SECTION 165:65-3-4. Extension of mains

(a)   General. A utility shall extend its distribution mains to serve the consumers within the corporate limits of a municipality served by the utility, or any recorded addition thereof, or within a reasonable distance from the utility's existing distribution system in accordance with the provisions of this Chapter.

(b)   Free extension. A utility shall extend its distribution system, as needed, up to one hundred feet (100') per residence without cost to the one requesting service. In arriving at the length of such main extension necessary to render service to the consumer, the distance shall be measured along lines of proper construction from the nearest distribution main with adequate capacity.

(c)   Extension above free limit-advance. If the extension necessary to furnish service is greater than allowed as a free extension under subsection (b) of this Section, a utility may require an advance of the cost of the main extension over the free limit. However, the utility shall not arbitrarily or with disparity impose the obligation of requiring an advance, but rather shall determine whether to require an advance and the amount thereof on a case-by-case basis. Whenever such advance is made, the utility shall be required to refund to the consumer who made the advance an amount equal to the cost of one hundred feet (100') of free extension for each additional consumer whose service line is connected to such main within a period of ten (10) years from the making of the extension. No refunds shall be made for consumers connected to future extensions tied into such an extension. This refund will cease after ten (10) years from the making of the extension but the total of all refunds shall not exceed the original advance. The advance shall not draw interest.

(d)   Extensions above free limit-revenue basis. The Commission may authorize a utility to make extensions above the free limit upon receipt of a lesser advance, or no advance, when the gross anticipated annual revenue from an extension will provide the utility with an adequate return on its investment pursuant to a formula or other method approved by the Commission. After such authorization, the utility shall make extensions when requested by the consumer pursuant to such approved formula or method.

(e)   Extension above free limit-special contract. In lieu of making an extension pursuant to subsections (c) or (d) of this Section, a utility may make an extension above the free limit with a lesser advance or no advance, when the utility has entered into an agreement whereby the one proposing to provide the advance guarantees a minimum annual revenue from the extension to the utility. Such an agreement shall be deemed a special contract governed by OAC 165:65-9-7.

(f)   Determining cost of extension. In determining the amount of advance, if any, which shall be made for an extension pursuant to this Section, the total construction cost of the extension shall first be determined in accordance with the approved system of accounts for water utilities and from such total construction cost there shall be deducted:

(1)   Costs incident to any increase in size of the main in excess of that required to adequately and satisfactorily provide service, costs incident to future expansion or to continue a construction plan of the utility, and costs necessary to correct inadequate capacity.

(2)   The total construction cost of that portion of the extension constituting a free extension, which includes meters, service regulators, stopcocks, and service connections.

(g)   Extensions applicable in prospective real estate subdivisions. In lieu of an extension pursuant to other provisions of this Section, a utility may require a developer desiring an extension to a prospective real estate subdivision to make an advance equal to the estimated cost of the extension before construction is started, and such advance shall not draw interest. At least annually for a period not to exceed ten (10) years, the utility shall refund to the developer a sum equivalent to the cost of the free extension under subsection (b) of this Section for each consumer connected to the extension during the calendar year. In no case will the total amount refunded exceed the amount advanced to the utility. Consumers locating on an extension made pursuant to this Section will not be required to make an advance for an extension.

(h)   Extension above free limit. If the extension above the free limit is of such length and the future anticipated revenues therefrom so small that it is doubtful that the extension would ever make a fair return on the investment, the utility or any interested person or entity may apply to the Commission for an appropriate order after notice and hearing.

(i)   Property of extension. Every extension shall at all times be the property of the utility regardless of whether an advance or contribution is made for its construction. Any unrefunded portion of an advance shall become the property of the utility.

(j)   Filing an extension policy. In lieu of the extension provisions described in subsections (b) through (i) of this Section, a water utility may file with the Commission an Extension of Facilities Policy governing reasonable extensions of facilities to consumers. This plan must be approved by the Commission.

(k)   Other extensions of facilities. A utility may implement a policy whereby consumers who request water service requiring the installation of new distribution mains may apply to the utility for service in compliance with Commission-approved tariffs, and may negotiate with the utility to perform some of the work necessary to install the new mains. If a mutually acceptable agreement is reached, the utility and the consumer shall enter a written agreement which conforms with the requirements provided in the utility'sCommission-approved tariff. The utility shall own any distribution main installed pursuant to this subsection, and shall be responsible for proper maintenance and operation of the line.

[Source: Amended at 16 Ok Reg 2380, eff 7-1-99]