Summary — SB 1350: Water and Sewer Public Utility Environmental Compliance Cost Recovery
Status
- Bill: SB 1350 (Utilities — Cost Recovery)
- Subject: Adds a new cost-recovery mechanism for regulated water and sewer public utilities
- Sponsor / Related: Companion bill HB 4405; primary sponsor listed as Saud Anwar
- Legislative status (as provided): Passed both houses, signed by the governor 06/20/2025; listed effective date 09/01/2025. (Bill text also states “effective immediately”; the legislative actions record an effective date of 9/1/2025.)
- Repeal: Statutory provisions created by the bill are explicitly repealed on January 1, 2031 (time-limited authority).
Purpose and intent
- Allow regulated water and sewer utilities to recover, via Commission‑authorized surcharges, costs and capital investments necessary to comply with environmental requirements (statutes, rules, permits or permit terms) addressing contaminants such as PFAS (per‑ and polyfluoroalkyl substances), cyanotoxins, lead and copper, and other emerging chemical contaminants that pose a known or suspected risk to human health or the environment.
- Provide a streamlined, separate recovery mechanism (a surcharge or rider) independent of general rate‑case revenue‑requirement proceedings to accelerate recovery of environmental‑compliance costs.
Key provisions
- Commission authorization: The Illinois Commerce Commission (ICC) must authorize, on petition by a public water or sewer utility, one or more surcharges that adjust customer rates/charges to recover eligible environmental compliance costs or capital investments. Surcharges may provide for prospective recovery.
- Reconciliation: The ICC must periodically initiate hearings to reconcile amounts collected under approved surcharge(s) with the actual prudently incurred recoverable costs for each annual period the surcharge was in effect.
- Rulemaking duties: Within one year of the bill’s effective date the ICC must adopt implementing rules. Required rule topics include:
- Limits on customer bill increases under surcharges and notice requirements to customers;
- Reconciliation, billing, audit and filing requirements;
- Eligibility criteria for infrastructure upgrades and other recoverable costs;
- Application and information requirements, internal audit standards, and any other reporting the Commission needs to evaluate reasonableness/prudence.
- Scope: Applies to public water and sewer utilities regulated by the ICC; the surcharge mechanism is “independent” of other rate‑case elements (i.e., separate rider authority).
Who is affected
- Regulated public water and sewer utilities (investor‑owned and any utilities under ICC jurisdiction).
- Utility ratepayers/customers, who may see separate surcharge line items on bills to cover environmental compliance costs.
- The ICC (new rulemaking and oversight responsibilities).
- Potentially contractors, vendors and infrastructure suppliers engaged in compliance projects.
Potential impacts
- Utilities: Faster, more certain recovery of environmental compliance costs and capital investments (reduces lag compared to full rate cases).
- Ratepayers: Possible near‑term increases in bills via surcharge(s); mitigated by required reconciliations, prudence reviews, and ICC rule‑imposed limits/notice obligations.
- Regulators: Increased administrative workload (rulemaking, periodic reconciliation hearings, audits, reporting).
- Policy horizon: Time‑limited authority through January 1, 2031, enabling temporary, targeted cost‑recovery while regulators and stakeholders evaluate longer‑term approaches.
Read‑outs / timeline requirements
- ICC must adopt implementing rules within one year of the bill’s effective date.
- The Commission must conduct periodic annual reconciliations of amounts collected under the surcharge(s).
- The statutory authority created by the bill expires (is repealed) on January 1, 2031.
