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(1) As used in this section:
(a) "Designated water service area" means the area defined by a municipality in accordance with the Utah Constitution, Article XI, Section 6, Subsection (1)(c).
(b) "Large municipal drinking water system" means a municipally owned and operated drinking water system serving a population of 10,000 or more.
(c) "Retail customer" means an end user:
(i) who receives culinary water directly from a municipality's waterworks system; and
(ii) whom the municipality described in Subsection (1)(c)(i) bills for water service.
(2) A municipality shall fix the rates to be paid for the use of water furnished by the municipality.
(3) The setting of municipal water rates is a legislative act.
(4) Within the municipality's designated water service area, a municipality shall:
(a) establish, by ordinance, reasonable rates for the services provided to the municipality's retail customers;
(b) use the same method of providing notice to all retail customers of proposed rate changes; and
(c) allow all retail customers the same opportunity to appear and participate in a public meeting addressing water rates.
(5)
(a) A municipality may establish different rates for different classifications of retail customers within the municipality's designated water service area, if the rates and classifications have a reasonable basis.
(b) A reasonable basis for charging different rates for different classifications may include, among other things, a situation in which:
(i) there is a difference in the cost of providing service to a particular classification;
(ii) one classification bears more risk in relation to a system operation or obligation;
(iii) retail customers in one classification invested or contributed to acquire a water source or supply or build or maintain a system differently than retail customers in another classification;
(iv) the needs or conditions of one classification:
(A) are distinguishable from the needs or conditions of another classification; and
(B) based on economic, public policy, or other identifiable elements, support a different rate; or
(v) there is a differential between the classifications based on a cost of service standard or a generally accepted rate setting method, including a standard or method the American Water Works Association establishes.
(c) An adjustment based solely on the fact that a particular classification of retail customers is located either inside or outside of the municipality's corporate boundary is not a reasonable basis.
(6)
(a) If more than 10% of the retail customers within a large municipal drinking water system's designated water service area are located outside of the municipality's corporate boundary, the municipality shall:
(i) post on the municipality's website the rates assessed to retail customers within the designated water service area; and
(ii) establish an advisory board to make recommendations to the municipal legislative body regarding water rates, capital projects, and other water service standards.
(b) In establishing an advisory board described in Subsection (6)(a)(ii), a municipality shall:
(i) if more than 10% but no more than 30% of the municipality's retail customers receive service outside the municipality's municipal boundary, ensure that at least 20% of the advisory board's members represent the municipality's retail customers receiving service outside the municipality's municipal boundary;
(ii) if more than 30% of the municipality's retail customers receive service outside of the municipality's municipal boundary, ensure that at least 40% of the advisory board's members represent the municipality's retail customers receiving service outside of the municipality's municipal boundary; and
(iii) in appointing board members who represent retail customers receiving service outside of the municipality's municipal boundary, as required in Subsections (6)(b)(i) and (ii), solicit recommendations from each municipality and county outside of the municipality's municipal boundary whose residents are retail customers within the municipality's designated water service area.
(7) A municipality that supplies water outside of the municipality's designated water service area shall supply the water only by contract and shall include in the contract the terms and conditions under which the contract can be terminated.
(8) A municipality shall:
(a) notify the director of the Division of Drinking Water of a contract the municipality enters into with a person outside of the municipality's designated water service area, including the name and contact information of the person named in each contract; and
(b) each year, provide any supplementing or new information regarding a contract described in Subsection (8)(a), including whether there is no new information to provide at that time.