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municipalauthorities.org | 57 Schedule an overview today to see why more public agencies and design firms trust PennBid. info@pennbid.net | www.pennbid.net EndorsedMember Program The EvolutionOf eProcurement. should consult with counsel as strict compliance with non- disclosure terms could trigger claims of violation of applicable open meetings and right-to-know laws that apply (subject to certain specified exceptions) to both municipalities and authorities. These agreements do create windows for critical (and sometimes candid) negotiations over deal terms such that deal can come to fruition. Q Why not simply regionalize in all cases? A Some municipalities have pursued perceived opportunities to regionalize only to find out there may be no viable regional partners willing to acquire their water or wastewater assets. In some cases, deferred maintenance, regulatory compliance challenges and lack of adequate funding resources may chill interest from prospective regional authorities, who might fear that their own rate base cannot handle the higher rates needed to address necessary capital expenditures. The IOUs have very large rate bases and may be the only option for a municipality looking to sell. Further, the IOUs generally seem willing to offer higher purchase prices than a regional public authority can (or would want to) offer. As noted earlier, however, those higher prices come (eventually) with higher rates fees and charges to allow the IOU to recover its higher purchase price in its PUC-approved rates. Q If an IOU offers a rate freeze, what is it and how is it accomplished by the IOU? A IOUs have very limited legal ability to offer a hard rate freeze. The PUC has ruled that IOUs do not have the power to agree by contract to a rate freeze or a cap on rates. An IOU’s rates can only be determined by the PUC itself. In response to this limitation, the IOUs have resorted to offering a covenant not to include the purchase price or certain other costs of acquisition or reinvestment in their next base rate case filed with PUC. (Rate cases tend to be filed about every three years or so.) This covenant may give the existing customers a similar holiday from rapid rate increases, but the duration of that holiday is uncertain as rate setting is within the purview of the PUC, not the IOUs themselves. S