LCO f 6
General Assembly Substitute Bill No. 6777
January Session, 2025
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 adopted or amended after December 7
16, 2021, (B) has not been authorized by the authority for inclusion in a 8
water company's rate base, and (C) is not subject to the provisions of 9
section 16-262w of the general statutes; 10
(3) "Perfluoroalkyl and polyfluoroalkyl substances" or "PFAS" has the 11
same meaning as provided in section 22a-255h of the general statutes; 12
and 13
(4) "Water company" has the same meaning as provided in section 16-14
1 of the general statutes. 15
(b) Upon the filing of a request for approval by a water company 16
pursuant to subsection (c) of this section, the authority may authorize 17
such water company to recover, on an annual basis, expenses incurred 18 Substitute Bill No. 6777
LCO { f 6
to date for any water company project determined to be an eligible 19
project. Notwithstanding the provisions of section 16-19 of the general 20
statutes, the water company may charge such costs as a water quality 21
and treatment surcharge in addition to such water company's existing 22
authorized rates and charges at the time of filing such request with the 23
authority. 24
(c) (1) Any water company seeking to impose a water quality and 25
treatment surcharge pursuant to this section shall file a request for 26
approval of such surcharge with the authority containing a water 27
quality and treatment assessment report. Such report shall identify any 28
proposed eligible project planned for completion by the water company 29
not later than five years from the date of such filing that meets the 30
requirements for an eligible project and adheres to the criteria set forth 31
in subdivision (2) of this subsection. 32
(2) Criteria for any such project shall include, but not be limited to, 33
(A) compliance with applicable state or federal drinking water quality 34
standards or other standards met by such project; (B) the nature and 35
extent of water treatment required to meet such water quality standards; 36
and (C) water source development, system consolidation, treatment or 37
other acceptable means necessary to comply with action levels 38
determined by the Commissioner of Public Health or applicable state or 39
federal water quality standards for PFAS, lead or other contaminants. 40
(d) The authority shall approve a water company's request for 41
approval filed pursuant to subsection (c) of this section and such 42
company's water quality and treatment assessment report upon a 43
determination that such company has demonstrated (1) the 44
infrastructure projects considered for renewal or replacement are 45
eligible projects; (2) the projects considered for addition, upgrade, 46
improvement or replacement provide public health benefits by 47
improving water quality for customers; and (3) the projects adhere to 48
the criteria specified in subsection (c) of this section for determining 49
priority for eligible projects. The authority may hold a hearing to solicit 50
input on a water company's water quality and treatment assessment 51 Substitute Bill No. 6777
LCO { f 6
report, provided the authority's decision on the assessment is made not 52
later than one hundred eighty days after the company files the water 53
quality and treatment assessment report with the authority. 54
(e) (1) Such water quality and treatment surcharge shall be calculated 55
as a percentage based on the actual cost of an eligible project as 56
authorized by the authority multiplied by the applicable rate of return 57
as approved in the water company's most recent general rate case 58
proceeding, plus associated income tax, depreciation and property tax 59
expenses related to eligible projects and any reconciliation adjustment 60
calculated pursuant to subsection (h) of this section as a percentage of 61
the retail water revenues approved in the water company's most recent 62
general rate case proceeding pursuant to section 16-19 or 16-19a of the 63
general statutes. 64
(2) Any such water company may apply the water quality and 65
treatment surcharge approved by the authority for an eligible project as 66
a charge on customer bills at intervals of not less than twelve months, 67
commencing on either January first, April first, July first or October first 68
in any year. 69
(f) (1) No proposed water quality and treatment surcharge shall 70
become effective unless the authority has approved (A) the water 71
quality and treatment assessment report concerning such proposed 72
surcharge pursuant to subsection (d) of this section, and (B) the amount 73
of such surcharge in an administrative proceeding. The administrative 74
proceeding shall be completed and a decision shall be rendered by the 75
authority not later than sixty days after a water company files an 76
application to approve such surcharge. 77
(2) In connection with such administrative proceeding, the water 78
