HB 2863 — UTILITY ACQUISITION NOTICE

*LRB10408243AAS18293b* HB2863 104THEngrossed GENERALLRB104 ASSEMBLY08243 StateAAS of18293 Illinoisb andAN 2026ACT HB2863concerning Introducedregulation. 2/6/2025, by Rep.

Amy Elik SYNOPSIS AS INTRODUCED:

ILCS 5/9-210.5 Amends the Public Utilities Act.

Provides that a water or sewer utility owned by the State or any political subdivision thereof and being acquired by a large public utility must inform the public of the terms of its acquisition by the large public utility by holding a public meeting prior to the acquisition and mailing a notice to the public residing in the area that the water or sewer utility operates (rather than publishing a notice in a newspaper of general circulation in the area that the water or sewer utility operates).

Provides that the notice shall include (i) information about the public meeting being held prior to the acquisition, (ii) information on what public body will be making the decision regarding the sale of the water or sewer utility, and (iii) an estimate of the potential rate increases that may be incurred in the next 5 years due to the acquisition, including the maximum rate increase that the large public utility estimates rate payers would incur each year for the next 5 years.

Provides that, for a period of 5 years after the acquisition of the water or sewer utility, the Illinois Commerce Commission shall deny any proposed rate increase that exceeds the maximum estimated rate increase provided in the notice.

LRB104 08243 AAS 18293 b A BILL FOR HB2863 LRB104 08243 AAS 18293 b AN ACT concerning regulation.

(2) shall not derive a material financial benefit from the sale of the water or sewer utility other than fees for services rendered, and (3) shall not have a member of the person's immediate family, including a spouse, parents or spouse's parents, children or spouses of children, or siblings and their spouses or children, be a director, officer, or employee of either the large public utility or water or sewer utility or the water or sewer utility or its direct affiliates or subsidiaries for at least 12 months HB2863 Engrossed - 2 - LRB104 08243 AAS 18293 b before becoming engaged under this Section or receive a material financial benefit from the sale of the water or sewer utility other than fees for services rendered.

"Utility service source" means the water or sewer HB2863 Engrossed - 3 - LRB104 08243 AAS 18293 b utility or large public utility from which the customer receives its utility service type.

(b) Notwithstanding any other provision of this Act, a large public utility that acquires a water or sewer utility may request that the Commission use, and, if so requested, the Commission shall use, the procedures set forth under this HB2863 Engrossed - 4 - LRB104 08243 AAS 18293 b Section to establish the ratemaking rate base of that water or sewer utility at the time when it is acquired by the large public utility.

(3) engage one disinterested engineer who is licensed in this State, and who may be the same engineer that is HB2863 Engrossed - 5 - LRB104 08243 AAS 18293 b engaged by the other appraisers, to prepare an assessment of the tangible assets of the water or sewer utility, which is to be incorporated into the appraisal under the cost approach;

If the appraiser is unable to negotiate reasonable engagement terms with the recommended engineer within 15 days after the recommendation by the Commission's Executive Director or designee, then the HB2863 Engrossed - 6 - LRB104 08243 AAS 18293 b appraiser shall notify the Commission's Executive Director or designee and the process shall be repeated until an engineer is successfully engaged.

Any acquisition of a water or sewer utility that affects the cumulative base rates of the large public utility's existing ratepayers in the tariff group into which the water or sewer utility is to be combined by less than (1) 2.5% at the time of the acquisition for any single acquisition completed under HB2863 Engrossed - 7 - LRB104 08243 AAS 18293 b this Section or (2) 5% for all acquisitions completed under this Section before the Commission's final order in the next rate case shall not be deemed to violate Section 7-204 or any other provision of this Act.

(e) If the water or sewer utility being acquired is owned by the State or any political subdivision thereof, then the water or sewer utility being acquired must inform the public of the terms of its acquisition by the large public utility by (1) holding a public meeting prior to the acquisitionacquisition, and (2) mailingcausing ato noticebe topublished, thein publica residingnewspaper of general circulation in the area that the water or sewer utility operates.operates, information about the public meeting being held prior to the acquisition, a notice setting forth the terms of the water or sewer utility's its acquisition by the large public utility, and options that shall be available to assist customers to pay their bills after the acquisition, and (3) mailing a notice 30 days prior to the public meeting to customers who will be affected by the acquisition.

SuchThe notice shall includebe (i)sent information about the public meeting being held prior to the acquisition,HB2863 (ii)Engrossed information- on8 what- publicLRB104 body08243 willAAS be18293 makingb thecustomers decision regarding the sale of the water or sewer utility, and (iii) an estimate of the potential rate increases that may be incurred in the nextsame 5manner yearsas due to the acquisition,customers' includingmonthly thebills, maximumeither rateby increasemail thator theelectronically. large public utility estimates rate payers would incur each HB2863 - 8 - LRB104 08243 AAS 18293 b year for the next 5 years.

ForThe anotice periodshall ofbe 5mailed yearsor afterelectronically thedelivered acquisitionwith of the watercustomers' orbills, seweron utility,a thepage Commissionseparate shallfrom deny any proposed rate increase that exceeds the maximumbill estimateditself, rateand increasein providedno inless thethan notice.12-point font.

causingThe tonotice beshall published,include in(i) ainformation newspaperabout ofthe generalpublic circulationmeeting inbeing held prior to the areaacquisition, (ii) information on the public body that will make the decision regarding the sale of the water or sewer utilityutility, operates,and (iii) a noticecomparison settingof forth the termscurrent ofrate itsbeing acquisitioncharged by the largewater publicor sewer utility andbeing optionsacquired, the rate that shallis expected to be availablecharged toimmediately assistfollowing customersthe toacquisition, payand theirthe billseffect afteron rates if the acquisition.acquisition does not proceed.

(g) From the date of acquisition until the date that new rates are effective in the acquiring large public utility's next rate case, the customers of the acquired water or sewer HB2863 Engrossed - 9 - LRB104 08243 AAS 18293 b utility shall pay the approved then-existing rates of the district or tariff group as ordered by the Commission, or some lesser rates as recommended by the large public utility and HB2863 - 9 - LRB104 08243 AAS 18293 b approved by the Commission under subsection (f);

HB2863 Engrossed - 10 - LRB104 08243 AAS 18293 b (h) In the acquiring large public utility's next rate case, the water or sewer utility and the district or tariff group ordered by the Commission and their costs of service may HB2863 - 10 - LRB104 08243 AAS 18293 b be combined under the same rate tariff.

(i) Any post-acquisition improvements made by the large public utility in the water or sewer utility shall accrue a cost for financing set at the large public utility's determined rate for allowance for funds used during construction, inclusive of the debt, equity, and income tax HB2863 Engrossed - 11 - LRB104 08243 AAS 18293 b gross up components, after the date on which the expenditure was incurred by the large public utility until the investment has been in service for a 4-year period or, if sooner, until HB2863 - 11 - LRB104 08243 AAS 18293 b the time the rates are implemented in the large public utility's next rate case.

(k) Nothing in this Section shall prohibit a party from declining to proceed with an acquisition or be deemed as HB2863 Engrossed - 12 - LRB104 08243 AAS 18293 b establishing the final purchase price of an acquisition.

(l) In the Commission's order that approves the large utility's acquisition of the water or sewer utility, the HB2863 - 12 - LRB104 08243 AAS 18293 b Commission shall address each aspect of the acquisition transaction for which approval is required under the Act.