65- 407 C.M.R. ch. 395, § 7

Current through 2024-46, November 13, 2024

Section 407-395-7 - Transfer of Ownership; Taxes on Contribution in aid of Construction

A.Line Extensions in Developments. The ownership all line extensions in developments shall be transferred to the T&D utility prior to energization of the line.

B.Optional Transfer of Ownership. A person who owns a privately-owned line extension may request the T&D utility to assume ownership of the line extension. The T&D utility must assume ownership if the line meets the standards required by section 3, and the owner has made all the payments required by subsection E below. If the line extension does not meet the standards required by section 3, the owner of the line shall upgrade the line extension to those standards or request the utility to upgrade the line, subject to the payment requirements of subsection E(3) below. If the line was energized prior to the date of transfer, and the standards required by section 3 have changed since the line was energized, the line must be brought into compliance only with those changed standards that affect the reliability or safety of the line.

C.Additional Customers. If an additional person will be served by a line extension that is owned by a private person as permitted by the provisions of section 6(B)(1) and (2), the ownership of all portions of the existing line extension and of any new line extension, extending from the existing line extension, that will serve more than one customer must be transferred to the T&D utility prior to energization of the new line. If the existing line extension does not meet the standards required by section 3, the new customer or customers shall cause the line extension to be upgraded to current standards that affect the reliability or safety of the line or request the T&D utility to upgrade the line extension to those standards, subject to the payment requirements of subsection F(2)(b) below.

D.Compensation to Customers for Transfers of Ownership of Line Extensions. If the Terms and Conditions of a T&D Utility require a person ordering or building a line extension to pay for all the costs of the line extension, whether built by the utility or by a private contractor, the utility shall not compensate an owner of a line extension that transfers ownership of a line extension pursuant to subsections A, B, or C of this section. If the utility's Terms and Conditions provide some portion of line extensions or line extension costs to customers without charge, its Terms and Conditions must also provide for compensation to an owner that transfers a line extension pursuant to this section, in an amount equivalent to the amount that would have been provided by the utility if it had built the line extension, if that amount has not already been provided to the owner of the line extension.

E.Cost Obligation of Owner Transferring Line Extension Pursuant to Subsections A or B. When an owner of a privately-owned line extension transfers ownership to a T&D utility pursuant to the provisions of subsections A or B above, the transferring owner shall pay the T&D utility an amount that includes:

1.Taxes on Contribution in Aid of Construction or Contribution of Facilities. Amounts that the T&D utility must pay in federal and state taxes for contributed facilities, reduced by the present value of the tax reduction the utility receives as a result of tax depreciation over the years of the tax depreciable life of the asset. The amount that the transferring owner must pay shall be calculated by:

a. Determining the amount of the income tax payable by the utility as a result of the contribution, pursuant to federal and State of Maine income tax law, using the utility's expected marginal federal and state income tax rates;

b. Determining the amount of tax depreciation for each remaining year of the tax depreciable life of the asset;

c. Determining the amount of income tax reduction resulting from tax depreciation over each remaining year of the tax depreciable life of the asset, using the utility's expected marginal federal and state tax rates;

d. Determining the present value of the amounts established by step c, using as a discount rate the weighted cost of debt plus the pre-tax weighted cost of equity as most recently determined in a Commission proceeding for an investor-owned T&D utility; and

e. Deducting the total amount established by step d from the amount of the calculated in step a;

2.Interconnection Costs. Costs incurred by the T&D utility for labor and materials required to carry out the physical interconnection of the line extension to the T&D utility's system;

3.Compliance Costs. Any costs incurred by the T&D utility to bring the line extension into compliance with the standards required by section 3, subject to the qualification contained in subsection B above;

4.Costs to Upgrade the Existing Distribution System. Costs incurred by the T&D utility for upgrades to the existing distribution system because of increased demand from a new customer that will be served by the line extension, if the utility has an approved Term and Condition requiring such payment;

5.Easement and Permit Costs. Costs incurred by the T&D utility to obtain or maintain easements or necessary permits, including but not limited to permits required by environmental agencies and authorized licensing authorities; and

6.Other Costs. Other costs as specified in the T&D utility's Terms and Conditions.

F.Cost Obligation of Owner Transferring Line Extension Pursuant to Section 7(C). When an owner of a privately-owned line extension transfers ownership to a T&D utility pursuant to the provisions of subsection C above, so that line may serve another person, the following payments shall be made:

1.Taxes on Contribution in Aid of Construction. The owner of the existing line extension and the additional person or persons to be served by the new line extension shall pay the T&D utility amounts that the T&D utility must pay in federal and state taxes for contributed facilities, reduced by the present value of the tax reduction the utility receives as a result of tax depreciation over the years of the tax depreciable life of the asset, using the method contained in subsection 7(E)(1) above. The total payment required by this paragraph shall be allocated among the transferring owner and the new customer(s) pursuant to the customer shares established under section 9(E)(1)(a).

2.Other Costs. Prior to the energization of any facilities, including a service drop, that will serve an additional customer or customers who will be served by the existing line extension, either directly or through a new line extension connected to the original line extension, the additional customer or customers shall pay the T&D utility:

a.Interconnection Costs. The utility's costs to connect those customers directly to the original line extension or to connect any new line extension serving those customers to the original line extension;

b.Compliance Costs. Costs incurred by the T&D utility to bring the existing line extension into compliance with any subsequent changes to the standards required by section 3 that affect reliability or safety;

c.Costs to Upgrade the Distribution System. Costs incurred by the T&D utility for upgrades to the existing distribution system due to increased demand from the new customers, if the utility has an approved Term and Condition requiring such payment;

d.Easement and Permit Costs. Costs incurred by the T&D utility to obtain or maintain easements or necessary permits, including but not limited to permits required by environmental agencies and authorized licensing authorities;

e.Reallocation Payments. All amounts required by section 9(c)(2); and

f.Other Costs. Other costs as specified in the T&D utility's terms and conditions.

65- 407 C.M.R. ch. 395, § 7