of them, of any real property which
directly or indirectly is or has been connected with the sewerage system or
from or on which originates or has originated sewage or other wastes which
directly or indirectly have entered or may enter the sewerage system, and the
owner of any such real property shall be liable for and shall pay such sewerage
service charges to the municipal authority at the time when and place where
such sewerage service charges are due and payable. Such rents, rates, fees and
charges
for commercial use of sewerage services
, being in the nature of
use or service charges, shall as nearly as the municipal authority shall deem
practicable and equitable be uniform throughout the district for the same type,
class and amount of use or service of the sewerage system
[
, except as
permitted by section 1 of P.L.1992, c.215 (C.40:14B-22.2),
]
and may be
based or computed either on the consumption of water on or in connection with
the real property
[
,
making due allowance for commercial use of water,
]
or on the number and kind of
water outlets on or in connection with the real property, or on the number and
kind of plumbing or sewerage fixtures or facilities on or in connection with
the real property, or on the number of persons
[
residing or
]
working on or
otherwise connected or identified with the real property, or on the capacity of
the improvements on or connected with the real property, or on any other
factors determining the type, class and amount of use or service of the
sewerage system, or on any combination of any such factors, and may give weight
to the characteristics of the sewage and other wastes and any other special
matter affecting the cost of treatment and disposal of the same, including
chlorine demand, biochemical oxygen demand, concentration of solids and
chemical composition, and, as to service outside the district, the cost of
installation of necessary physical properties.�
Rents, rates, fees, and
charges for residential use of sewerage services shall be uniform throughout
the district for the same type, class, and amount of use, products, or services
of the water system, except as permitted by section 1 of P.L.1992, c.215
(C.40:14B-22.2), and shall be based or computed on the metered consumption of
water on or in connection with the real property; provided, however, that a
residential customer with a separate account for outdoor water services shall
not be charged sewerage disposal fees for water obtained for outdoor use or
recorded by a meter dedicated to the outdoor account.
� In addition to any
such sewerage service charges, a separate charge in the nature of a connection
fee or tapping fee, in respect of each connection of any property with the
sewerage system, may be imposed upon the owner or occupant of the property so
connected.� Such connection charges shall be uniform within each class of
users, except as provided by section 5 of P.L.2005, c.29 (C.40:14B-22.3) and
except as provided by section 5 of P.L.2005, c.173 (C.44:14B-22.4), and the
amount thereof shall not exceed the actual cost of the physical connection, if
made by the authority, plus an amount computed in the following manner to
represent a fair payment towards the cost of the system:

���� a.��� The amount representing
all debt service, including but not limited to sinking funds, reserve funds,
the principal and interest on bonds, and the amount of any loans and the
interest thereon, paid by the municipal authority to defray the capital cost of
developing the system as of the end of the immediately preceding fiscal year of
the authority shall be added to all capital expenditures made by a municipal
authority not funded by a bond ordinance or debt for the development of the
system as of the end of the immediately preceding fiscal year of the authority.

���� b.��� Any gifts, contributions
or subsidies to the authority received from, and not reimbursed or reimbursable
to, any federal, State, county or municipal government or agency or any private
person, and that portion of amounts paid to the authority by a public entity
under a service agreement or service contract which is not repaid to the public
entity by the authority, shall then be subtracted.

���� c.��� The remainder shall be
divided by the total number of service units served by the authority at the end
of the immediately preceding fiscal year of the authority, and the results
shall then be apportioned to each new connector according to the number of service
units attributed to that connector.� In attributing service units to each
connector, the estimated average daily flow of sewage for the connector shall
be divided by the average daily flow of sewage from the average single family
residence in the authority's district, to produce the number of service units
to be attributed.

���� The connection fee shall be
recomputed at the end of each fiscal year of the authority, after a public
hearing is held in the manner prescribed in section 23 of P.L.1957, c.183
(C.40:14B-23).� The revised connection fee may be imposed upon those who subsequently
connect in that fiscal year to the system.

