Section 407-65-5 - INVESTMENT REDUCED OR NOT REQUIRED FOR HIGHCOST UTILITY; INCREASED FOR LOW-COST UTILITYA.High-Cost Utility; Election by Utility. A water utility may, with the approval of the Commission, be exempted from investing in a water main extension or may invest less than the amount otherwise required by Sections 3 or 4 if it is a high-cost utility, as defined in this subsection. A utility has high costs if the additional annual investment and operating revenue required to serve additional customers exceeds the amount of revenue which those customers will supply. If a utility has received approval to eliminate or reduce its investments pursuant to this section, individuals or developers requesting the construction of a water main extension, or service from an existing water main extension during the 10 years following connection of the first customer shall be responsible for the entire construction cost of the water main extension or all amounts in excess of any reduced investment amount through developer or customer contributions. The original customer contribution(s) and recalculation of customer contributions when additional customers are connected shall be in accordance with section 1(B) or 1(C), as applicable, but only the required investment amount shall be deducted.B.Low-Cost Utility; Election by Utility. If a water utility is a low-cost utility as defined in this subsection, it may choose to invest in the utility's portion of service lines, whether from a main extension or not; and, with the approval of the Commission, it may invest a greater amount in main extensions than the amount set by section 1(F). A water utility has low costs if additional revenue which new customers provide exceeds the additional annual investment and operating costs to serve those customers. A utility is presumed to meet this test if it has excess capacity in the commonly used facilities of the water system, including reservoirs, standpipes, treatment systems, pumping facilities and transmission mains and low customer growth.C.Prima Facie Evidence of High-Cost Utility. There shall be a presumption that a utility is a high-growth utility if it has undertaken reasonable conservation and load-management efforts and:1. It has experienced:(a) an increase in service installations in excess of an average of 1.5% compounded for the previous three years (4.57% for the three-year period); and(b) Because of that growth in service installations, it is necessary to undertake a construction program of commonly used facilities of the water system, including reservoirs, standpipes, treatment systems, pumping facilities and transmission mains; and the program requires additional investment-related revenue of 15% or more. The percentage of investment-related revenue shall be determined pursuant to the first fraction of the investment factor formula state in section 1(F), i.e., (D + A + I)/(R + T).D.Definition of Service Installation and Equivalent Service. For purposes of subsection C(1) and (2) of this section, each residential dwelling, including apartment units, shall be considered one service installation unit; each motel or hotel unit shall be considered a half unit. The number of equivalent units for all other commercial and industrial service connections shall be based on the equivalent cross-section area of the service as follows: | Size of Service | Equivalent number of units |
| 3/4" | 1.0 |
| 1" | 1.8 |
| 1 1/14" | 2.8 |
| 1 1/2" | 4.0 |
| 2" | 7.1 |
| 3" | 16.0 |
| 4" | 28.4 |
| 6" | 64.0 |
| 8" | 113.8 |
| 10" | 177.8 |
| 12" | 256.0 |
| 16" | 455.1 |
E.Continued Investment Requirement for Utility with System Development Charge. If a utility is permitted to impose a system development charge for the purpose of financing future capacity in commonly-used facilities required as a result of customer growth, the utility shall not be permitted to eliminate or reduce its investment in a water main extension pursuant to this section.65- 407 C.M.R. ch. 65, § 5