The proposed bill, Substitute Bill No. 6777, aims to establish a framework for water utility systems to implement water quality and treatment surcharges. Effective July 1, 2025, the bill defines key terms such as "Authority," "Eligible project," and "Water company," and outlines the criteria for projects that qualify for surcharge recovery. Water companies can request approval from the Public Utilities Regulatory Authority (PURA) to recover expenses for eligible projects that enhance water infrastructure to meet updated drinking water regulations. The bill allows these companies to charge a water quality and treatment surcharge in addition to existing rates, contingent upon the authority's approval of their assessment reports and project eligibility.

The bill also stipulates that the surcharge cannot exceed 15% of the company's annual retail water revenues and must be recalibrated to zero upon the approval of new base rates. Water companies are required to submit annual reconciliation reports to ensure compliance with the surcharge limits and to address any discrepancies in collected revenues. Additionally, companies must inform customers about the surcharge through direct communication, ensuring transparency in billing. Overall, the bill seeks to enhance water quality and infrastructure while providing a structured process for financial recovery related to necessary improvements.