���� The combination of such
connection fee or tapping fee and the aforesaid sewerage service charges shall
meet the requirements of section 23
of P.L.1957, c.183 (C.40:14B-23)
.

(cf: P.L.2005, c.173, s.4)

���� 4.��� R.S.40:62-107 is amended
to read as follows:

���� 40:62-107.� The governing body
of any municipality owning its water and sewer systems and operating the same
as one utility may fix a combination water and sewer rental
in the same
manner as a municipal authority pursuant to the provisions of sections 21 and
22 of P.L.1957, c.183 (C.40:14B-21 and C.40:14B-22) concerning the computation
of rates and rentals
, and in case prompt payment of said combined rent is
not made according to the regulations adopted by said governing body cause said
water to be shut off from such houses, tenements, buildings or other premises
so supplied and not to turn the same on again until all arrears, with interest
and penalties, shall be fully paid.

(cf: R.S.40:62-107)

���� 5.��� R.S.40:62-107.6 is
amended to read as follows:

���� 40:62-107.6.� a.� After any
municipality shall have purchased a water distribution system pursuant to
sections 40:62-107.4 and 40:62-107.5 of this title, the governing body of the
municipality shall be authorized to operate the water distribution system as
nearly as may be as a part of its own system, and any schedule of rates, rents,
charges and penalties which the governing body shall thereafter fix shall be
applicable to water users within both� municipalities, and in the collection of
all rates, rents, charges and penalties the municipality shall have all the
rights and remedies that may apply to private water companies supplying water
to municipalities of this State.

���� b.��� The governing body of a
municipality that has purchased a water distribution system shall establish a
rate structure that provides for uniform rates, rentals, or other service
charges for water supply service and fire protection systems
in the same
manner as a municipal authority pursuant to the provisions of section 21 of P.L.1957,
c.183 (C.40:14B-21) concerning the computation of rates and rentals
.

���� The governing body shall not
impose standby fees or charges for any fire protection system to a residential
customer served by a water service line of two inches or less in diameter.

���� Nothing in this section shall
preclude the governing body of a municipality that has purchased a water
distribution system from requiring separate dedicated service lines for fire
protection.� The governing body of a municipality that has purchased a water
distribution system may require that fire service lines be metered.� Nothing in
this section shall alter the liability for maintenance and repair of service
lines which exists on the effective date of P.L.2003, c.278.

(cf: P.L.2003, c.278, s.3)

���� 6.��� R.S.40:62-127 is amended
to read as follows:

���� 40:62-127.� a.� The water
commission may prescribe and change from time to time rates to be charged for
water supplied by the waterworks so acquired, and by any extension or
enlargement thereof, but rates for the same kind or class of service shall be
calculated
in the same manner as a municipal authority pursuant to the provisions of
section 21 of P.L.1957, c.183 (C.40:14B-21) concerning the computation of rates
and rentals and
uniform in all the municipalities supplied by the
waterworks.

���� The water commission shall
establish a rate structure that provides for uniform water service charges for
municipal water supply service and fire protection systems.

���� No rates shall include the
imposition of standby fees or charges for any fire protection system to a
residential customer served by a water service line of two inches or less in
diameter.

���� Nothing in this section shall
preclude a water commission from requiring separate dedicated service lines for
fire protection.� The water commission may require that fire service lines be
metered.� Nothing in this section shall alter the liability for maintenance and
repair of service lines which exists on the effective date of P.L.2003, c.278.

���� No rates shall include the
imposition of any fees in excess of the cost of water actually used for any
sprinkler system required to be installed in any residential health care
facility pursuant to the "Health Care Facilities Planning Act," P.L.1971,
c.136 (C.26:2H-1 et seq.) and regulations promulgated thereunder or in any
rooming or boarding house pursuant to the "Rooming and Boarding House Act
of 1979," P.L.1979, c.496 (C.55:13B-1 et al.) and regulations promulgated
thereunder.

���� Nothing herein shall preclude
any commission from charging for the actual cost of water main connection.

