rvi t Virgi~ia December 20,201 8

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1 li f rvi t Virgi~ia 201 Brooks Street, P.O. Box 812 Charleston, West Virginia Phone: (304) Fax: (304) December 20,201 8 Electronic Service Only W. Michael Frazier, Esq. Counsel, WV Cleaners, Inc. Frazier & Oxley LC PO Box 2808 Huntington, WV Robert R. Rodecker, Esq. John R. McGhee, Esq. Counsel, Huntington Sanitary Board Kay Casto & Chaney PLLC PO Box 2031 Charleston, WV RE: Case No S-C WV Cleaners, Inc., dba White Way City of Huntington Sanitary Board Gentlemen: The Staff Memorandum issued today was served via on the above-listed parties. Any responses must be submitted to the Executive Secretary s Office in writing within 10 days of this date, unless directed otherwise. You will not receive a copy of the Staff Memorandum by regular mail. Your failure to respond in writing to the utility s answer, Staffs recommendations, or other documents may result in a decision in your case based on your original filing and the other documents in the case file, without further hearing or notice. When you provide an address, you will automatically receive electronic docket notifications as documents are filed in this proceeding. The notifications allow recipients to view a document within an hour from the time the filing is processed. If you have not done so, you are encouraged to file the Electronic Mail Agreement, previously mailed to you, which allows the Cornmission to serve all orders issued in this matter via electronic docket notification. Please note - the Public Service Commission does not accept electronic filings. Sincerely, IF/tg Enc. - Memo Executive Secretary Division

2 FINAL JOINT STAFF MEMORANDUM TO: FROM: INGRID FERRELL Executive Secretary LUCAS R. HEAD Staff Attorney DATE: DECEMBER 20,2018 RE: CASE NO S-C VVV CLEANERS, INC., DBA WHITE WAY CITY OF HUNTINGTON SANITARY BOARD Legal Staff recommends that this matter be dismissed because the Complainant has failed to meet its burden of proof. The Complainant may want to consider one of the two alternatives, involving a sewer flow meter or development of a suitable formula in lieu of a sewer flow meter, that are described in detail by Engineering Staff in the attached memorandum On September 21,2018, W Cleaners, Inc., dba White Way (Complainant) filed a verified Formal Complaint with the Public Service Commission of West Virginia (Commission) against the City of Huntington Sanitary Board (Sanitary Board). The Complainant alleged that approximately 75% of the water it uses at its commercial cleaning business is converted to steam and not treated by the Sanitary Board. The Sanitary Board bases its charges on the metered measurement of water used by its customers. The Complainant does not want to be charged by the Sanitary Board for treatment of water that the Sanitary Board does not actually treat. As relief the Complainant requested that it be billed based on the amount of water actually entering the Sanitary Board s treatment system, and that the Sanitary Board be ordered to reimburse the Complainant for past improper charges. Staff received the Sanitary Board s Answer and Motion to Dismiss on October 1, The Complainant has two (2) accounts; one is billed based upon metered water service provided by West Virginia-American Water Company, and one is based upon metered water from the Complainant s well. The Sanitary Board is without knowledge to form a belief about the veracity of the Complainant s statement that 75% of the water it uses is converted to steam. The Sanitary Board stated that its rates are designed to produce revenues based upon the amount of water purchased by each customer. The Sanitary Board believes its rates are consistent with the Commission s Rules for the Government of Sewer Utilities (Sewer Rules) which provide for sewer service charges to be based upon the volume of water delivered to a customer s property. The Complainant previously requested an adjustment to its bill from the Sanitary Board based on the amount of water used by the complainant that was not subsequently treated by the

