Acquisition of small water or sewer corporation by capable publicutility, when--definitions--alternatives to be discussed, factorsto consider--price for acquisition, how determined--plan forimprovements required--rate case procedure to be used--rulemakingauthority.
393.146. 1. As used in this section the following terms shall mean:
(1) "Capable public utility", a public utility that regularlyprovides the same type of service as a small water corporation or a smallsewer corporation to more than eight thousand customer connections, that isnot an affiliate of a small water corporation or a small sewer corporation,and that provides safe and adequate service; and shall not include a sewerdistrict established pursuant to article VI*, section 30(a) of the MissouriConstitution, sewer districts established under the provisions of chapter204, 249 or 250, RSMo, public water supply districts established under theprovisions of chapter 247, RSMo, or municipalities that own and operatewater or sewer systems;
(2) "Department", the department of natural resources;
(3) "Small sewer corporation", a public utility that regularlyprovides sewer service to eight thousand or fewer customer connections;
(4) "Small water corporation", a public utility that regularlyprovides water service to eight thousand or fewer customer connections.
2. The commission may order a capable public utility to acquire asmall water or sewer corporation if, after providing notice and anopportunity to be heard, the commission determines:
(1) That the small water or sewer corporation is in violation ofstatutory or regulatory standards that affect the safety and adequacy ofthe service provided by the small water or sewer corporation, including butnot limited to the public service commission law, the federal clean waterlaw, the federal Safe Drinking Water Act, as amended, and the regulationsadopted under these laws; or
(2) That the small water or sewer corporation has failed to comply,within a reasonable period of time, with any order of the department or thecommission concerning the safety and adequacy of service, including but notlimited to the availability of water, the potability of water, thepalatability of water, the provision of water at adequate volume andpressure, the prevention of discharge of untreated or inadequately treatedsewage to the waters of the state, and the prevention of environmentaldamage; or
(3) That it is not reasonable to expect that the small water or sewercorporation will furnish and maintain safe and adequate service andfacilities in the future; and
(4) That the commission has considered alternatives to acquisition inaccordance with subsection 3 of this section and has determined that theyare impractical or not economically feasible; and
(5) That the acquiring capable public utility is financially,managerially, and technically capable of acquiring and operating the smallwater or sewer corporation in compliance with applicable statutory andregulatory standards.
3. Except when there is an imminent threat of serious harm to life orproperty, before the commission may order the acquisition of a small wateror sewer corporation in accordance with subsection 2 of this section, thecommission shall discuss alternatives to acquisition with the small wateror sewer corporation and shall give such small water or sewer corporationthirty days to investigate alternatives to acquisition, including:
(1) The reorganization of the small water or sewer corporation undernew management;
(2) The entering of a contract with another public utility or amanagement or service company to operate the small water or sewercorporation;
(3) The merger of the small water or sewer corporation with one ormore other public utilities; and
(4) The acquisition of the small water or sewer corporation by amunicipality, a municipal authority, a public water supply district, apublic sewer district, or a cooperative.
4. When the commission determines that there is an imminent threat ofserious harm to life or property, the commission may appoint an interimreceiver prior to the opportunity for hearing, provided that the commissionshall provide opportunity for hearing as soon as practicable after theissuance of such order.
5. In making a determination under subsection 2 of this section, thecommission shall consider:
(1) The financial, managerial, and technical ability of the smallwater or sewer corporation;
(2) The financial, managerial, and technical ability of all proximatepublic utilities that provide the same type of service and constitute analternative to acquisition;
(3) The expenditures that are needed to improve the facilities of thesmall water or sewer corporation to assure compliance with applicablestatutory and regulatory standards concerning the adequacy, efficiency,safety, and reasonableness of utility service, and to sufficiently providesafe and adequate service to the customers of the small water or sewercorporation;
(4) The potential for expansion of the certificated service area ofthe small water or sewer corporation; and
(5) The opinion and advice, if any, of the department as to whatsteps may be necessary to assure compliance with applicable statutory orregulatory standards concerning the safety and adequacy of utility service.
6. Subsequent to the determination required under subsection 2 ofthis section, the commission shall issue an order for the acquisition of asmall water or sewer corporation by a capable public utility. Such ordershall include granting a certificate of public convenience and necessity tothe acquiring capable public utility for the small water or sewercorporation's established service area.
7. The price for the acquisition of a small water or sewercorporation shall be determined by agreement between the small water orsewer corporation and the acquiring capable public utility, subject to adetermination by the commission that the price is reasonable. If the smallwater or sewer corporation and the acquiring capable public utility areunable to agree on the acquisition price, or the commission disapproves theacquisition price to which the utilities agreed, the commission shall issuean order directing the acquiring capable public utility to acquire thesmall water or sewer corporation at an acquisition price that is equal tothe ratemaking rate base as determined by the commission after notice andhearing, or providing that the acquiring capable public utility will not beallowed to earn a rate of return on the portion of the purchase price thatis in excess of the ratemaking rate base determined by the commission afternotice and hearing. The burden of establishing the ratemaking rate baseshall be upon the small water or sewer corporation.
8. Any capable public utility that is ordered by the commission toacquire a small water or sewer corporation shall, within thirty days afteracquisition, submit a plan, including a timetable, for bringing the smallwater or sewer corporation into compliance with applicable statutory andregulatory standards to the commission for approval. The capable publicutility shall also provide a copy of the plan to the department and suchother state or local agency as the commission may direct. The commissionshall give the department adequate opportunity to comment on the plan andshall consider any comments submitted by the department and shallexpeditiously decide whether to approve the plan.
9. Upon the acquisition of a small water or sewer corporation by acapable public utility, and approval by the commission of a plan forimprovements submitted under subsection 8 of this section, the acquiringcapable public utility shall not be liable for any damages if the cause ofthose damages is proximately related to violations of applicable statutesor regulations by the small water or sewer corporation and the acquiringcapable public utility remains in compliance with the plan for improvementssubmitted under subsection 8 of this section. This subsection shall notapply:
(1) Beyond the end of the timetable in the plan for improvements;
(2) Whenever the acquiring capable public utility is not incompliance with the plan for improvements; or
(3) If, within sixty days after receipt of notice of the proposedplan for improvements, the department submitted written objections to thecommission and those objections have not subsequently been withdrawn.
10. Upon approval by the commission of a plan for improvementssubmitted under subsection 8 of this section, and the acquisition of asmall water or sewer corporation by a capable public utility, the acquiringcapable utility shall not be subject to any enforcement actions by state orlocal agencies that had notice of the plan, if the basis of suchenforcement action is proximately related to violations of applicablestatutes or regulations by the small water or sewer corporation. Thissubsection shall not apply:
(1) Beyond the end of the timetable in the plan for improvements;
(2) Whenever the acquiring capable public utility is not incompliance with the plan for improvements;
(3) If, within sixty days of having received notice of the proposedplan for improvements, the department submitted written objections to thecommission and those objections have not subsequently been withdrawn; or
(4) To emergency interim actions of the commission or the department,including but not limited to the ordering of boil-water advisories or otherwater supply warnings, of emergency treatment, or of temporary alternatesupplies of water or sewer services.
11. If the commission orders the acquisition of a small water orsewer corporation, the commission shall authorize the acquiring capablepublic utility to utilize the commission's small company rate caseprocedure for establishing the rates to be applicable to the system beingacquired. Such rates may be designed to recover the costs of operating theacquired system and to recover one hundred percent of the revenuesnecessary to provide a net after-tax return on the ratemaking rate basevalue of the small water or sewer corporation's facilities acquired by thecapable public utility, and the ratemaking rate base value of anyimprovements made to the facilities by the acquiring capable public utilitysubsequent to the acquisition, at a rate of return equivalent to onehundred basis points above the rate of return authorized for the acquiringcapable public utility in its last general rate proceeding. The acquiringcapable public utility may utilize the commission's small company rate caseprocedure for the purposes stated in this section until such time that adetermination is made on the acquiring utility's next company-wide generalrate increase, but not in excess of three years from the date of theacquisition of the subject small water or sewer corporation.
