This bill establishes new procedures for enhancing infrastructure related to water and wastewater utilities in Iowa, allowing for alternative ratemaking mechanisms to support the development and sustainability of these essential services. It specifies that the commission is not bound by traditional ratemaking principles when evaluating system enhancement infrastructure. Key definitions are provided, including "system enhancement costs," which encompass depreciation, operation and maintenance expenses, restoration costs, property taxes, and pretax returns, while excluding fines and penalties. The bill outlines what constitutes "system enhancement improvements," such as projects that replace or extend existing infrastructure, install new infrastructure for compliance with health and safety regulations, or relocate infrastructure for public improvement projects.

Before an eligible utility can recover system enhancement costs through a system enhancement charge, it must obtain commission approval for a detailed plan. The bill mandates that applications for such plans include various supporting documents, such as projected capital expenditures, estimated operation and maintenance costs, and compliance narratives. The commission is required to issue a final order within six months of filing and can approve plans that meet specific criteria. Additionally, the bill allows utilities to file annual applications to establish or adjust system enhancement charges, with specific guidelines on cost recovery and reporting requirements. It also permits deferral of costs incurred prior to plan approval for future recovery, exempts certain petitions from publication notice requirements, and stipulates that system enhancement charges reset to zero upon the approval of new basic rates in a general rate case.