IndianaSB 241Second Regular Session 124th General Assembly (2026)SenateWALLET

Utility service enhancement improvement costs.

Sponsored By: Eric Koch (Republican)

Signed by Governor

Summary

Amends the statute that authorizes a conservancy district providing water service to withdraw from the jurisdiction of the Indiana utility regulatory commission (IURC) if the conservancy district serves less than 2,000 customers, so as to authorize a withdrawal from the IURC's jurisdiction if the conservancy district serves less than 3,000 customers. Amends the existing statute authorizing alternative regulatory procedures for water or sewer utilities with customer bases not exceeding specified numbers to include within the scope of the statute a procedure that promotes economic development opportunities in rural areas while providing just and reasonable protections to a utility's existing ratepayers. Prohibits a water or wastewater utility (utility) from charging or collecting a capacity related fee or a tap fee to an eligible customer for connecting workforce housing to the utility's water or wastewater system (system) under certain circumstances. Provides that if the utility determines that the extension of service to the workforce housing will not result in a positive contribution to the utility's overall cost of service over a 20 year period, the utility may charge and collect from the eligible customer a capacity related fee or a tap fee that does not exceed the difference between: (1) the otherwise applicable capacity related fee or tap fee; minus (2) the contribution to the utility's overall cost of service over a 20 year period that will result from the extension of service to the workforce housing. Provides that for purposes of these provisions, an "eligible customer" means a not-for-profit organization that: (1) has entered into an agreement with the Indiana housing and community development authority under which the person will construct workforce housing in Indiana; and (2) seeks to connect the workforce housing to the system of a utility under the terms of a special contract with the utility. Authorizes a water or wastewater utility that is eligible under existing law to recover costs for service enhancement improvements (eligible utility) to adjust the statutory adjustment tracker to reflect certain per unit chemical and power costs if those costs have increased or decreased by more than 3% over the two most recent years. Provides that if the costs: (1) have increased by more than 3% over the two year period, the amount of the adjustment shall be included in the adjustment rider as an expense; or (2) have decreased by more than 3% over the two year period, the amount of the adjustment shall be included in the adjustment rider as a credit. Provides that an eligible utility is not required to seek preapproval of a plan from the IURC in order to seek recovery of the costs of chemicals and power. Requires an eligible utility for which the IURC has issued an order approving an adjustment rider for the recovery of chemical or power costs to file a petition for a change in its adjustment amount: (1) not later than 30 days after the end of each 12 month period after the date of the IURC's order approving the adjustment rider; and (2) until the IURC issues an order in the eligible utility's next general rate case. Specifies that the costs of chemicals and power may be recovered in full and without deferring 20% of the costs for recovery as part of the eligible utility's next general rate case.

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 2 benefits, 0 costs, 2 mixed.

Lower Connection Fees For Workforce Housing

Effective upon passage, the law provides utility connection fee relief for qualifying workforce housing built by eligible tax-exempt nonprofits. Nonprofits must have an agreement with the Indiana Housing and Community Development Authority and a special utility contract. Homes must be single-family houses or duplexes near employment, serving households below area median income, adjusted for family size. Monthly sale or lease costs cannot exceed 30% of household monthly income. Capacity-related and tap fees are waived to the extent the extension makes a positive contribution to utility costs over 20 years. Any remaining fee is capped at the normal fee minus that contribution. Utilities can limit contracts to prevent unreasonable subsidies from other customers; residents are not guaranteed a specific saving.

Rural Utility Standards Include Customer Protections

Beginning July 1, 2026, Indiana’s utility commission can set procedures or standards for qualifying water and sewer utilities. It can act on its own or after a request allowed by state law. After notice and a hearing, it must find the standards serve the public interest and advance a statutory goal. Those goals now include rural economic development with just and reasonable protections for existing customers. The change does not itself set rates or guarantee savings.

Faster Utility Charges With Regulatory Review

Eligible utilities can seek certain rate add-ons without first getting an improvement plan approved. Costs listed in section 7(2)(B) and (C) qualify for full recovery, without the usual 20% delay. For section 7(2)(A) improvements, Indiana’s utility commission must find the work reasonable and necessary before approving cost recovery. It must rule within 120 days and may review combined requests in a separate case. Municipal and nonprofit utilities must follow the cost-recovery method in IC 8-1-31-8(a)(3). These changes can bring customer charges sooner, but the law sets no household bill amount.

Utility Cost Changes Bring Charges Or Credits

Eligible utilities can request chemical or power cost adjustments at least two years after their last basic-rate order. Average actual annual costs must change by at least 3% over that two-year period, with supporting records and calculations. The difference from current collections, adjusted for projected water volume, becomes an expense if positive or a credit if negative. Utilities with approved riders for section 7(2)(B) or (C) costs must request updates within 30 days after each 12-month period. They must send each request to the consumer counselor until the commission issues its next general-rate order. The commission must hold a hearing and rule within 60 days after each filing.

Sponsors & Cosponsors

Sponsor

  • Eric Koch

    Republican • Senate

Cosponsors

  • Andrea Hunley

    Democratic • Senate

  • Blake Doriot

    Republican • Senate

  • Dave Hall

    Republican • House

  • Edmond Soliday

    Republican • House

  • Jim Pressel

    Republican • House

  • Randy Maxwell

    Republican • Senate

  • Spencer Deery

    Republican • Senate

Roll Call Votes

All Roll Calls

Yes: 177 • No: 8

Senate vote • 2/25/2026

Senate concurred with House amendments

Yes: 44 • No: 3

House vote • 2/9/2026

Third reading: passed

Yes: 91 • No: 3

Senate vote • 1/22/2026

Third reading: passed

Yes: 42 • No: 2

Actions Timeline

  1. Public Law 127

    3/5/2026Senate
  2. Signed by the Governor

    3/5/2026Senate
  3. Signed by the Speaker

    2/27/2026House
  4. Signed by the President of the Senate

    2/27/2026Senate
  5. Signed by the President Pro Tempore

    2/27/2026Senate
  6. Senate concurred with House amendments; Roll Call 284: yeas 44, nays 3

    2/25/2026Senate
  7. Motion to concur filed

    2/16/2026Senate
  8. Returned to the Senate with amendments

    2/10/2026House
  9. Third reading: passed; Roll Call 210: yeas 91, nays 3

    2/9/2026House
  10. Second reading: ordered engrossed

    2/5/2026House
  11. Representatives Hall, Pressel added as cosponsors

    2/3/2026House
  12. Committee report: amend do pass, adopted

    2/3/2026House
  13. First reading: referred to Committee on Utilities, Energy and Telecommunications

    1/28/2026House
  14. Referred to the House

    1/23/2026Senate
  15. House sponsor: Representative Soliday

    1/22/2026Senate
  16. Third reading: passed; Roll Call 59: yeas 42, nays 2

    1/22/2026Senate
  17. Second reading: ordered engrossed

    1/20/2026Senate
  18. Senators Doriot, Maxwell added as coauthors

    1/15/2026Senate
  19. Committee report: amend do pass, adopted

    1/15/2026Senate
  20. Senator Hunley added as third author

    1/15/2026Senate
  21. Senator Deery added as second author

    1/15/2026Senate
  22. Authored by Senator Koch

    1/8/2026Senate
  23. First reading: referred to Committee on Utilities

    1/8/2026Senate

Bill Text

  • Enrolled Senate Bill (S)

  • Introduced Senate Bill (S)

  • Senate Bill (H)

  • Senate Bill (S)

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