17607_PMAA_Authority_June_2024

24 The Authority | June 2024 G overnment R elations U pdate PMAA Testifies on HB 905 - House Democratic Policy Committee Public Hearing In April, PMAA testified at a public hearing of the House Democratic Policy Committee on HB 905 (“Red Flag Water Usage”) sponsored by Representative McNeill (Lehigh). HB 905 amends Title 53, Chapter 56, the Municipality Authorities Act by adding a new section to require municipal authorities to provide customer notice of atypical water usage. The bill also would require an authority to assist the customer in “identifying potential leaks or other wasteful inefficiencies on the property.” In the bill, “atypical water usage” is defined as “a 50% increase in water use for one month above the average water usage for the property.” Liesel Gross, Chief Executive Officer of the Lehigh County Authority, testified on behalf of PMAA. Gross pointed out to the committee several concerns that authorities have with this proposal including: the 50 % threshold for notification, billing cycles, and staffing and liability concerns when it comes to assisting customers with potential leaks or wasteful inefficiencies. PMAA’s testimony is found at muncipalauthorities.org/the- authorities-today, select April 4, 2024). PMAA Submits Comments to the PUC’s Proposed Changes to "Fair Market Value" Act 12 In February, the Pennsylvania Public Utility Commission’s proposal for four specific revisions to future Act 12 acquisitions (“fair market value legislation” - Act 12 of 2016, Section 1329) was published in the Pennsylvania Bulletin . With publication on February 17 th , a 30-day public comment period commenced and ended on March 18 th . PMAA submitted comments on the proposed revisions (found at muncipalauthorities.org/the- authorities-today, select March 11, 2024). The four revisions include: • Public Meeting and Hearing Requirements. Utilities would be required to hold at least two in-person public meetings before signing an asset purchase agreement. The public hearings should address the proposed acquisition, describe the potential rate impacts, provide the opportunity for public comment, and be held within the municipal boundaries of the selling utility. • Rate Impact Notice. The acquiring utility and the selling utility will be required to verify the potential rate impacts the transaction may have on the selling utility’s customers and the selling utility will have to publicly communicate the implication on rates through notices issued to existing customers. • Default Weights for Appraisals. Establishing default will help to eliminate utility valuation experts being able to artificially inflate or deflate the results of any appraisals. This will also help to level the competitive bidding landscape of acquiring utilities by standardizing the process. • Reasonableness Review Ratio. The Commission will publish an annual “Reasonableness Review Ratio” (RRR) to help guide the Commission when it reviews and makes a final decision on the reasonableness of transaction prices under section 1329 applications. Four Bill Package to Reform Act 12 Acquisitions Advances To date, approximately 24 legislative proposals and bills have been introduced dealing with either Act 12 Predatory Pricing/”Fair Market Value” repeal or reform or both. In April, the House Consumer Protection, Technology and Utilities Committee reported out four bills to reform Act 12. The four bills, all sponsored by Representative Matzi (Beaver), include: HB 1862 – imposes new and enhanced public notification and participation requirements on the purchaser and seller of the system. HB 1863 – eliminated the six-month evaluation period for acquisitions. HB 1864 - requires any rate increase after an acquisition be incorporated into the rate base over three separate base rate cases. HB 1865 – caps any purchase price for a system at 125% of the depreciated original cost.