A.
Temporary
Surcharge for Infrastructure Replacement or Repair
1.
Calculation of Surcharge
A water utility implementing a Temporary Surcharge for
Infrastructure Replacement or Repair shall calculate the Surcharge Revenue
Requirement necessary to recover the construction costs of completed projects
and allocate that Surcharge Revenue Requirement to the customer classes as
described below. A water utility that has implemented a Temporary Surcharge for
Infrastructure Replacement or Repair may adjust the amount of revenue recovered
through the surcharge no more than twice in any 12 month period. A water
utility that elects to recalculate its Temporary Surcharge for Infrastructure
Replacement or Repair more than once in a 12 month period must adjust its
annual revenue requirement to reflect the adopted recovery period for the
project. Upon the effective date of new base rates, the surcharge will be
rolled back to zero.
a.
Revenue
Requirement
The calculation of the revenue requirement to be recovered
through a Temporary Surcharge for Infrastructure Repair or Replacement shall
include:
i. Depreciation Expense -
calculated pursuant to Chapter 68 of the Commission's rules
ii. Increases in property taxes where
applicable
b.
Additional Adjustments
i. An
investor owned water utility shall be allowed a return on its rate base, which
shall be the cost of the qualifying individual projects for the period reduced
for accumulated deferred income taxes and accumulated depreciation associated
with all projects being recovered through the surcharge. The rate of return
shall be calculated using the current cost of debt and the return on equity and
capital structure adopted in the water utility's most recent rate proceeding.
However, when calculating the rate of return for an investor-owned water
utility, the investor-owned water utility, the Public Utilities Commission's
advisory staff and the Office of the Public Advocate may agree in advance of
the filing of the infrastructure surcharge request on the current cost of debt
and return on equity and capital structure to be used.
ii. A consumer owned water utility shall be
allowed to recover principal payments and interim and permanent interest and
other debt issuance related expense for debt issued for projects included in
the surcharge. - A consumer- owned water utility must be able to document that
the project was funded by the debt issuance.
2.
Applicable Customer Classes
a. A water utility shall allocate the
increase in revenue requirements first to public and private fire protection
charges using the percentages and methodology adopted in its last rate case and
the remainder to water usage rates.
b. A water utility shall calculate the
surcharge revenue requirements applicable to water usage rates by subtracting
from the total increased revenue requirement the amount to be recovered from
both public and private fire protection as described above. The surcharge rate
shall be calculated by dividing this total by the estimated sales forecast for
the period that the surcharge will be effective.
3.
Filing Requirements
a. A water utility shall file the proposed
surcharge with a justification for the implementation of the surcharge with the
Commission no less than 30 days before the effective date of the surcharge. The
Commission may investigate the surcharge in accordance with
35-A M.R.S.
§1303 to determine if the surcharge is
just and reasonable. If the Commission investigates the surcharge, the
Commission shall make its determination within 75 days of the filing and shall
approve the surcharge if it is determined to be just and reasonable and deny
the surcharge if it is determined not to be just and reasonable.
b. A water utility shall include in its
surcharge filing a cover letter justifying the need for the charge, a surcharge
rate change worksheet in an electronic format approved by the Director of
Telephone and Water Industries and revised tariff sheet(s) reflecting the
surcharge.
4.
Notice and Billing Requirements
a. A water utility must provide notice to its
customers for its first filing for a surcharge pursuant to the requirements of
Chapter 307. The notice shall include in this notice the planned frequency of
future changes in the surcharge. The water utility is not required to file
subsequent notices of these changes.
b. A water utility may, but is not required
to, show the surcharge as a separate line item on its bill. If it chooses to
separately label the surcharge it must label it an infrastructure replacement
surcharge on the bill.
B.
Capital Reserve Accounts
Upon the effective date of terms and conditions that includes
charges attributable to capital reserve accounts, a water utility must
establish a separate account on its books and records for this reserve and must
fund the account.
