Should Water Utilities Replace Customer-Side Lead Pipes? 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