*SB0247.1*
January 26, 2024
SENATE BILL No. 247
_____
DIGEST OF SB 247 (Updated January 25, 2024 11:55 am - DI 119)
Citations Affected: IC 8-1; IC 8-1.5.
Synopsis: Water and wastewater utility infrastructure. Amends the
statute concerning the acquisition by a utility company of a water or
wastewater utility to provide that if: (1) the appraised value of the
utility property to be acquired does not exceed $3,000,000; and (2) the
purchase price for the utility property is less than the appraised value
of the utility property; the acquiring utility company may submit to the
Indiana utility regulatory agency (IURC) a petition under a procedure,
based on the procedures set forth in the IURC's rules governing 30 day
administrative filings, to include in the acquiring utility company's rate
base specified costs associated with the acquisition. Sets forth certain
information that must be included in an acquiring utility company's
petition. Provides that if the IURC approves an acquiring utility
company's petition, the IURC: (1) may authorize that only the full
purchase price be recorded as the acquiring utility company's net
original cost of acquisition; and (2) shall provide that incidental and
other costs of the acquisition are subject to a reasonableness review as
part of the acquiring utility company's next base rate case.
Effective: Upon passage; July 1, 2024.
Koch
January 10, 2024, read first time and referred to Committee on Utilities.
January 25, 2024, amended, reported favorably — Do Pass.
SB 247—LS 6951/DI 101 January 26, 2024
Second Regular Session of the 123rd General Assembly (2024)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2023 Regular Session of the General Assembly.
SENATE BILL No. 247
A BILL FOR AN ACT to amend the Indiana Code concerning
utilities.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 8-1-30.3-5, AS AMENDED BY P.L.61-2022,
2 SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JULY 1, 2024]: Sec. 5. (a) Except as provided in section 6.6 of this
4 chapter, this section applies if:
5 (1) a utility company acquires property from an offered utility in
6 a transaction involving a willing buyer and a willing seller; and
7 (2) at least one (1) utility company described in subdivision (1) is
8 subject to the jurisdiction of the commission under this article.
9 (b) Subject to subsection (c), there is a rebuttable presumption that
10 a cost differential is reasonable.
11 (c) If the acquisition:
12 (1) is made under IC 8-1.5-2-6.1, and to the extent the purchase
13 price does not exceed the appraised value as determined under
14 IC 8-1.5-2-5; or
15 (2) is not made under IC 8-1.5-2-6.1, and to the extent the
16 purchase price does not exceed the appraised value as determined
17 under section 5.5 of this chapter;
SB 247—LS 6951/DI 101 2
1 the purchase price is considered reasonable for purposes of subsection
2 (d) and any resulting cost differential is considered reasonable.
3 (d) Before closing on the acquisition, the utility company that
4 acquires the utility property may petition the commission to include
5 any cost differential as part of its rate base in future rate cases. The
6 commission shall approve the petition if the commission finds the
7 following:
8 (1) The utility property is used and useful to the offered utility in
9 providing water service, wastewater service, or both water and
10 wastewater service.
11 (2) The offered utility is too small to capture economies of scale
12 or has failed to furnish or maintain adequate, efficient, safe, and
13 reasonable service and facilities.
14 (3) The utility company will improve economies of scale or, if
15 otherwise needed, make reasonable and prudent improvements to
16 the offered utility's plant, the offered utility's operations, or both,
17 so that customers of the offered utility will receive adequate,
18 efficient, safe, and reasonable service.
19 (4) The acquisition of the utility property is the result of a mutual
20 agreement made at arms length.
21 (5) The actual purchase price of the utility property is reasonable.
22 (6) The utility company and the offered utility are not affiliated
23 and share no ownership interests.
