SB0075sam002 104TH GENERAL ASSEMBLY

Sen. Laura M. Murphy

Filed: 5/27/2026

10400SB0075sam002 LRB104 08184 AAS 38342 a

AMENDMENT TO SENATE BILL 75

AMENDMENT NO. ______. Amend Senate Bill 75, AS AMENDED, by replacing everything after the enacting clause with the following:

"Section 5. The Illinois Municipal Code is amended by changing Section 11-124-5 as follows:

(65 ILCS 5/11-124-5)

Sec. 11-124-5. Acquisition of water or sewer systems by eminent domain.

(a) In addition to other provisions providing for the acquisition of water or sewer systems or water or sewer works, whenever a public utility subject to the Public Utilities Act utilizes public property (including, but not limited to, right-of-way) of a municipality for the installation or maintenance of all or part of its water distribution system or sewer system, the municipality has the right to exercise eminent domain to acquire all or part of the water or sewer system, in accordance with this Section. Unless it complies with the provisions set forth in this Section, a municipality is not permitted to acquire by eminent domain that portion of a system located in another incorporated municipality without agreement of that municipality, but this provision shall not prevent the acquisition of that portion of the water or sewer system existing within the acquiring municipality.

(b) Where a water or sewer system that is owned by a public utility (as defined in the Public Utilities Act) provides water or sewer service to customers located in 2 or more municipalities, the system may be acquired by a majority of the municipalities by eminent domain. If the system is to be acquired by more than one municipality, then there must be an intergovernmental agreement in existence between the acquiring municipalities providing for the acquisition.

(c) If a water or sewer system that is owned by a public utility provides water or sewer service to customers located in one or more municipalities and also to customers in an unincorporated area and if at least 70% of the customers of the system or portion thereof are located within the municipality or municipalities, then the system, or portion thereof as determined by the corporate authorities, may be acquired, using eminent domain or otherwise, by either a municipality under subsection (a) or an entity created by agreement between municipalities where at least 70% of the customers reside. For the purposes of determining "customers of the system", only retail customers directly billed by the company shall be included in the computation. The number of customers of the system most recently reported to the Illinois Commerce Commission for any calendar year preceding the year a resolution is passed by a municipality or municipalities expressing preliminary intent to purchase the water or sewer system or portion thereof shall be presumed to be the total number of customers within the system. The public utility shall provide information relative to the number of customers within each municipality and within the system within 60 days after any such request by a municipality.

(d) In the case of acquisition by a municipality or municipalities or a public entity created by law to own or operate a water system under this Section, service and water supply must be provided to persons who are customers of the system on the effective date of this amendatory Act of the 94th General Assembly without discrimination based on whether the customer is located within or outside of the boundaries of the acquiring municipality or municipalities or entity, and a supply contract existing on the effective date of this amendatory Act of the 94th General Assembly must be honored by an acquiring municipality, municipalities, or entity according to the terms so long as the agreement does not conflict with any other existing agreement.

(e) For the purposes of this Section, "system" includes all assets reasonably necessary to provide water or sewer service to a contiguous or compact geographical service area or to an area served by a common pipeline and include, but are not limited to, interests in real estate, all wells, pipes, treatment plants, pumps and other physical apparatus, data and records of facilities and customers, fire hydrants, equipment, or vehicles and also includes service agreements and obligations derived from use of the assets, whether or not the assets are contiguous to the municipality, municipalities, or entity created for the purpose of owning or operating a water or sewer system.

(f) Before making a good faith offer, a municipality may pass a resolution of intent to study the feasibility of purchasing or exercising its power of eminent domain to acquire any water system or water works, sewer system or sewer works, or combined water and sewer system or works, or part thereof. Upon the passage of such a resolution, the municipality shall have the right to review and inspect all financial and other records, and both corporeal and incorporeal assets of such utility related to the condition and the operation of the system or works, or part thereof, as part of the study and determination of feasibility of the proposed acquisition by purchase or exercise of the power of eminent domain, and the utility shall make knowledgeable persons who have access to all relevant facts and information regarding the subject system or works available to answer inquiries related to the study and determination.

