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Utility Legislative Update

By Scott A. Miller, CPA, Partner, May 30, 2018

The Dust Has Settled on an Extended 2018 Legislative Session that Saw Several Significant Utility Bills Enacted

There was a lot of drama surrounding the special legislative session called by the Governor to finish business undone at the end of the regular session. Utility-related issues were not impacted, however, since the legislature wrapped up its work on Indiana’s "wet" utility infrastructure prior to the March deadline.

Using a methodical approach towards understanding the needs of utilities, the legislature issued two new laws that could significantly impact the industry.

The first, Public Law 126 (formerly Senate Enrolled Act 362) includes three main components:

  1. New water and wastewater utility companies that are created after June 30, 2018 will be subject to the jurisdiction of the Indiana Utility Regulatory Commission (IURC) for approval of rates and charges, financing, rules and annual reporting requirements for at least the first 10 years of existence as a legal entity even if they are otherwise able to opt out of IURC jurisdiction. These provisions would not affect municipalities, regional districts or conservancy districts.
  2. Participation in the State Revolving Fund (SRF) loan program will now require documentation that demonstrates the utility has the financial, managerial, technical and legal capability of operating and maintaining its water or wastewater treatment, distribution and collection systems. Additionally, documentation that demonstrates that the utility has or is in the process of developing an asset management plan will be required. SRF is in the process of developing guidance regarding the technical and financial components of an asset management plan.
  3. Permits issued or amended for newly constructed, newly acquired or expanded water or wastewater treatment plants will require documentation certifying the completion of a life cycle cost-benefit analysis, a capital asset management plan and a cyber security plan. The statute describes some of the additional components that each of these items must contain including user rate analyses. These studies must be updated every five years while the facilities continue operation. Importantly, these rules do not apply to renewals of permits for existing plants provided there is not expansion of capacity.

The second new law, Public Law 196 (formerly House Enrolled Act 1267), establishes a Water Infrastructure Task Force that is charged with examining recommended standards and best practices for the maintenance and life cycle management of drinking water systems, wastewater management systems and storm water management systems.

As part of this examination, the task force is to analyze whether individual systems are achieving the recommended standards, assess the adequacy of funding sources, evaluate the impact of regionalization on system performance and ratepayer value and assess the impact on economic development in Indiana of an improved system of water infrastructure.

The task force is also directed to (1) create an empirical decision-making tool to assist policymakers in prioritizing funding for water infrastructure projects and (2) develop a long-term plan for addressing drinking water, wastewater and storm water management needs in Indiana.

The task force must act quickly. A report on recommendations from the task force is due no later than December 1, 2018.

If you would like additional information regarding capital asset management plans, rate studies or other long-term financial planning tools, please contact us at .(JavaScript must be enabled to view this email address).

Information in this article was believed current as of the date of publication. As you know, changes occur frequently. The information presented is of a general educational nature. Before applying to your specific circumstances, please contact us at vision@umbaugh.com.


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