PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON Entered: May 30, Complainants, Defendant. HEARING EXAMINER'S DECISION PROCEDURE

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1 ~ *,.' L ORIGINAL CASE NO W-C MR. AND MRS. RAYMOND L. COOPER, 304 Brunswick Street, Brunswick, Maryland 21716, V. KEYFS FERRY ACRES, INC., a corporation, Harpers Ferry, Jefferson County, CHARLESTON Entered: May 30, 1985 Complainants, Defendant. HEARING EXAMINER'S DECISION PROCEDURE On March 5, 1984, the Commission received a written communication from Mr. and Mrs. Raymond L. Cooper, 304 Brunswick Street, Brunswick, Maryland, 21716, which the Commission treated as a formal complaint against Keyes Ferry Acres, Inc. (hereinafter "KFA" or "Company"), a corporation and a public utility, Harpers Ferry, Jefferson County. By order entered March 12, 1984, KFA was required to satisfy said complaint or make answer thereto, in writing, within ten (10) days of the service upon it by certified mail of a copy of said complaint and a copy of the Commission's order. On April 24, 1984, KFA filed its answer to the aforesaid complaint..by order entered May 21, 1984, the Commission Audit, Engineering, and Finance and Special Studies Divisions were directed to undertake a cost of service study of the water services and operations of KFA, and thereafter recommend to the Commission a rate structure and rates and charges which m ""- m

2 F separately take into account capital and flow related costs. It had been alleged by the Complainants that the Company is requiring its customers to submit payment for all prior months of service in which they are not in residence and in which there is no water use. The aforesaid audit and cost of service study were ordered for the purpose of establishing a just and reasonable reconnection charge for use by Keyes Ferry Acres, Inc. By order entered September 14, 1984, the matters involved herein were set for hearing to be held on Wednesday, October 17, 1984, at 9:00 a.m., EDST, in the County Commissioner's Courtroom, 1st Floor, Jefferson County Courthouse, Charles Town, West Virginia, at which time and place the Complainants and the Defendant were ordered to appear and pursue their respective interests and at which time the Commission Staff was to present its recommendations. Said order further directed the Executive Secretary of the Commission to publish public notice of the time and place of the aforesaid hearing twice between the date of said order and the October 3, 1984 hearing, making due return thereof to the Commission of certification of said publication. On October 10, 1984, the Executive Secretary filed an affidavit of the aforesaid public notice by newspaper publication. On October 1, 1984, the Keyes Ferry Acres Property Owners, Inc. (hereinafter "Property Owners'') filed with the Commission a Motion to Continue the scheduled hearing and a Motion To Show Cause and To Order Audits. Additionally, the Property Owners filed a Petition for Leave to Intervene in this case and proceeding. By order entered October 5, 1984, the Motions to Continue the scheduled hearing, To Show Cause, and To Order Audits were denied and the Motion to Intervene was granted. -3-

3 On October 4, 1984, the Property Owners filed a motion, pursuant to Rule 12(1) of the Commission's Rules of Practice and Procedure to consolidate for the purpose of hearing the case herein with Case No W-CN which is currently before the Commission on exceptions to a Hearing Examiner's Decision and Order. By order entered October 5, 1984, the aforesaid motion to consolidate was denied. The October 17, 1984 hearing was held as scheduled. The Complainants, Mr. and Mrs. Raymond L. Cooper, failed to appear. (Tr., p. 5). Appearing on behalf of Keyes Ferry Acres, Inc., was Charles Bean, Esquire. Appearing on behalf of the Commission Staff was Dan Frutchey, Legal Division, and Paul P. Stewart, Finance and Special Studies Division. Appearing on behalf of the Property Owners was Elizabeth Blake, Esq. Testimony was given by one witness and no exhibits were placed in evidence. Thirty-nine (39) pages of testimony were recorded. KFA moved to dismiss this complaint and proceeding if the issues involved and/or the Intervenor's (Property Owners) intent was to go beyond the scope of the complaint and notice provided. (Tr. pp. 6, 10, 12). The Property Owners were opposed to the motion to dismiss due to their expressed desire to present a case which would result in the lowering of rates and charges. (Tr., pp. 6, 38). Mr. Bean went on to state that the Company has no objection to addressing the issue of a proper reconnect charge if the proceeding were limited to that single issue. The Hearing Examiner thereupon restricted this proceeding to the presentation of evidence with regard to termination of service and the establishment of a just and reasonable reconnect charge, which matters were the subject of the Coopers' complaint. (Tr., p. 11). -3- rn

