N.J. Admin. Code § 14:9-10.8

Current through Register Vol. 56, No. 11, June 3, 2024

Section 14:9-10.8 - Rate limitation

(a) The water utility shall stop assessing a DSIC charge at the earlier of the following:

1. The Board finds, at any time, that a water utility is not in compliance with the DSIC as approved;

2. The water utility does not meet the requirements of the earnings test calculation pursuant to (b) below; or

3. Upon reaching the date upon which this chapter has expired, except that a water utility may continue to assess the DSIC charge for any DSIC investments included in an approved Foundational Filing and made prior to the date this chapter expires.

(b) To determine whether a water utility is earning on its DSIC investments within the amount approved by the Board, for the purposes of continued eligibility to use the DSIC program, the water utility shall report the following information to the Board:

1. On an annual basis, concurrent with the DSIC filing, the water utility shall submit an earnings description to the Board, in a format consistent with this subchapter;

2. The earnings description shall contain information from the water utility's official books and records and shall be consistent with the water utility's independently audited results of operations and its most recent annual report to the Board, and shall include 12 months of actual financial information; and

3. The earnings description, which shall include the following:

i. Rate base, revenues (including approved DSIC revenues not yet in base revenues), expenses, taxes, capital structure, weighted average cost of capital, approved net DSIC plant additions not yet in rate base, and other such relevant financial information as may be known to the water utility;

ii. Adjustments to the information supplied, pursuant to (b)3i above, to reflect to the extent practicable, its results of operations on a ratemaking basis and include annualization, normalization, and ratemaking adjustments that are consistent with current Board policy and practices; and

iii. An earnings test calculation, in which the water utility's earnings shall be subjected to an earnings test where the net operating income, including approved net DSIC revenues, is divided by the rate base, including approved net DSIC plant additions not yet in rate base.

(c) If the product of the calculation set forth in (b)3iii above exceeds the water utility's most recently approved overall rate of return, as set forth in the most recent base rate order for the water utility, the water utility shall stop assessing the DSIC for as long as the condition persists.

(d) A water utility may resume participation in the DSIC program, upon receiving Board approval, once it can demonstrate that the product of the calculation set forth in (b)3iii above no longer exceeds its last approved overall rate of return.

N.J. Admin. Code § 14:9-10.8

Amended and recodified from 14:9-10.7 by 49 N.J.R. 2542(a), effective 8/7/2017