Code of Maine Rules › 65 - DEPARTMENT OF PUBLIC UTILITIES COMMISSION › 407 - PUBLIC UTILITIES COMMISSION › Chapter 65 - WATER MAIN EXTENSION AND SERVICE LINE RULE › Section 407-65-4 - EXTENSIONS TO SERVE DEVELOPMENTS

Current through 2024-29, July 17, 2024
A.
Developer
				Requirements
. Upon request, an applicant for a main extension to serve a
				development shall furnish all reasonable information concerning the
				development, including an approved recorded plan which will show the line and
				grade of any roadways and an easement giving the utility prior rights in the
				public right-of-way. The utility shall prepare the cost estimate. If a water
				utility includes public fire protection the estimate and the final cost for
				each foot of the extension shall include the average current per foot cost of
				providing hydrants. Averages shall be determined by dividing current
				installation cost by the spacing in feet between hydrants for areas of the same
				density and character.
B.
Utility Investment
. Unless a non-investor owned utility has chosen
				to make no investment in water main extensions pursuant to 35 M.R.S.A.
				§72-A(1), during the period of 10 years following connection of the first
				customer, the utility shall make an investment in a water main extension in the
				form of a payment to the developer each time a permanent customer is connected
				to the extension. The amount of the investment per customer shall be determined
				pursuant to section 1(F) at the time the first customer was connected shall
				remain unchanged over the 10 year period. The total amount of investment shall
				equal the investment amount multiplied by the number of additional customers
				served by the main extension, but shall not exceed one-half of the original
				cost of the extension. Additional service drops constructed at any time after
				the construction of the main extension shall be paid for in advance of
				construction by the developer or customer to be served.
C.
Developer Contribution; Cost of
				Service Lines; Advances and Deposits; Contracts
. The developer shall
				advance to the utility, no more than two weeks prior to the commencement of
				construction, the total estimated cost of the line extension including the fire
				protection allocation and, subject to section 2(G), and the total estimated
				cost of service drops to all lots or locations where future service may
				reasonably be anticipated. Developers shall also be responsible for the net
				federal and state income tax liability of an investor-owned utility resulting
				from the contribution in aid of construction. The total amount which the
				applicant must pay shall be determined by (1) determining the amount of
				contribution before taxes (construction cost minus investment amount); (2)
				determining the amount of depreciation for tax purposes for each year over the
				tax depreciable life of the asset; (3) determining the amount of tax reduction
				resulting from tax depreciation over each year of the tax depreciation life of
				the asset, using the utility's expected marginal federal and state tax rates;
				(4) determining the present value of the amounts established by step 3, using
				as a discount rate the weighted cost of debt plus the weighted pre-tax cost of
				equity as determined in the investment amount formula; (5) deducting the total
				amount established by step 4 from the amount of the contributions established
				by step 1; (6) grossing up the amount established by step 5 for federal and
				state taxes pursuant to the following formula:
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Where
TC = Total contribution including taxes
C = Contribution after deduction of present value of tax
				  reductions resulting from tax depreciation (step 5)
FIT = Federal Income Tax marginal rate
SIT = State Income Tax marginal rate
The utility may require a deposit of the cost of materials
				  and supplies or detailed engineering design, or some portion thereof, two
				  months prior to the commencement of construction. Any portion of the deposit
				  actually spent for detailed engineering design or for materials and supplies
				  which cannot readily be used for other projects by the utility shall not be
				  refundable.
No construction of a main extension or service drop shall be
				  commenced until the utility and the developer have executed a written contract.
				  The contract shall incorporate this rule by reference, shall state that in the
				  case of a conflict between the contract and the rule, the rule shall govern,
				  and shall state that the provisions of the contract are subject to alteration
				  by Public Utilities Commission decision or rule.
Within 60 days following receipt by the utility of the final
				  bills for the extension, the charge to the developer shall be adjusted to make
				  up for any difference between the estimated and actual costs of the lines. For
				  the purposes of these rules, actual cost shall be reasonable and shall not
				  exceed costs recorded in conformity with accepted water utility accounting
				  practice as defined in the Uniform System of Accounts for Water Utilities
				  prescribed by the Commission.
D.
Customer Contributions by Customers
				Outside Development
. If a main extension must cross property other than
				that within the development prior to reaching the development, and customers
				located on the property outside the development are connected to the main
				extension within ten years following connection of the first customer at any
				location on contribution. The total cost of the main extension shall be
				allocated between the development and the area outside the development on the
				basis of the number of feet within the development and the number of feet
				outside the development. After determining the total cost of the portion of the
				main extension outside the development on the basis of this allocation,
				customers outside the development should be required to make a contribution,
				less an investment amount per customer if applicable, as provided pursuant to
				section 1(B) or 1(C). For the purpose of determining the contribution or
				reallocating contributions when subsequent customers outside the development
				are connected, the developer shall be considered the equivalent of the number
				of customers within the development or the number of services constructed
				pursuant to subsection C of this section, whichever is greater, as if all those
				customers or services were located at the termination of the portion of the
				extension located outside the development. If a development is master-metered,
				the number of customers within the development, for purposes of this
				subsection, shall be considered as the number of residential, commercial or
				industrial units or establishments.