NASUCA 2017 MID YEAR SHOULD WATER UTILITIES REPLACE

NASUCA 2017 MID YEAR SHOULD WATER UTILITIES REPLACE CUSTOMER-SIDE LEAD PIPES?

WHO SHOULD PAY TO REPLACE THE CUSTOMER-OWNED PORTION OF A LEAD SERVICE LINE?

INTRODUCTION • EDWARD KAUFMAN – INDIANA OFFICE OF UTILITY CONSUMER COUNSELOR • GEOFF MARKE, PHD – MISSOURI OFFICE OF PUBLIC COUNSEL • GARY NAUMICK – AMERICAN WATER WORKS

DISCLAIMER • THE VIEWS EXPRESSED IN THIS PRESENTATION ARE MINE. • THEY DO NOT REFLECT ANY POLICY POSITIONS OR RECOMMENDATIONS ON BEHALF OF THE OUCC OR THE UTILITY CONSUMER COUNSELOR.

ISSUES • BOTH PORTIONS OF THE PIPE SHOULD BE REPLACED AT THE SAME TIME • PARTIAL REPLACEMENT CAN INCREASE LEAD LEVELS • SAME TIME REPLACEMENT IS LESS EXPENSIVE • REPLACEMENT IS COSTLY TO CUSTOMER • MANY CUSTOMERS HAVE LOW INCOMES • APARTMENTS AND NON-USER OWNERS • TIMING - PROGRAMS MAY TAKE MANY YEARS • COMMUNICATIONS WITH CUSTOMERS

RATEMAKING ISSUES • WHO WILL OWN THE REPLACED PIPES? • DEPRECIATION VS. AMORTIZATION? • SOME CUSTOMERS MAY ALREADY HAVE REPLACED THEIR PORTIONS OF THE LED LINE • DOES LEAD LINE REPLACEMENT DISPLACE OTHER UTILITY INVESTMENT?

INDIANA HOUSE ENROLLED ACT 1519 • PASSED IN 2017 • INDIANA CODE 8 -1 -31. 6: CUSTOMER OWNED LEAD SERVICE LINES • THE WATER UTILITY MUST FIRST OBTAIN COMMISSION APPROVAL FOR ITS PLAN TO REPLACE CUSTOMER-OWNED LEAD SERVICE LINES • THE UTILITY’S PLAN MUST ADDRESS: THE AVAILABILITY OF GRANTS OR LOW INTEREST LOANS AND HOW THE WATER UTILITY PLANS TO USE THEM. A DESCRIPTION OF HOW THE REPLACEMENT OF CUSTOMER-OWNED LEAD SERVICE LINES WILL BE ACCOMPLISHED IN CONJUNCTION WITH DISTRIBUTION SYSTEM INFRASTRUCTURE REPLACEMENT PROJECTS. • •

HEA 1519 (CONT. ) • THE ESTIMATED SAVINGS IN COSTS PER SERVICE LINE FOR THE UTILITY REPLACING THE CUSTOMER OWNED-PORTIONS. • THE NUMBER OF LEAD MAINS AND LEAD SERVICE LINES ESTIMATED TO BE IN THE UTILITY'S SYSTEM. • AN ESTIMATED RANGE OF HOW MANY CUSTOMER-OWNED LEAD SERVICE LINES WILL BE REPLACED ANNUALLY. • AN ESTIMATED RANGE FOR TOTAL FEET OF LEAD MAINS TO BE REPLACED ANNUALLY.

HEA 1519 (CONT. ) • THE UTILITY'S PROPOSAL FOR ADDRESSING UNUSUAL SITE RESTORATION WORK COSTS. • THE UTILITY'S PROPOSAL CONCERNING WHETHER IT OR ITS CUSTOMERS WILL BE RESPONSIBLE FOR FUTURE REPLACEMENT OR REPAIR OF THE PORTION OF THE NEW SERVICE LINE. • THE ESTIMATED TOTAL COST TO REPLACE ALL CUSTOMER-OWNED PORTIONS OF THE LEAD SERVICE LINES WITHIN OR CONNECTED TO THE UTILITY'S SYSTEM WITH AN ESTIMATED RANGE OF THE ANNUAL COST.

HEA 1519 (CONT. ) • THE WATER UTILITY'S PROPOSAL TO: • (A) COMMUNICATE REPLACEMENT PLAN INFORMATION WITH ITS CUSTOMERS; AND • (B) DOCUMENT THE CUSTOMER'S CONSENT OR LACK OF CONSENT TO REPLACE THE CUSTOMER-OWNED PORTION OF THE LEAD SERVICE LINE.

QUESTIONS? • EDWARD KAUFMAN, CRRA • INDIANA OFFICE OF UTILITY CONSUMER COUNSELOR • 317 -232 -2777 • EKAUFMAN@OUCC. IN. GOV