24 (7) The rates charged by the utility company will not increase
25 unreasonably in future general rate cases solely as a result of
26 acquiring the utility property from the offered utility. For purposes
27 of this subdivision, the rates and charges will not increase
28 unreasonably in future general rate cases so long as the net
29 original cost proposed to be recorded under subsection (f) is not
30 greater than two percent (2%) of the acquiring utility's net original
31 cost rate base as determined in the acquiring utility's most recent
32 general rate case, plus any adjustments to the rate base under
33 IC 8-1-31 and IC 8-1-31.7 that have occurred after the rate case.
34 If the amount proposed to be recorded under subsection (f) is
35 greater than two percent (2%) of the acquiring utility's net original
36 cost rate base as determined in the acquiring utility's most recent
37 general rate case, plus any adjustments to the rate base under
38 IC 8-1-31 and IC 8-1-31.7 that have occurred after the rate case,
39 the commission shall proceed to determine whether the rates
40 charged by the utility company will increase unreasonably in
41 future general rate cases solely as a result of acquiring the utility
42 property from the offered utility and, in making the determination,
SB 247—LS 6951/DI 101 3
1 may consider evidence of:
2 (A) the anticipated dollar value increase; and
3 (B) the increase as a percentage of the average bill.
4 (8) The cost differential will be added to the utility company's rate
5 base to be amortized as an addition to expense over a reasonable
6 time with corresponding reductions in the rate base.
7 (e) In connection with its petition under subsection (d), the
8 acquiring utility company shall provide the following:
9 (1) Notice to customers of the acquiring utility company that a
10 petition has been filed with the commission under this chapter.
11 The notice provided under this subdivision must include the cause
12 number assigned to the petition. Notice under this subdivision
13 may be provided to customers in a billing insert.
14 (2) Notice to the office of the utility consumer counselor.
15 (3) A statement of known infrastructure, environmental, or other
16 issues affecting the offered utility, and the process for
17 determining reasonable and prudent improvements upon
18 completing the acquisition.
19 (f) In a proceeding under subsection (d), the commission shall issue
20 its final order not later than two hundred ten (210) days after the filing
21 of the petitioner's case in chief. If the commission grants the petition,
22 the commission's order shall authorize the acquiring utility company to
23 make accounting entries recording the acquisition and that reflect:
24 (1) the full purchase price;
25 (2) incidental expenses; and
26 (3) other costs of acquisition;
27 as the net original cost of the utility plant in service assets being
28 acquired, allocated in a reasonable manner among appropriate utility
29 plant in service accounts.
30 SECTION 2. IC 8-1-30.3-6.6 IS ADDED TO THE INDIANA
31 CODE AS A NEW SECTION TO READ AS FOLLOWS
32 [EFFECTIVE JULY 1, 2024]: Sec. 6.6. (a) This section does not
33 apply to a petition that is filed with the commission under section
34 5 of this chapter before July 1, 2024.
35 (b) Subject to subsection (d) and notwithstanding any other law
36 or any rule of the commission, including 170 IAC 1-6-1(b), if:
37 (1) the appraised value of the utility property to be acquired,
38 as determined under:
39 (A) section 5.5 of this chapter; or
40 (B) IC 8-1.5-2-5;
41 as applicable, does not exceed three million dollars
42 ($3,000,000); and
SB 247—LS 6951/DI 101 4
1 (2) the purchase price for the utility property is less than the
2 appraised value;
3 a utility company seeking to acquire the utility property of an
4 offered utility is not required to file a petition under section 5 of
5 this chapter, and may instead submit to the commission a petition
6 to obtain the relief set forth in section 5 of this chapter under the
7 procedures set forth in 170 IAC 1-6, as modified by this section.
8 (c) A petition authorized under subsection (b) must include the
9 following:
10 (1) A copy of the purchase agreement entered into between
11 the acquiring utility company and the offered utility.
12 (2) A copy of the journal entry reflecting the accounting
13 entries recording the acquisition in accordance with section
14 5(f) of this chapter.
15 (3) A copy of the appraisal of the utility property under:
16 (A) section 5.5 of this chapter; or
17 (B) IC 8-1.5-2-5;
18 as applicable.
19 (4) A statement of known infrastructure, environmental, or
20 other issues affecting the offered utility, and the process for
21 determining reasonable and prudent improvements upon
22 completing the acquisition.
23 (5) Any other information required to be submitted under the
24 procedures set forth in 170 IAC 1-6, as modified by this
25 section.
