Legislative Priorities for 2002

I. Statement of General Principles

1. Need for Funding/IDEM
We recognize the need for additional funding for drinking water related programs at the Indiana Department of Environmental Management (IDEM). However, we have concerns about the direction of programs currently being administered; we believe they are driven to a greater extent than is appropriate by dictates attached to Federal funding and by Federal priorities.

We support retention of Primacy by IDEM, and recognize that will require a state program which is adequately funded and appropriately staffed.

We believe it is appropriate to review the existing and proposed directions of the Drinking Water branch and programs, as a part of the process of determining appropriate budgetary mechanisms.

We are not opposed to development of an appropriate interim fundraising mechanism with an explicit “sunset” provision, in order to provide funding adequate to sustain operations while a rigorous and measured evaluation can occur.

Any legislation creating an interim funding mechanism such as that described above needs to allow for utilities to recover the costs of that funding mechanism through water bills, without having to go through a rate case to obtain an adjustment. We believe a mechanism such as the fuel adjustment clause for gas and electric utilities, or the E911 surcharge added to telephone bills would be appropriate.

2. Program Review
It is our understanding that Sen. Beverly Gard (Chair of the Senate Environmental Affairs Committee) and Rep. Jonathan Weinzapfel (Chair of the House Environmental Affairs Committee) each plan to introduce a resolution calling for the Environmental Quality Service Council (EQSC) to initiate a review of drinking water programs, policies and funding requirements (as discussed above), to be undertaken as an interim study between the end of the current (short) session and the convening of the next session in 2003.

We support such an initiative and applaud Rep. Weinzapfel and Sen. Gard for their leadership in this matter. We believe the EQSC is the appropriate forum in which to provide for broad public participation and to address the question of whether Indiana is administering and funding the appropriate programs.

As an industry, we support identification of funding mechanisms that will support priorities that focus on the needs of Indiana, rather than those which are set in Region V USEPA or Washington. We recognize that by calling for a review and potential redirection of priorities, the industry has a responsibility to support appropriate funding mechanisms, and we are prepared to do so.

3. RLF Funding
The consensus of the Water Utility Council is that maintaining full state match funding of the Drinking Water RLF is a top priority for the current legislative session (see also HB 1004).

II. Specific Legislation
1. Administration of revolving loan funds (RLF)

Senate Bill 0192 - Died in Regular Session
Senate Bill 0195 - Died in Regular Session

Senate Bill 0192 designates the State Budget Agency to manage and administer all aspects of the wastewater and drinking water financial assistance programs (RLF). Senate Bill 0195 establishes a new Environmental Assistance Authority to accomplish much the same purposes.

We have serious reservations about this proposal as initially drafted, which would have the effect of stripping the Indiana Department of Environmental Management of input with regard to allocation and distribution of revolving fund resources. The drinking water industry views such input as essential to the process of making intelligent decisions with regard to fund allocation. The State Budget Agency has shown great reluctance in the past to approve legitimate allocations of funds for educational and training projects which can have a profound impact on the quality of drinking water in Indiana. We do not believe the State Budget Agency is equipped to make valid judgments with respect to the technical relative merits of various programs which may be considered for funding. Nor is there any assurance that industry concerns would be given an appropriate hearing. As originally proposed, we are prepared to actively oppose this legislation. We have similar reservations about the creation of a new Environmental Assistance Authority.

2. 21st Century Tax Plan [O'Bannon.Kernan Tax Restructuring Plan],
originally HB 1003, combined with HB 1004, state budget deficit reduction measures.

House Bill 1004 - Failed to Pass Regular Session

Late in January, versions of HB 1003 and 1004 were consolidated into one legislative package addressing both key issues. HB 1004 contains a provision to allow for up to $2 million in fees to be levied against drinking water utilities (both municipal and investor owned) as well as other regulated drinking water facilities, for the purpose of funding programs related to the (Federal) Safe Drinking Water Act Reauthorization of 1996, which the Indiana Department of Environmental Management (IDEM) is charged with implementing. How these fees would be implemented is not spelled out in detail, but is relegated instead to the rule making process.

As the bill passed the House by a vote of 51-47, half of the funds raised through imposition of the proposed fees and originally proposed to fund drinking water programs would be allocated to the State's General Fund. When the bill ultimately failed at Session end, there was new funding for IDEM in it.

Although we agree in principle with the need to generate added funding for drinking water programs of IDEM, technical issues regarding implementation remain which warrant study. Specifically, what will be funded and how the proposed levy would be passed on to customers are issues of concern to the Council.

We support legislation providing funding on an interim basis, with a "date certain" expiration clause written into the bill. We believe this will best address short-term concerns and also allow careful study of the issue by the Environmental Quality Service Council. See discussion above.

We are strongly opposed to diversion of funds into the General Fund from levies proposed in support of drinking water programs, as reflected in the version of HB 1004 which passed the House.

3. Jurisdiction over utility mergers/IURC enforcement authority

House Bill 1116 (also Senate Bill 0143) - Died in Conference Committee

Combines IURC enforcement authority (HB 1116) with what was originally HB 1117, utility regulatory commission (IURC) jurisdiction over mergers of public utilities, utility companies, and holding companies of public utilities and utility companies.

From 2001 recommendations, jurisdiction over mergers...

This proposal is among the legislative priorities for the IURC. Review of the proposal by the WUC lead to the conclusion that virtually all drinking water utilities fall outside the practical scope of the intent of the proposed legislation. This led to a decision of the Council to make no recommendation on this legislation.

From 2001 recommendations, enforcement authority...

The drinking water industry has a long tradition and commitment to providing the highest possible level of service to its customers, and to the restoration of service as quickly as possible in those circumstances where service is interrupted. We recognize and strongly support the goal of providing superior customer service, and reaffirm our commitment to that spirit. Because the drinking water industry does not anticipate that the proposed legislation would have an impact on the industry, the Council has elected to remain silent with regard to the proposed legislation.

4. Local government administration (includes a provision for addressing the method of charging for local fire protection).

House Bill 1138 - Passed Legislature; became Public Law 176.

Our stance on the clauses of this legislation relating to charges for the production, storage, transmission, sale and delivery or furnishing of water for public fire protection purposes is reflected in our policy statement as expressed in 2001 on House Bill 2044:

The proposed legislation is intended to clarify previous legislation with regard to the manner by which fire protection costs (hydrants, related) may be recouped by a water utility. The consensus opinion of the WUC is that the legislation should be supported and passed.

5. Other Legislation
Because of the variety and scope of the proposals pending before the General Assembly this year, and in view of the crowded agenda facing the General Assembly, while there are other bills pending in the General Assembly which may merit support, the Council concluded it is appropriate to avoid diluting the impact of the industry through dilution of focus, and to limit the number of bills supported. This decision is subject to review in the event certain unanticipated developments may occur later in the session. See the Water Utility Council Web site for additional information on bills of interest.