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General Assembly Committee Bill No. 222
January Session, 2019
LCO No. 5716
Referred to Committee on ENERGY AND TECHNOLOGY
Introduced by:
(ET)
AN ACT CONCERNING TH E SALE OF MUNICIPAL WATER SUPPLY
AND WASTEWATER UTILI TY ASSETS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective October 1, 2019) (a) For purposes of this 1
section: 2
(1) "Municipal" or "municipality" means any unit of government, 3
including a town, city, borough, consolidated town and city, 4
consolidated town and borough, district taxing district, public agency 5
or authority established by the general statutes, a special act or a local 6
law, ordinance or charter, or any other subdivision of government; 7
(2) "Municipal water supply system" means a water system owned 8
by a municipality, including a municipal waterworks system 9
established by the general statutes, a special act or a local law, 10
ordinance or charter, or any other subdivision of government; 11
(3) "Municipal wastewater system" means a sewage or wastewater 12
system owned by a municipality or otherwise established by the 13
general statutes, a special act or a local law, ordinance or charter, or 14 Committee Bill No. 222
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any other subdivision of government; 15
(4) "Average fair market value" means the numerical average of the 16
fair market values of two utility valuation expert appraisals conducted 17
pursuant to subsection (c) of this section; 18
(5) "Ratemaking rate base" means the dollar value of the municipal 19
water supply system or municipal wastewater system; 20
(6) "Water company" has the same meaning as provided in section 21
16-1 of the general statutes; and 22
(7) "Utility valuation expert" means an experienced appraiser. 23
(b) A municipality may negotiate with a water company for the sale 24
of a municipal water supply system or municipal wastewater system 25
to such water company. The municipality and the water company shall 26
negotiate a sale price. After such sale price is negotiated and agreed 27
upon, such municipality and water company shall determine the 28
average fair market value of such municipal water supply system or 29
municipal wastewater system pursuant to subsection (c) of this section. 30
(c) To determine the average fair market value of a municipal water 31
supply system or municipal wastewater system, after a municipality 32
and a water company have negotiated and agreed upon a sale price 33
pursuant to subsection (b) of this section, (1) the municipality and the 34
water company shall jointly engage the services of a licensed engineer 35
to conduct an assessment of the tangible assets of such municipal 36
water supply system or municipal wastewater system, (2) the 37
municipality and the water company shall each engage a utility 38
valuation expert, (3) each utility valuation expert, using the assessment 39
conducted pursuant to subdivision (1) of this subsection, shall perform 40
an appraisal of such municipal water supply system or municipal 41
wastewater system, which shall include a determination of the fair 42
market value of such municipal water supply system or municipal 43
wastewater system pursuant to the Uniform Standards of Professional 44
Appraisal Practice, and (4) each utility valuation expert shall provide 45 Committee Bill No. 222
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such utility valuation expert's appraisal to the municipality and the 46
water company within ninety days of engagement pursuant to 47
subdivision (2) of this subsection. 48
(d) After the completion of the appraisals pursuant to subsection (c) 49
of this section, the municipality and the water company shall jointly 50
submit an application for approval for the sale of such municipal water 51
supply system or municipal wastewater system to the Public Utilities 52
Regulatory Authority. The authority may approve such application, 53
provided the authority shall approve or deny such application not 54
later than six months after the date on which the application was filed. 55
(e) If the authority approves such application, the authority shall (1) 56
determine the ratemaking rate base as the lesser of (A) the sale price 57
negotiated by the municipality and the water company pursuant to 58
subsection (b) of this section, and (B) the average fair market value of 59
such municipal water supply system or municipal wastewater system 60
as determined by subsection (c) of this section, (2) approve rates and 61
any applicable surcharges for customers of such municipal water 62
supply system or municipal wastewater system, (3) permit such water 63
company to include the ratemaking rate base in such water company's 64
rate base for ratemaking purposes in its next general rate case, and (4) 65
permit such water company to include in its rate base the costs 66
associated with the acquisition of such municipal water supply system 67
or municipal wastewater system, including (A) transaction and closing 68
costs, and (B) fees paid to the engineer conducting the assessment of 69
the assets and the utility valuation experts, provided appraisal fees 70
that do not exceed five per cent of the fair market value of the 71
municipal water supply system or municipal wastewater system shall 72
be presumed to be reasonable. 73
(f) Nothing in this section shall be construed to supersede any 74
provisions of the general statutes or municipal charters regarding the 75
sale or disposition of municipal assets or any provisions of the general 76
statutes regarding the acquisition of a water company. 77 Committee Bill No. 222
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This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2019 New section
ET Joint Favorable