4 DISCUSSION OF THE EVIDENCE INCLUDING FINDINGS OF FACT Paul Stewart, Commission Finance and Special Studies Division, presented that Division's recommendations for the establishment of a reconnect charge. Mr. Stewart did not undertake a full cost of service study and noted that the audit conducted by Mr. James Simmons, Commission Audit Division, was beyond the scope of what he had expected. Mr. Stewart's data requirements were with regard to current operating ex- penses, and other items, such as rate base and tax considerations, were beyond the means of the study and ultimate objective which he had. (Tr., pp. 14, 15). In fact, the only figures which Mr. Stewart utilized from the audit report is the number of customers served by the Company and the figures for chemicals and electricity expense. (Tr., pp. 22, 23, 27). Mr. Stewart did not rely upon the audit report for the revenue requirement which was established in the Company's last rate or certificate case. At the time of hearing that case was before the Commission on exceptions. The purpose of his effort was merely to establish a reconnection charge that would permit the termination of service and keep revenue at a reasonable level. (Tr., pp. 15, 16). His attempt was therefore to establish a reconnection charge that maintains the previously authorized revenue level of $32,500. (Tr., pp. 16, 17). Mr. Stewart's recommendation is that the $18.50 monthly rate currently authorized for charge by KFA remain in effect and that customers be allowed to disconnect or terminate service, at will, and thereafter reconnect for a charge of $111. The aforesaid charge is not based upon the actual cost of disconnecting and reconnecting service, but is intended solely to maintain.the authorized revenue level. (Tr., p. 17). -b-

5 The recommended $111 reconnect charge is the equivalent of six months water use. Of the 146 customers served by KFA, there are approximately 44 part-time residents. Mr. Stewart's assumption is that of those 44 part-time residents, some will be absent six months to one year, while others will be absent intermittently. The aforesaid charge provides little incentive for a person who uses his house on weekends or more frequently to have his service terminated. However, a person who does not use his house for nine months may desire to avail himself of the termination alternative. (Tr., pp. 19, 20, 24). Finally, Mr. Stewart did not address the involuntary disconnect and reconnect of customers for their failure to pay his or her water bill. (Tr., p. 21). Mr. Frutchey added that the reconnect charge should apply for disconnect and reconnect within a period of eight months, as provided by Rule 4.08(2) of this Commission's Rules and Regulations for the Government of Water Utilities (hereinafter "Water Rules"). (Tr., p. 34). Irene Speaks testified on behalf of Keyes Ferry Acres, Inc. The Company has been charging $18.50 per month for service and a $10 reconnect charge if service is terminated for the non-payment of bills. During periods of absence customers continue to pay (and are billed) the $18.50 per month rate. (Tr., p. 32). Ms. Speaks confirmed that there are 44 customers who do not live in the development full time. She does not know the number of customers that are absent six months out of the year. (Tr., I p. 36). Ms. Speaks explained that the Company is charging customers for the months that they are not in residence due to the need to protect the Company's revenue. She is not opposed to the $111 reconnect charge nor to a $10 reconnect charge for involuntary service termination and reconnect. -5-

6 (Tr., pp. 33, 34). She does not know, however, the effect that the reconnect charge and permitted termination of service will have on the Company's revenue. (Tr., p. 36). COMMENTARY The Company's obvious concern in prohibiting the termination and resubscription to service is that it maintain its revenue base. With an approximate 30% of its customers being only part-time residents, a policy which permits or encourages frequent disconnect and reconnect of service would be devastating to the Company's revenue base. It is in accordance with that concern that KFA has required its customers to pay all months prior bills, bringing their account up-to-date, before service is restored. The Hearing Examiner views the Company's need and desire to maintain its revenue base as a justified concern. However, the obvious defect in the Company's termination policy is that it de facto prohibits a customer from terminating service for any period of time, such as for a three or four year period, and all prior billings for the period must be paid before service will be restored. The Hearing Examiner considers the aforesaid practice unreasonable and contrary to Rule 4.07 of the Water Rules which authorizes a customer to discontinue his or her water service, for any reason. The Company's tariff and policies should provide a method by which a customer may terminate service, without facing the accrual of billings into infinity, while at the same time protecting the Company's revenue base. It is in accordance with that balancing of interests that the Hearing Examiner finds a substantial reconnect charge should be approved. -6-

