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General Assembly Raised Bill No. 6777
January Session, 2025
LCO No. 3741
Referred to Committee on ENERGY AND TECHNOLOGY
Introduced by:
(ET)
AN ACT CONCERNING WATER UTILITY SYSTEMS AND WATER
QUALITY AND TREATMENT SURCHARGES.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective July 1, 2025) (a) As used in this section: 1
(1) "Authority" means the Public Utilities Regulatory Authority; 2
(2) "Eligible project" means a water company project, whether 3
completed in a single year or a multiyear project, that (A) the authority 4
determines is a major addition, upgrade, improvement or replacement 5
of a critical element of water infrastructure necessary to meet state or 6
federal drinking water regulations, provided such state or federal 7
mandated drinking water regulations were not foreseeable, as 8
determined by the authority, during the pendency of a water company's 9
most recent general rate case pursuant to section 16-19 or 16-19a of the 10
general statutes, (B) has not been authorized by the authority for 11
inclusion in a water company's rate base, and (C) is not subject to the 12
provisions of section 16-262w of the general statutes; 13
(3) "Perfluoroalkyl and polyfluoroalkyl substances" or "PFAS" has the 14
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same meaning as provided in section 22a-255h of the general statutes; 15
and 16
(4) "Water company" has the same meaning as provided in section 16-17
1 of the general statutes. 18
(b) The authority may authorize a water company to recover, on an 19
annual basis, costs incurred to date for any water company project 20
determined to be an eligible project. Notwithstanding the provisions of 21
section 16-19 of the general statutes, the water company may charge 22
such costs as a water quality and treatment surcharge in addition to such 23
water company's existing authorized rates and charges at the time of 24
filing such request with the authority. 25
(c) (1) Before implementing a water quality and treatment surcharge 26
pursuant to this section, the water company shall file for approval by 27
the authority a water quality and treatment assessment report that 28
identifies any proposed water infrastructure additions, upgrades, 29
improvements or replacements of a water system or any component of 30
such system planned for completion not later than ten years from the 31
date of such filing that meet the requirements for an eligible project and 32
adhere to the criteria set forth in subdivision (2) of this subsection. 33
(2) Criteria for any such project shall include, but not be limited to, 34
(A) compliance with applicable state or federal drinking water quality 35
standards or other standards met by such project; (B) the nature and 36
extent of water treatment required to meet such water quality standards; 37
(C) water source development or treatment necessary to comply with 38
action levels determined by the Commissioner of Public Health or 39
applicable state or federal water quality standards for PFAS, lead or 40
other contaminants; and (D) system components determined to be past 41
their useful life based on generally accepted engineering standards. 42
(d) The authority shall approve a water company's water quality and 43
treatment assessment report upon determining that the company has 44
demonstrated (1) the infrastructure projects considered for renewal or 45
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replacement are eligible projects; (2) the projects considered for 46
addition, upgrade, improvement or replacement provide public health 47
benefits by improving water quality for customers; and (3) the projects 48
adhere to the criteria specified in subsection (c) of this section for 49
determining priority for eligible projects. The authority may hold a 50
hearing to solicit input on a water company's water quality and 51
treatment assessment report, provided the authority's decision on the 52
assessment is made not later than one hundred eighty days after the 53
company files the water quality and treatment assessment report with 54
the authority. Any such report not approved, rejected or modified by 55
the authority within such one-hundred-eighty-day period shall be 56
deemed approved. 57
(e) (1) The water quality and treatment surcharge shall be calculated 58
as a percentage based on the actual cost of an eligible project as 59
authorized by the authority multiplied by the applicable rate of return 60
as approved in the water company's most recent general rate case 61
proceeding, plus associated income tax, depreciation and property tax 62
expenses related to eligible projects and any reconciliation adjustment 63
calculated pursuant to subsection (h) of this section as a percentage of 64
the retail water revenues approved in the water company's most recent 65
general rate case proceeding pursuant to section 16-19 or 16-19a of the 66
general statutes. 67
(2) A water company may apply the water quality and treatment 68
surcharge for an eligible project as a charge on customer bills at intervals 69
of not less than twelve months, commencing on either January first, 70
April first, July first or October first in any year. 71
(f) (1) No proposed water quality and treatment surcharge shall 72
become effective unless the authority has approved (A) the water 73
quality and treatment assessment report concerning such proposed 74
surcharge pursuant to subsection (d) of this section, and (B) the amount 75
of such surcharge in an administrative proceeding. The administrative 76
