REPRESENTATIVES Olman, Hartnett, Hagan, Distel, Schmidt

To amend section 4909.171 and to enact section

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4909.172 of the Revised Code to authorize, subject

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to Public Utilities Commission approval,

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cost-based rate adjustments for water supplied to

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a waterworks utility by another waterworks

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utility, rate adjustment authority for a sewage

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disposal utility similar to the authority of a

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waterworks utility, and infrastructure improvement

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surcharges on waterworks or sewage disposal

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utility rates to cover specified costs associated

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with, and provide a return on, certain plant

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investment.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That section 4909.171 be amended and section	13
4909.172 of the Revised Code be enacted to read as follows:	14

Sec. 4909.171. (A) Any waterworks company whose water supply	15
is provided by a municipal corporation or other local governmental	16
unit of this state whose rates are not subject to regulation byor	17
any sewage disposal system company may submit an application to	18
the public utilities commission shall requestfor an increase or	19
decrease in rates when theany rate or charge for, respectively,	20
water or sewage treatment, if both of the following conditions are	21
met:	22

(1) The water or sewage treatment is provided to the company	23
by either of the following:	24

(a) A municipal corporation or other local governmental unit	25
of this state whose rates are not subject to regulation by the	26
commission;	27

(b) Another waterworks company, or another sewage disposal	28
system company, that is a public utility and whose rates for the	29
water, or the sewage treatment, have been approved by the	30
commission pursuant to an application filed under section 4909.18	31
of the Revised Code.	32

(2) The change in rate or charge is based solely on a change	33
in the cost to the company of the water imposed on the waterworks	34
company by the municipal corporation or other governmental unit	35
and, in such instance, sectionsor the sewage treatment.	36

Sections 4909.18 and 4909.19 of the Revised Code do not apply	37
to any application filed under this section. When the waterworks	38
company requests a rate change, it shall file with the commission	39
An application shall be accompanied by evidence of the new rates	40
imposed by the municipal corporation or other governmental unit	41
and charges charged the company by a provider described in	42
division (A)(1)(a) or (b) of this section.	43

(B) Pursuant to the filing of an application under division	44
(A) of this section by a waterworks company or a sewage disposal	45
system company, the commission shall approve appropriate tariff	46
revisions, withoutin the schedule of the company filed under	47
section 4905.30 of the Revised Code, which revisions shall reflect	48
solely the change in the cost to the company of the water or the	49
sewage treatment, as specified in division (A) of this section and	50
no other cost, charge, or item, and shall not change in the	51
distribution of the revenue responsibility of the various classes	52
of the company's customers, which revisions shall become effective	53
immediately.	54

(C) An increase authorized pursuant to division (B) of this	55
section shall not be effective until ten days after the date the	56
waterworks company or the sewage disposal system company has	57
provided affected customers with notification of the increase, in	58
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
service:	107

(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
section.	140

(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 Code	148
is hereby repealed.	149