January 17, Case No PSD-CN (REOPENED) Harpers Ferry-Bolivar Public Service District Expedited Treatment Requested.

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1 500 LEE STREET EAST SIJITE 1600 * PO BOX 553 * CHARLESTON, WEST VIRGINIA TELEPHONE TELECOPIER I30 www~acksookeffy con, DIRECT TELEPHONE: (304) DIRECT TELECOPIER: (304) snchambers@,iacksonkellv.com State Bar No. 694 Via Hund Delivery Ms. Ingrid Ferrell Executive Secretary Public Service Commission of West Virginia 201 Brooks Street Charleston, West Virginia January 17,20 18 Re: Case No PSD-CN (REOPENED) Harpers Ferry-Bolivar Public Service District Expedited Treatment Requested Dear Ms. Ferrell: Please be advised that Harpers Ferry-Bolivar Public Service District ( District ) does not object to the recommendations set forth in the Second Final Joint Staff Memorandum filed in the referenced matter on January 16,2017, including, but not limited to, the recommended Step 1 and Step 2 rates. As noted in a prior filing made on January 12, 201 8, the District requests expedited review by the Commission and approval of the revised project financing and rates by January 18,201 8 to pemit closing of project financing prior to the January 29 expiration of construction bids. Enclosed is a proposed Commission Order which we hope may be of some assistance in facilitating the Commission s review. We are happy to make the proposed order available electronically if desired. We apologize for imposing on the Commission and Staff, but due to the nature of the financing, even if the bids were extended, applicable legal requirements would likely increase mandatory minimum wage rates for contract labor, thereby increasing the project costs beyond the limits of existing funding. The District greatly appreciates Staff s efforts to timely review the rate impact of the bid overruns and associated increased funding. Please date stamp the extra copy provided and return it with our messenger. As always, we appreciate your assistance. SNC/mv Enclosures cc: David P. Simmons, Chairman (w/enc.) Ronald Robertson, Jr., Esq. (wlenc.) Richard W. Klein, PE, PS (w/enc.) ~ 1 BridgeporrWV * Charlerton.WV * Martmsburg.WV * Morgancown.WV * Wheeling.WV Denver, CO. Crawfordrvilb. IN Evanrvrlle. IN Lexington. KY * Akmn. OH Rtsburgh. PA *Washington. DC

2 PUBLIC SERVICE C O~~ISSION OF WEST VIRGINIA CHARLESTON At a session of the PUBLIC SERVICE COMMISSION OF WEST VIRGINIA in the City of Charleston on the - day of January, CASE NO PSD-CN (REOPENED) HARPERS FERRY-BOLIVAR PUBIC SERVICE DISTRICT, a public utility, Harpers Ferry, Jefferson County. Application for a certificate of convenience and necessity for the construction of certain improvements to existing waste water collection and treatment facilities, and for approval of project funding and related increases in rates and charges. COMMISSION ORDER The Commission approves revised project costs, financing and rates. BACKGROUND By Recommended Decision entered on September 8, 2017 (Final on September 28, 201 7), Harpers Ferry-Bolivar Public Service District (District) was granted a certificate of convenience and necessity for the construction of improvements to its wastewater treatment and collection system. Proposed financing was approved for the project, consisting of a $2,599,779 West Virginia Clean Water State Revolving Fund (CWSRF) loan bearing interest at the rate of 2.50%, together with a 0.50% administrative fee, for a term of twenty (20) years. A two-step, project-related rate increase was also approved, with Step 1 Rates to become effective upon substantial completion of the project and to continue through November 7, 2020, and with Step 2 Rates to become effective after November 7,2020. On November 21, 2017, the District filed a petition to reopen (Petition), explaining that the lowest bids received for the project collectively exceeded the estimated construction cost by $4 1 1, The District further explained, however, that the bids erroneously included allowances for sales taxes and that when such taxes were vl

3 The District stated that the West Virginia Department of Environmental Protection (WVDEP), the state administrator of the CWSRF program, had committed to increase funding for the project to $2,874,930, on the same terms as the original loan commitment, to cover the net bid overrun. The District requested approval of the proposed increased project funding, together with proposed increases in project related rates to generate sufficient additional revenues to cover the increased debt service expense and other incrementally increased expenses. By Commission Order entered on November 21, 2017, the District was ordered to publish a Notice of Filing of the Petition, which notice set forth both the previously authorized and newly proposed Step 1 Rates and Step 2 Rates and noted the dollar and percentage increases in the Districts proposed service, usage, minimum and flat rate charges. The Notice of Filing also noted the dollar and percentage increases for typical usages of residential, commercial and public authority customers. The District was also ordered to provide separate notices of the filing of the Petition to each of its customers. The District subsequently certified that the required notices were properly given. To date, the Commission has received one letter of protest to the proposed rate increase. On January 10, 2018, Commission Staff filed its Final Joint Staff Memorandum in which it recommended that the District s petition to reopen this proceeding be approved and that Staff recommended Step 1 Rates and Step 2 Rates be approved. On January 12, 2018, the District filed a revised cash flow analysis and a net debt service schedule, along with correspondence explaining that while the cash flow analysis that was included with the Petition was based on a loan repayment schedule consisting of 76 quarterly payments, it had subsequently been confirmed that under the terms of the project loan documents, the loan repayment schedule actually consists of only 73 quarterly payments. The correspondence from the District also reiterated that the bids for the project will expire on January 29, 2018 and that such bids cannot be extended, if at all, without potentially adverse financial consequences. The District requested that the Commission enter an order approving the reopening of the case, increased project financing and increased project-related rates by January 18, 2018 in order to accommodate necessary advance reviews of loan closing documents in time for a closing scheduled for January 26, On January 16, 2018, Staff filed a Second Final Joint Staff Memorandum revising its prior rate recommendations contained in its January 10, 2018 Final Joint Staff Memorandum based on an adjustment to project-related operations and maintenance I On January 17, 2018, the District filed correspondence indicating that it had no objection to the rates recommended by Staff in its Second Final Joint Staff Memorandum ~1 2