The right to review and inspect shall be upon reasonable notice to the utility, with reasonable inspection and review time limitations and reasonable response times for production, copying, and answer. In addition, the utility may utilize a reasonable security protocol for personnel on the municipality's physical inspection team.

In the absence of other agreement, the utility must respond to any notice by the municipality concerning its review and inspection within 21 days after receiving the notice. The review and inspection of the assets of the company shall be over such period of time and carried out in such manner as is reasonable under the circumstances.

Information requested that is not privileged or protected from discovery under the Illinois Code of Civil Procedure but is reasonably claimed to be proprietary, including, without limitation, information that constitutes trade secrets or information that involves system security concerns, shall be provided, but shall not be considered a public record and shall be kept confidential by the municipality.

In addition, the municipality must, upon request, reimburse the utility for the actual, reasonable costs and expenses, excluding attorneys' fees, incurred by the utility as a result of the municipality's inspection and requests for information. Upon written request, the utility shall issue a statement itemizing, with reasonable detail, the costs and expenses for which reimbursement is sought by the utility. Where such written request for a statement has been made, no payment shall be required until 30 days after receipt of the statement. Such reimbursement by the municipality shall be considered income for purposes of any rate proceeding or other financial request before the Illinois Commerce Commission by the utility.

The municipality and the utility shall cooperate to resolve any dispute arising under this subsection. In the event the dispute under this subsection cannot be resolved, either party may request relief from the circuit court in any county in which the water or sewer system is located, with the prevailing party to be awarded such relief as the court deems appropriate under the discovery abuse sanctions currently set forth in the Illinois Code of Civil Procedure.

The municipality's right to inspect physical assets and records in connection with the purpose of this Section shall not be exercised with respect to any system more than one time during a 5-year period, unless a substantial change in the size of the system or condition of the operating assets of the system has occurred since the previous inspection. Rights under franchise agreements and other agreements or statutory or regulatory provisions are not limited by this Section and are preserved.

The passage of time between an inspection of the utilities and physical assets and the making of a good faith offer or initiation of an eminent domain action because of the limit placed on inspections by this subsection shall not be used as a basis for challenging the good faith of any offer or be used as the basis for attacking any appraisal, expert, argument, or position before a court related to an acquisition by purchase or eminent domain.

(g) Notwithstanding any other provision of law, the Illinois Commerce Commission has no approval authority of any eminent domain action brought by any governmental entity or combination of such entities to acquire water or sewer systems or water or sewer works, except as is provided in subsection (h) of Section 10-5-10 of the Eminent Domain Act.

(h) The provisions of this Section are severable under Section 1.31 of the Statute on Statutes.

(i) This Section does not apply to any public utility company that, on January 1, 2006, supplied a total of 70,000 or fewer meter connections in the State unless and until (i) that public utility company receives approval from the Illinois Commerce Commission under Section 7-204 of the Public Utilities Act for the reorganization of the public utility company or (ii) the majority control of the company changes through a stock sale, a sale of assets, a merger (other than an internal reorganization) or otherwise. For the purpose of this Section, "public utility company" means the public utility providing water or sewer service and includes any of its corporate parents, subsidiaries, or affiliates possessing a franchised water or sewer service in the State.

(j) Any contractor or subcontractor that performs work on a water or sewer system acquired by a municipality or municipalities under this Section shall comply with the requirements of Section 30-22 of the Illinois Procurement Code. The contractor or subcontractor shall submit evidence of compliance with Section 30-22 to the municipality or municipalities.

(k) The municipality or municipalities acquiring the water or sewer system shall offer available employee positions to the qualified employees of the acquired water or sewer system.

(l) No later than 60 days after January 1, 2027, and at least once every 5 years thereafter, a public utility subject to the Public Utilities Act shall provide notice via U.S. Mail to the municipal clerk of each municipality in which the public utility provides water or sewer service that includes an explanation of the rights afforded to a municipality under this Section.

The notice under this subsection (l) may be sent on a postcard via U.S. Mail and shall be written in a substantially similar format to the following:

"All or part of (insert name of service area), owned and operated by (insert name of public utility), is within the geographic boundaries of (insert municipality). Section 11-124-5 of the Illinois Municipal Code grants a municipality the right, via resolution, to study the feasibility of purchasing or exercising its power of eminent domain to acquire any water system or water works, sewer system or sewer works, or combined water and sewer system or water and sewer works.

