SENATE AMENDED
PRIOR PRINTER'S NOS. 2409, 2848, 3217 PRINTER'S NO. 3424
No. 1899 Session of 1987
INTRODUCED BY LLOYD, BATTISTO, TIGUE, FARGO, JOHNSON, KUKOVICH,
SWEET, HALUSKA, CARLSON, PISTELLA, YANDRISEVITS, BELARDI,
McVERRY, MOEHLMANN, VROON, DORR, ITKIN, TELEK, McHALE AND
RICHARDSON, OCTOBER 27, 1987
SENATOR BELL, CONSUMER PROTECTION AND PROFESSIONAL LICENSURE,
IN SENATE, RE-REPORTED AS AMENDED, JUNE 7, 1988
AN ACT
1 Amending Title 66 (Public Utilities) of the Pennsylvania
2 Consolidated Statutes, LIMITING CERTAIN DEREGULATION; AND <--
3 further providing for rates.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Title 66 of the Pennsylvania Consolidated
7 Statutes is amended by adding a section SECTIONS to read: <--
8 § 1105. CERTAIN DEREGULATION LIMITED. <--
9 (A) GENERAL RULE.--THE COMMISSION SHALL NOT DEREGULATE,
10 REFUSE TO REGULATE, ELIMINATE REGULATION OR LESSEN REGULATION OF
11 PUBLIC UTILITIES PROVIDING LOCAL EXCHANGE TELEPHONE SERVICE
12 UNLESS SPECIFICALLY DIRECTED TO DO SO BY AN ACT OF THE GENERAL
13 ASSEMBLY.
14 (B) EXCEPTION.--THIS SECTION SHALL NOT BE CONSTRUED TO
15 PROHIBIT THE COMMISSION FROM REDUCING FILING OR REPORTING
16 REQUIREMENTS FOR SMALL PUBLIC UTILITIES PROVIDING LOCAL EXCHANGE
1 TELEPHONE SERVICE. A SMALL UTILITY SHALL BE A TELEPHONE UTILITY
2 HAVING 20,000 OR FEWER ACCESS LINES.
3 § 1326. Acquisition of water and sewer utilities.
4 (a) Acquisition cost greater than depreciated original
5 cost.--If a public utility acquires property from another public
6 utility, a municipal corporation or a person at a cost which is
7 in excess of the original cost of the property when first
8 devoted to the public service less the applicable accrued
9 depreciation, that excess, or any portion thereof found by the
10 commission to be reasonable, may be included in the rate base of
11 the acquiring public utility, provided that the acquiring public
12 utility proves that:
13 (1) the property is used and useful in providing water
14 or sewer service;
15 (2) the public utility acquired the property from
16 another public utility, a municipal corporation or a person
17 which had 1,000 or fewer customer connections;
18 (3) the public utility, municipal corporation or person
19 from which the property was acquired was not, at the time of
20 acquisition, furnishing and maintaining adequate, efficient,
21 safe and reasonable service and facilities to the customers <--
22 served by the property or could not reasonably be expected to
23 furnish and maintain adequate, efficient, safe and reasonable
24 service and facilities to the customers served by the
25 property in the future at rates no higher than those of the
26 acquiring public utility; EVIDENCE OF WHICH SHALL INCLUDE, <--
27 BUT NOT BE LIMITED TO, VIOLATION OF STATUTORY OR REGULATORY
28 REQUIREMENTS OF THE DEPARTMENT OF ENVIRONMENTAL RESOURCES OR
29 THE COMMISSION CONCERNING THE SAFETY, ADEQUACY, EFFICIENCY OR
30 REASONABLENESS OF SERVICE AND FACILITIES, OR A FINDING BY THE
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1 COMMISSION OF INADEQUATE FINANCIAL, MANAGERIAL OR TECHNICAL
2 ABILITY OF THE SMALL WATER OR SEWER UTILITY, OR A FINDING BY <--
3 THE COMMISSION THAT THERE IS A PRESENT DEFICIENCY CONCERNING
4 THE AVAILABILITY OF WATER, THE PALATABILITY OF WATER OR THE
5 PROVISION OF WATER AT ADEQUATE VOLUME AND PRESSURE OR A <--
6 FINDING BY THE COMMISSION THAT THE SMALL WATER OR SEWER
7 COMPANY UTILITY, BECAUSE OF NECESSARY IMPROVEMENTS TO ITS <--
8 PLANT OR DISTRIBUTION SYSTEM, CANNOT REASONABLY BE EXPECTED
9 TO FURNISH AND MAINTAIN ADEQUATE SERVICE TO ITS CUSTOMERS IN
10 THE FUTURE AT RATES NO HIGHER THAN THOSE OF THE ACQUIRING
11 PUBLIC UTILITY;
12 (4) reasonable and prudent investments will be made to
13 assure that the customers served by the property will receive
14 adequate, efficient, safe and reasonable service;
15 (5) THE PUBLIC UTILITY, MUNICIPAL CORPORATION OR PERSON <--
16 WHOSE PROPERTY IS BEING ACQUIRED IS IN AGREEMENT WITH THE
17 ACQUISITION AND the negotiations which led to the acquisition
18 were conducted at arm's length;
19 (6) the actual purchase price is reasonable;
20 (7) neither the acquiring nor the selling public
21 utility, municipal corporation or person is an affiliated
22 interest of the other;
23 (8) the rates charged by the acquiring public utility to
24 its preacquisition customers will not increase unreasonably
25 because of the acquisition; and
26 (9) the excess of the acquisition cost over the
27 depreciated original cost will be added to the rate base and <--
28 TO BE amortized as an addition to expense over a reasonable <--
29 period of time with corresponding reductions in the rate
30 base.
