Substitute House Bill No. 6777, also known as Public Act No. 25-142, establishes a framework for water utility systems to implement water quality and treatment surcharges to recover costs associated with eligible projects. An "eligible project" is defined as a significant addition, upgrade, or replacement of water infrastructure necessary to comply with updated state or federal drinking water regulations, which have not been previously authorized for inclusion in a water company's rate base. The bill allows water companies to file requests for approval of these surcharges with the Public Utilities Regulatory Authority (PURA), which must determine that the projects provide public health benefits and adhere to specific criteria related to water quality standards.

The bill outlines the process for water companies to impose these surcharges, including the requirement for a water quality and treatment assessment report, and stipulates that the surcharge cannot exceed 15% of the company's annual retail water revenues. Additionally, it mandates annual reconciliation reports to ensure that the surcharges are limited to eligible projects and allows for adjustments based on over- or under-collection of revenues. The new provisions will take effect on July 1, 2025, and include the insertion of new legal language regarding the definitions and processes for implementing the surcharges, while deleting outdated provisions related to water utility regulations.