12. Proceedings under this section may be initiated by complaintfiled by the staff of the commission, the office of the public counsel, themayor, or the president or chair of the board of aldermen, or a majority ofthe council, commission, or other legislative body of any city, town,village, or county within which the alleged unsafe or inadequate service isprovided, or by not less than twenty-five consumers or purchasers, orprospective consumers or purchasers, of the utility service provided by asmall water or sewer corporation. The complainant shall have the burden ofproving that the acquisition of the small water or sewer corporation wouldbe in the public interest and in compliance with the provisions of thissection.
13. The notice required by subsection 2 of this section, or any otherprovision of this section, shall be served upon the small water or sewercorporation affected, the office of the public counsel, the department, allproximate public utilities providing the same type of service as the smallwater or sewer corporation, all proximate municipalities and municipalauthorities providing the same type of service as the small water or sewercorporation, and the municipalities served by the small water or sewercorporation. The commission shall order the affected small water or sewercorporation to provide notice to its customers of the initiation ofproceedings under this section in the same manner in which the utility isrequired to notify its customers of proposed general rate increases.
14. A public utility that would otherwise be a capable public utilityexcept for the fact that it has fewer than eight thousand customerconnections may petition the commission to be designated a capable publicutility for the purposes of this section regardless of the number of itscustomer connections and regardless of whether it is proximate to the smallwater corporation or small water corporation to be acquired. Thecommission may grant such a petition upon finding that designating thepetitioning public utility as a capable public utility is not detrimentalto the public interest.
15. Notwithstanding the requirement of section 386.600, RSMo, to thecontrary, penalties for violations of the public service commission law orrelated commission regulations that have been imposed on a small sewer orwater corporation that has been placed in receivership under the provisionsof section 393.145 may, upon the order of the court that imposed thepenalties, be used to reduce the purchase price paid by a capable publicutility for the acquisition of the assets of the subject small sewer orwater corporation. In such a case, the commission shall make acorresponding reduction to the ratemaking rate base value of the subjectassets for purposes of future ratemaking activities.
16. The commission shall, no later than June 29, 2005, initiate arulemaking, pursuant to the provisions of its internal rulemakingprocedures, to promulgate rules to carry out the purposes of this section.Any rule or portion of a rule, as that term is defined in section 536.010,RSMo, that is created under the authority delegated in this section shallbecome effective only if it complies with and is subject to all of theprovisions of chapter 536, RSMo, and, if applicable, section 536.028, RSMo.This section and chapter 536, RSMo, are nonseverable and if any of thepowers vested with the general assembly pursuant to chapter 536, RSMo, toreview, to delay the effective date, or to disapprove and annul a rule aresubsequently held unconstitutional, then the grant of rulemaking authorityand any rule proposed or adopted after August 28, 2005, shall be invalidand void.
(L. 2005 S.B. 462)
Effective 6-29-05
*Original rolls contain "IV", a typographical error.
Acquisition of small water or sewer corporation by capable publicutility, when--definitions--alternatives to be discussed, factorsto consider--price for acquisition, how determined--plan forimprovements required--rate case procedure to be used--rulemakingauthority.
393.146. 1. As used in this section the following terms shall mean:
(1) "Capable public utility", a public utility that regularlyprovides the same type of service as a small water corporation or a smallsewer corporation to more than eight thousand customer connections, that isnot an affiliate of a small water corporation or a small sewer corporation,and that provides safe and adequate service; and shall not include a sewerdistrict established pursuant to article VI*, section 30(a) of the MissouriConstitution, sewer districts established under the provisions of chapter204, 249 or 250, RSMo, public water supply districts established under theprovisions of chapter 247, RSMo, or municipalities that own and operatewater or sewer systems;
(2) "Department", the department of natural resources;
(3) "Small sewer corporation", a public utility that regularlyprovides sewer service to eight thousand or fewer customer connections;
(4) "Small water corporation", a public utility that regularlyprovides water service to eight thousand or fewer customer connections.