3 Case No S-C December 20,201 8 Page 2 Sanitary Board. The Sanitary Board denied the request based upon advice from its bond counsel that granting such an adjustment would be in violation of its bond covenants. Lastly, the Sanitary Board requested that the Commission not exercise its jurisdiction with respect to the Complainant s request for reimbursement of past improper charges due to a collection action the Sanitary Board filed against the Complainant in the Circuit Court of Cabell County. The collection action resulted in a settlement which the Sanitary Board stated bars the Complainant for requesting such relief from the Commission due to a mutual release of claims. A copy of the settlement was attached to the Sanitary Board s Answer. The Circuit Court has not dismissed the collection action for the purposes of enforcing the terms of the settlement. The Sanitary Board requested that the Commission dismiss this matter. On October 22, 2018, the Complainant responded to the Sanitary Board s Motion to Dismiss. The Complainant objects to dismissing this matter based on the Sanitary Board s assertion that s just the way we do things. The Complainant clarified that it is only asking for relief from its well usage. The Complainant agrees that the water purchased from West Virginia-American Water Company does enter the Sanitary Board s system. The majority of the water used by the Complainant s dry cleaning business is drawn from its well into a boiler system where most of it is converted to steam. The steam does not enter the Sanitary Board s system. The Complainant stated that it is in the process of metering what percentage of water goes into the boiler. It will supplement its filing with additional information once the results are available. The Complainant stated it appears that in excess of 75% of the water drawn from the well is converted to steam. The Complainant believes that the potential loss of revenue to the Sanitary Board should not be the standard in this matter. The Sanitary Board should be collecting revenue based upon services rendered. On October 26, 2018, Legal Staff filed an Initial Joint Staff Memorandum that included memoranda prepared by Dwayne K. Bevins, Utilities Analyst with the Commission s Utilities Division (Utilities Staff) and Mansour Mashayekhi, Technical Analyst Associate with the Commission s Engineering Division (Engineering Staff). Legal Staff agreed that additional information was needed before Staff could make a final recommendation. On November 5, 2018, the Complainant responded to the Initial Joint Staff Memorandum and provided additional information that was requested by Technical Staff. Attached are memoranda prepared by Mi-. Mashayekhi and Mr. Bevins. Engineering Staff was unable to make a quantitative recommendation regarding the Complainant s main allegation that 75% of the water it uses is converted to steam and does not enter the sewer system. The Complainant did not provide data in the form of a

4 Case No S-C December 20,201 8 Page 3 study or calculations to support its allegation. Engineering Staff indicated that there is a possibility that a substantial portion of the well water is not entering the sewer system, but accurate flow estimates have not been obtained. Engineering Staff recommended that pursuant to the Commission s Rules for the Government of Sewer Utilities (Sewer Rules) the Complainant consider either installing a sewer flow meter to directly measure water flowing into the sewage system, or developing a suitable formula to determine sewer flow in lieu of a sewer flow meter. Based on the recommendation of Engineering Staff, Utilities Staff did not have a substantive recommendation in this matter and deferred all further recommendations to Legal Staff. Legal Staff has reviewed the material submitted and agrees with Engineering Staff. Rule 6.2.g. of the Commission s Rules of Practice and Procedure requires that the complainant must in all cases establish the facts alleged to constitute a violation of the law, unless the defendant admits the same or fails to answer the complaint. In this matter the Complainant did not meet its burden of proof because it failed to provide evidence to support its primary allegation. Legal Staff recommends that this matter be dismissed. The Complainant may want to consider one of the two alternatives, involving a sewer flow meter or development of a suitable formula in lieu of a sewer flow meter, that are described in detail by Engineering Staff in the attached memorandum. LRH/cs Attachments cws CWJ\n$./ H:U,Head\Cases\20 18 Cases\l S-C, WV Cleaners dba White Way v. City of Huntington Sanitary BoardFinal Memo.doc

5 PUBLIC SERVICE COMMISSION OF WEST VIRGINIA ENGINEERING DIVISIONS FINAL MEMORANDUM DATE: TO: FROM: SUBJECT: November 16, Lucas Head, Staff Attorney Legal Division Mansour Mashayekhi, Technical Analyst Associate Lll6 Engineering Division Case No S-C WTV Cleaners, Inc. dba White Way Huntington Sanitary Board On September 21,201 8, WV Cleaners, Inc., dba White Way (Complainant) filed a formal Complaint against the City of Huntington Sanitary Board (HSB). The Complainant states that approximately 75% of its intake water from a well at the site is converted to steam at this operation and thus is not being treated at the Defendant s wastewater treatment plant. On October 1,20 18, the Defendant (HSB) responded via their attorney Mr. Robert R. Rodecker. The Defendant responded by providing billing history from 2016 through 2018 of the Complainants sewer accounts. Account, No is based upon metered water service provided by the WV-American Water Company (WVAWC). The account, No , is for metered water from the Complainant s well. The response addresses that the HSB is without sufficient knowledge to form a belief as to the truth or falsity of the Complainant s allegation that 75% of the water used by the Complainant is converted to steam and not treated by the HSB. The Defendant requests that the Commission decline to exercise jurisdiction to consider this claim in that the HSB filed a collection action against the Complainant with respect to prior billings (Stvled Huntington Sanitary Board v. WV Cleaners, Inc., Civil Action No. 16-C-803). The Circuit Court of Cabell County has not dismissed the Collection Action, but has retained jurisdiction for the purposes of enforcing the terms of the settlement Agreement. Staff Investigation: Technical Staff on October 1 5,20 18, visited the facility to learn about the operation and discussed issues concerning the Complaint with Mr. John McClaskey of the plant. Additionally, the Staff requested several questions be

