(a) For purposes of this section, (1) “revenue adjustment mechanism” means a mechanism that reconciles in rates the difference between the actual revenues of a water company and allowed revenues, (2) “actual revenues” means the revenues received or accrued by a water company for water sales for a calendar year, including sales for resale and approved miscellaneous charges, authorized by the Public Utilities Regulatory Authority pursuant to sections 16-19 and 16-262w, and those revenues authorized for customers acquired pursuant to § 16-43, 16-262o or 16-262s since the last general rate case of the company, (3) “allowed revenues” means revenues for a water company for water sales for a calendar year, including sales for resale and approved miscellaneous charges, authorized by the authority pursuant to sections 16-19 and 16-262w, and shall include customer growth from an acquisition approved by the authority pursuant to § 16-43, 16-262o or 16-262s since the last general rate case of such company, and (4) “water company” has the same meaning as provided in § 16-1.

(b) (1) The authority shall not render any draft or final decision in a general rate case of a water company pending before the authority on June 5, 2013, without approving a revenue adjustment mechanism for such company.

(2) After approval of a revenue adjustment mechanism pursuant to subdivision (1) of this subsection, such mechanism shall be authorized by the authority annually thereafter until such time as such company files its next general rate case. Such company shall file with the authority an annual reconciliation of actual revenues to allowed revenues that shall include a report of the changes in water demands and any measures such company has taken to promote water conservation.

(c) (1) On or after June 5, 2013, and before a water company with actual revenues at least one per cent less than allowed revenues files for its next general rate case pursuant to § 16-19, such company may request, and the Public Utilities Regulatory Authority shall initiate, a docket for a limited reopener to approve a revenue adjustment mechanism.

(2) After approval of a revenue adjustment mechanism pursuant to subdivision (1) of this subsection, such mechanism shall be authorized by the authority annually thereafter until the later of the sixth year after either (A) the last general rate case, (B) the initial establishment of such mechanism by a company, or (C) the company’s prior rate case is reopened and either (i) rate levels are reset by the authority, (ii) WICA surcharges are rolled into base rates, or (iii) other authorized changes in rates are made pursuant to a settlement agreement or other action by the authority. After such six-year period, the authority may authorize continuation of the revenue adjustment mechanism for up to an additional three-year period upon request by the company, pursuant to a filing with the authority at least ninety days before the revenue adjustment mechanism is due to be discontinued. The authority shall act on such request within such ninety-day period in an uncontested proceeding. Such company shall file with the authority an annual reconciliation of actual revenues to allowed revenues that shall include a report of the changes in water demands and any measures such company has taken to promote water conservation. As used in this section, “WICA” has the same meaning as “Water Infrastructure and Conservation Adjustment (WICA)”, as provided in § 16-262v.

(d) (1) A water company may request during a general rate case filed pursuant to § 16-19, and the Public Utilities Regulatory Authority shall approve, a revenue adjustment mechanism.

(2) After approval of a revenue adjustment mechanism pursuant to subdivision (1) of this subsection, such mechanism shall be authorized by the authority annually thereafter until such time as such company files its next general rate case. Such company shall file with the authority an annual reconciliation of actual revenues to allowed revenues that shall include a report of the changes in water demands and any measures such company has taken to promote water conservation.

(e) A revenue adjustment mechanism approved pursuant to subsection (b), (c) or (d) of this section shall be implemented through a modification to the authorized rates or a rate surcharge or recorded as a deferral on the balance sheet for recovery in rates at the time of the next general rate case filed by a water company pursuant to § 16-19. Any under-recovery or over-recovery of the revenue adjustment or deferred amount of the previous year shall be included in the calculation of the subsequent annual adjustment or general rate case proceeding, whichever occurs first.

(f) Concurrent with implementation of a revenue adjustment mechanism pursuant to subsection (b), (c) or (d) of this section, the authority shall establish an earnings sharing mechanism that provides for any earnings in excess of the allowed return on equity to be shared equally between ratepayers and shareholders.