As Reported by the House Public Utilities Committee

125th General Assembly
Regular Session
Sub. S. B. No. 44

SENATORS Robert Gardner, Blessing, Spada, Dann, Mumper, Prentiss

REPRESENTATIVES Olman, Hartnett, Hagan, Distel, Schmidt

To amend section 4909.171 and to enact section1
4909.172 of the Revised Code to authorize, subject2
to Public Utilities Commission approval, 3
cost-based rate adjustments for water supplied to 4
a waterworks utility by another waterworks 5
utility, rate adjustment authority for a sewage 6
disposal utility similar to the authority of a 7
waterworks utility, and infrastructure improvement 8
surcharges on waterworks or sewage disposal 9
utility rates to cover specified costs associated 10
with, and provide a return on, certain plant11


       Section 1. That section 4909.171 be amended and section13
4909.172 of the Revised Code be enacted to read as follows:14

       Sec. 4909.171. (A) Any waterworks company whose water supply15
is provided by a municipal corporation or other local governmental16
unit of this state whose rates are not subject to regulation byor17
any sewage disposal system company may submit an application to18
the public utilities commission shall requestfor an increase or19
decrease in rates when theany rate or charge for, respectively,20
water or sewage treatment, if both of the following conditions are21

       (1) The water or sewage treatment is provided to the company23
by either of the following:24

       (a) A municipal corporation or other local governmental unit25
of this state whose rates are not subject to regulation by the26

       (b) Another waterworks company, or another sewage disposal28
system company, that is a public utility and whose rates for the29
water, or the sewage treatment, have been approved by the30
commission pursuant to an application filed under section 4909.1831
of the Revised Code.32

       (2) The change in rate or charge is based solely on a change33
in the cost to the company of the water imposed on the waterworks34
company by the municipal corporation or other governmental unit35
and, in such instance, sectionsor the sewage treatment.36

       Sections 4909.18 and 4909.19 of the Revised Code do not apply37
to any application filed under this section. When the waterworks38
company requests a rate change, it shall file with the commission39
An application shall be accompanied by evidence of the new rates40
imposed by the municipal corporation or other governmental unit41
and charges charged the company by a provider described in42
division (A)(1)(a) or (b) of this section.43

       (B) Pursuant to the filing of an application under division44
(A) of this section by a waterworks company or a sewage disposal45
system company, the commission shall approve appropriate tariff46
revisions, withoutin the schedule of the company filed under47
section 4905.30 of the Revised Code, which revisions shall reflect48
solely the change in the cost to the company of the water or the49
sewage treatment, as specified in division (A) of this section and50
no other cost, charge, or item, and shall not change in the51
distribution of the revenue responsibility of the various classes52
of the company's customers, which revisions shall become effective53

       (C) An increase authorized pursuant to division (B) of this55
section shall not be effective until ten days after the date the56
waterworks company or the sewage disposal system company has57
provided affected customers with notification of the increase, in58
such form and by such method as the commission shall prescribe.59

       Sec. 4909.172.  (A) A waterworks company, or a sewage 60
disposal system company, that is a public utility may file an 61
application with the public utilities commission for approval to 62
collect an infrastructure improvement surcharge, determined in 63
accordance with this section, from customers located in the 64
company's affected service areas and subject to affected schedules 65
filed by the company under section 4905.31 of the Revised Code. 66
The application shall be in such form and contain such information 67
as the commission prescribes. At the time of filing, the company 68
shall serve a copy of the application upon the chief executive of 69
each municipal corporation, the board of township trustees of each 70
township, and the board of county commissioners of each county in 71
which affected customers are located. A company for which a 72
surcharge is authorized under this section may file an application 73
for another such surcharge not sooner than twelve months after the 74
filing date of its most recent surcharge application. 75

       (B) The commission shall provide an opportunity for the 76
filing of comments on an application filed under division (A) of 77
this section. After considering those comments, the commission may 78
authorize a surcharge for the company that is just and reasonable 79
and is sufficient, but does not exceed, the revenue requirement 80
necessary to do both of the following:81

        (1) Cover such infrastructure plant costs of the company as 82
are described in division (C) of this section, incurred after 83
March 1, 2003, and before the date of filing, and not already 84
reflected in the affected schedules filed by the company under 85
section 4905.31 of the Revised Code;86

       (2) Provide a fair and reasonable rate of return on the 87
filing date valuation of that particular infrastructure plant.88

        The surcharge chargeable to each affected customer class of 89
the company shall not exceed three per cent of the rates and 90
charges applicable to the class and in effect on the date the 91
application was filed and, as to the allowed percentage increase, 92
shall be uniform for each such class. The commission shall not 93
authorize a company to have more than three surcharges in effect 94
at any time.95

        Additionally, the commission shall not authorize a surcharge 96
under this section if it determines that the surcharge causes the 97
company to earn an excessive rate of return on its valuation under 98
section 4909.15 of the Revised Code.99

        (C) For purposes of this section, a company's costs of 100
infrastructure plant may include depreciation expenses. Such 101
infrastructure plant shall exclude any improvement providing the 102
company with additional revenue other than any minimal revenue 103
associated with the elimination of a dead end, and may consist 104
only of the following capital improvements that the commission 105
determines are used and useful in rendering public utility 106

        (1) In the case of a waterworks company, service lines for, 108
and hydrants, mains, and valves installed as a part of, a 109
replacement project for an existing facility; main extensions that 110
eliminate dead ends to resolve documented water supply problems 111
presenting significant health or safety issues to then existing 112
customers; and main cleaning or relining; 113

       (2) In the case of a sewage disposal system company, mains 114
and lift stations installed as part of a replacement project for 115
an existing facility; main extensions that resolve documented 116
sewage disposal problems presenting significant health or safety 117
issues to then existing customers; and main cleaning, inflow and 118
infiltration elimination, or relining;119

        (3) Unreimbursed capital expenditures made by the waterworks 120
company, or the sewage disposal system company, for waterworks, or 121
sewage disposal, facility relocation required by a governmental 122
entity due to a street or highway project;123

        (4) Minimum land or land rights acquired by the company as 124
necessary for any service line, equipment, or facility described 125
in divisions (A)(1) to (3) of this section.126

        (D) During the period that an authorized surcharge is in 127
effect, the commission, by order and on its own motion or upon 128
good cause shown, may reduce the amount of or terminate a 129
surcharge if it determines that the surcharge causes the company 130
to earn an excessive rate of return on its valuation under section 131
4909.15 of the Revised Code.132

        (E) An order issued by the commission deciding an application 133
by a waterworks company or a sewage disposal system company for an 134
increase in rates and charges pursuant to an application filed by 135
the company under section 4909.18 of the Revised Code shall 136
provide for the termination, as of the earlier of the effective 137
date of the increase or the date specified in division (F) of this 138
section, of any surcharges of the company authorized under this 139

        (F) All surcharges authorized under this section shall 141
terminate by operation of law not later than December 31, 2014.142

        (G) The company shall provide notice of any surcharge 143
authorized under this section to each affected customer with or on 144
the customer's first bill containing the surcharge. 145

       (H) The commission may adopt such rules as it considers 146
necessary to carry out this section.147

       Section 2. That existing section 4909.171 of the Revised Code148
is hereby repealed.149