2. The commission may order a capable public utility to acquire asmall water or sewer corporation if, after providing notice and anopportunity to be heard, the commission determines:
(1) That the small water or sewer corporation is in violation ofstatutory or regulatory standards that affect the safety and adequacy ofthe service provided by the small water or sewer corporation, including butnot limited to the public service commission law, the federal clean waterlaw, the federal Safe Drinking Water Act, as amended, and the regulationsadopted under these laws; or
(2) That the small water or sewer corporation has failed to comply,within a reasonable period of time, with any order of the department or thecommission concerning the safety and adequacy of service, including but notlimited to the availability of water, the potability of water, thepalatability of water, the provision of water at adequate volume andpressure, the prevention of discharge of untreated or inadequately treatedsewage to the waters of the state, and the prevention of environmentaldamage; or
(3) That it is not reasonable to expect that the small water or sewercorporation will furnish and maintain safe and adequate service andfacilities in the future; and
(4) That the commission has considered alternatives to acquisition inaccordance with subsection 3 of this section and has determined that theyare impractical or not economically feasible; and
(5) That the acquiring capable public utility is financially,managerially, and technically capable of acquiring and operating the smallwater or sewer corporation in compliance with applicable statutory andregulatory standards.
3. Except when there is an imminent threat of serious harm to life orproperty, before the commission may order the acquisition of a small wateror sewer corporation in accordance with subsection 2 of this section, thecommission shall discuss alternatives to acquisition with the small wateror sewer corporation and shall give such small water or sewer corporationthirty days to investigate alternatives to acquisition, including:
(1) The reorganization of the small water or sewer corporation undernew management;
(2) The entering of a contract with another public utility or amanagement or service company to operate the small water or sewercorporation;
(3) The merger of the small water or sewer corporation with one ormore other public utilities; and
(4) The acquisition of the small water or sewer corporation by amunicipality, a municipal authority, a public water supply district, apublic sewer district, or a cooperative.
4. When the commission determines that there is an imminent threat ofserious harm to life or property, the commission may appoint an interimreceiver prior to the opportunity for hearing, provided that the commissionshall provide opportunity for hearing as soon as practicable after theissuance of such order.
5. In making a determination under subsection 2 of this section, thecommission shall consider:
(1) The financial, managerial, and technical ability of the smallwater or sewer corporation;
(2) The financial, managerial, and technical ability of all proximatepublic utilities that provide the same type of service and constitute analternative to acquisition;
(3) The expenditures that are needed to improve the facilities of thesmall water or sewer corporation to assure compliance with applicablestatutory and regulatory standards concerning the adequacy, efficiency,safety, and reasonableness of utility service, and to sufficiently providesafe and adequate service to the customers of the small water or sewercorporation;
(4) The potential for expansion of the certificated service area ofthe small water or sewer corporation; and
(5) The opinion and advice, if any, of the department as to whatsteps may be necessary to assure compliance with applicable statutory orregulatory standards concerning the safety and adequacy of utility service.
6. Subsequent to the determination required under subsection 2 ofthis section, the commission shall issue an order for the acquisition of asmall water or sewer corporation by a capable public utility. Such ordershall include granting a certificate of public convenience and necessity tothe acquiring capable public utility for the small water or sewercorporation's established service area.
7. The price for the acquisition of a small water or sewercorporation shall be determined by agreement between the small water orsewer corporation and the acquiring capable public utility, subject to adetermination by the commission that the price is reasonable. If the smallwater or sewer corporation and the acquiring capable public utility areunable to agree on the acquisition price, or the commission disapproves theacquisition price to which the utilities agreed, the commission shall issuean order directing the acquiring capable public utility to acquire thesmall water or sewer corporation at an acquisition price that is equal tothe ratemaking rate base as determined by the commission after notice andhearing, or providing that the acquiring capable public utility will not beallowed to earn a rate of return on the portion of the purchase price thatis in excess of the ratemaking rate base determined by the commission afternotice and hearing. The burden of establishing the ratemaking rate baseshall be upon the small water or sewer corporation.
8. Any capable public utility that is ordered by the commission toacquire a small water or sewer corporation shall, within thirty days afteracquisition, submit a plan, including a timetable, for bringing the smallwater or sewer corporation into compliance with applicable statutory andregulatory standards to the commission for approval. The capable publicutility shall also provide a copy of the plan to the department and suchother state or local agency as the commission may direct. The commissionshall give the department adequate opportunity to comment on the plan andshall consider any comments submitted by the department and shallexpeditiously decide whether to approve the plan.
