Relating to test years used for ratemaking purposes by certain water and sewer utilities.

Contracts

• Construction/Vendor Agreements: You must amend contracts for capital projects included in your rate base. Insert strict completion penalties to ensure projects are "used and useful" by the end of the projected test year. Failure to meet this deadline invalidates the projection and triggers refund liability.
• Consultant Retainers: Update scopes of work for rate consultants to include the mandatory "True-Up" filing and defense of forward-looking financial models, rather than just historical audits.

Hiring/Training

• Financial Modeling: Finance teams must shift focus from historical auditing to predictive modeling. Staff must be trained to forecast revenues and expenses 12 months out with high precision to avoid the "clawback" provision.
• Engineering Validation: Engineering leadership requires training on the legal definition of "used and useful" to ensure construction timelines align strictly with regulatory test year quarters.

Reporting & Record-Keeping

• Mandatory True-Up Filing: Utilities using a future test year must file a reconciliation statement with the regulatory authority no later than 30 days after the last quarter of the test year ends.
• Segregated Accounting: Implement accounting codes that allow for a direct, line-item comparison between *projected* figures used in the rate case and *actual* results realized during the test year.

Fees & Costs

• Refund Liquidity: There are no new state fees, but you must maintain sufficient liquidity to cover mandatory refunds if actual performance outperforms your projections.
• Administrative Costs: Budget for increased legal and consulting fees associated with the new "True-Up" filing requirement.