company shall provide the authority with an updated water quality and 79
treatment assessment report along with its filing for a water quality and 80
treatment surcharge that details any significant changes in the extent of 81
capital spending on water quality projects planned to be completed 82
within the ten years following the date of such filing. The water 83 Substitute Bill No. 6777
LCO { f 6
company shall also provide a detailed capital spending plan to the 84
authority for each such eligible project for the three years following the 85
date of such filing. 86
(3) The authority shall receive and consider comments of interested 87
persons and members of the public at the administrative proceeding, 88
which shall not be considered a contested case for purposes of chapter 89
54 of the general statutes, this section or any provision of the regulations 90
of Connecticut state agencies. Any approval or denial of the authority 91
pursuant to this subsection shall not be deemed an order, authorization 92
or decision of the authority for purposes of section 16-35 of the general 93
statutes. 94
(g) The amount of any such water quality and treatment surcharge 95
charged between general rate case filings shall not exceed fifteen per 96
cent of the water company's annual retail water revenues approved in 97
its most recent rate filing, and shall not exceed seven and one-half per 98
cent of such revenues for any twelve-month period. The amount of the 99
adjustment for any eligible project shall be included in new base rates 100
and the surcharge shall be reset to zero as of the effective date of new 101
base rates approved pursuant to section 16-19 or 16-19a of the general 102
statutes. Following the reset of the surcharge in a general rate case, the 103
company may continue to collect through the surcharge costs incurred 104
for any eligible project, including additional costs in multiyear projects. 105
If, after any adjustments pursuant to section 16-262y of the general 106
statutes are made, the company exceeds the allowable rate of return for 107
the rolling twelve-month period ending with the two most recent 108
consecutive financial quarters, the authority shall allocate any excessive 109
return in accordance with any earnings sharing mechanism applicable 110
to the company's base rate revenues. 111
(h) On or before February twenty-eighth of each year, any such water 112
company shall submit to the authority an annual reconciliation report 113
for any water quality and treatment surcharge applied to customer rates 114
through December thirty-first of the previous calendar year. Such 115
reconciliation report shall identify the costs incurred on any eligible 116 Substitute Bill No. 6777
LCO { f 6
project, demonstrate that the water quality and treatment surcharge is 117
limited to eligible projects and include any other information required 118
by the authority. In addition, the reconciliation report shall compare the 119
water quality and treatment surcharge revenues actually collected to the 120
applicable authorized water quality and treatment revenue 121
requirement. If, upon completion of the review of the annual 122
reconciliation report the authority determines that such water company 123
overcollected or undercollected a water quality and treatment 124
surcharge, the difference between the revenues actually collected and 125
the applicable authorized water quality and treatment surcharge 126
revenue requirement shall be recovered or refunded, as appropriate, as 127
a reconciliation adjustment over a one-year period commencing on 128
April first. Any such water company shall refund its customers with 129
carrying costs calculated at the water company's authorized overall rate 130
of return, as determined in its most recent general rate proceeding, for 131
any such overcollection. No such water company shall recover any 132
carrying costs for any undercollection. 133
(i) Each water company shall notify customers through a bill insert or 134
other direct communication when a water quality and treatment 135
surcharge is first applied. Such water quality and treatment surcharge 136
shall appear as a separate item on customer bills. 137
This act shall take effect as follows and shall amend the following
sections:
Section 1 July 1, 2025 New section
Statement of Legislative Commissioners:
In Subsec. (b), "Upon the filing of a request for approval by a water
company pursuant to subsection (c) of this section," was added for
clarity and internal consistency; Subsec. (c)(1) was rewritten for clarity;
in Subsec. (d), "request for approval filed pursuant to subsection (c) of
this section and such company's" was added for clarity; in Subsec. (e)(2),
"approved by the authority" was added for accuracy and technical
corrections were made throughout the section for adherence to standard
drafting conventions.
Substitute Bill No. 6777
LCO { f 6
ET Joint Favorable Subst.