9. Upon the acquisition of a small water or sewer corporation by acapable public utility, and approval by the commission of a plan forimprovements submitted under subsection 8 of this section, the acquiringcapable public utility shall not be liable for any damages if the cause ofthose damages is proximately related to violations of applicable statutesor regulations by the small water or sewer corporation and the acquiringcapable public utility remains in compliance with the plan for improvementssubmitted under subsection 8 of this section. This subsection shall notapply:
(1) Beyond the end of the timetable in the plan for improvements;
(2) Whenever the acquiring capable public utility is not incompliance with the plan for improvements; or
(3) If, within sixty days after receipt of notice of the proposedplan for improvements, the department submitted written objections to thecommission and those objections have not subsequently been withdrawn.
10. Upon approval by the commission of a plan for improvementssubmitted under subsection 8 of this section, and the acquisition of asmall water or sewer corporation by a capable public utility, the acquiringcapable utility shall not be subject to any enforcement actions by state orlocal agencies that had notice of the plan, if the basis of suchenforcement action is proximately related to violations of applicablestatutes or regulations by the small water or sewer corporation. Thissubsection shall not apply:
(1) Beyond the end of the timetable in the plan for improvements;
(2) Whenever the acquiring capable public utility is not incompliance with the plan for improvements;
(3) If, within sixty days of having received notice of the proposedplan for improvements, the department submitted written objections to thecommission and those objections have not subsequently been withdrawn; or
(4) To emergency interim actions of the commission or the department,including but not limited to the ordering of boil-water advisories or otherwater supply warnings, of emergency treatment, or of temporary alternatesupplies of water or sewer services.
11. If the commission orders the acquisition of a small water orsewer corporation, the commission shall authorize the acquiring capablepublic utility to utilize the commission's small company rate caseprocedure for establishing the rates to be applicable to the system beingacquired. Such rates may be designed to recover the costs of operating theacquired system and to recover one hundred percent of the revenuesnecessary to provide a net after-tax return on the ratemaking rate basevalue of the small water or sewer corporation's facilities acquired by thecapable public utility, and the ratemaking rate base value of anyimprovements made to the facilities by the acquiring capable public utilitysubsequent to the acquisition, at a rate of return equivalent to onehundred basis points above the rate of return authorized for the acquiringcapable public utility in its last general rate proceeding. The acquiringcapable public utility may utilize the commission's small company rate caseprocedure for the purposes stated in this section until such time that adetermination is made on the acquiring utility's next company-wide generalrate increase, but not in excess of three years from the date of theacquisition of the subject small water or sewer corporation.
12. Proceedings under this section may be initiated by complaintfiled by the staff of the commission, the office of the public counsel, themayor, or the president or chair of the board of aldermen, or a majority ofthe council, commission, or other legislative body of any city, town,village, or county within which the alleged unsafe or inadequate service isprovided, or by not less than twenty-five consumers or purchasers, orprospective consumers or purchasers, of the utility service provided by asmall water or sewer corporation. The complainant shall have the burden ofproving that the acquisition of the small water or sewer corporation wouldbe in the public interest and in compliance with the provisions of thissection.
13. The notice required by subsection 2 of this section, or any otherprovision of this section, shall be served upon the small water or sewercorporation affected, the office of the public counsel, the department, allproximate public utilities providing the same type of service as the smallwater or sewer corporation, all proximate municipalities and municipalauthorities providing the same type of service as the small water or sewercorporation, and the municipalities served by the small water or sewercorporation. The commission shall order the affected small water or sewercorporation to provide notice to its customers of the initiation ofproceedings under this section in the same manner in which the utility isrequired to notify its customers of proposed general rate increases.
14. A public utility that would otherwise be a capable public utilityexcept for the fact that it has fewer than eight thousand customerconnections may petition the commission to be designated a capable publicutility for the purposes of this section regardless of the number of itscustomer connections and regardless of whether it is proximate to the smallwater corporation or small water corporation to be acquired. Thecommission may grant such a petition upon finding that designating thepetitioning public utility as a capable public utility is not detrimentalto the public interest.
