HF 2101 — A bill for an act relating to the acquisition of water, sanitary sewer, and storm water utilities by rate-regulated public utilities.

KimHouse ReynoldsFile O2101 f- fEnrolled iHouse cFile e2101 oAN fACT tRELATING hTO eTHE GACQUISITION oOF vWATER, eSANITARY rSEWER, nAND oSTORM rWATER AUTILITIES dBY aRATE-REGULATED mPUBLIC GreggUTILITIES. G O V E R N O R L T G O V E R N O R April10,2024 The Honorable Paul Pate SecretaryofStateofIowa StateCapitol Des Moines,Iowa50319 DearMr.Secretary, Iherebytransmit:

HouseFile2101,anActrelatingtotheacquisitionofwater,sanitarysewer,andstormBE waterutilitiesbyrate-regulatedpublicutilities.IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

TheaboveHouseFileisherebyapprovedonthisdate.Section 1.

Sincerely,Section KimT^ynolds476.84, Governorsubsection ofIowa2, cc:Code 2024, is amended to read as follows:

SecretaryoftheSenate Clerk ofthe House STATE CAPITOL DES MOINES, I O W A 5035I5.28I.521FAX 515.725.3527 W W W .

G O V E R N O R .

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G E N E R A L A S S E w i H M t i a H o u F i l2 1 0 1 A NA C T RELATING TO THE ACQUISITION OF WATER, SANITARY SEWER, AND STORM W A T EU T I L I T IR A T E - R E G U L A T E D P U B L I C U T I L I T I E S .

B E IT E N A C T ET H E G E N EA S S E M B L Y S T A T E I O W A :

Section 1, Section 476.84, subsection 2, Code 2024, is a m e n dt oread a s f o l l o w s :

a,a. A public utility shall not acquire, in whole or in part, a water, sanitary sewer, or storm water utility with a fair market value purchase price of five hundred thousand three million dollars or more from a non-rate-regulated entity described in section 476.1, subsection 3, unless the board first approves the acquisition.

InA addition,public ifutility theshall utilitynot toacquire, bein acquiredwhole isor in part, a citywater, utility,sanitary thensewer, theor publicstorm water utility shallwith nota acquirefair themarket cityvalue utilitypurchase untilprice theof cityfive hashundred firstthousand me^three certifiedmillion completiondollars ofor themore requirementsfrom ofa ooctionnon-rate-regulated 388.2Aentity sectionsdescribed 362.3,in 364.2,section 364.7,476.1, 384.84,subsection 388.2,3, 388.2A,unless andthe 388.6.board first approves the acquisition.

AIn certifiedaddition, completionif submittedthe pursuantutility to thisbe paragraphacquired shallis containa ancity affirmationutility, thatthen the citypublic thatutility isshall thenot subjectacquire of the acquisitioncity hasutility timelyuntil andthe substantiallycity compliedhas infirst relationmet tocertified thecompletion acquisitionof with the applicablerequirements provisions of section 388.2A sections 362.3, 364.2, 364.7, 384,84,384.84, 388.2, 388.2A, and 388.6.

A certified completion submitted pursuant to this paragraph shall contain an affirmation that the city that is the subject of the acquisition has timely and substantially complied in relation to the acquisition with the applicable provisions of sections 362.3, 364.2, 364.7, 384.84, 388.2, 388.2A, and 388.6.

If a water, sanitary sewer, or storm water utility that is the subject of an acquisition meets the requirements of paragraph “a”, then the acquiring public utility may apply to the board, prior to the completion of the acquisition, for advance approval of a proposed initial tariff for providing House File 2101, p.

In making this finding, the board may consider any factor it reasonably concludes may affect future rates, including but not limited to the price paid for the acquired utility and the projected cost of reasonable and prudent changes to investments in the acquired utility in order to provide adequate safe and reliable services and facilities t o c u s t o m T h board s h a l l c o n whether rt h e r e a r e ratemaking principles that will result in just and reasonable rates to allcustomers. customers in determining whether to approve or disapprove a proposed acquisition.

The board shall consider whether there are ratemaking principles that will result in just and reasonable rates to all customers in determining whether to approve or disapprove a proposed acquisition.

(1) In determining the applicable ratemaking principles, the board shall require the public utility to submit a purchase agreement for the acquisition and shall find that the purchase agreement includes terms, conditions, requirements, and other House PileFile 2101, p.

3 provisions applicable to the system to be acquired that are in substantial compliance with the requirements in sections 362.3, 364.2, 364.7, 384.84, 3388.2, 8388.2A, 8and .388.6.

2 , 388.2A, a388.6.

e?"e. ^ If the acquisition involves a utility that is an at-risk system as defined in section 455B.199D, the board shall issue a final order on an application for approval of the acquisition within one hundred twenty days from the filing of the application.

f.

If the acquisition involves a utility that is an at-risk system as defined in section 455B.199D, the board shall issue a final order on an application for approval of the acquisition within one hundred twenty days from the filing of the application.

#5-f. gj_ Upon the approval of a proposal for acquisition by board order, the parties subject to the acquisition shall have the option of either proceeding with such acquisition or not, subject to any termination provisions contained in the acquisition agreement.

g!-g. I7j_ Notwithstanding any provision of this chapter to the contrary, the ratemaking principles established by the board pursuant to this section shall be binding with regard to the acquired utility in^^y subsequent rate prpceeding.

PATUpon GRASSLEY//the AMYapproval SINC^IRof Speakera ofproposal tnefor Houseacquisition Presidentby ofboard order, the Senateparties Isubject herebyto certifythe thatacquisition thisshall billhave originatedthe inoption theof Houseeither andproceeding iswith knownsuch asacquisition Houseor Filenot, 2101,subject Ninetiethto Generalany Assembly.termination provisions contained in the acquisition agreement.

ME^ANg. NELSON C h i C l e ro ft h H o u s e Approved (\\ t 2024 R E Y N O L D S G o v e r n o r

h.

Notwithstanding any provision of this chapter to the contrary, the ratemaking principles established by the board pursuant to this section shall be binding with regard to the acquired utility in any subsequent rate proceeding.

______________________________ ______________________________ PAT GRASSLEY AMY SINCLAIR Speaker of the House President of the Senate I hereby certify that this bill originated in the House and is known as House File 2101, Ninetieth General Assembly.

______________________________ MEGHAN NELSON Chief Clerk of the House Approved _______________, 2024 ______________________________ KIM REYNOLDS Governor