(a)(1) In the case of a proposed acquisition of a water company that is not economically viable, as determined by the Public Utilities Regulatory Authority in accordance with the criteria provided in subsection (b) of § 16-262n, by a water company that is economically viable, as determined by the authority in accordance with said criteria, upon petition of the acquiring water company and after notice and hearing, the authority may allow the acquiring water company to implement, and revise quarterly thereafter, a rate surcharge applied to the rates of the acquired water company or of both the acquiring water company and the acquired water company, as determined by the authority, that would recover on a current basis those costs of such acquisition, including a reasonable acquisition premium, and of needed improvements to the acquired water company’s system, to the extent the authority deems such costs appropriate. The regulations adopted by the authority pursuant to § 16-262o shall apply for purposes of this section.

(2) The Public Utilities Regulatory Authority may allow the recovery of such reasonable acquisition premium when it is demonstrated that such proposed acquisition shall provide benefits to customers by (A) enhancing system viability, or (B) avoiding capital costs or savings in operating costs, or as otherwise determined by the authority. If an acquisition premium is authorized, the excess of the acquisition cost over the depreciated original cost shall be added to the rate base to be amortized as an addition to expenses over a reasonable period of time with corresponding reductions in the rate base.

(b) In the case of a proposed acquisition of a water company that is not economically viable, as determined by the Public Utilities Regulatory Authority in accordance with the criteria provided in subsection (b) of § 16-262n, by a water company that is economically viable, as determined by the authority in accordance with said criteria, the authority may, as part of the acquiring water company’s next general rate case, award a premium rate of return to such acquiring water company when it is demonstrated that such proposed acquisition will provide benefits to customers by (1) enhancing system viability, or (2) avoiding capital costs or saving in operating costs, or as otherwise determined by the authority.

(c) In lieu of all or part of a rate surcharge, the authority may allow the acquiring water company to defer such costs of such acquisition for subsequent collection as part of its next general rate case.