§ 1329. Valuation of acquired water and wastewater systems
Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 66 Pa.C.S.A. Public UtilitiesEffective: June 13, 2016
Effective: June 13, 2016
66 Pa.C.S.A. § 1329
§ 1329. Valuation of acquired water and wastewater systems
(4) The acquiring public utility or entity and selling utility shall engage the services of the same licensed engineer to conduct an assessment of the tangible assets of the selling utility. The assessment shall be incorporated into the appraisal under the cost approach required under paragraph (3).
(3) Fees paid to utility valuation experts may be included in the transaction and closing costs associated with acquisition by the acquiring utility or entity. Fees eligible for inclusion may be of an amount not exceeding 5% of the fair market value of the selling utility or a fee approved by the commission.
(1) If the acquiring public utility and selling utility agree to use the process outlined in subsection (a), the acquiring public utility shall include the following as an attachment to its application for commission approval of the acquisition filed pursuant to section 1102 (relating to enumeration of acts requiring certificate):
(4) The tariff submitted pursuant to subsection (d)(1)(v) shall remain in effect until such time as new rates are approved for the acquiring public utility as the result of a base rate case proceeding before the commission. The acquiring public utility may collect a distribution system improvement charge during this time, as approved by the commission under this chapter.
(5) The selling utility's cost of service shall be incorporated into the revenue requirement of the acquiring public utility as part of the acquiring utility's next base rate case proceeding. The original source of funding for any part of the water or sewer assets of the selling utility shall not be relevant to determine the value of said assets.
(1) An acquiring public utility's postacquisition improvements that are not included in a distribution improvement charge shall accrue allowance for funds used during construction after the date the cost was incurred until the asset has been in service for a period of four years or until the asset is included in the acquiring public utility's next base rate case, whichever is earlier.
“Acquiring public utility.” A water or wastewater public utility subject to regulation under this title that is acquiring a selling utility as the result of a voluntary arm's-length transaction between the buyer and seller.
“Allowance of funds used during construction.” An accounting practice that recognizes the capital costs, including debt and equity funds that are used to finance the construction costs of an improvement to a selling utility's assets by an acquiring public utility.
“Entity.” A person, partnership or corporation that is acquiring a selling utility and has filed or whose affiliate has filed an application with the commission seeking public utility status pursuant to section 1102.
“Fair market value.” The average of the two utility valuation expert appraisals conducted under subsection (a)(2).
“Ratemaking rate base.” The dollar value of a selling utility which, for postacquisition ratemaking purposes, is incorporated into the rate base of the acquiring public utility or entity.
“Rate stabilization plan.” A plan that will hold rates constant or phase rates in over a period of time after the next base rate case.
“Selling utility.” A water or wastewater company located in this Commonwealth, owned by a municipal corporation or authority that is being purchased by an acquiring public utility or entity as the result of a voluntary arm's-length transaction between the buyer and seller.
“Utility valuation expert.” A person hired by an acquiring public utility and selling utility for the purpose of conducting an economic valuation of the selling utility to determine its fair market value.
Credits
2016, April 14, P.L. 76, No. 12, § 1, effective in 60 days [June 13, 2016].
66 Pa.C.S.A. § 1329, PA ST 66 Pa.C.S.A. § 1329
Current through Act 13 of the 2024 Regular Session. Some statute sections may be more current, see credits for details.
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