7 However, the reconnect charge recommended by Mr. Stewart does not differentiate between customers whose service is involuntarily terminated, such as for the non-payment of bills, and those customers who may volun- tarily terminate service due to the non-occupancy of their residences. Further complicating the application of a reconnect charge is that if a reconnect charge following involuntary termination of service is lower than that for voluntary termination, as applicable to part-time residents, such may be abused whereby part-time residents could intentionally fail to meet their billings, without giving notice of voluntary termination, in order to obtain the lower reconnect charge. Therefore, the reconnect charge approved must be such that it may be applied uniformly and without subjective judgment as to the nature and intent of the service termina- tion. While Rule 4.08(2) of the Water Rules authorizes a utility to apply its tariff approved reconnect charge when service is disconnected and reconnected at the same premises within eight months, said rule may be modified to meet the need of the situation. Rule 1.02(2) Rules states: of the Water If hardship results from the application of any rule herein prescribed, or if unusual difficulty is involved in immediately complying with any rule, application may be made to the commission for the modification of the rule or for temporary or permanent exemption from its provisions; provided, that no utility shall submit application for such modification or exemption without submitting therewith a full and complete justification for such action. It is in accordance with the aforesaid leave granted for the modi- fication of this Commission's Rules and Regulations that the Hearing Examiner finds that the eight (8) month reconnect period of Rule 4.08(2) should in this case be extended. The application of the reconnect charge to customers who disconnect and reconnect within a period of eight months PueLic SERVICE COMMISSION -7-

8 ' I makes it possible for a customer to subscribe to service during only three or four months of the year, to terminate his service and thereafter resubscribe to service without being subject to the reconnect charge. The application of the reconnect charge herein authorized and approved should therefore be made applicable to service disconnect and reconnect within a period of twelve (12) months. It is therefore the Hearing Examiner's opinion that the currently authorized $10 reconnect fee or rate should be stricken from the Company's tariff and the following reconnect charge approved for inclusion within said tariff: Reconnect Charge For the disconnect and subsequent reconnect of water service within a period of twelve (12) months at the same premises, customers who voluntarily terminate their service or have their service involuntarily terminated shall pay a reconnection charge equal to the lesser of the normal $18.50 per month service charge which would have accrued had service not been terminated, plus $10, - or the sum of $111. CONCLUSIONS OF LAW The Hearing Examiner is of the opinion and finds that: 1. The Company's current policy of prohibiting the voluntary termination of water service is unreasonable. 2. It is within the jurisdiction and authority of this Commissior as conveyed by West Virginia Code to require the Company tc establish a reasonable and equitable policy and charge for the voluntarj termination and resubscription to water service. 3. The reconnection charge as hereinbefore set out is just an( reasonable in that it brings the Company into compliance with this Com- mission's Rules and Regulations while maintaining the Company's revenuf 1 base, is in the public interest, and should therefore be approved. -8-

9 IT IS, THEREFORE, ORDERED that: ORDER 1. The currently authorized $10 reconnect charge be stricken from the Company's tariff. 2. The following reconnection charge be, and it hereby is, au- thorized and approved for inclusion within Company's tariff effective on service rendered on and after the date that this order becomes final. Reconnect Charge: For the disconnect and subsequent reconnect of water service within a period of twelve (12) months at the same premises, customers who voluntarily terminate their service or have their service involuntarily terminated shall pay a reconnection charge equal to the lesser of the normal $18.50 per month service charge which would have accrued had service not been terminated, plus $10, - or the sum of $ Within fifteen (15) days of the date that this order becomes final the Company shall file with this Commission a proper tariff setting forth the Reconnect Charge herein authorized and approved. The Executive Secretary is hereby ordered to serve a copy of this order upon the Commission by hand delivery, and upon all parties of record by United States Certified Mail, return receipt requested. Leave is hereby granted to the parties to file written exceptions supported by a brief with the Executive Secretary of the Commission within fifteen (15) days of the date this order is mailed. If exceptions are filed, the parties filing exceptions shall certify to the Executive Secretary that all parties of record have been served said exceptions. If no exceptions are so filed this order shall become the order of the Commission, without further action or order, five (5) days following the expiration of the aforesaid fifteen (15) day time period, unless it is ordered stayed or postponed by the Commission. -9-

10 L. Any party may request waiver of the right to file exceptions to a Hearing Examiner's Order by filing an appropriate petition in writing with the Secretary. No such waiver will be effective until approved by order of the Commission, nor shall any such waiver operate to make any Hearing Examiner's Order or Decision the order of the Commission sooner than five (5) days after approval of such waiver by the Commission. CDP :mal Charles D. Perfa& Hearing Examiner