N.J. Admin. Code § 14:9-11.8

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

Section 14:9-11.8 - Rate limitation

(a) The wastewater utility shall stop assessing a WSIC charge at the earlier of the following:

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

2. The wastewater 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 wastewater utility may continue to assess the WSIC charge for any WSIC investments included in an approved Foundational Filing and made prior to the date this chapter expires.

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

1. On an annual basis, concurrent with the WSIC filing, the wastewater 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 wastewater utility's official books and records and shall be consistent with the wastewater 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.

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

i. Rate base, revenues (including approved WSIC revenues not yet in base revenues), expenses, taxes, capital structure, weighted average cost of capital, approved net WSIC plant additions not yet in rate base, and other such relevant financial information as may be known to the wastewater 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 wastewater utility's earnings shall be subjected to an earnings test where the net operating income, including approved net WSIC revenues, is divided by the rate base, including approved net WSIC plant additions not yet in rate base.

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

(d) A wastewater utility may resume participation in the WSIC 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 § 14:9-11.8

Adopted by 52 N.J.R. 2115(a), effective 12/7/2020