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Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20150&cosponId=18409
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House of Representatives
Session of 2015 - 2016 Regular Session

MEMORANDUM

Posted: May 26, 2015 11:29 AM
From: Representative Robert W. Godshall
To: All House members
Subject: Valuation of an acquired water or wastewater system.
 
Currently, there are community owned and private water and wastewater utilities whose system infrastructure is urgently in need of repair or replacement however, the system owners cannot afford to make these needed upgrades without significant investment resulting in increased costs to its customers. For many of these systems, sale to a larger water or wastewater company is a welcome opportunity as it enables system improvements and ensures the continued provision of safe, reliable service to customers at reasonable rates. However, current law relating to valuation of utility property discourages these acquisitions because the purchasing utility may not be able to recover its investment.

To remedy this issue, I will be introducing legislation to establish a process for determining the fair market value of a water or wastewater company acquired by a water or wastewater public utility for rate making purposes. My bill establishes a voluntary process whereby the acquiring public utility and selling utility may choose to have the value of the selling utility established through independent appraisals of conducted by utility valuation experts. The fair market value of the selling utility, for post-acquisition rate making purposes, will be either the average of the two appraisals or the purchase price, whichever is less.

The Public Utility Commission must to approve all public utility acquisitions and will review the utility valuation expert appraisals and the proposed post-acquisition rates as part of this process. The PUC may reduce the established fair market value if the rates of the purchasing utility will increase by 5% or more.



Introduced as HB1326