N.J. Admin. Code § 14:3-8.11
Current through Register Vol. 56, No. 21, November 4, 2024
Section 14:3-8.11 - Suggested formula for allocating extension costs-single residential customer(a) The requirements in this section apply in addition to the requirements at N.J.A.C. 14:3-8.9. This section addresses how Board staff will apply the suggested formula to the costs of an extension that will serve only a single residential customer. This section does not address how deposits, non-refundable contributions, or refunds will be grossed up to reflect the tax consequences incurred by the regulated entity *pursuant to* the Internal Revenue Code, which is addressed at N.J.A.C. 14:3-8.6.(b) To determine the deposit required for an extension subject to this section, the regulated entity shall: 1. Estimate the actual cost of the extension required to bring service to the customer from the nearest existing infrastructure;2. Estimate the annual distribution revenue that will be derived from the customer, and multiply it by 10 for gas, electric, and telecommunication regulated entities, and by 2.5 for water and wastewater regulated entities, to obtain the estimated distribution revenue over the applicable multi-year period; and3. Subtract the estimated applicable multi-year period distribution revenue determined under (b)2 above from the estimated cost of the extension determined under (b)1 above. This is the amount of the deposit.(c) One year after the customer begins receiving service, the regulated entity shall calculate the distribution revenue derived from the customer's first year of service. If the year one distribution revenue is less than the estimated annual distribution revenue that was used in (b)2 above to determine the deposit, the regulated entity is not required to provide a refund. If the year one distribution revenue exceeds the estimated annual distribution revenue, the regulated entity shall provide a refund to the applicant. The amount of the refund shall be the difference between the estimated and annual year one distribution revenues, multiplied by 10 for gas, electric, and telecommunication regulated entities, and by 2.5 for water and wastewater regulated entities.(d) Two years after the customer begins receiving service, the regulated entity shall calculate the distribution revenue derived from the customer's second year of service. The regulated entity shall provide a refund to the applicant if the actual distribution revenue from the customer's most recent year of service exceeds the greater of the amounts in (d)1 and 2 below. The amount of the refund shall be 10 for gas, electric, and telecommunication regulated entities, and 2.5 for water and wastewater regulated entities, multiplied by the difference between the distribution revenue from the most recent year of service and the higher of the following: 1. The estimated annual distribution revenue, which was used as the basis for the initial deposit; or2. The highest actual distribution revenue from any prior year.(e) The process in (d) above shall be repeated annually until the earlier of the following: 1. The regulated entity has refunded the entire deposit to the applicant; or2. Ten years have passed since the customer began receiving service.(f) If, during the 10-year period after a single residential customer begins receiving service, additional customers connect to the extension and the regulated entity still holds a portion of the deposit from the original applicant, the regulated entity shall increase the refunds to the original applicant to reflect the distribution revenue from the additional customers. For a water main extension, this additional distribution revenue shall include amounts paid by a municipality for fire protection during the year. For each of these additional customers, the regulated entity shall: 1. Estimate the actual cost of the extension required to bring service to the customer from the nearest existing infrastructure;2. Estimate the annual distribution revenue that will be derived from the customer, and multiply it by 10 for gas, electric, and telecommunications regulated entities and 2.5 for water and wastewater regulated entities to obtain the estimated distribution revenue over the applicable multi-year period;3. Subtract the estimated cost of the extension determined under (f)1 above from the applicable multi-year period distribution revenue determined under (f)2 above;4. Refund the amount determined in (f)3 above to the original applicant when the customer begins receiving service if the amount determined in (f)3 above is a positive number. This "startup" refund shall be in addition to the annual refunds described in this section; and5. Provide additional refunds to the original applicant if the actual annual distribution revenue from these additional customers exceeds the estimated annual distribution revenue from these customers. These additional refunds shall be made using the methodology described in (c) above.(g) See Example B below for an illustration of the use of the suggested formula for a single residential customer: EXAMPLE B
Suggested formula applied to an extension to provide gas, electric, water and wastewater, or telecommunications service to a single residential customer
| When? | Action | Amount for Gas, Electric, and Telecommun-nications | Amount for Water and Wastewater |
| Before construction | Applicant gives deposit, determined as follows, to regulated entity: 1. Estimate total cost of extension ($ 7,500.00); 2. Estimate annual distribution revenue ($ 500.00); 3. Multiply annual distribution revenue by 10 for gas, electric, and telecommunications ($ 5,000.00); and 2.5 for water and wastewater ($ 1250.00); 4. Subtract item 3 from item 1 to determine deposit. | $ 2,500.00 | $ 6,250.00 |
| One year after Customer comes online | If first year distribution revenue is less than estimated annual distribution revenue ($ 500.00), no refund. If first year distribution revenue ($ 525.00) is more than estimated annual distribution revenue ($ 500.00), regulated entity gives first refund to applicant. Refund is determined as follows: 1. Subtract estimated annual distribution revenue ($ 500.00) from first year distribution revenue ($ 525.00); and 2. Multiply item 1 ($ 25.00) by 10 for gas, electric, and telecommunications ($ 250.00), and 2.5 for water and wastewater ($ 62.50). | $ 250.00 | $ 62.50 |
| Amount of deposit remaining with regulated entity after first refund | $ 2,250.00 | $ 6,187.50 |
| Two years after customer comes online | If second year distribution revenue is less than first year revenue ($ 525.00), no refund. If second year distribution revenue ($ 575.00) is more than the greater of either the first year distribution revenue ($ 525.00), or the estimated annual distribution revenue used as the basis for the initial deposit computation ($ 500.00) regulated entity gives second refund to applicant. Refund is determined as follows: 1. Subtract the greater of either the first year distribution revenue ($ 525.00) or the estimated annual distribution revenue used as the basis for the initial deposit computation ($ 500.00) from second year distribution revenue ($ 575.00); and 2. Multiply item 1 ($ 50.00) by 10 for gas, electric, and telecommunications ($ 500.00), and 2.5 for water and wastewater ($ 125.00) | $ 500.00 |
| Amount of deposit remaining with regulated entity after second refund | $ 1,750.00 | $ 6,062.50 |
Continue with this process each year, until 10 years has passed or the deposit is completely refunded, whichever comes first.
N.J. Admin. Code § 14:3-8.11
Amended by 47 N.J.R. 3133(c), effective 12/21/2015Amended by 54 N.J.R. 1612(a), effective 8/15/2022