Distribution System Improvement Charge (DSIC)
The Problem
Much of New Jersey’s drinking and wastewater infrastructure is rapidly
approaching the end of its useful life. With a significant percentage
of New Jersey’s drinking water infrastructure having been installed
between 1880 and 1960, most of it has or soon will have reached its
reasonably expected life span.
The problem is real and accelerating, but
it is also masked because
much of the infrastructure is underground and out of sight.
The inevitable impacts of not starting to address this problem
now could be an unreliable supply of safe drinking water; increased
service
interruptions; more frequent and costly emergency repairs that
will cost up to 10 times more to fix than planned replacements
and rehabilitation;
insufficient water flow and pressure; and lack of sufficient water
infrastructure to support local and state economic growth. The
BPU has proposed a new mechanism to address these problems which,
without
this proactive regulatory action, can become a crisis.
The Solution
The National Association of Water Companies, NJ Chapter, a trade
organization representing private water companies serving a population
of nearly 4.5 million in 321 towns, supports the establishment
of the proposed distribution system improvement charge (DSIC) program
to provide
a mechanism that will allow accelerated investment to replace and
rehabilitate NJ’s drinking water infrastructure. DSIC is a proven regulatory
tool that allows for modest rate increases for non-revenue producing
investments, like rehabilitating and replacing aging infrastructure,
while maintaining NJ Board of Public Utilities (BPU) regulatory oversight.
The program would only cover projects for the BPU-regulated, privately
owned systems since the publicly owned facilities generally do not fall
within BPU ’s rate-setting jurisdiction.
Program Highlights
The program is similar to water infrastructure investment programs
in 10 other states:
- Well-defined, with built in rate caps; designed to complement the existing BPU regulatory process
- Covers the cost of ongoing improvements through planned rehabilitation and replacements
- Improves public safety through better water quality and fire protection
- Minimizes the impact of future rate increases
- Enhances conservation efforts by reducing leaks and increasing efficiency
- Secures and creates jobs and supports local economic growth.
BPU Oversight
Only BPU eligible projects would receive funding through the program.
Types of asset investments proposed to be allowed under the program:
- Water main replacement and rehabilitation
- Water main cleaning and lining
- Valve and hydrant replacement
- Service line replacement from water main to customer service line
- Unreimbursed improvements due to highway relocations.
For more information
contact the DSIC Communications Coordinator
at 609-392-1000.
The NJ-WIN background paper can provide you with more information.
