Section 407-675-6 - RATEMAKING TREATMENTA.Temporary Surcharge for Infrastructure Replacement or Repair1.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 RequirementThe 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 rulesii. Increases in property taxes where applicableb.Additional Adjustmentsi. 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 Classesa. 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 Requirementsa. 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 Requirementsa. 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 AccountsUpon 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.
65- 407 C.M.R. ch. 675, § 6