15. Notwithstanding the requirement of section 386.600, RSMo, to thecontrary, penalties for violations of the public service commission law orrelated commission regulations that have been imposed on a small sewer orwater corporation that has been placed in receivership under the provisionsof section 393.145 may, upon the order of the court that imposed thepenalties, be used to reduce the purchase price paid by a capable publicutility for the acquisition of the assets of the subject small sewer orwater corporation. In such a case, the commission shall make acorresponding reduction to the ratemaking rate base value of the subjectassets for purposes of future ratemaking activities.
16. The commission shall, no later than June 29, 2005, initiate arulemaking, pursuant to the provisions of its internal rulemakingprocedures, to promulgate rules to carry out the purposes of this section.Any rule or portion of a rule, as that term is defined in section 536.010,RSMo, that is created under the authority delegated in this section shallbecome effective only if it complies with and is subject to all of theprovisions of chapter 536, RSMo, and, if applicable, section 536.028, RSMo.This section and chapter 536, RSMo, are nonseverable and if any of thepowers vested with the general assembly pursuant to chapter 536, RSMo, toreview, to delay the effective date, or to disapprove and annul a rule aresubsequently held unconstitutional, then the grant of rulemaking authorityand any rule proposed or adopted after August 28, 2005, shall be invalidand void.
(L. 2005 S.B. 462)
Effective 6-29-05
*Original rolls contain "IV", a typographical error.
Acquisition of small water or sewer corporation by capable publicutility, when--definitions--alternatives to be discussed, factorsto consider--price for acquisition, how determined--plan forimprovements required--rate case procedure to be used--rulemakingauthority.
393.146. 1. As used in this section the following terms shall mean:
(1) "Capable public utility", a public utility that regularlyprovides the same type of service as a small water corporation or a smallsewer corporation to more than eight thousand customer connections, that isnot an affiliate of a small water corporation or a small sewer corporation,and that provides safe and adequate service; and shall not include a sewerdistrict established pursuant to article VI*, section 30(a) of the MissouriConstitution, sewer districts established under the provisions of chapter204, 249 or 250, RSMo, public water supply districts established under theprovisions of chapter 247, RSMo, or municipalities that own and operatewater or sewer systems;
(2) "Department", the department of natural resources;
(3) "Small sewer corporation", a public utility that regularlyprovides sewer service to eight thousand or fewer customer connections;
(4) "Small water corporation", a public utility that regularlyprovides water service to eight thousand or fewer customer connections.
2. The commission may order a capable public utility to acquire asmall water or sewer corporation if, after providing notice and anopportunity to be heard, the commission determines:
(1) That the small water or sewer corporation is in violation ofstatutory or regulatory standards that affect the safety and adequacy ofthe service provided by the small water or sewer corporation, including butnot limited to the public service commission law, the federal clean waterlaw, the federal Safe Drinking Water Act, as amended, and the regulationsadopted under these laws; or
(2) That the small water or sewer corporation has failed to comply,within a reasonable period of time, with any order of the department or thecommission concerning the safety and adequacy of service, including but notlimited to the availability of water, the potability of water, thepalatability of water, the provision of water at adequate volume andpressure, the prevention of discharge of untreated or inadequately treatedsewage to the waters of the state, and the prevention of environmentaldamage; or
(3) That it is not reasonable to expect that the small water or sewercorporation will furnish and maintain safe and adequate service andfacilities in the future; and
(4) That the commission has considered alternatives to acquisition inaccordance with subsection 3 of this section and has determined that theyare impractical or not economically feasible; and
(5) That the acquiring capable public utility is financially,managerially, and technically capable of acquiring and operating the smallwater or sewer corporation in compliance with applicable statutory andregulatory standards.
3. Except when there is an imminent threat of serious harm to life orproperty, before the commission may order the acquisition of a small wateror sewer corporation in accordance with subsection 2 of this section, thecommission shall discuss alternatives to acquisition with the small wateror sewer corporation and shall give such small water or sewer corporationthirty days to investigate alternatives to acquisition, including:
(1) The reorganization of the small water or sewer corporation undernew management;
(2) The entering of a contract with another public utility or amanagement or service company to operate the small water or sewercorporation;
(3) The merger of the small water or sewer corporation with one ormore other public utilities; and
(4) The acquisition of the small water or sewer corporation by amunicipality, a municipal authority, a public water supply district, apublic sewer district, or a cooperative.