6 responded in its INITIAL data request memorandum. The following are information on operation of the facility: The facility is operating approximately 5 daydweek, 10 hours/day (4 a.m. to 2 pm.), and approximately 25 people are employed at this facility. The Complainant stated that its three (3) largest clients average approximately 8-1 0,000 pounds of dry products each week, plus all the individual work. There are two separate accounts for billing incoming waters at the site: The account No is belonging to the WV-American Water Company (WVAWC) and is for supply of water for employee s consumption only. However, WVA WC water is also used as a back-up when there are problems with the well water. The account No is intended for water used in the laundry operation. The HSB to arrive at its monthly sewer bill, combines monthly consumption from both sources. 0 Laundry equipment are: Seven (7) steam powered washers (direct steam injection for heating), seven (7) steam dryers (steam through coils, none contact steam), ten (10) gas dryers, two (2) dry cleaning, one (1) 20 foot ironer, twenty one (2 1) presses, one (1) spotting board, and one (1) 1 15 HP steam boiler. 0 On average, approximately 356,888 gallons/month (1 7,844 gpd) of well water is consumed in the laundry operation (HSB data). 0 The well water is pumped into a tank and treated to remove water hardness before directing into the steam boiler and laundry machines. Staffs Summary of the Case: The Complainant states that approximately 75% of its intake water from an onsite well is converted to steam. The steam after being used in various processes ultimately is discharged into the atmosphere and is not treated at the HSB wastewater treatment plant. Therefore, the HSB should bill the Complainant for only 25% of the well water. Staff notes that the complainant has not provided any calculation or data as to how they arrived at a 75% steam discharges to atmosphere. Staff is unable to offer an opinion as to the amount of water is being discharged as steam into the atmosphere. However, Staff notes the following regarding its investigation and review of documents provided by the Complainant and the HSB: 0 Direct steam injection into laundry machines (7 machines): Staff opined that when the steam is injected directly into laundry

7 machines to raise the temperature of water to a desired level, steam would condense to water inside the machine. Therefore, content of machines are discharged as wastewater into the sewer system. 0 Non-contact steam used in dryers (7 dryers): Steam is used to heat coils for drying of clothing reasons. Steam from dryers may end-up being discharged into the atmosphere. 0 Drying wet clothing after washing: It has been estimated that when clothing is washed, its weight could increase by approximately 40%-50% before the drying. This water will evaporate in the dryer and should go into the atmosphere and not the sewer system. 0 Boilers blow down: Occasional boiler blow down will end-up going into the sewer system. The quantity can be calculated by the Complainant s consulting engineer. 0 Softener backwash water: After the well water is treated in the softener, backwash wastewater (Ion exchanged) is generated and discharged into the sewer system. The quantity can be calculated by the Complainant s consulting engineer. Staffs Conclusion and Recommendations: Technical Staff is not in a position to offer a recommendation due to lack of a study from the Complainant proving the veracity of the 75% steam not going into the sewer system. The Complainant has not provided a proof either by a study or calculations that the 75% of the steam is discharged into the atmosphere. Staff opines that the existing language in Sewer Rules 3.1 and 3.2 is relevant in this matter Meter Requirements Scope. -- In general, sewer service charges shall be based upon the volume of water delivered to the customer s property. This volume is measured by the water meter serving the premises. In cases where a signijicant volume of the water delivered to the premises is not returned to the sanitary sewer system or water from another source is discharged to the sanitary sewer system the customer may request, or the utility may require, special flow measuring devices to properly measure the volume of waste water entering the sanitary sewer system. Such specialjow measuring devices shall be furnished, installed, and maintained by and at the expense of the customer with the approval of the utility. In some situations suitable formulae may be used to determine waste waterflow in lieu of special metering devices. Such formulae shall be approved by both the customer and the utility and are subject to the approval of the Commission. Allflow meters

