Sec. 16-262w. Water company rate adjustment mechanisms.
Sec. 16-262w. Water company rate adjustment mechanisms. (a) The Department of Public Utility Control may authorize a water company to use a rate adjustment
mechanism, such as a water infrastructure and conservation adjustment (WICA), for
eligible projects completed and in service for the benefit of the customers. A water
company may only charge customers such an adjustment to the extent allowed by the
department based on a water company's infrastructure assessment report, as approved
by the department and upon semiannual filings by the company which reflect plant
additions consistent with such report. The department, in consultation with the Office
of Consumer Counsel, shall conduct the proceeding in accordance with the provisions
of section 16-18a.
(b) On or before ninety days after June 19, 2007, the department shall initiate a
generic docket on what shall be included in a water company's infrastructure assessment
report and annual reconciliation reports and the criteria for determining priority of eligible projects. The department shall provide public notice with a deadline for interested
parties to submit recommendations on the report contents and criteria. The department
may hold a hearing on the generic docket but shall issue a decision on the docket not
later than one hundred eighty days after the deadline for interested parties to submit
their recommendations on the report contents and criteria.
(c) The water company shall file their individual infrastructure assessment report
with the department and such report shall identify the water system infrastructure needs
and a water company's criteria for determining priority for eligible projects related to
infrastructure. The department shall address such criteria in its docket initiated pursuant
to subsection (b) of this section. Criteria may include, but shall not be limited to, (1)
age, material or condition of the facilities; (2) extent and frequency of main breaks or
interruption of service; (3) adequacy of pressure; (4) head loss; (5) availability of fire
flows; and (6) the potential of such projects to improve system integrity and reliability.
(d) The department shall approve a water company's individual infrastructure assessment report upon determining that the company has demonstrated through generally
accepted engineering practices (1) the infrastructure projects considered for renewal or
replacement are eligible projects; (2) such projects will benefit customers by improving
water quality, system integrity or service reliability; (3) they adhere to the criteria established for determining priority for infrastructure projects; and (4) there is a sufficient
level of investment in infrastructure. The department may hold a hearing to solicit input
on a water company's individual infrastructure assessment report provided a decision
on the assessment is made not later than one hundred eighty days after filing. Any such
report not approved, rejected or modified by the department within such one-hundred-eighty-day period shall be deemed to have been approved.
(e) Notwithstanding the provisions of section 16-19, upon department approval of
a water company's individual infrastructure assessment report, the water company may
charge the WICA for eligible projects in addition to such water company's existing rate
schedule pursuant to subsection (f) of this section and the procedures and customer
notification requirements in subsections (g) and (h) of this section.
(f) The WICA adjustment shall be calculated as a percentage, based on the original
cost of completed eligible projects multiplied by the applicable rate of return, plus associated depreciation and property tax expenses related to eligible projects and any reconciliation adjustment calculated pursuant to subsection (j) of this section as a percentage of
the retail water revenues approved in its most recent rate filing for the regulated activities
of said water company.
(g) A water company may impose the WICA adjustment for eligible projects as a
charge or credit on customers' bills at intervals of not less than six months, commencing
on either January first, April first, July first or October first in any year. No proposed
WICA charge or credit shall become effective until the Department of Public Utility
Control has approved such charges or credits pursuant to an administrative proceeding.
The department may receive and consider comments of interested persons and members
of the public at such a proceeding, which shall not be considered a contested case for
purposes of title 4, this section or any regulation adopted thereunder. Such administrative
proceeding shall be completed not later than thirty days after the filing of an application
by a water company or within a time period as otherwise established in the generic
docket conducted pursuant to subsection (b) of this section. Any approval or denial of
the department pursuant to this subsection shall not be deemed an order, authorization
or decision of the department for purposes of section 16-35. Notwithstanding the provisions of this section, if the department has not rendered an approval or denial concerning
any such application within the established timeframe, the proposed charges or credits
shall become effective at the option of the company pending the department's finding
with respect to such charges, provided the company will refund its customers any such
amounts collected from them in excess of the charges approved by the department in
its finding.
(h) Water companies shall notify customers through a bill insert or other direct
communications when the adjustment is first applied and the WICA charge or credit
shall appear as a separate item on customers' bills.
(i) The amount of the WICA applied between general rate case filings shall not
exceed seven and one-half per cent of the water company's annual retail water revenues
approved in its most recent rate filing, and shall not exceed five per cent of such revenues
for any twelve-month period. The amount of the adjustment shall be reset to zero as of
the effective date of new base rates approved pursuant to section 16-19 and shall be
reset to zero if the company exceeds the allowable rate of return by more than one
hundred basis points for any calendar year.
(j) On or before February twenty-eighth of each year, a water company shall submit
to the department an annual reconciliation report for any WICA charges applied to
customers' rates through December thirty-first of the previous calendar year. Such reconciliation report shall identify those projects that have been completed, demonstrate
that the WICA charges are limited to eligible projects that are in service and used and
useful as of the end of the calendar year, and include any other information required as
a result of the generic docket conducted pursuant to subsection (b) of this section. The
company shall indicate in its report any significant changes in the extent of infrastructure
spending, the priorities for determining eligible projects or the criteria established in
the infrastructure assessment report. In addition, the reconciliation report shall compare
the WICA revenues actually collected to the allowed amount of the adjustment. If upon
completion of the review of the annual reconciliation report the department determines
that a water company overcollected or undercollected the WICA adjustment, the difference between the revenue and costs for eligible projects will be recovered or refunded,
as appropriate, as a reconciliation adjustment over a one-year period commencing on
April first. The company shall refund the customers with interest for any overcollection
but shall not be eligible for interest for any undercollection.
(P.A. 07-139, S. 2.)
History: P.A. 07-139 effective June 19, 2007.