SB3178 104TH GENERAL ASSEMBLY

LRB104 20198 RTM 33649 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3178

Introduced 2/2/2026, by Sen. Emil Jones, III

SYNOPSIS AS INTRODUCED:

New Act

Creates the Municipal Water System Repurchase Act. Provides that a municipality may repurchase an investor-owned utility if the municipality finds that (1) the investor-owned utility is repeatedly non-compliant with the service quality standards mandated by the Illinois Commerce Commission; (2) water or wastewater service rates charged by the investor-owned utility have increased beyond the rate of inflation without corresponding improvements in service quality; or (3) a majority of the electorate in the municipality votes in favor of repurchase in a binding referendum. Provides that, if a municipality adopts an ordinance to repurchase an investor-owned utility, then the municipality shall provide written notice to (1) the investor-owned utility; (2) the Illinois Commerce Commission; and (3) all affected customers. Provides that a municipality may not repurchase an investor-owned utility unless (i)the municipality files a petition with the Illinois Commerce Commission and (ii) the Illinois Commerce Commission approves the petition. Provides that the Illinois Commerce Commission may approve the repurchase if it finds that (1) the municipality has complied with notice and hearing requirements; (2) the municipality used a reasonable method to determine the value of the investor-owned utility; (3) the repurchase of the investor-owned utility shall not cause unreasonable harm to customers or service continuity; and (4) the transition plan provides for uninterrupted utility service. Provides that, if the Illinois Commerce Commission approves a municipality's petition to repurchase an investor-owned utility, then the investor-owned utility shall transfer all facilities, records, and customer accounts to the municipality or its designated public entity. Provides that the purchase price for any system repurchased shall be determined by the fair market value of the system, including all physical assets and customer accounts, less depreciation, as determined by an independent valuation agreed upon by the parties or ordered by the Illinois Commerce Commission.

A BILL FOR

AN ACT concerning local government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Municipal Water System Repurchase Act.

Section 5. Findings and purpose.

(a) The General Assembly finds that:

(1) Water systems are critical public infrastructure that directly impact public health, economic development, and environmental protection.

(2) Some municipalities have sold these systems to investor-owned utilities but may wish to regain local control when service quality, rates, or accountability do not meet community expectations.

(3) A clear statutory process for repurchase by municipalities will empower local governance while maintaining regulatory protections and ensuring orderly transitions.

(b) The purpose of this Act is to establish a clear and equitable legal pathway for municipalities to repurchase water systems from regulated private utilities when certain conditions are met.

Section 10. Definitions. As used in this Act:

"Investor-owned utility" means any public utility subject to the jurisdiction of the Illinois Commerce Commission that provides water services, wastewater services, or both water services and wastewater services.

"Municipality" means a city, village, or incorporated town in the State.

"Water system" means a public utility facility used for producing, treating, transmitting, distributing, or disposing of water or wastewater services serving residential and commercial customers.

Section 15. Municipal authority to repurchase an investor-owned utility.

(a) A municipality may repurchase an investor-owned utility if the municipality finds that:

(1) the investor-owned utility is repeatedly non-compliant with the service quality standards mandated by the Illinois Commerce Commission;

(2) water or wastewater service rates charged by the investor-owned utility have increased beyond the rate of inflation without corresponding improvements in service quality; or

(3) a majority of the electorate in the municipality votes in favor of repurchase in a binding referendum.

(b) A municipality seeking repurchase must adopt an ordinance by its corporate authorities setting forth the basis for repurchase and providing notice to all affected customers and the investor-owned utility.

Section 20. Notice. If a municipality adopts an ordinance to repurchase an investor-owned utility, then the municipality shall provide written notice to:

(1) the investor-owned utility;

(2) the Illinois Commerce Commission; and

(3) all affected customers.

Section 25. Public hearing. A municipality shall hold at least one public hearing at least 30 days after the municipality has completed the notice requirements under Section 20. The public hearing shall allow for public comment on the proposed repurchase.

Section 30. Illinois Commerce Commission filing. A municipality shall file a petition with the Illinois Commerce Commission for approval of the repurchase before the municipality may repurchase an investor-owned utility. A municipality may not repurchase an investor-owned utility unless the petition is approved. The petition must include:

(1) the repurchase plan;

(2) proposed terms and compensation;

(3) estimated impact on rates; and

(4) a transition plan to ensure uninterrupted service.

Section 35. Illinois Commerce Commission review and approval.

(a) The Illinois Commerce Commission shall review a petition to repurchase an investor-owned utility within 180 days of receiving the petition. The Illinois Commerce Commission may approve the repurchase if it finds that:

(1) the municipality has complied with notice and hearing requirements of this Act;

(2) the municipality used a reasonable method to determine the value of the investor-owned utility;

(3) the repurchase of the investor-owned utility shall not cause unreasonable harm to customers or service continuity; and

(4) the transition plan provides for uninterrupted utility service.

(b) In the Illinois Commerce Commission's approval of a repurchase, the Illinois Commerce Commission may impose conditions necessary to protect customers and ensure compliance with safety and service standards.

Section 40. Transition and continuity of service.

(a) If the Illinois Commerce Commission approves a municipality's petition to repurchase an investor-owned utility, then the investor-owned utility shall transfer all facilities, records, and customer accounts to the municipality or its designated public entity.

(b) The investor-owned utility shall cooperate and assist in the transition, including workforce considerations, and comply with all labor laws.

Section 45. Valuation and compensation.

(a) The purchase price for any system repurchased under this Act shall be determined by the fair market value of the system, including all physical assets and customer accounts, less depreciation, as determined by an independent valuation agreed upon by the parties or ordered by the Illinois Commerce Commission.

(b) The process for valuation shall be transparent and include opportunities for both the investor-owned utility and the municipality to submit evidence.

Section 50. Rate setting after repurchase.

(a) Following repurchase, the municipality may establish rates consistent with statutory requirements and in consultation with the Illinois Commerce Commission or appropriate regulatory authority to ensure rates are fair, just, and reasonable.

(b) Any new rate structure shall include considerations for low-income affordability programs.

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.