Exception (Repealed)

(a) The Division of Public Utility Control (DPUC) may allow construction work in progress (CWIP) to be included in rate base for facilities necessary to comply with the federal safe drinking water act (SDWA) and to permit affected water companies to implement a rate surcharge based on such CWIP, under the terms and conditions described below. CWIP that is included in rate base will be subject to the following conditions: (1) such surcharge will be implemented and revised on a calendar quarterly basis; (2) Only actual expenditures will be included on a quarterly basis; (3) The surcharge to be allowed will be based on 90% of the amount of construction expenditures as of the last date of the particular quarterly period, as confirmed on the project work orders; (4) The rate of return or equivalent computation used in computing the surcharge will be the same as that allowed in the last rate case computed on a simple interest base and not compounded and the surcharge will include a specific revenue adjustment to offset applicable state and federal taxes payable on the revenues collected pursuant to the surcharge; (5) Ten percent (10%) of said quarterly construction expenditures will be retained in "allowance for funds used during construction" (AFUDC) and the entire project will be reviewed for efficiency of construction at the time the facility is entered into service as being used and useful and any expenses resulting from inefficiency will be disallowed for regulatory purposes; (6) Charges arising from the inclusion of construction work in progress in rate base will be allocated across the board on a rate structure basis and will appear as a separate item on the customer’s bill until the facility is included in rate base; and (7) No application for the actual implementation of any such surcharge will be accepted, and no such surcharge will be permitted to be collected, until the primary project has been let, started and is progressing to the point of onsite contractor and crew set-up, and full construction has begun on major elements of the subject facility. (b) Any water company which is required to construct facilities necessary to enable that company to comply with the SDWA may apply to the DPUC for approval of a surcharge to customers based on the foregoing policy. The requirements set out in this section shall apply to proceedings and applications of water companies for an increase in rates based upon such a surcharge. (c) (1) The provisions of subsection (a) (7) notwithstanding, any water company may apply to the DPUC for an advance determination that the subject facility meets the DPUC general condition for inclusion in interest base for purposes of such a CWIP-based surcharge, namely that such facility is necessary to enable the company to comply with applicable SDWA provisions, the construction of such facility was precipitated by such SDWA provisions, and such facility constitutes the least costly means of compliance, and has been designed in accordance with efficient and adequate engineering standards. (2) Any water company applying for such an advance determination of facility qualification shall, no later than 60 days prior to the date such determination is required, submit to the DPUC the following: (a) A letter of approval of the project plans and drawings from the State Health Department stating that such project is necessary, by applicable reference, for compliance with the SDWA along with a time/expenditure projection for the entire project, and (b) Evidence that the SDWA precipitated the construction of the facility, and evidence preferably in the form of an engineering study that the company has selected the least costly solutions to meet the SDWA requirements and that efficient and adequate engineering standards have been applied to the design specifications. (3) The DPUC will make any such requested determination within sixty (60) days following the filing contemplated by subdivision (2) of this subsection provided, that if such a determination has not been made within said 60 day period, the affected facility shall be deemed to have met such general conditions for inclusion and to have so qualified for application of the CWIP surcharge. (d) Any water company applying for a CWIP-based surcharge shall submit to the DPUC the following: (1) if not previously submitted, the documentation and evidence listed in subsection (c) (2); (2) Details of the results of open bidding on the project and final bid prices and the basis for the selection of the contractor(s); (3) A complete description of the project, broken down by appropriate elements of work and cost, to permit demonstration of the percentage of completion as the work progresses, said description to be updated in each quarterly period when a revision in the amount of the surcharge is requested, with extra work, the basis thereof and associated costs also to be separately described for the applicable quarterly period; (4) A construction schedule for the entire project indicating appropriate construction phases and estimated start/completion dates for each phase, as available; (5) A summary of construction expenditures covering the applied for quarterly period as shown on the project work order(s), and broken down into corresponding job element(s) of the construction schedule; (6) A letter from the company’s independent accountant which states that the additions to the CWIP plant account for such facility during the affected quarterly period have been reviewed and found to be in accordance with the applicable uniform system of accounts; (7) The computation of the total amount of the surcharge showing 90% of the amount shown in subdivisions (5) and (6) above, the rate of return allowed in the applicant company’s most recent rate case, and the appropriate revenue adjustments for state and federal taxes; and (8) The schedule of charges arising from the inclusion of CWIP in the rate base as allocated across the board on a rate structure basis, including a full explanation of the basis for allocation between classes of customers, with any background work papers used. Subdivisions (1) and (2) need be filed only with the initial filing for a particular project. (e) Any water company initially applying for a CWIP-based surcharge shall submit to the DPUC all documentation and evidence required in subsection (d) no later than the 20th day of the month following the end of the applicable calendar quarter. The DPUC shall hold a public hearing with respect to such application within 30 days of the filing thereof and shall issue a decision on such application within 60 days of the filing of that application unless the DPUC shall have notified the company that the company has failed to comply with the implementation requirements contained herein or that the DPUC otherwise requires a modification of the proposed surcharge. (f) After initial implementation of a surcharge, any water company applying for a change in the CWIP-based surcharge with respect to any calendar quarter thereafter shall file with the DPUC on or before the 20th day of the month immediately following the end of said calendar quarter, all documentation and evidence described in subdivisions (3) through (8), inclusive, of subsection (d). The DPUC shall hold a consolidated public hearing with respect to all such quarterly applications on or about the 50th day after the end of each such quarter. The DPUC shall issue a decision on or before the 70th day after the end of such calendar quarter unless prior to such day the DPUC shall have notified the company that the company has failed to comply with the implementation requirements contained herein or that the DPUC otherwise requires a modification of the proposed surcharge. (g) To the extent not specifically required by the provisions of this section, the requirements of sections 16-1-16 through 16-1-59A of the regulations of Connecticut state agencies shall not be applicable to applications and proceedings pursuant to this section.