(Source: P.A. 103-13, eff. 6-9-23.)

Section 10. The Public Utilities Act is amended by changing Section 9-210.5 as follows:

(220 ILCS 5/9-210.5)

(Section scheduled to be repealed on June 1, 2028)

Sec. 9-210.5. Valuation of water and sewer utilities.

(a) In this Section:

"Disinterested" means that the person directly involved (1) is not a director, officer, or an employee of the large public utility or the water or sewer utility or its direct affiliates or subsidiaries for at least 12 months before becoming engaged under this Section; (2) shall not derive a material financial benefit from the sale of the water or sewer utility other than fees for services rendered, and (3) shall not have a member of the person's immediate family, including a spouse, parents or spouse's parents, children or spouses of children, or siblings and their spouses or children, be a director, officer, or employee of either the large public utility or water or sewer utility or the water or sewer utility or its direct affiliates or subsidiaries for at least 12 months before becoming engaged under this Section or receive a material financial benefit from the sale of the water or sewer utility other than fees for services rendered.

"District" means a service area of a large public utility whose customers are subject to the same rate tariff.

"Large public utility" means an investor-owned public utility that:

(1) is subject to regulation by the Illinois Commerce Commission under this Act;

(2) regularly provides water or sewer service to more than 15,000 customer connections;

(3) provides safe and adequate service; and

(4) is not a water or sewer utility as defined in this subsection (a).

"Next rate case" means a large public utility's first general rate case after the date the large public utility acquires the water or sewer utility where the acquired water or sewer utility's cost of service is considered as part of determining the large public utility's resulting rates.

"Prior rate case" means a large public utility's general rate case resulting in the rates in effect for the large public utility at the time it acquires the water or sewer utility.

"Utility service source" means the water or sewer utility or large public utility from which the customer receives its utility service type.

"Utility service type" means water utility service or sewer utility service or water and sewer utility service.

"Water or sewer utility" means any of the following:

(1) a public utility that regularly provides water or sewer service to 6,000 or fewer customer connections;

(2) a water district, including, but not limited to, a public water district, water service district, or surface water protection district, or a sewer district of any kind established as a special district under the laws of this State that regularly provides water or sewer service;

(3) a waterworks system or sewerage system established under the Township Code that regularly provides water or sewer service; or

(4) a water system or sewer system owned by a municipality that regularly provides water or sewer service; and

(5) any other entity that is not a public utility that regularly provides water or sewer service.

(b) Notwithstanding any other provision of this Act, a large public utility that acquires a water or sewer utility may request that the Commission use, and, if so requested, the Commission shall use, the procedures set forth under this Section to establish the ratemaking rate base of that water or sewer utility at the time when it is acquired by the large public utility.

(c) If a large public utility elects the procedures under this Section to establish the rate base of a water or sewer utility that it is acquiring, then 3 appraisals shall be performed. The average of these 3 appraisals shall represent the fair market value of the water or sewer utility that is being acquired. The appraisals shall be performed by 3 appraisers approved by the Commission's Executive Director or designee and engaged by either the water or sewer utility being acquired or by the large public utility. Each appraiser shall be engaged on reasonable terms approved by the Commission. Each appraiser shall be a disinterested person licensed as a State certified general real estate appraiser under the Real Estate Appraiser Licensing Act of 2002.

Each appraiser shall:

(1) be sworn to determine the fair market value of the water or sewer utility by establishing the amount for which the water or sewer utility would be sold in a voluntary transaction between a willing buyer and willing seller under no obligation to buy or sell;

(2) determine fair market value in compliance with the Uniform Standards of Professional Appraisal Practice;

(3) engage one disinterested engineer who is licensed in this State, and who may be the same engineer that is engaged by the other appraisers, to prepare an assessment of the tangible assets of the water or sewer utility, which is to be incorporated into the appraisal under the cost approach;

(4) request from the manager of the Accounting Department, if the water or sewer utility is a public utility that is regulated by the Commission, a list of investments made by the water or sewer utility that had been disallowed previously and that shall be excluded from the calculation of the large public utility's rate base in its next rate case; and

(5) return their appraisal, in writing, to the water or sewer utility and large public utility in a reasonable and timely manner.

