SB 211 — Amend Water/Sewer Rate Adjustment Mechanisms.

GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2021 S 1 SENATE BILL 211 RATIFIEDShort BILLTitle: AN ACT TO ENCOURAGE INVESTMENT IN REGULATED WATER AND SEWER SYSTEMS BY AUTHORIZING THE USE OF A WATER AND SEWER INVESTMENT PLAN RATE-MAKING MECHANISM FOR ESTABLISHING RATES OF REGULATED WATER AND SEWER UTILITIES AND TO OTHERWISE AMEND RATE ADJUSTMENT MECHANISMS FOR WATER AND SEWER IMPROVEMENTS.

Amend Water/Sewer Rate Adjustment Mechanisms.

(Public) Sponsors:

Senator Newton (Primary Sponsor).

Referred to:

Rules and Operations of the Senate March 10, 2021 A BILL TO BE ENTITLED AN ACT TO ENCOURAGE INVESTMENT IN REGULATED WATER AND SEWER SYSTEMS BY AUTHORIZING THE USE OF A WATER AND SEWER INVESTMENT PLAN RATE-MAKING MECHANISM FOR ESTABLISHING RATES OF REGULATED WATER AND SEWER UTILITIES AND TO OTHERWISE AMEND RATE ADJUSTMENT MECHANISMS FOR WATER AND SEWER IMPROVEMENTS.

(c) Any rate adjustment allowed under a Water and Sewer Investment Plan approved pursuant to this section shall not, on an annual basis for years two and three of the plan, exceed *S211-v-1* General Assembly Of North Carolina Session 2021 five percent (5%) of the utility's North Carolina retail jurisdictional gross revenues for the preceding plan year.

Upon a petition to the Commission, the Commission may consider the addition of unplanned emergency capital investments that must be undertaken during a plan term to address risk ofnoncompliancewith primarydrinkingwateroreffluent standards, orto mitigate *S211-v-2* cyber or physical security risks, even if such expenditures would cause the above-referenced cap to be exceeded.

Page 2 Senate Bill 211-First Edition General Assembly Of North Carolina Session 2021 (4) Establish a procedure for the water or sewer utilityto annuallyrefund or credit to customers excess earnings above the high end of the authorized band of returns.

Page 2 Senate Bill 211-Ratified (5) Establishamethodologytoannuallyreviewthecostssubjecttotheadjustment mechanism, including the opportunity for public hearings.hearings." SECTION 1.(b) G.S.

(j) On or before July 1, 2026, the Commission shall report to the Joint Legislative Commission on Energy Policy on the impacts of each Water and Sewer Investment Plan approved by the Commission pursuant to this section for a water or sewer utility.

At a minimum, thereportshall include a Plan's impact on rates for customersof theapplicableutility, thenumber of customers disconnected for nonpayment in the four years prior to Commission approval of a Plan for the applicable utility, the number of utilitycustomers disconnected for nonpayment after approval and implementation of the Plan to the date the report is submitted, and the amount of utility earnings under an approved plan.

In consultation with the Department of Environmental Quality, the Commission shall also report on any impacts to drinking water quality of utility customers or to surface or groundwater resources from Plans implemented by water and sewer utilities.

The report mayinclude anyother information the Commission deems relevant, and shall include any Commission recommendations for legislative action." SECTION 1.(b) G.S.

(3) Equipment and infrastructure installed to complywith primaryprimarydrinking drinking water standards.

Senate Bill 211-Ratified Page 3 (4) Equipment and infrastructure installed at the direction of the Commission to comply with secondary drinking water standards.standards or other health or environmental standards established by federal, State, or local governments.

Senate Bill 211-First Edition Page 3 General Assembly Of North Carolina Session 2021 (4) Pumps, Replacement or improvement of force mains, gravity mains, service lines, pumps, motors, blowers, and other electrical or mechanical equipment installed as in-kind replacements for customers.equipment.

Unreimbursed costs incurred for projects that are eligible under subdivisionssubsections (c)(5) and (d)(3) of this section shall be exempt from the percentage limitation imposed by this subsection on cumulative system improvement charges based upon annual service revenues.

Accumulated depreciation for eligible water or sewer system improvements shall be updated in each filing submitted by a utilitywithin the same docket." Page 4 Senate Bill 211-Ratified SECTION 3.

InPage the4 GeneralSenate AssemblyBill read211-First threeEdition times and ratified this the 1 day of September, 2021.

s/ Phil Berger President Pro Tempore of the Senate s/ Tim Moore Speaker of the House of Representatives _____________________________________ Roy Cooper Governor Approved __________.m.

this ______________ day of ___________________, 2021 Senate Bill 211-Ratified Page 5