proceeding shall be completed and a decision shall be rendered by the 77
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authority not later than one hundred twenty days after a water company 78
files an application to approve such surcharge. 79
(2) In connection with the administrative proceeding, the company 80
shall provide the authority with an updated water quality and treatment 81
assessment report with its filing for a water quality and treatment 82
surcharge that details any significant changes in the extent of capital 83
spending on water quality projects planned to be completed within the 84
ten years following the date of such filing. The company shall also 85
provide a detailed capital spending plan for each such eligible project 86
for the three years following the date of such filing. 87
(3) The authority shall receive and consider comments of interested 88
persons and members of the public at the administrative proceeding, 89
which shall not be considered a contested case for purposes of chapter 90
54 of the general statutes, this section or any regulation. Any approval 91
or denial of the authority pursuant to this subsection shall not be 92
deemed an order, authorization or decision of the authority for 93
purposes of section 16-35 of the general statutes. 94
(4) Notwithstanding the provisions of this section, if the authority has 95
not rendered a decision concerning any such application for a proposed 96
water quality and treatment surcharge within the time frame 97
established under subdivision (1) of this subsection, the proposed 98
surcharge shall become effective at the option of the water company 99
pending the authority's decision. If a water company elects to impose 100
such surcharge in accordance with the terms of this subdivision before 101
the authority renders a decision concerning such surcharge, the water 102
company shall refund its customers any such amounts collected from 103
such customers in excess of the surcharge approved by the authority in 104
its decision. 105
(g) The amount of water quality and treatment surcharge charged 106
between general rate case filings shall not exceed fifteen per cent of the 107
water company's annual retail water revenues approved in its most 108
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recent rate filing, and shall not exceed seven and a one-half per cent of 109
such revenues for any twelve-month period. The amount of the 110
adjustment for any eligible project shall be included in new base rates 111
and the surcharge shall be reset to zero as of the effective date of new 112
base rates approved pursuant to section 16-19 or 16-19a of the general 113
statutes. Following the reset of the surcharge in a general rate case, the 114
company may continue to collect through the surcharge costs incurred 115
for any eligible project, including additional costs in multiyear projects. 116
If, after any adjustments pursuant to section 16-262y of the general 117
statutes are made, the company exceeds the allowable rate of return by 118
more than one hundred basis points for the rolling twelve-month period 119
ending with the two most recent consecutive financial quarters, the 120
authority shall establish an earnings sharing mechanism that provides 121
for any earnings in excess of the allowed return on equity to be shared 122
equally between ratepayers and shareholders. 123
(h) On or before February twenty-eighth of each year, a water 124
company shall submit to the authority an annual reconciliation report 125
for any water quality and treatment surcharge applied to customer rates 126
through December thirty-first of the previous calendar year. Such 127
reconciliation report shall identify the costs incurred on any eligible 128
project, demonstrate that the water quality and treatment surcharge is 129
limited to eligible projects and include any other information required 130
by the authority. In addition, the reconciliation report shall compare the 131
water quality and treatment surcharge revenues actually collected to the 132
applicable authorized water quality and treatment revenue 133
requirement. If, upon completion of the review of the annual 134
reconciliation report the authority determines that a water company 135
overcollected or undercollected a water quality and treatment 136
surcharge, the difference between the revenues actually collected and 137
the applicable authorized water quality and treatment surcharge 138
revenue requirement shall be recovered or refunded, as appropriate, as 139
a reconciliation adjustment over a one-year period commencing on 140
April first. The water company shall refund its customers with carrying 141
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costs calculated at the water company's authorized overall rate of return 142
as determined in its most recent general rate proceeding for any 143
overcollection, but the water company shall not be eligible to recover 144
any carrying costs for any undercollection. 145
(i) A water company shall notify customers through a bill insert or 146
other direct communication when a water quality and treatment 147
surcharge is first applied, and the water quality and treatment surcharge 148
shall appear as a separate item on customer bills. 149
This act shall take effect as follows and shall amend the following
sections:
Section 1 July 1, 2025 New section
Statement of Purpose:
To allow water companies to charge a water quality and treatment
surcharge to recover costs for capital projects required to comply with
state and federal water regulations.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]