4. When the commission determines that there is an imminent threat ofserious harm to life or property, the commission may appoint an interimreceiver prior to the opportunity for hearing, provided that the commissionshall provide opportunity for hearing as soon as practicable after theissuance of such order.
5. In making a determination under subsection 2 of this section, thecommission shall consider:
(1) The financial, managerial, and technical ability of the smallwater or sewer corporation;
(2) The financial, managerial, and technical ability of all proximatepublic utilities that provide the same type of service and constitute analternative to acquisition;
(3) The expenditures that are needed to improve the facilities of thesmall water or sewer corporation to assure compliance with applicablestatutory and regulatory standards concerning the adequacy, efficiency,safety, and reasonableness of utility service, and to sufficiently providesafe and adequate service to the customers of the small water or sewercorporation;
(4) The potential for expansion of the certificated service area ofthe small water or sewer corporation; and
(5) The opinion and advice, if any, of the department as to whatsteps may be necessary to assure compliance with applicable statutory orregulatory standards concerning the safety and adequacy of utility service.
6. Subsequent to the determination required under subsection 2 ofthis section, the commission shall issue an order for the acquisition of asmall water or sewer corporation by a capable public utility. Such ordershall include granting a certificate of public convenience and necessity tothe acquiring capable public utility for the small water or sewercorporation's established service area.
7. The price for the acquisition of a small water or sewercorporation shall be determined by agreement between the small water orsewer corporation and the acquiring capable public utility, subject to adetermination by the commission that the price is reasonable. If the smallwater or sewer corporation and the acquiring capable public utility areunable to agree on the acquisition price, or the commission disapproves theacquisition price to which the utilities agreed, the commission shall issuean order directing the acquiring capable public utility to acquire thesmall water or sewer corporation at an acquisition price that is equal tothe ratemaking rate base as determined by the commission after notice andhearing, or providing that the acquiring capable public utility will not beallowed to earn a rate of return on the portion of the purchase price thatis in excess of the ratemaking rate base determined by the commission afternotice and hearing. The burden of establishing the ratemaking rate baseshall be upon the small water or sewer corporation.
8. Any capable public utility that is ordered by the commission toacquire a small water or sewer corporation shall, within thirty days afteracquisition, submit a plan, including a timetable, for bringing the smallwater or sewer corporation into compliance with applicable statutory andregulatory standards to the commission for approval. The capable publicutility shall also provide a copy of the plan to the department and suchother state or local agency as the commission may direct. The commissionshall give the department adequate opportunity to comment on the plan andshall consider any comments submitted by the department and shallexpeditiously decide whether to approve the plan.
9. Upon the acquisition of a small water or sewer corporation by acapable public utility, and approval by the commission of a plan forimprovements submitted under subsection 8 of this section, the acquiringcapable public utility shall not be liable for any damages if the cause ofthose damages is proximately related to violations of applicable statutesor regulations by the small water or sewer corporation and the acquiringcapable public utility remains in compliance with the plan for improvementssubmitted under subsection 8 of this section. This subsection shall notapply:
(1) Beyond the end of the timetable in the plan for improvements;
(2) Whenever the acquiring capable public utility is not incompliance with the plan for improvements; or
(3) If, within sixty days after receipt of notice of the proposedplan for improvements, the department submitted written objections to thecommission and those objections have not subsequently been withdrawn.
10. Upon approval by the commission of a plan for improvementssubmitted under subsection 8 of this section, and the acquisition of asmall water or sewer corporation by a capable public utility, the acquiringcapable utility shall not be subject to any enforcement actions by state orlocal agencies that had notice of the plan, if the basis of suchenforcement action is proximately related to violations of applicablestatutes or regulations by the small water or sewer corporation. Thissubsection shall not apply:
(1) Beyond the end of the timetable in the plan for improvements;
(2) Whenever the acquiring capable public utility is not incompliance with the plan for improvements;
(3) If, within sixty days of having received notice of the proposedplan for improvements, the department submitted written objections to thecommission and those objections have not subsequently been withdrawn; or
(4) To emergency interim actions of the commission or the department,including but not limited to the ordering of boil-water advisories or otherwater supply warnings, of emergency treatment, or of temporary alternatesupplies of water or sewer services.