���� b.��� The supplying of water
to locations beyond the boundaries of the municipalities owning the waterworks
shall be basis for separate classification of service to permit reasonable
differentiation of rates. As soon as practicable after acquiring the waterworks,
rates shall be prescribed, and shall be revised from time to time whenever
necessary, so that the waterworks shall be self-supporting, the earnings to be
sufficient to provide for all expenses of operation and maintenance and such
charges as interest, sinking fund and amortization, so as to prevent any
deficit to be paid by taxation from accruing.� The interest, sinking fund and
amortization shall be construed to include:

���� (1)� All service on debt
heretofore or hereafter incurred by the commission or by any municipality
represented by the commission in connection with the acquisition of such
privately-owned waterworks, and any extensions thereto and enlargements
thereof, heretofore or hereafter formally assumed by the commission or its
successors, and

���� (2)� All service on debt
heretofore or hereafter incurred by the commission or by a municipality
represented by the commission, or its successors, and heretofore or hereafter
formally assumed by the commission, or its successors, as part of any agreement
with the municipality relative to the acquisition, by the commission, or its
successors, of the ownership of or the management and control of or the right
to use any water supply or part thereof or interest therein or any distribution
system of water mains and connections, or any part thereof, which any such
municipality may own or control.

���� c.��� The provisions of this
section shall be deemed a contract with the holders of all obligations which
shall be or may have been issued for the purpose of financing such acquisitions
or which heretofore have been or may hereafter be issued to refund temporary
bonds or obligations issued for such purposes, the payment of any of which
obligations, and interest thereon, the commission, or its successors, has
heretofore or may hereafter formally assume as aforesaid.

���� d.��� The commission and any
succeeding commission may prescribe, and alter and enforce all reasonable rules
and regulations for the maintenance and operation of the waterworks and the
collection of rates.

(cf: P.L.2003. c.278, s.4)

���� 7.��� N.J.S.40A:26A-10 is
amended to read as follows:

���� 40A:26A-10.� After the
commencement of operation of sewerage facilities, the local unit or units may
prescribe and, from time to time, alter rates or rentals to be charged to users
of sewerage services.� Rates or rentals being in the nature of use or service
charges or annual rental charges, shall be uniform and equitable for the same
types and classes of use and service of the facilities, except as permitted by
section 5 of P.L.1994, c.78 (C.40A:26A-10.1).� Rates or rentals and types and
classes of use and service
for commercial purposes
may be based on any
factors which the governing body or bodies of that local unit or units shall
deem proper and equitable within the region served.�
Rates or rentals for
residential use shall be based or computed on the metered consumption of water
on or in connection with the real property; provided, however, that a
residential customer with a separate account for outdoor water services shall
not be charged sewerage disposal fees for water obtained for outdoor use or
recorded by a meter dedicated to the outdoor account.� A local unit may
establish a tiered system of rates, through which the local unit may charge
different rates based upon the total metered units of water consumed on or in
connection with the real property in a billing cycle.

���� In fixing rates, rental and
other charges for supplying sewerage services, the local unit or units shall
establish a rate structure that allows, within the limits of any lawful
covenants made with bondholders, the local unit to:

���� a.� Recover all costs of
acquisition, construction or operation, including the costs of raw materials,
administration, real or personal property, maintenance, taxes, debt service
charges, fees and an amount equal to any operating budget deficit occurring in
the immediately preceding fiscal year;

���� b.� Establish a surplus in an
amount sufficient to provide for the reasonable anticipation of any contingency
that may affect the operating of the sewerage facility, and, at the discretion
of the local unit or units, allow for the transfer of moneys from the budget
for the sewerage facilities to the local budget in accordance with section 5 of
P.L.1983, c.111 (C.40A:4-35.1).

