Agenda - 05-22-1989 - Laserfiche WebLink

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DOCKET NO. W-100, SUB 5 NOTICE TO WATER AND SEWER COMPANIES REGULATED BY THE NORTH CAROLINA UTILITIES COMMISSION INFORMATION ON THE WATER AND SEWER BOND REQUIREMENT The Commission has received many inquires concerning the implementation of the new bond requirement for water and sewer companies which was established by the General Assembly in 1987. This bond requirement is applicable to all applications for franchises filed with the Commission on and after October 1, 1987. At the time it approves a new-franchise, the Commission will require a bond in an amount not less than $10,000 nor more than $200,000. In response to inquiries received by the Commission, the following questions and answers have been developed for your information: 1) Q. What franchises and transfer of franchises will be subject to the bond requirement? A. The bond requirement applies only to applications for franchises filed on and after October 1, 1987. Once a franchise becomes subject to the bond requirement, the bond requirement will continue to attach to transfers of that franchise. If an application for a franchise was filed before October 1, 1987, no bond is required, and the franchise may be transferred without requirement of a bond. 2) Q. Pursuant to statute the Commission will require a bond in an amount not less than $10,000 nor more than $200,000. Will there be a specific rule of thumb used by the Commission in making its decision as to the bond amount required? A. The Public Staff has recommended that the following formula be used as a general guideline in determining the bond amount: B = ($200 x P) ($25 x E) Where B = bond amount P = proposed number of customers to be served in the newly applied-for service area E = existing number of customers already served in previously approved service area(s). For example, if the Applicant were applying for a new franchise to serve 60 new customers and already has certificated franchises serving 80 customers, the bond amount would be $10,000 calculated as follows: ($200 x 60) - ($25 x 80) = $10,000. Of course the use of this formula may be limited, since the bond amount must be not less than $10,000 nor more than $200,000. In recommending this formula, the Public Staff stated that, depending on each company's specific circumstances, it may recommend more or less than produced by the formula. In making the determination of the bond amount required, the Commission will examine all the evidence on a case-by-case basis and may then require the amount produced by use of the Public Staff formula or some other amount based on the specific circumstances of each case. 1