26 (d) In an order approving a petition filed under this section, the
27 commission:
28 (1) may only authorize the acquiring utility company to make
29 accounting entries recording the acquisition that:
30 (A) reflect the full purchase price, as set forth in section
31 5(f)(1) of this chapter; and
32 (B) do not include:
33 (i) incidental expenses, as set forth in section 5(f)(2) of
34 this chapter; or
35 (ii) other costs of acquisition, as set forth in section
36 5(f)(3) of this chapter;
37 as the net original cost of the utility plant in service assets
38 being acquired; and
39 (2) shall provide that any:
40 (A) incidental expenses, as set forth in section 5(f)(2) of this
41 chapter; or
42 (B) other costs of acquisition, as set forth in section 5(f)(3)
SB 247—LS 6951/DI 101 5
1 of this chapter;
2 are subject to a reasonableness review as part of the acquiring
3 utility company's next base rate case.
4 SECTION 3. IC 8-1.5-2-2, AS AMENDED BY P.L.120-2021,
5 SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
6 UPON PASSAGE]: Sec]. 2. (a) This chapter does not apply to utilities
7 governed by:
8 (1) IC 8-1-13; or
9 (2) IC 8-1-2 except for a municipally owned electric, natural gas,
10 water, wastewater, or combined water and wastewater utility.
11 (b) The law relating to acquisition of electric utility property and to
12 electricity suppliers' service area assignments shall be governed by
13 IC 8-1-2.3 and IC 8-1-2-95.1, and nothing in this chapter modifies or
14 abridges those provisions.
15 SECTION 4. An emergency is declared for this act.
SB 247—LS 6951/DI 101 6
COMMITTEE REPORT
Madam President: The Senate Committee on Utilities, to which was
referred Senate Bill No. 247, has had the same under consideration and
begs leave to report the same back to the Senate with the
recommendation that said bill be AMENDED as follows:
Page 3, line 35, delete "Notwithstanding" and insert "Subject to
subsection (d) and notwithstanding".
Page 3, line 36, after "commission," insert "including 170
IAC 1-6-1(b),".
Page 4, line 5, delete "thirty" and insert "petition to obtain the
relief set forth in section 5 of this chapter under the procedures set
forth in 170 IAC 1-6, as modified by this section.".
Page 4, delete lines 6 through 7.
Page 4, line 8, delete "thirty (30) day administrative filing" and
insert "petition".
Page 4, between lines 18 and 19, begin a new line block indented
and insert:
"(4) A statement of known infrastructure, environmental, or
other issues affecting the offered utility, and the process for
determining reasonable and prudent improvements upon
completing the acquisition.".
Page 4, line 19, delete "(4)" and insert "(5)".
Page 4, line 19, delete "in" and insert "under the procedures set
forth in 170 IAC 1-6, as modified by this section.
(d) In an order approving a petition filed under this section, the
commission:
(1) may only authorize the acquiring utility company to make
accounting entries recording the acquisition that:
(A) reflect the full purchase price, as set forth in section
5(f)(1) of this chapter; and
(B) do not include:
(i) incidental expenses, as set forth in section 5(f)(2) of
this chapter; or
(ii) other costs of acquisition, as set forth in section
5(f)(3) of this chapter;
as the net original cost of the utility plant in service assets
being acquired; and
(2) shall provide that any:
(A) incidental expenses, as set forth in section 5(f)(2) of this
chapter; or
(B) other costs of acquisition, as set forth in section 5(f)(3)
of this chapter;
SB 247—LS 6951/DI 101 7
are subject to a reasonableness review as part of the acquiring
utility company's next base rate case.".
Page 4, delete lines 20 through 21, begin a new paragraph and
insert:
"SECTION 3. IC 8-1.5-2-2, AS AMENDED BY P.L.120-2021,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec]. 2. (a) This chapter does not apply to utilities
governed by:
(1) IC 8-1-13; or
(2) IC 8-1-2 except for a municipally owned electric, natural gas,
water, wastewater, or combined water and wastewater utility.
(b) The law relating to acquisition of electric utility property and to
electricity suppliers' service area assignments shall be governed by
IC 8-1-2.3 and IC 8-1-2-95.1, and nothing in this chapter modifies or
abridges those provisions.
SECTION 4. An emergency is declared for this act.".
Renumber all SECTIONS consecutively.
and when so amended that said bill do pass.
(Reference is to SB 247 as introduced.)
KOCH, Chairperson
Committee Vote: Yeas 9, Nays 0.
SB 247—LS 6951/DI 101