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1 (b) Procedure.--The commission, upon application by a public
2 utility, person or corporation which has agreed to acquire
3 property from another public utility, municipal corporation or
4 person, may approve an inclusion in rate base in accordance with
5 subsection (a) prior to the acquisition and prior to a
6 proceeding under this chapter to determine just and reasonable
7 rates if:
8 (1) the applicant has published notice of the <--
9 application in the legal publication designated for the
10 publication of legal notices by the local rules of court in
11 each county in which the public utility, municipal
12 corporation or person whose property is to be acquired has
13 customers;
14 (2) the applicant has published notice of the
15 application in at least one newspaper of general circulation
16 in each county in which the public utility, municipal
17 corporation or person whose property is to be acquired has
18 customers;
19 (1) THE APPLICANT HAS PROVIDED NOTICE OF THE PROPOSED <--
20 ACQUISITION AND ANY PROPOSED INCREASE IN RATES TO THE
21 CUSTOMERS SERVED BY THE PROPERTY TO BE ACQUIRED, IN SUCH FORM
22 AND MANNER AS THE COMMISSION, BY REGULATION, SHALL REQUIRE;
23 (2) THE APPLICANT HAS PROVIDED NOTICE TO ITS CUSTOMERS,
24 IN SUCH FORM AND MANNER AS THE COMMISSION, BY REGULATION,
25 SHALL REQUIRE, IF THE PROPOSED ACQUISITION WOULD INCREASE
26 RATES TO THE ACQUIRING PUBLIC UTILITY'S CUSTOMERS;
27 (3) the applicant has provided notice of the application
28 to the Director of Trial Staff and the Consumer Advocate; and
29 (4) in addition to any other information required by the
30 commission, the application includes a full description of
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1 the proposed acquisition and a plan for reasonable and
2 prudent investments to assure that the customers served by
3 the property to be acquired will receive adequate, efficient,
4 safe and reasonable service.
5 (c) Hearings.--The commission may hold such hearings on the
6 application as it deems necessary.
7 (D) FORFEITURE.--NOTWITHSTANDING SECTION 1309 (RELATING TO <--
8 RATES FIXED ON COMPLAINT; INVESTIGATION OF COSTS OF PRODUCTION),
9 THE COMMISSION, BY REGULATION, SHALL PROVIDE FOR A UTILITY TO
10 REMOVE THE COSTS OF ACQUISITION FROM ITS RATES AND TO REFUND ANY
11 REVENUES COLLECTED AS A RESULT OF THIS SECTION, PLUS INTEREST,
12 WHICH SHALL BE THE AVERAGE RATE OF INTEREST SPECIFIED FOR
13 RESIDENTIAL MORTGAGE LENDING BY THE SECRETARY OF BANKING IN
14 ACCORDANCE WITH THE ACT OF JANUARY 30, 1974 (P.L.13, NO.6),
15 REFERRED TO AS THE LOAN INTEREST AND PROTECTION LAW, DURING THE
16 PERIOD OR PERIODS FOR WHICH THE COMMISSION ORDERS REFUNDS, IF
17 THE COMMISSION, AFTER NOTICE AND HEARINGS, DETERMINES THAT THE
18 REASONABLE AND PRUDENT INVESTMENTS TO BE MADE IN ACCORDANCE WITH
19 THIS SECTION HAVE NOT BEEN COMPLETED WITHIN A REASONABLE TIME.
20 (d) (E) Acquisition cost lower than depreciated original <--
21 cost.--If a public utility acquires property from another public
22 utility, a municipal corporation or a person at a cost which is
23 lower than the original cost of the property when first devoted
24 to the public service less the applicable accrued depreciation
25 and the property is used and useful in providing water or sewer
26 service, that difference may SHALL, ABSENT MATTERS OF A <--
27 SUBSTANTIAL PUBLIC INTEREST, be amortized as an addition to
28 income over a reasonable period of time or may be passed through <--
29 to the ratepayers by such other methodology as the commission
30 may direct. NOTICE OF THE PROPOSED TREATMENT OF AN ACQUISITION <--
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1 COST LOWER THAN DEPRECIATED ORIGINAL COST SHALL BE GIVEN TO THE
2 DIRECTOR OF TRIAL STAFF AND THE CONSUMER ADVOCATE.
3 (F) REPORTS.--THE COMMISSION SHALL ANNUALLY TRANSMIT TO THE
4 GOVERNOR AND TO THE GENERAL ASSEMBLY AND SHALL MAKE AVAILABLE TO
5 THE PUBLIC A REPORT ON THE ACQUISITION ACTIVITY UNDER THIS
6 TITLE. SUCH REPORT SHALL INCLUDE, BUT NOT BE LIMITED TO, THE
7 NUMBER OF SMALL WATER OR SEWER PUBLIC UTILITIES, MUNICIPAL
8 CORPORATIONS OR PERSONS ACQUIRED BY PUBLIC UTILITIES, AND THE
9 AMOUNTS OF ANY RATE INCREASES OR DECREASES SOUGHT AND GRANTED
10 DUE TO THE ACQUISITION.
11 (G) EXPIRATION.--THIS SECTION SHALL EXPIRE IN FIVE YEARS
12 UNLESS EXTENDED BY STATUTE.
13 Section 2. This act shall take effect in 60 days AS FOLLOWS: <--
14 (1) SECTION 1105 SHALL TAKE EFFECT IMMEDIATELY.
15 (2) SECTION 1326 SHALL TAKE EFFECT IN 60 DAYS.
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