Reserve/Escrow Accounts

(1) Definitions (a) Reserve/escrow accounts are funds that are maintained in a separate, dedicated bank account with uses limited to emergency expenditures, necessary capital projects, or other uses as permitted by the Commission. (b) Emergency expenses are those resulting from events that are infrequent and unusual in nature, and unrelated to the utility’s routine service or business activities. WASTEWATER REGULATIONS CHAPTER 1220-04-13 (c) Necessary capital projects are expenditures other than routine operations and maintenance expenses required to repair, replace, or upgrade long-lived wastewater property, plant and equipment and include, but are not limited to, repairing line breaks, major pump repairs, pump replacements, major vault repairs, vault replacements, major panel upgrades, panel replacements, and plant upgrades and replacements. (2) Reserve/escrow accounts established by a public wastewater utility shall be limited to paying for or reimbursing the utility for emergency expenses of the utility or for necessary capital projects, unless otherwise permitted by the Commission. (a) The Commission may require public wastewater utility employees having signature authority over such accounts to obtain a fidelity bond. (b) The public wastewater utility’s tariff shall set forth the specific amount charged to customers to fund the reserve/escrow account. Such escrow charges and changes thereto shall be approved by the Commission. (3) Procedures for accessing escrow/reserve account funds (a) Within thirty days of accessing escrow funds, a utility must file a written notice with the Commission detailing the situation that required the use of escrow funds, the amount and date of the withdrawal, and an accounting of how the funds were used, inclusive of supporting documentation such as invoices, bank statements, and account ledgers. The Commission or its designee will decide whether the circumstances and use of the funds qualify as an emergency expense or a necessary capital project. (b) If it is determined that the withdrawal of escrow funds was not due to an emergency expense or necessary capital project, it will notify the utility to either reimburse the escrow account for the amount of the withdrawal or file a petition with the Commission requesting to use the withdrawn funds for the specified purpose. If, within thirty days of the Commission’s notice, the utility fails to either reimburse the escrow account for the withdrawn funds or file a petition requesting approval to use the withdrawn funds, the Commission may order the utility to reimburse the escrow account with interest and may impose a civil penalty for the improper withdrawal. (c) Prior to withdrawing escrow funds, a utility may file a petition requesting to use escrow funds for a purpose other than emergency expenses or necessary capital projects, and upon approval by the Commission, the utility may access escrow funds for such purposes. (4) The TPUC may waive or modify requirements of this rule for good cause shown, including but not limited to affordability of rates, minimization of rate shock, or other operating characteristics of the utility.