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D. Extensions Designed to Include Fire Protection 1. The cost of distribution mains designed to meet the fire flow requirements set forth in Section VIII.1(a) of General Order No. 103 is to be advanced by the applicant. The utility shall refund this advance as provided in Sections B.2. and C.2. of this rule. 2. Should distribution maims be designed to meet fire flow requirements in excess of those set forth in Section VII1.1(a) of General Order No. 103, the increase in cost of the distribution mains necessary to meet such higher fire flow requirements shall be paid to the utility as a contribution in aid of construction. 3. The cost of facilities other than hydrants and distribution mains required to provide supply, pressure, or storage primarily for fire protection purposes, or portions of such facilities allocated in proportion to the capacity designed for fire protection purposes, shall be paid to the utility as a contribution in aid of construction. E. Income Tax Component of Contributions and Advances Provision 1. Contributions in Aid of Construction and Advances for Construction shall include, but are not limited to, cash, services, facilities, labor, property, and income taxes thereon provided by a person or agency to the utility. The value of all contributions and advances shall be based on the utility's estimates. Contributions and advances shall consist of two components for the purpose of recording transactions as follows: a. In ane Tax Component (ITC), and b. The balance of the contribution or advance. 2. The ITC shall be calculated by multiplying the balance of the contribution by the tax factor of: Prior to January 1, 1992 25.4% After December 31, 1991 a. For Contribution 32.7% b. For Advance 33.1% 3. The tax factor is established by using Method 5 as set forth in Decision No. 87-09-026 in 1.86-11-019. 4. The formula to conpute Method 5 includes the following factors: Prior to After 1-1-92 12-31-91 a. Corporate tax rate of: 34.00% 34.00% b. Franchise tax rate of: 9.30% b. A discount rate of: 11.69% 11.25% C. A pretax rate of return of: 15.24% 15.42% 5. The ITC tax factor has been derived from the corporate rate and it will remain in effect until the utility's net taxable i n ane changes to the extent that the gross-up rate would increase or decrease by five percentage points or more. Wb en and if that occurs, the utility will file an advice letter showing the new rates and cancel out this sheet. 6. If a utility collects a gross-up calculated by using an incremental tax rate that is more than its actual incremental rate, the difference between what was collected and what should have been collected will be refunded to the contributor. 7.