New Jersey Administrative Code
Title 14 - PUBLIC UTILITIES
Chapter 9 - WATER AND WASTEWATER
Subchapter 10 - DISTRIBUTION SYSTEM IMPROVEMENT CHARGE
Section 14:9-10.2 - Definitions

For the purposes of this subchapter, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise. Additional definitions that apply to this subchapter can be found at N.J.A.C. 14:3-1.1.

"Adjusted weighted average cost of capital" does not include short-term debt, so long as the water utility does not have short-term debt in its approved capital structure. The equity component of the pre-tax adjusted weighted average cost of capital will be the equity rate approved by the Board in the water utility's most recent base rate case; however, the approved embedded cost of debt will be adjusted semi-annually, to reflect the actual embedded cost of debt at the end of the DSIC recovery period, never to exceed the actual embedded cost of debt approved in the last base rate case.

"Base spending" means the level of investment equal to the water utility's depreciation expense for utility plant accounts: 343 (Transmission & Distribution Mains), 345 (Services), and 348 (Hydrants), as reported in the water utility's most recent annual report to the Board, at the time the Foundational Filing is submitted. The investments eligible for inclusion in base spending are the same as set forth in N.J.A.C. 14:9-10.3(a) and dead end looping projects.

"Depreciation expense" on the DSIC assets means the amount of the total of all eligible investments multiplied by the weighted composite depreciation rate on those assets.

"Distribution System Improvement Charge" or "DSIC" means the charge developed in accordance with this subchapter. Once implemented, the DSIC continues in effect until new base rates become effective for the water utility, consistent with the requirements of this subchapter.

"DSIC cap" or "cap" means the maximum amount of annual DSIC revenues that a water utility can recover during the period the DSIC rate is in effect, through the assessment or surcharge computed in accordance with the requirements of this subchapter. The cap is established by calculating five percent of the water utility's total revenues as established in the most recent base rate decision. The outcome of that calculation establishes the maximum revenue requirement recovery level for which a water utility can seek recovery through the DSIC.

"DSIC-eligible projects" mean water distribution system projects and projected costs that:

1. Are limited to non-revenue producing water main replacement or rehabilitation projects, including structural and non-structural lining projects, valve replacements, hydrant replacements, and service line replacements, or water main relocations required by governmental entities;

2. Are included in the appropriate foundational filing or semi-annual filing made by the water utility with the Board, and approved by the Board, as set forth at 14:9-10.4, and/or the semi-annual DSIC reconciliation filing, as set forth in 14:9-10.5;

3. Are in excess of the water utility's base spending; and

4. The costs of which are not already being recovered through current base rates, as set by the water utility's most recently concluded base rate case proceeding.

"DSIC filing" means the filing made by a water utility for each DSIC recovery period as specified in 14:9-10.5. DSIC filings shall contain actual data for the DSIC recovery period and are expected to be made approximately semi-annually.

"DSIC period" means the period of time between the effective date of the Foundational Filing and the rate effective date of the next base rate case.

"DSIC rate" means the amount of the assessment added to customers' bills, calculated in accordance with the requirements of this subchapter, which will be assessed on the basis of meter charges. This rate is reviewed by the Board and reset to zero in a water utility's base rate case.

"DSIC recovery period" means each period during which DSIC-eligible projects are to be completed and put into service followed by a DSIC filing.

"DSIC revenue requirement recovery amount" means the total eligible amount to be recovered through the DSIC charge as calculated pursuant to N.J.A.C. 14:9-10.9.

"Eligible investment in DSIC projects" means the total of the applicable projects placed in service under this program, less the base spending requirement.

"In-service" means when a DSIC-eligible project has been replaced/rehabilitated and is functioning in its intended purpose. It is in use (that is, not under construction) and useful (that is, actively helping the utility provide efficient service).

"Pre-tax adjusted weighted average cost of capital" means the adjusted weighted average cost of capital calculated on a pre-income tax basis.

"Restoration costs" means costs necessary to restore construction to preconstruction condition or as dictated by State, Federal, or municipal laws, rules, ordinances, orders, or regulations, including, but not limited to, paving, sidewalks, curbing, landscaping, and traffic control costs for DSIC-eligible projects approved in a Foundational Filing.

"Revenue factor" means a gross-up for the associated revenue taxes, uncollectables, BPU assessment, and Division of Rate Counsel assessment, adjusted to properly reflect the revenue required to generate the agreed upon rate of return.

"Water utility" has the meaning assigned to this term in the Board's water and wastewater rules at 14:9-1.2.