8 used in serving bulk or resale customers shall be owned and operated by the utility providing service to the bulk or resale customer Sewer flow measuring devices. -- Where sewer flow measuring devices are used for billingpurposes, the utility shall test these devices for accuracy on an annual basis. The measuring devices shall also be maintained in good working order and shall be adjusted or repaired to be as nearly correct as is commercially practicable. To summarize, the aforementioned rules provide the following alternatives to the Complainant: 1) The installation of a sewer flow meter to directly measure flows to the sanitary sewer - Sewer Rule 3.1 requires the customer to furnish, install, and maintain the flow meter, and Sewer Rule 3.2 requires the utility to conduct an annual accuracy test for billing purposes; 2) Develop a suitable formulae to determine sewer flow in lieu of a flow meter - such formulae would require agreement between the customer and utility, and subject to Commission approval. Because it is possible that a substantial portion of the well water is not entering the sewer system and accurate flow estimates have not been obtained, Staff recommends the following: The parties apply one of the two alternatives stated above; The Complainant should carefully weigh the costs and benefits of each option before deciding on which alternative to pursue.

9 PUBLIC SERVICE COMMISSION OF WEST VIRGINIA UTILITIES DIVISION, STAFF FINAL MEMORANDUM FROM: Dwayne I(.Bevins, Utility Inspector I IIpKv Utilities Division DATE: December 7,20 18 SUBJECT: CASE NO S-C WV CLEANERS, INC., DBA WHITE WAY CITY OF HUNTINGTON SANITARY BOARD On September 21,2018, WV Cleaners, Inc., dba White Way (Complainant) filed a Formal Complaint before the Public Service Commission of West Virginia (Commission) against the City of Huntington Sanitary Board (HSB). The Complainant stated that the HSB bases its sewer charges on the metered measurement of water used. However, the Complainant believes that approximately 75% of the water it uses is converted to steam, thus it is not being treated by the HSB. The Complainant stated that the HSB refuses to acknowledge this issue and continues to charge it for services not rendered. The Complainant asks the Commission to make the HSB base Customer billings on the amount of water actually entering the waste water system and for the Commission to Order the HSB to reimburse the Complainant for overpayments made due to improper charges. On October 1, 20 18, the HSB filed its Formal Answer in the case with the Commission s Executive Secretary s Office. The HSB denied wrongdoing in the matter, The HSB stated that the Complainant actually has two (2) sewer accounts. One sewer account, No , is based upon metered water service provided by WVAWC. The second account, No , is based on metered water f?om the Complainant s well. The HSB admits that its rates for all customers, including the Complainant, are based upon metered water usage and are the rates approved by the City Council as contained in Tariff No. 16 on file with the Commission. The HSB stated that it is without knowledge sufficient to form a belief as to the tmth or falsity that 75% of the Complainant s water usage is converted to steam and not treated by the HSB. The HSB stated that its rates are designed to produce revenues based upon the amount of water purchased by each Customer, which is consistent with the Commission s Sewer Rules. Generally, sewer service charges shall be based upon the volume of water delivered to the Customer s property.

10 Case No S-C w v Cleaners, Inc., dba White Way City of Huntington Sanitary Board December 7,2018 Page 2. The HSB stated that on July 24,2018, the Complainant s Counsel issued the HSB a letter making its first and only request for an adjustment to the bill fiom the HSB on the basis that not all of the metered water was treated by the HSB but was released as steam. By letter dated September 4,2018, Counsel for the HSB informed the Complainant that the HSB had been advised by its bond counsel that it could not grant the requested adjustment. The HSB stated that the City of Huntington Sewer Refunding Revenue Bonds, Series 2016A, at Article V, General Covenants, contains the following language: Section Rates. The Issuer will... fix and collect such rates, fees or other charges for the services and facilities of the System,... as will always provide Revenues to pay ale operating expenses of the System and to leave a balance each year equal to at least 115% of the maximum amount required in any year forpqment ofprincipal of and interest on the Series 2016 A Bonds and all other obligations secured by or payable from the revenues of the System on aparity with the Series 2016 A Bonds and suflcient to make the payments required herein into, all funds and accounts and all the necessary expenses of operating and maintaining the System during such Fiscal Year and such rates, fees and other charges shall not be reduced so as to be insuficient to provide adequate Revenues for such purposes. [Emphasis Added]. The HSB stated that its method of billing and its refusal for a billing adjustment is consistent with Sewer Rule 3.1. The HSB opines that requiring it to amend its method of billing for one Customer would be discriminatory to other Customers who could claim sixnilax relief. Moreover, the HSB has determined that granting adjustments for some or all such Customers who claim to be similarly situated to the Complainant could result in a loss of revenues sufficient to jeopardize the ability of the HSB to meet its service obligations without rate increases necessary to make up for lost revenues. The HSB stated that the Complainant requests an Order from the Commission directing it to reimburse Complainant [sic] for past improper charges. The HSB opines that the Commission should decline to exercise jurisdiction to consider this claim in that the HSB filed a collection action against the Complainant with respect to prior billings (styled Huntington Sanitary Board v. WV Cleaners, Inc., Civil Action No. 16-C-803) ( the Collection Action ). The Collection Action resulted