(cf: P.L.1994, c.78, s.6)

���� 8.��� N.J.S.40A:31-10 is
amended to read as follows:

���� 40A:31-10.� a.� After the
commencement of operation of water supply facilities, the local unit or units
may prescribe and, from time to time, alter rates or rentals to be charged to
users of water supply services.� Rates or rentals being in the nature of use or
service charges or annual rental charges, shall be uniform and equitable for
the same type and class of use or service of the facilities, except as
permitted by section 7 of P.L.1994, c.78 (C.40A:31-10.1).� Rates or
rentals and types and classes of use and service
for commercial use
may
be based on any factors which the governing body or bodies of that local unit
or units shall deem proper and equitable within the region served.�
Rates or
rentals for residential use shall be based or computed on the metered
consumption of water on or in connection with the real property.� A local unit
may establish a tiered system of rates, through which the local unit may charge
different rates based upon the total metered units of water consumed on or in
connection with the real property in a billing cycle
.

���� b.��� Every local unit
operating a municipal water supply facility shall establish a rate structure
that provides for uniform rates, rentals, or other charges for water supply
service and fire protection systems.

���� No local unit may impose
standby fees or charges for any fire protection system to a residential
customer served by a water service line of two inches or less in diameter.

���� c.��� In fixing rates, rental
and other charges for supplying water services, the local unit or units shall
establish a rate structure that allows, within the limits of any lawful
covenants made with bondholders, the local unit to:

���� (1)� Recover all costs of
acquisition, construction or operation, including the costs of raw materials,
administration, real or personal property, maintenance, taxes, debt service
charges, fees and an amount equal to any operating budget deficit occurring in the
immediately preceding fiscal year;

���� (2)� Establish a surplus in an
amount sufficient to provide for the reasonable anticipation of any contingency
that may affect the operation of the utility, and, at the discretion of the
local unit or units, allow for the transfer of moneys from the budget for the
water supply facilities to the local budget in accordance with section 5 of
P.L.1983, c.111 (C.40A:4-35.1).

���� d.��� No local unit or units
shall impose any rates or rentals in excess of the cost of water actually used
for any sprinkler system required to be installed in any residential health
care facility pursuant to the "Health Care Facilities Planning Act,"
P.L.1971, c.136 (C.26:2H-1 et seq.) and regulations promulgated thereunder or
in any rooming or boarding house pursuant to the "Rooming and Boarding
House Act of 1979," P.L.1979, c.496 (C.55:13B-1 et al.) and regulations
promulgated thereunder.

���� e.��� Nothing in this section
shall preclude a local unit operating a municipal water supply facility from
requiring separate dedicated service lines for fire protection. The local unit
may require that fire service lines be metered.� Nothing in this section shall
alter the liability for maintenance and repair of service lines which exists on
the effective date of P.L.2003, c.278.

(cf: P.L.2003, c.278, s.7)

���� 9.��� This act shall take
effect immediately, but shall remain inoperative with respect to municipal
authorities and municipalities that do not have meters installed on the
effective date of this act; in which case the provisions of this act shall
become operative as soon as technically feasible but not later than the first
day of the fourth year next following enactment.

STATEMENT

���� This bill requires local
public authorities that charge for water and sewer services to base residential
customers' bills exclusively upon metered consumption.� Under current law,
local public authorities providing water and sewer services may establish charges
for those services based on any number of factors, including consumption, the
number and type of water outlets, the number and type of plumbing fixtures or
facilities, the number of persons residing on the property, the capacity of
fixtures, or any other factors determining the type, class, and amount of water
or sewer use.� In addition, this bill permits local public authorities and
local units to establish a tiered system of rates, through which a local unit
may charge different rates based upon the total metered units of water consumed
on or in connection with the real property in a billing cycle.� The bill
exempts residential customers with separate outdoor water or sewer accounts
from charges for sewer disposal services recorded by meters tied to the outdoor
account or that resulted from the disposal of water obtained from an outdoor
source.� Essentially, a resident with a separate outdoor account is not to be
responsible for sewer service charges related to the resident's use of water
from an outdoor source.

���� This bill takes effect
immediately, except with respect to local public authorities and local units
that do not have meters installed on the effective date of this bill.� For
those entities, the provisions of the bill are to become operative as soon as technically
feasible, but not later than the first day of the fourth year next following
enactment.