Reserve funds
Last updated on June 6, 2024From time to time the Comptroller of Water Rights orders the establishment of trust funds for specific purposes for private water utilities.
No distributions may be made from trust funds without authority of the Comptroller, except for interest earned on Maintenance Reserve Trust Funds and Revenue Deficit Trust Funds. Types of trust funds are described below.
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Replacement reserve
The Replacement Reserve Fund provides funds collected from customers to pay for replacement of water system components when required. Interest earned is retained in the fund. Funds may only be released by authority of the Comptroller, upon receipt of evidence of replacement.
Construction reserve
Construction Trust Funds are generally provided by land developers as a source of capital for a known, specific project. Authorized releases may be made upon evidence of project progress and completion.
Revenue deficit reserve
Revenue Deficit Reserve Funds (RDRF) are provided as an assured source of income by land developers to assist the utility in meeting operating costs. RDRFs are provided to small utilities and where water revenues are low due to a high proportion of unconnected lots. The utility may use the interest to assist in meeting operating costs, including replacement provision.
Deferred capacity reserve
The Deferred Capacity Reserve Fund accumulates one-time charges for applicants for service from outside the boundaries of the utility or from subdivision of existing lots. The amount provided in the tariff and accumulated interest is available to pay for future expansion of water system's capacity.
Other
Any other reserve funds established by the Comptroller will have full details provided within the formal order.
A schedule to the financial statements must be completed each year, detailing reserve fund transactions. Further information relative to any reserve fund may be obtained by reference to the formal order of the Comptroller establishing the fund.