If the appraiser cannot engage an engineer, as described in paragraph (3) of this subsection (c), within 30 days after the appraiser is engaged, then the Commission's Executive Director or designee shall recommend the engineer the appraiser should engage. The Commission's Executive Director or designee shall provide his or her recommendation within 30 days after he or she is officially notified of the appraiser's failure to engage an engineer and the appraiser shall promptly work to engage the recommended engineer. If the appraiser is unable to negotiate reasonable engagement terms with the recommended engineer within 15 days after the recommendation by the Commission's Executive Director or designee, then the appraiser shall notify the Commission's Executive Director or designee and the process shall be repeated until an engineer is successfully engaged.

(c-5) Beginning on January 1, 2027, if a large public utility elects the procedures under this Section to acquire a water or sewer utility, the large public utility shall, within 45 days after filing a petition for a certificate of public convenience and necessity under Section 8-406, provide a notice to each existing customer of the large public utility on the customer's monthly bill, either via U.S. Mail or electronically, informing the customer of the terms of the proposed acquisition, including the proposed purchase price identified in the signed asset purchase agreement, by the large public utility. If the notice is provided via U.S. Mail, the notice shall include the text of a link to the portion of the Commission's website that houses the applicable docket information. If the notice is provided electronically, the notice shall include a link to the portion of the Commission's website that houses the applicable docket information.

(d) Twenty percent of either The lesser of (i) the purchase price or (ii) the fair market value determined under subsection (c) of this Section shall constitute the rate base associated with the water or sewer utility as acquired by and incorporated into the rate base of the district designated by the acquiring large public utility under this Section, subject to any adjustments that the Commission deems necessary to ensure such rate base reflects prudent and useful investments in the provision of public utility service. The difference between the rate base and the purchase price or fair market value shall be borne by the shareholders of the acquiring large public utility. The reasonable transaction and closing costs incurred by the large public utility shall be treated consistent with the applicable accounting standards under this Act. The total amount of all of the appraisers' fees to be included in the transaction and closing costs shall not exceed the greater of $15,000 or 5% of the appraised value of the water or sewer utility being acquired. This rate base treatment shall not be deemed to violate this Act, including, but not limited to, any Sections in Articles VIII and IX of this Act that might be affected by this Section, provided that only 20% of the transaction and closing costs are included in the rate base. Any acquisition of a water or sewer utility that affects the cumulative base rates of the large public utility's existing ratepayers in the tariff group into which the water or sewer utility is to be combined by less than (1) 2.5% at the time of the acquisition for any single acquisition completed under this Section or (2) 5% for all acquisitions completed under this Section before the Commission's final order in the next rate case shall not be deemed to violate Section 7-204 or any other provision of this Act.

In the Commission's order that approves the large public utility's acquisition of the water or sewer utility, the Commission shall issue its decision establishing (1) the ratemaking rate base of the water or sewer utility; (2) the district or tariff group with which the water or sewer utility shall be combined for ratemaking purposes, if such combination has been proposed by the large public utility; and (3) the rates to be charged to customers in the water or sewer utility.

(e) If the water or sewer utility being acquired is owned by the State or any political subdivision thereof, then the water or sewer utility must inform the public of the terms of its acquisition by the large public utility by (1) holding a public meeting prior to the acquisition and (2) causing to be published, in a newspaper of general circulation in the area that the water or sewer utility operates, a notice setting forth the terms of its acquisition by the large public utility and options that shall be available to assist customers to pay their bills after the acquisition.

(f) The large public utility may recommend the district or tariff group of which the water or sewer utility shall, for ratemaking purposes, become a part after the acquisition, or may recommend a lesser rate for the water or sewer utility. If the large public utility recommends a lesser rate, it shall submit to the Commission its proposed rate schedule and the proposed final tariff group for the acquired water or sewer utility. The Commission's approved district or tariff group or rates shall be consistent with the large public utility's recommendation, unless such recommendation can be shown to be contrary to the public interest.

