Code of Maine Rules › 65 - DEPARTMENT OF PUBLIC UTILITIES COMMISSION › 407 - PUBLIC UTILITIES COMMISSION › Chapter 65 - WATER MAIN EXTENSION AND SERVICE LINE RULE › Section 407-65-3 - EXTENSIONS TO SERVE INDIVIDUALS

Current through 2024-29, July 17, 2024
A.
Cost
				Estimate
, Advances and Deposits. Upon request of a potential customer or
				customers for a main extension, the utility shall prepare, without charge, a
				preliminary sketch, general specifications such as size and type of pipe, an
				estimate of the cost of the proposed water main extension and separate
				estimates of the cost of service lines to serve the customers requesting the
				main extension. If a water utility provides public fire protection the estimate
				and final cost for each foot of the extension shall include the average current
				per foot cost for the utility of providing hydrants. Averages shall be
				determined by dividing current installation costs by the spacing in feet
				between hydrants for areas of the same density and character.
The main extension estimate shall serve as a basis for
				  determination of any required customer contribution. The costs of the main
				  extension and the service lines shall be kept separate in order to allow
				  reallocation among customers of the cost of the main extension alone pursuant
				  to subsection D. For the purposes of these rules, actual costs 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 this Commission.
B.
Utility Requirement
. Unless a
				non-investor owned utility has chosen to make no investment in main extensions
				pursuant to 35 M.R.S.A. § 72-A(1), the utility shall invest in the
				extension of its water mains the investment amount multiplied by the number of
				customers served by the main extension. Each time a permanent customer is
				connected to the line extension during the 10 years following connection of the
				first customer, the utility shall invest an additional investment amount,
				except that it shall not invest in more than one-half of the original cost of
				construction. The investment amount shall be the amount calculated as of the
				time the first customer was connected.
C.
Customer Contribution to Maine
				Extension and Other Requirements; Cost of Service lines; Advances and Deposits;
				Contracts
. Applicants either for a new water main extension, or for
				service from an existing water main extension, during the period of 10 years
				following connection of the first customer (on extensions to which the first
				customer was connected after May 7, 1986), shall, subject section 2(G), be
				responsible for customer contributions of all costs of construction of the main
				extension including the fire protection allocation, less the amount which the
				utility must invest. All applicants for service from a main, whenever
				constructed, shall be responsible for the cost of both portions of the service
				line that will serve each customer. Applicants for either a main extension or
				the utility's portion of the service line from an investor-owned utility shall
				also be responsible for the net federal and state income tax liability
				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 allocated pursuant to section 3(D)
				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 depreciable 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 pre-tax weighted cost of equity as determined in
				the investment factor formula; (5) deducting the total amount established by
				step 4 from the amount of the contribution 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 applicant(s) shall be required to advance the customer
				  contribution, if applicable, and the cost of the service drop to the utility no
				  more than two weeks prior to the start of construction, of a utility no more
				  than two weeks prior to the start of construction, of a new main or connection
				  to an existing main extension or main. The utility may require a deposit of the
				  cost of materials and supplies and detailed engineering design, or some portion
				  thereof, two months prior to the commencement of construction of a main
				  extension. 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. Within 60 days following
				  receipt by the utility of the final bills for the extension, adjustment shall
				  be made for any differences between the estimates and actual costs of the
				  extension and service line or lines.
No construction of a main extension or service drop shall be
				  commenced until the utility and the customer 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.
When new customers are added to an extension, customer
				  contributions to the line extension for existing and new customers shall be
				  recalculated as provided in Paragraph D.
D.
Distribution of additional
				Investment Amounts and Reallocation of Customer Contributions
. When
				additional customers are connected to an extension within the ten years
				following connection of the first customer, the utility shall make payments
				without interest to the existing customers of (1) the additional amount, if
				any, which the utility must invest in the main extension; and (2) the
				additional customer contribution to the main extension. The amounts to be paid
				to customers shall be determined by recomputation of the contribution by each
				customer (after deduction of the new total utility investment amount) pursuant
				to section 1(B) or 1(C), as applicable, as if all customers had been connected
				simultaneously. If the utility has ceased investing because it has invested an
				amount equal to one-half of the original cost of the extension, customer
				contributions and reallocations among customers shall nevertheless continue
				until the expiration of the 10-year period.
E.
Further Extension to Serve New
				Customer
. All further extensions to serve other customers shall be
				separate and customers served by further extensions shall not be required to
				contribute to any prior extension.