Sec.16-11-61. Plans for financing main extensions

Each utility shall file a plan acceptable to the commission providing for financing of extensions of mains. Such plan shall be based upon the following principles:

(1) Mains having a diameter of less than six inches shall not be installed without prior approval of the commission;

(2) when it is determined, in accordance with a predetermined formula on file with the commission, that the anticipated revenues are insufficient to cover all operating expenses and to support the investment, advance payments, contributions or guarantee rates in excess of the regular established rates shall be required.

(3) Costs to be borne by patrons or developers under extension contracts shall be calculated on mains of the size required to serve the customer but shall not be calculated on mains larger than eight inches in diameter unless unusual customer requirements warrant a larger size main. Extension contracts shall include the cost of all service connections, as defined in section 16-11-62 (3), constructed in connection with the installation of new mains by either class 1 or class 2 utilities.

(4) Estimated costs shall be adjusted to actual costs upon completion of the work, except that the use of average costs, excluding paving, may be used under the advance or contributory forms of agreement.

(5) All main extension applications shall be made in writing and a contract executed before start of construction.

(6) When the utility determines, in accordance with a predetermined formula on file with the commission, that the anticipated revenues are insufficient to cover all operating expenses and to support the investment, the following conditions shall apply:

(A) Individual patrons shall be offered a choice of the three following plans: "Guarantee," "Contributory" or "Refundable advance payment";

(B) developers having lots for building construction or the sale of homes shall be offered either the contributory or refundable advance payments plans;

(C) all contributions or advances required shall be paid before material is ordered. Material shall be ordered within a reasonable time after receipt of deposit;

(D) no interest shall be paid on advance deposits;

(E) the "Guarantee" plan shall state the amount of the annual guarantee and shall be apportioned equitably among patrons on the extension, and the time of payment shall be specifically set forth;

(F) the "Refundable advance payment" plan shall provide for and state the amount to be refunded for each additional patron taking service from the extension and shall have a termination date. The time of payment shall be specifically set forth;

(G) the "Contributory plan" shall provide for the payment by the developer of the entire cost of the extension less the then present value of the anticipated payments, as determined by the utility, which, under a refundable advance payment plan, would become refundable to the developer;

(H) if a party other than the original patron seeks service from an extension which was constructed under a refundable advance payment contract, such party shall be required to advance an amount to the company representing his equitable share of the cost of the extension, and appropriate refund shall be made to the original patrons;

(I) if an additional party obtains service along an extension serving patrons under guarantee rates, appropriate adjustment shall be made in such guarantee rates.

(7) If an extension contract requires additional facilities, such as standpipes and booster pumps, and such facilities are not necessary to benefit the system as a whole, the cost of such facilities may, with the approval of the commission, be included in the water main extension contract. If facilities larger than required are installed to serve an extension, the company shall pay the excess cost.

(8) If a utility determines, with the Department's approval, that constructing and operating a water system not connected to the utility's existing system is more feasible than extending the utility's existing mains, the utility shall build such a non-connected water system in accordance with (7) above, and account for such construction in accordance with the Uniform System of Accounts. Any such non-connected water system shall be designed to accommodate adjacent growth of at least 10% over the non-connected supply's normal design demand. Any such non-connected water supply shall be constructed in conformance with section 16-11-79 of these regulations. Installing a non-connected water system in lieu of extending a utility's existing mains shall be considered feasible if conditions including, but not limited to, the following prevail: in a development with at least fifteen dwelling units or twenty-five persons, the investment for an extension exceeds $5000 per dwelling unit or person; viable groundwater sources are present; and adequate fire protection may be provided.

(Effective May 27, 1986)