PRINTER'S NO. 1787

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1326

Session of

2015

INTRODUCED BY GODSHALL, MILLARD, PICKETT, ROZZI, HARHART,

KILLION, MURT, DAVIS AND EVANKOVICH, JUNE 11, 2015

REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, JUNE 11, 2015

hereby enacts as follows:

Section 1. Title 66 of the Pennsylvania Consolidated

Statutes is amended by adding a section to read:

§ 1329. Valuation of acquired water and wastewater systems.

(a) Process to establish fair market value of selling

utility.--Upon agreement by both the acquiring public utility

and the selling utility, the following procedure shall be used

to determine the fair market value of the selling utility:

separate appraisals of the selling utility for the purpose of

services of a licensed engineer to conduct an assessment of

the tangible assets of the selling utility. The assessment

shall be incorporated into the appraisal under the cost

approach required under paragraph (2).

completed appraisal to the acquiring public utility and

selling utility within 60 days of execution of the service

contract.

(b) Utility valuation experts.--

subsection (a) shall be selected as follows:

included in the transaction and closing costs associated with

acquisition by the acquiring utility, however, fees may not

exceed the greater of:

acquisition, the ratemaking rate base of the selling utility

shall be incorporated into the rate base of the acquiring

public utility.

shall be the lesser of the purchase price negotiated by the

acquiring public utility and selling utility or the fair

market value of the selling utility.

(d) Commission approval.--The following apply:

agree to use the process outlined in subsection (a), the

consistent with the rate recommendation provided under

paragraph (1)(v) unless it can be demonstrated that the

proceeding before the commission. The acquiring public

utility may collect a distribution system improvement charge

during this time, as approved by the commission under this

chapter.

incorporated into the revenue requirement of the acquiring

public utility either as part of the commission's order

approving the acquisition or as part of the acquiring

utility's next base rate case proceeding. The original source

of funding for any part of the water or sewer assets of the

acquiring public utility that are not eligible to be

collected through a distribution system improvement charge

shall be eligible for inclusion in allowance for funds used

during construction after the date the expense was incurred.

for funds used during construction, through rates, until the

improved asset has been in service for a period of four years

or until the asset is included in the acquiring public

utility's next base rate case, whichever is earlier.

(f) Definitions.--The following words and phrases when used

in this section shall have the meanings given to them in this

section unless the context clearly indicates otherwise:

"Acquiring public utility." An investor-owned water or

wastewater public utility subject to regulation under this title

for a period of at least five years that is acquiring a selling

utility as the result of a voluntary arm's-length transaction

between the buyer and seller.

"Allowance of funds used during construction." An accounting

practice that recognizes the capital costs, including debt and

"Fair market value." The average of the two utility

valuation expert appraisals conducted under subsection (a)(1).

"Ratemaking rate base." The dollar value of a selling

utility which, for postacquisition ratemaking purposes, is

incorporated into the rate base of the acquiring public utility.

"Selling utility." A water or wastewater company located in

this Commonwealth, owned by a public utility, municipal

corporation or authority that is being purchased by an acquiring

public utility as the result of a voluntary arm's-length

transaction between the buyer and seller.

"Utility valuation expert." A person hired by an acquiring