Amends TCA Title 65.

This bill authorizes an acquiring utility that acquires selling utility to request the public utility commission to use certain procedures to establish the ratemaking rate base of that selling utility at the time when it is acquired by the acquiring utility; and requires the commission to use the procedures when so requested.<br /> <br /> This bill defines "acquiring public utility" as a water or wastewater public utility that is acquiring a selling utility as the result of a voluntary arm's-length transaction between the buyer and seller. This bill defines "selling utility" as a water or wastewater service provider located in this state, owned by a municipal corporation or authority, or any other entity that is being purchased by an acquiring public utility as the result of a voluntary arm's-length transaction between the buyer and seller, and that regularly provides service to 10,000 or fewer customer connections.<br /> <br /> The procedures set forth in this bill are as follows:<br /> <br /> (1) The fair market value of the selling utility system must be based upon two appraisals of the system's fair market value. The two appraisals must come from independent appraisers selected by the selling and acquiring utility, respectively. The fair market value is the average of the two appraisals;<br /> (2) The appraisers must, among other things, be sworn to determine the fair market value of the selling utility by establishing the amount for which the selling utility would be sold in a voluntary transaction;<br /> (3) The lesser of the purchase price or the fair market value will constitute the rate base associated with the selling utility by incorporating it into the rate base of the current tariff district designated by the acquiring public utility under this bill. The amount of the appraisers' fee must be included in the rate base, and must not exceed the greater of $15,000 or 5 percent of the appraised value of the selling utility; and<br /> (4) The commission must accept the acquiring public utility's district or tariff group recommendation, unless the recommendation is determined by the commission to be contrary to the public interest. Any post-acquisition improvements made by the acquiring public utility to the selling utility must accrue cost for financing set at the acquiring public utility determined rate for allowance for funds used during construction, inclusive of debt, equity, and income tax gross up components, after the date on which the expenditure was made by the acquiring public utility until the investment has been placed in service and new rates or surcharges are implemented by the acquiring public utility. This bill specifies that it does not prohibit a party from declining to proceed with an acquisition or be deemed as establishing the final purchase price of an acquisition. This bill provides that a determination of the ratemaking rate base constitutes a finding that the determination will result in just and reasonable rates to all customers of the public utility, including, but not limited to, existing customers of the public utility.<br /> <br />