New Jersey Administrative Code › Title 14 - PUBLIC UTILITIES › Chapter 9 - WATER AND WASTEWATER › Subchapter 11 - WASTEWATER SYSTEM IMPROVEMENT CHARGE › Section 14:9-11.9 - Calculating the WSIC rate

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The
				revenues to be recovered through the WSIC rate shall not exceed the WSIC cap,
				and shall be calculated as follows:
1. The
				eligible net investment reflects the eligible investment, less the per-book
				accumulated depreciation amount recorded for the specific projects, further
				adjusted for the recorded accumulated deferred income tax amount for the
				specific projects.
2. The eligible
				net investment shall be multiplied by the pre-tax adjusted weighted average
				cost of capital, plus depreciation expense, plus or minus any WSIC
				under-recovery or over-recovery, divided by the revenue factor, minus interest
				on any over-recovery, the sum of which shall be multiplied by the revenue
				factor, to arrive at the WSIC revenue requirement recovery amount. The
				calculation of amounts over-recovered or under-recovered should start with the
				WSIC rate effective date for the previous WSIC filing.
3. The WSIC revenue requirement recovery
				amount shall be divided by the number of meter equivalents, weighted by meter
				capacity ratio, to arrive at the WSIC rate by meter size or other
				Board-approved charges.
WSIC Formula (example numbers shown are for illustrative
				  purposes only)
Eligible Investment
(Qualified WSIC Additions to Utility Plant in Service
						  (UPIS) During WSIC Period)
$ 15,000,000 (A)
Less: Accumulated Depreciation
$ (93,750) (B)
Less: Deferred Tax
$ (19,688) (C)
(net WSIC Additions to UPIS During WSIC Period)
$ 14,886,562
Times Pre-Tax Rate of Return
x 11.1509% (D)
Pre-Tax Return on Investment
$ 1,659,986
Add Depreciation
$ 375,000
Revenue Recovery
$ 2,034,986
Revenue Factor
x 1.170858 (E)
WSIC Revenue Requirement
Recovery Amount
$ 2,382,680 (F)
(A) Includes six months actual WSIC-eligible projects
						  closed to UPIS during WSIC Period
(B) Accumulated Depreciation:
WSIC-eligible projects closed to UPIS
$15,000,000
Composite Depreciation rate
2.5%
Depreciation Expense
$ 375,000
½ Year Convention (for first 6 months)
$ 93,750
(C) Deferred Taxes:
WSIC-eligible projects closed to UPIS
$15,000,000
MACRS rate for 1st year *wastewater* plant
4%
Tax Depreciation 1st year
$ 150,000
Book Depreciation
$ 93,750
Tax Depreciation Greater than Book
$ 56,250
Deferred Taxes at 35%
$ 19,688
(D) Pre-Tax Rate of Return
Ratios
Cost Rate
Weighted AVG Cost of Capital
Pre-Tax Rate of Return
Long-Term Debt
48.98%
6.26%
3.07%
3.066%
Common Equity
51.02%
10.30%
5.26%
8.08%
Subtotal Rate on Rate Base
8.23%
11.1509%
Revenue Factor:
Dollar of Revenue
$ 1.00000
Less: GRT Tax
(0.1376004) (per most recent base rate case)
Less: Bad Debts and Reg. Assessments
(0.0066000) (per most recent base rate case)
Less: BPU Assessment
(0.0014328) (per most recent assessment)
Less: DRC Assessment
(0.0002926) (per most recent assessment)
Revenue Remaining after taxes, bad debts, and
						  assessments
$ .854074
(E) Revenue (Gross-up Factor)
$ 1.170858
(F) Revenue Requirement Recovery Amount
The WSIC Revenue Requirement Recovery Amount is limited by
				  the WSIC cap defined in (a)2 above. For example, if the company's annual
				  revenues established in its last base rate case were $ 100,000,000, then the
				  WSIC cap would be calculated as follows:
Total annual revenues from most recent base rate case of $
				  100,000,000 x 5.00% = $ 5,000,000
The Company's WSIC Revenue Requirement Recovery Amount in the
				  above example cannot be greater than $ 5,000,000 per year.