11. If the commission orders the acquisition of a small water orsewer corporation, the commission shall authorize the acquiring capablepublic utility to utilize the commission's small company rate caseprocedure for establishing the rates to be applicable to the system beingacquired. Such rates may be designed to recover the costs of operating theacquired system and to recover one hundred percent of the revenuesnecessary to provide a net after-tax return on the ratemaking rate basevalue of the small water or sewer corporation's facilities acquired by thecapable public utility, and the ratemaking rate base value of anyimprovements made to the facilities by the acquiring capable public utilitysubsequent to the acquisition, at a rate of return equivalent to onehundred basis points above the rate of return authorized for the acquiringcapable public utility in its last general rate proceeding. The acquiringcapable public utility may utilize the commission's small company rate caseprocedure for the purposes stated in this section until such time that adetermination is made on the acquiring utility's next company-wide generalrate increase, but not in excess of three years from the date of theacquisition of the subject small water or sewer corporation.
12. Proceedings under this section may be initiated by complaintfiled by the staff of the commission, the office of the public counsel, themayor, or the president or chair of the board of aldermen, or a majority ofthe council, commission, or other legislative body of any city, town,village, or county within which the alleged unsafe or inadequate service isprovided, or by not less than twenty-five consumers or purchasers, orprospective consumers or purchasers, of the utility service provided by asmall water or sewer corporation. The complainant shall have the burden ofproving that the acquisition of the small water or sewer corporation wouldbe in the public interest and in compliance with the provisions of thissection.
13. The notice required by subsection 2 of this section, or any otherprovision of this section, shall be served upon the small water or sewercorporation affected, the office of the public counsel, the department, allproximate public utilities providing the same type of service as the smallwater or sewer corporation, all proximate municipalities and municipalauthorities providing the same type of service as the small water or sewercorporation, and the municipalities served by the small water or sewercorporation. The commission shall order the affected small water or sewercorporation to provide notice to its customers of the initiation ofproceedings under this section in the same manner in which the utility isrequired to notify its customers of proposed general rate increases.
14. A public utility that would otherwise be a capable public utilityexcept for the fact that it has fewer than eight thousand customerconnections may petition the commission to be designated a capable publicutility for the purposes of this section regardless of the number of itscustomer connections and regardless of whether it is proximate to the smallwater corporation or small water corporation to be acquired. Thecommission may grant such a petition upon finding that designating thepetitioning public utility as a capable public utility is not detrimentalto the public interest.
15. Notwithstanding the requirement of section 386.600, RSMo, to thecontrary, penalties for violations of the public service commission law orrelated commission regulations that have been imposed on a small sewer orwater corporation that has been placed in receivership under the provisionsof section 393.145 may, upon the order of the court that imposed thepenalties, be used to reduce the purchase price paid by a capable publicutility for the acquisition of the assets of the subject small sewer orwater corporation. In such a case, the commission shall make acorresponding reduction to the ratemaking rate base value of the subjectassets for purposes of future ratemaking activities.
16. The commission shall, no later than June 29, 2005, initiate arulemaking, pursuant to the provisions of its internal rulemakingprocedures, to promulgate rules to carry out the purposes of this section.Any rule or portion of a rule, as that term is defined in section 536.010,RSMo, that is created under the authority delegated in this section shallbecome effective only if it complies with and is subject to all of theprovisions of chapter 536, RSMo, and, if applicable, section 536.028, RSMo.This section and chapter 536, RSMo, are nonseverable and if any of thepowers vested with the general assembly pursuant to chapter 536, RSMo, toreview, to delay the effective date, or to disapprove and annul a rule aresubsequently held unconstitutional, then the grant of rulemaking authorityand any rule proposed or adopted after August 28, 2005, shall be invalidand void.
(L. 2005 S.B. 462)
Effective 6-29-05
*Original rolls contain "IV", a typographical error.