(g) From the date of acquisition until the date that new rates are effective in the acquiring large public utility's next rate case, the customers of the acquired water or sewer utility shall pay the approved then-existing rates of the district or tariff group as ordered by the Commission, or some lesser rates as recommended by the large public utility and approved by the Commission under subsection (f); provided, that, if the application of such rates of the large public utility to customers of the acquired water or sewer utility using 54,000 gallons annually results in an increase to the total annual bill of customers of the acquired water or sewer utility, exclusive of fire service or related charges, then the large public utility's rates charged to the customers of the acquired water or sewer utility shall be uniformly reduced, if any reduction is required, by the percent that results in the total annual bill, exclusive of fire services or related charges, for the customers of the acquired water or sewer utility using 54,000 gallons being equal to 1.5% of the latest median household income as reported by the United States Census Bureau for the most applicable community or county. For each customer of the water or sewer utility with potable water usage values that cannot be reasonably obtained, a value of 4,500 gallons per month shall be assigned. These rates shall not be deemed to violate this Act including, but not limited to, Section 9-101 and any other applicable Sections in Articles VIII and IX of this Act. The Commission shall issue its decision establishing the rates effective for the water or sewer utility immediately following an acquisition in its order approving the acquisition.

(h) In the acquiring large public utility's next rate case, the water or sewer utility and the district or tariff group ordered by the Commission and their costs of service may be combined under the same rate tariff. This rate tariff shall be based on allocation of costs of service of the acquired water or sewer utility and the large public utility's district or tariff group ordered by the Commission and utilizing a rate design that does not distinguish among customers on the basis of utility service source or type. This rate tariff shall not be deemed to violate this Act including, but not limited to, Section 9-101 of this Act. In the acquiring large public utility's 2 rate cases after an acquisition, but in no subsequent rate case, the large public utility may file a rate tariff for a water or sewer utility acquired under this Section that establishes lesser rates than the district or tariff group into which the water or sewer utility is to be combined. Those lesser rates shall not be deemed to violate Section 7-204 or any other provision of this Act if they affect the cumulative base rates of the large public utility's existing rate payers in the district or tariff by less than 2.5%.

(i) Any post-acquisition improvements made by the large public utility in the water or sewer utility shall accrue a cost for financing set at the large public utility's determined rate for allowance for funds used during construction, inclusive of the debt, equity, and income tax gross up components, after the date on which the expenditure was incurred by the large public utility until the investment has been in service for a 4-year period or, if sooner, until the time the rates are implemented in the large public utility's next rate case.

Any post-acquisition improvements made by the large public utility in the water or sewer utility shall not be depreciated for ratemaking purposes from the date on which the expenditure was incurred by the large public utility until the investment has been in service for a 4-year period or, if sooner, until the time the rates are implemented in the large public utility's next rate case.

(j) This Section shall be exclusively applied to large public utilities in the voluntary and mutually agreeable acquisition of water or sewer utilities. Any petitions filed with the Commission related to the acquisitions described in this Section, including petitions seeking approvals or certificates required by this Act, shall be deemed approved unless the Commission issues its final order within 11 months after the date the large public utility filed its initial petition. This Section shall only apply to utilities providing water or sewer service and shall not be construed in any manner to apply to electric corporations, natural gas corporations, or any other utility subject to this Act.

(k) Nothing in this Section shall prohibit a party from declining to proceed with an acquisition or be deemed as establishing the final purchase price of an acquisition.

(l) In the Commission's order that approves the large utility's acquisition of the water or sewer utility, the Commission shall address each aspect of the acquisition transaction for which approval is required under the Act.

(m) Any contractor or subcontractor that performs work on a water or sewer utility acquired by a large public utility under this Section shall be a responsible bidder as described in Section 30-22 of the Illinois Procurement Code. The contractor or subcontractor shall submit evidence of meeting the requirements to be a responsible bidder as described in Section 30-22 to the large public water or sewer utility. Any new water or sewer facility built as a result of the acquisition shall require the contractor to enter into a project labor agreement. The large public utility acquiring the water or sewer utility shall offer employee positions to qualified employees of the acquired water or sewer utility.

(n) This Section is repealed on June 30, 2038 June 1, 2028.

(Source: P.A. 102-149, eff. 1-1-22.)

Section 99. Effective date. This Act takes effect January 1, 2027.".