11 Case No S-C WV Cleaners, Inc., dba White Way City of Huntington Sanitary Board December 7,2018 Page 3. in the HSB and the Complainant entering into a Settlement Agreement on May 15,2018 which contained a mutual release of all claims that existed or could have existed at the time of settlement (including any claims by the Complainant with respect to improper billing). Further, in consideration of the HSB agreeing to dismiss its claims against the Complainant in the Collection Action, the Complainant agreed to pay the HSB $15, for past unpaid amounts and remain current and pay its sewer service invoices on a timely basis. The Circuit Court of Cabell County has not dismissed the Collection Action, but has retained jurisdiction for the purposes of enforcing the terms of the Settlement Agreement. The HSB stated that the Collection Action arose afier the Complainant ceased making regular payments on its sewer accounts with the HSB in In an effort to resolve the payment issues, the HSB entered into multiple payment agreements with the Complainant between May 2014 to December 2016 in accordance with the Commission s regulations. However, the Complainant defaulted on each agreement. In 2016 the HSB initiated the Collection Action against the Complainant for said delinquent amounts. The Complainant did not dispute owing the HSB said delinquent amounts or failing to make payments but it did dispute how much it owed. Notably, the Complainant never asserted that it was being improperly billed due to substantial water evaporation of the water entering its facilities. The Complainant may not make such a claim with respect to past billings, both because the Complainant agreed in the Settlement Agreement to release any claims of improper billing against the HSB and because it failed to assert such claims before the Circuit Court of Cabell County. By letter dated August 29,2018, Counsel for the HSB informed the Counsel for the Complainant that the Complainant is in default of its Settlement Agreement in failing to remain current on its accounts with the HSB. The HSB stated that the Complainant has previously agreed to settle its dispute with the HSB regarding past charges in a matter that is still pending in the Circuit Court of Cabell County. The Circuit Court continues to retain jurisdiction over the dispute, including jurisdiction to enforce the Settlement Agreement and the mutual release of all claims related to past billings. The HSB opines that the Commission should refrain from exercising concurrent jurisdiction related to such matters and asks that the case be dismissed from the Commission s open docket of cases.

12 Case No S-C WV Cleaners, Inc., dba White Way City of Huntington Sanitary Board December 7,2018 Page 4. Utility Staff understands that the Commission s Enweering Division assigned Mr. Mansour Mashayekhi to investigate this complaint from an engineering standpoint. Mr. Mashayekhi filed his Final Memorandurn in the case with the Commission Legal Division on November 16,2018. In that Final Memorandum, Mr. Mashayekhi surrnised that he was unable to offer a substantive Final Recommendation in the matter due to the lack of a study which should have been conducted by the Complainant proving the veracity that 75% of the steam it generated is not going into the sewer system. According to Mr. Mashayekhi, the Complainant has not provided proof of its allegation by either a study or calculations that 75% of the steam it generates is discharged into the atmosphere. Mi. Mashayekhi further surmised that the language in Commission Sewer Rules 3.1 and 3.2 is relevant to the case. Utility Staff has reviewed the information provided by both parties and has reviewed the Engineering Division Final Memorandum in this case. Utility Staff agrees with the Engineering Division Staffs assessment in this case. In Utility Stars non legal opinion, it appears that the Complainant has not met its burden of proof in this matter. Therefore, Utility Staff defers any and all Final recommendations in this case to the Comission s Legal Division.