1. Removes Some of the Regulatory Restrictions
Illinois Legislation
Removes Some of the Regulatory Restrictions
(Allowing rate base to reach market levels benefiting local governments)

2. Equity Recapture at Market Pricing
Historically smaller governments sold their utilities:
To investor owned utilities at the ICC approved rate base plus a modest risk premium or;
Merged their utilities into a regional governmental utility authority or other entity for a wide range of consideration or;
To a neighboring larger utility for the book value.

3. Equity Recapture at Market Pricing
All three approaches (non-trended original cost less depreciation) are at less than market pricing. In other words, the small governments:
Lost the value due to the devaluation of the dollar;
Lost any going concern and any other intangible value;
Sold real property for historic acquisition prices---extremely below market
Lost the value of renewals, replacements, and major maintenance extending facilities average service lives;
Did not recover the value of property still in use, yet fully depreciated.

4. Equity Recapture at Market Pricing
The ACT allows fair market value to be the basis of the purchase price and the ICC rate base.
The smaller governments, under the ACT, can get paid the proper full and fair compensation for their utility and their customers can derive the benefits of the economy of scale of the large professionally managed utility company.

5. Equity Recapture at Market Pricing
The small local government then can use the proceeds and the utility availability to benefit their community in a number of ways including:
Economic development,
Needed infrastructure financing,
Community desired projects,
Lower taxes,
Improved financial position, and
Other uses.

6. Risk Avoidance
Local governments have the enterprise risk
of operations, regulatory compliance, liability,
health, safety and welfare of your customers.
Capital funding risk is great.
Rate control risk is great.
Customer accommodation risk is great.
Risk is transferred to a larger entity where
Provisions dampen the impact of the event.

7. ICC Regulation
The ICC is mandated to set fair and reasonable
Rates and to ensure that customer service is
Provided effectively and meeting the needs that
Are present. They function as a rate and
Customer service “watch dog”. The local entity
Is always accepted as a party in any rate matter
And other matters. The ICC staff is there to
Provide information and assist the public in
Utility matters. Proper use of the ICC is straight
Forward and requires only a call or letter.

8. Your Text Here Make sure you have assembled the right team
Decide what is right for you, then attain
Support from the Village Manager
Utilities, Public Works, Planning,
Finance, Administrative staffing
Support from Legal and Utility
Transaction consultant
Constant briefing to Trustees.
Your Text Here

9. Is your utility a candidate for private professional ops?
Are your customers satisfied with their service?
Do you have capital needs; management needs;
Budgetary needs; funding needs; do you want to
Get out of debt; lower taxes; have a secure revenue
Source for the general fund; do you need more
Resources; do you need a trained professional
And specialized staff; is there a potential of a major
Rate increase which could be dampened; do you
Need to optimize your services to be more effective?

10. If your answer’s are
Not really
Yes to any of the second paragraph
Then it may be prudent to investigate the
Option of privatization of your utility
Enterprise (business) which is governmentally
Operated. While the Act is in place is the
Best time to do it. Remember the process
Takes about a year.

11. Illinois Municipal League Annual Meeting
Session IML Panel
September 18, 2015
Briefing 3:30 PM
Questions:
Gerald Hartman
Hartman Consultants, LLC.
Phone:
Fax: