Article 3.5. Water Utility Infrastructure, Plant And Facilities of California Public Utilities Code >> Division 1. >> Part 1. >> Chapter 4. >> Article 3.5.

This article shall be known and may be cited as the Water Utility Infrastructure Improvement Act of 1995.

The Legislature finds and declares all of the following:
  (a) Water corporations currently are faced with, and will continue to be faced with, increasing demands for new infrastructure, plant, and facilities to comply with increasingly strict state and federal safe drinking water laws and regulations.
  (b) The state's limited water supply will require investment by water corporations in infrastructure, plant, and facilities to develop new sources of supply, make existing sources of supply more reliable, and encourage and implement water conservation measures including water reclamation and reuse.
  (c) Water corporations also are faced with the need to replace or upgrade water infrastructure, plant, and facilities and to design and construct all of those replacements and improvements to meet the governing fire flow standards for public fire protection purposes.
  (d) Water corporations may, from time to time, own real property that once was, but is no longer, necessary or useful in the provision of water utility service and that now may be sold. It is the policy of the state that water corporations be encouraged to dispose of real property that once was, but is no longer, necessary or useful in the provision of water utility service and to invest the net proceeds therefrom in utility infrastructure, plant, facilities, and properties that are necessary or useful in the provision of water service to the public.
  (e) It is the policy of the state that any net proceeds from the sale by a water corporation of real property that was at any time, but is no longer, necessary or useful in the provision of public utility service, shall be invested by a water corporation in infrastructure, plant, facilities, and properties that are necessary or useful in the performance of its duties to the public and that all of that investment in infrastructure, plant, facilities, and properties shall be included among the other utility property of the water corporation that is used and useful in providing water service and upon which the commission authorizes the water corporation the opportunity to earn a reasonable return.

(a) Whenever a water corporation sells any real property that was at any time, but is no longer, necessary or useful in the performance of the water corporation's duties to the public, the water corporation shall invest the net proceeds, if any, including interest at the rate that the commission prescribes for memorandum accounts, from the sale in water system infrastructure, plant, facilities, and properties that are necessary or useful in the performance of its duties to the public. For purposes of tracking the net proceeds and their investment, the water corporation shall maintain records necessary to document the investment of the net proceeds pursuant to this article. The amount of the net proceeds shall be a water corporation's primary source of capital for investment in utility infrastructure, plant, facilities, and properties that are necessary or useful in the performance of the water corporation's duties in providing water utility service to the public.
  (b) All water utility infrastructure, plant, facilities, and properties constructed or acquired by, and used and useful to, a water corporation by investment pursuant to subdivision (a) shall be included among the water corporation's other utility property upon which the commission authorizes the water corporation the opportunity to earn a reasonable return.
  (c) This article shall apply to the investment of the net proceeds referred to in subdivision (a) for a period of 8 years from the end of the calendar year in which the water corporation receives the net proceeds. The balance of any net proceeds and interest thereon that is not invested after the eight-year period shall be allocated solely to ratepayers.
  (d) Upon application by a water corporation with 10,000 or fewer service connections, the commission may, after a hearing, by rule or order, exempt the water corporation from the requirements of this article.
  (e) The commission retains continuing authority to determine the used, useful, or necessary status of any and all infrastructure improvements and investments.

In any proceeding pending after January 1, 1996, the commission shall apply this article in its consideration of any matter concerning the sale by a water corporation of real property that is not necessary or useful in the provision of water utility service, for any sale that occurred prior to that date. If the water corporation has not invested the net proceeds therefrom in utility infrastructure, plant, facilities, and properties that are necessary or useful in the provision of water service to the public, it may elect to do so during the period provided in subdivision (c) of Section 790 and that period shall be deemed to have commenced as of January 1, 1996.