Each public utility shall file with the Commission, as part of its tariff, a rule setting forth the conditions under which facilities will be extended to supply service to an applicant within its service area. Upon request by a bona fide service applicant, a utility shall construct line extensions within its franchised territory consistent with the following directives:

1. (1) Line extensions to bona fide service applicants shall be funded without customer advance if the annual revenue from the line extension will equal or exceed the utility’s annual line extension costs.
2. (2) If the annual revenue from the line extension will not equal or exceed the utility’s annual line extension costs, a bona fide service applicant may be required to provide a customer advance to the utility’s cost of construction for the line extension. The utility’s investment for the line extension shall be the portion of the total construction costs which generate annual line extension costs equal to annual revenue from the line extension. The customer advance amount shall be determined by subtracting the utility’s investment for the line extension from the total construction costs.

3. (3) The utility’s investment for the line extension shall be based on the following formula, where X equals the utility’s investment attributed to each bona fide applicant:

   X	= [AR - OM] divided by [I + D] ; and,
   AR	= the utility’s annual revenue
   OM	= the utility’s operating and maintenance costs
   I	= the utility’s current debt ratio multiplied by the utility’s weighted long-term debt cost rate
   D	= the utility’s current depreciation accrual rate

Authority

The provisions of this § 65.21 issued under the Public Utility Code, 66 Pa.C.S. § § 501, 504—506, 1301 and 1501.

Source

The provisions of this § 65.21 adopted February 14, 1997, effective February 18, 1997, 27 Pa.B. 799.

Notes of Decisions

Line Extensions

The Public Utility Commission’s line extension regulations authorizing a utility to require contributions from bona fide service applicants if the cost of the extension project to the utility would exceed the expected return on the extension is wholly consistent with the plain language of its regulations. Popowsky v. Pennsylvania Public Utility Commission, 910 A.2d 38, 53 (Pa. 2006).

The line extension regulations do not conflict with 66 Pa.C.S. § 501 (relating to character of service and facilities). Popowsky v. Pennsylvania Public Utility Commission, 853 A.2d 1097, 1110 (Pa. Cmwlth. 2004); appeal granted 868 A.2d 454 (Pa. 2005); affirmed 912 A.2d 38 (Pa. 2006).

Agency Not Bound by Court Interpretation of Statutory Provision

In promulgating a regulation to implement a statutory provision, an agency is not bound by a prior court decision interpreting that statutory provision. A regulation must be followed even if prior case law supports a narrower interpretation. Popowsky v. Pennsylvania Public Utility Commission, 853 A.2d 1097, 1106 (Pa. Cmwlth. 2004).

Requester of Utility Extension to Bear Cost

A utility can lawfully require the party requesting an extension of utility facilities to bear the cost thereof, if that party is not a ‘‘bona fide service applicant,’’ if the request entails ‘‘special utility service,’’ or if the facility extension would be ‘‘uneconomic or unreasonable absent an appropriate customer contribution.’’ Shenago Township Board of Supervisors v. Pennsylvania Public Utility Commission, 686 A.2d 910 (Pa. Cmwlth. 1996).