Gov. Pence Signs two Utility Bills but Vetoes "No More Stringent" Proposal
There were three bills of interest to the utility world this session, and all three focus on the water and sewer sectors. The bills are SB 257, SB 347 and SB 383, all authored by Sen. Ed Charbonneau.
SB 257 distressed water and wastewater utilities:
This bill mirrors the process for sale of a municipally-owned sewer utility to that of a water utility. It eliminates the referendum requirement in the event of sale of a distressed utility that is municipally owned. Placing an expensive and time-consuming referendum on a process that already requires redundant local and state official review hurts customers and constituents. Municipally-owned utilities can seek new opportunities to fix their systems and better serve their customers with greater flexibility by appraisal assessment and identifying solutions beyond traditional means.
SB 383 system integrity adjustments:
SB 383 provides that an eligible water or wastewater utility may petition the utility regulatory commission to charge a system integrity adjustment to recover or credit an adjustment amount based on the eligible utility's revenues. The bill allows a utility to collect a system integrity adjustment until the earlier of:
- Forty-eight months after the date on which the utility is allowed to begin collecting the system integrity adjustment.
- The date on which the commission issues an order in the utility's next general rate case proceeding. The bill requires the commission to adopt rules concerning system integrity adjustment proceedings.
This bill is designed to allow water utilities to adjust rates based on weather.
SB 347 water resources:
This bill repeals the law requiring all water utilities to annually report to the utility regulatory commission on operations and maintenance costs in providing water service to customers. It requires the Indiana Finance Authority ("Authority"), before Nov. 1, 2017, to prepare and submit a report on non-revenue water (the difference between the volume of water entering a water distribution system and the volume of water consumption billed to customers served by the water distribution system) and water loss in Indiana. It also requires the Authority to perform a quality assurance review of the water resources data compiled from the reports submitted annually by owners of significant water withdrawal facilities for all calendar years since 1985 and to present the results of the quality assurance review as those results become available to the water rights and use section of the division of water of the department of natural resources. Lastly, the bill requires the Authority to study, analyze and report to the executive director of the legislative services agency by Nov. 1, 2016, on the infrastructure needs of Indiana's water utilities.
The introduction of the term “non-revenue” water is the largest policy issue in this bill. The study of that item will have a direct correlation to the quality of any water system’s infrastructure.
HB 1082 environmental rules and policies (the “no more stringent” bill):
HB 1082 requires the Indiana Department of Environmental Management (IDEM) to report annually to the legislative council:
- Any administrative rule adopted by the environmental rules board (board) or proposed by IDEM.
- Any operating policy or procedure instituted or altered by IDEM.
- Any non-rule policy or statement put into effect by IDEM during the previous year that constitutes a change in the policy previously followed by IDEM under the provisions of IC 13 and the rules adopted by the board.
The bill provides that if notice given by IDEM concerning a proposed rule identifies an element of the proposed rule that imposes a restriction or requirement more stringent than a restriction or requirement imposed under federal law, the proposed rule does not become effective until the adjournment sine die of the regular general assembly session that begins after IDEM provides the notice. There is an exception for the adoption of emergency rules in response to emergency situations.
This policy idea has been kicked around in the statehouse for a long time. Many thought that this year was the year it would pass. The largest bump in the road came during the second half of the session, when Gov. Pence’s legislative team communicated their reluctance to support the bill after the crisis in Flint, Mich., became prominent in the media. The bill was significantly changed as a result.
The softer version of the bill passed the Senate 48-2 but still only passed the House on a 65-30 vote.
Many involved were surprised when Gov. Pence vetoed the bill on March 24, which was one of only two vetoes this year.
Veto override votes are constitutionally required, and many expect it to be overridden. Until that occurs, the legislation is ineffectual.
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