IN Code § 8-1-30.3-5 (2021)
2021 Indiana Code|Title 8. Utilities and Transportation|Article 1. Utilities Generally|Chapter 30.3. Acquisition of Distressed Water or Wastewater Utilities|8-1-30.3-5. Applicability; Presumption of Reasonableness; Petition to Include Cost Differential in Rate Base; Commission Findings; Final Order; Net Original Cost of Assets

Sec. 5. (a) This section applies if:(1) a utility company acquires property from an offered utility in a transaction involving a willing buyer and a willing seller; and(2) at least one (1) utility company described in subdivision (1) is subject to the jurisdiction of the commission under this article.(b) Subject to subsection (c), there is a rebuttable presumption that a cost differential is reasonable.(c) If the acquisition:(1) is made under IC 8-1.5-2-6.1, and to the extent the purchase price does not exceed the appraised value as determined under IC 8-1.5-2-5; or(2) is not made under IC 8-1.5-2-6.1, and to the extent the purchase price does not exceed the appraised value as determined under section 5.5 of this chapter;the purchase price is considered reasonable for purposes of subsection (d) and any resulting cost differential is considered reasonable.(d) Before closing on the acquisition, the utility company that acquires the utility property may petition the commission to include any cost differential as part of its rate base in future rate cases. The commission shall approve the petition if the commission finds the following:(1) The utility property is used and useful to the offered utility in providing water service, wastewater service, or both water and wastewater service.(2) The offered utility is too small to capture economies of scale or has failed to furnish or maintain adequate, efficient, safe, and reasonable service and facilities.(3) The utility company will improve economies of scale or, if otherwise needed, make reasonable and prudent improvements to the offered utility's plant, the offered utility's operations, or both, so that customers of the offered utility will receive adequate, efficient, safe, and reasonable service.(4) The acquisition of the utility property is the result of a mutual agreement made at arms length.(5) The actual purchase price of the utility property is reasonable.(6) The utility company and the offered utility are not affiliated and share no ownership interests.(7) The rates charged by the utility company will not increase unreasonably in future general rate cases solely as a result of acquiring the utility property from the offered utility. For purposes of this subdivision, the rates and charges will not increase unreasonably in future general rate cases so long as the net original cost proposed to be recorded under subsection (f) is not greater than two percent (2%) of the acquiring utility's net original cost rate base as determined in the acquiring utility's most recent general rate case. If the amount proposed to be recorded under subsection (f) is greater than two percent (2%) of the acquiring utility's net original cost rate base as determined in the acquiring utility's most recent general rate case, the commission shall proceed to determine whether the rates charged by the utility company will increase unreasonably in future general rate cases solely as a result of acquiring the utility property from the offered utility and, in making the determination, may consider evidence of:(A) the anticipated dollar value increase; and(B) the increase as a percentage of the average bill.(8) The cost differential will be added to the utility company's rate base to be amortized as an addition to expense over a reasonable time with corresponding reductions in the rate base.(e) In connection with its petition under subsection (d), the acquiring utility company shall provide the following:(1) Notice to customers of the acquiring utility company that a petition has been filed with the commission under this chapter. The notice provided under this subdivision must include the cause number assigned to the petition. Notice under this subdivision may be provided to customers in a billing insert.(2) Notice to the office of the utility consumer counselor.(3) A statement of known infrastructure, environmental, or other issues affecting the offered utility, and the process for determining reasonable and prudent improvements upon completing the acquisition.(f) In a proceeding under subsection (d), the commission shall issue its final order not later than two hundred ten (210) days after the filing of the petitioner's case in chief. If the commission grants the petition, the commission's order shall authorize the acquiring utility company to make accounting entries recording the acquisition and that reflect:(1) the full purchase price;(2) incidental expenses; and(3) other costs of acquisition;as the net original cost of the utility plant in service assets being acquired, allocated in a reasonable manner among appropriate utility plant in service accounts.As added by P.L.189-2015, SEC.1. Amended by P.L.98-2016, SEC.4; P.L.64-2018, SEC.1; P.L.229-2019, SEC.5; P.L.160-2020, SEC.5.