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PUBLIC LAWS OF MAINE
Second Special Session of the 121st

CHAPTER 529
H.P. 1272 - L.D. 1750

An Act To Improve the Ability of Water Utilities To Maintain a Contingency Allowance

Be it enacted by the People of the State of Maine as follows:

     Sec. 1. 35-A MRSA §6105, sub-§4, ¶E, as corrected by RR 1991, c. 2, §131, is amended to read:

     Sec. 2. 35-A MRSA §6112, as renumbered by RR 1991, c. 1, §49, is amended to read:

§6112. Contingency allowance

     1. Annual contingency allowance. A consumer-owned water utility may provide for an annual contingency allowance by including in rates an amount up to 5% of the revenues required to operate the water utility. Each year any contingency allowance, which may not exceed 5% of the prior year's total revenue, must be credited to a contingency reserve fund. Other revenue may not be credited to the account. the amounts as follows:

     2. Contingency reserve fund maximum. The maximum amount that may be accumulated in a contingency reserve fund is as follows:

Any contingency allowance collected when the contingency reserve fund is at the maximum amount permitted must be credited to the unappropriated retained earnings account and treated in the same manner as any other surplus produced by a consumer-owned utility.

     3. Use of contingency reserve fund. The contingency reserve fund may be used only to pay for operating losses resulting from insufficient revenues to meet operating expenses and debt service costs, including, but not limited to, principal and interest repayment.

     3-A. Authorized uses; commission review. This section does not:

     4. Transition. Any contingency reserve fund accumulated and expended prior to January 1, 1991 may not be considered in determining whether a utility has reached its maximum amount under subsection 2.

     5. Commission review. If the commission determines that a water utility's contingency reserve fund has reached the maximum that may be accumulated under subsection 2 and that the utility is accumulating the consumer-owned water utility has accumulated in its unappropriated retained earnings account an amount that is inconsistent with just and reasonable rates, the commission may, pursuant to chapter 13, order the utility to reduce its rates to the appropriate level either in the form of temporary rate adjustments, credits or reduction in rates.

     6. Public hearing on excesses. If a consumer-owned water utility in each of 3 consecutive years collects through rates under subsection 1 an amount, in the case of a utility with up to $85,000 total annual revenues, greater than 10% of the utility's annual operating expenses or, in the case of a utility with greater than $85,000 total annual revenues, an amount equal to or greater than 7% of the utility's total annual operating expenses, the water utility shall:

     Sec. 3. 35-A MRSA §6113, sub-§1, as enacted by PL 1993, c. 30, §1, is amended to read:

     1. Water supply protection fund. A consumer-owned water utility may establish a water supply protection fund to which a sum may be credited annually from surplus funds. The annual credit may not exceed 5% of the prior year's total revenue. If the utility has established a contingency reserve fund pursuant to section 6112, the utility may not credit any amount to the water supply protection fund unless the contingency reserve fund has reached its maximum pursuant to section 6112, subsection 2.

Effective July 30, 2004, unless otherwise indicated.

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