4 and requesting that the Commission enter an order by January 18, 2018 approving the revised project financing and the Staff recommended rates. The District also submitted a proposed Commission Order. DISCUSSION The Commission finds that the Petition for approval of additional funding for the project consisting of a $2,874,930 CWSRF loan, bearing interest at the rate of 2.50% and a 0.50% administrative fee, for a term of twenty (20) years should be approved. The Commission also finds that the Staff recommended Step 1 Rates and Step 2 Rates should be approved. Staff recommended Step 1 Rates generate additional revenues of $245,697 annually an increase of 59.98% over Staff Recornmended Rates in Case No PSD- 19A. This compares to the District s proposed Step 1 Rates that would generate additional annual revenue of $246,085, or 60.07%, over Staff Recommended Rates in Case No PSD- 19A. Staff recommended Step 1 Rates, which are to become effective upon certification of substantial completion of the project, continue to provide funds for the District s loan from the Bank of Charles Town and for Senate Bill 234 funds from Case No PSD-19A. Staff recommends that Step 1 Rates be continued until November 7, Staffs recommended Step 1 Rates Staff recommended Step 2 Rates generate additional revenues of $212,3 17 annually, an increase of % over Staff Recommended rates in Case No PSD-19A. This compares to the District s proposed Step 2 Rates that would generate additional annual revenue of $216,146, or 52.76%, over Staff Recommended Rates in Case No PSD- 19A. Staff recommends Step 2 Rates take effect upon completion of the project and no sooner than November 8,2020. As illustrated below, the Staff recommended rates are just slightly lower than the District s proposed rates that were included in the notice that was published and also mailed to the District s customers: Step 1 Rates Service Charge Usage Charge Minimum Charge Flat Rate District Proposed Staff Recommended $18.74 $18.72 $16.53 $16.52 $18.74 $18.72 $84.86 $84.80 Step 2 Rates Service Charge Usage Charge $17.88 $15.77 Recommended $17.72 $ ~1 3

5 CONCLUSIONS OF LAW 1. The District s petition for approval of increased funding for the project consisting of a $2,874,930 CWSRF loan bearing interest at the rate of 2.50%, together with a 0.50% administrative fee, for a term of twenty (20) years, should be approved. 2. The Staff recommended increased Step 1 Rates and Step 2 Rates set forth in the Second Final Joint Staff Memorandum are necessary to generate sufficient revenue to meet the increased debt service requirements of the increased project loan and should be approved. 3. The Staff recommended increase in the District s leak adjustment rate to $1.80 per 1,000 gallons is necessary to properly reflect the District s incremental cost of wastewater treatment and should be approved. 4. No further public notice of the increased rates is required as the rates approved herein do not exceed the proposed rates previously published by the District and mailed to its customers. 5. A hearing is not required as no substantial protest has been received. ORDER IT IS, THEREFORE, ORDERED that Harpers Ferry-Bolivar Public Service District s petition to reopen is hereby granted. IT IS FURTHER ORDERED that Harpers Ferry-Bolivar Public Service District s revised project financing, consisting of a $2,874,930 West Virginia Clean Water State Revolving Fund (CWSRF) loan bearing interest at the rate of 2.50%, together with a 0.50% administrative fee, for a term of twenty (20) years, is hereby approved. IT IS FURTHER ORDERED that the Staff-recommended rates and charges, attached hereto as Attachment A, are hereby approved to become effective for all service rendered on and after certification of substantial completion of the project and to remain in effect through November 7,2020. IT IS FURTHER ORDERED that the Staff-recommended rates and charges, d hereto as Attach d on and after c er 7, ~ 1 5

6 Minimum Charge $18.74 Flat Rate $80.96 $17.72 $80.32 Staff also recommends that the District s leak adjustment rate be increased to $1.80 per 1,000 gallons to properly reflect its incremental cost of wastewater treatment. FINDINGS OF FACT 1. Due to bid overruns, the District filed a petition to reopen on November 2 1, 2017 and requested approval of an increased CWSRF loan and proposed increased tariff rates to generate additional annual revenue to meet the increased debt service associated with the increased loan funding. 2. A Notice of Filing detailing the proposed increased rates was timely published and mailed to the District s customers as directed by the Commission. 3. On January 10, 2018, Commission Staff filed its Final Joint Staff Memorandum in which it recommended that the District s petition to reopen this case be approved and that Staff recommended Step 1 Rates and Step 2 Rates, attached as exhibits thereto, also be approved. 4. On January 12, 2018, the District filed a revised cash flow analysis and a net debt service schedule for Staffs review and consideration in arriving at Staff recommended rates. The District also noted that the bids were due to expire on January 29, and requested expedited review of the Petition. 5. On January 16, 2018, Staff filed a Second Final Joint Staff Memorandum revising its prior rate recommendations contained in its January 10, Final Joint Staff Memorandum based on an adjustment to project-related operations and maintenance expense and a revised cash flow analysis to reconcile with the revised loan repayment schedule. 6. On January 17, 20 18, the Pistrict filed correspondence indicating that it had no objection to the Staff recommended rates and requesting that the Commission enter an order by January 18, 2018 approving the revised project financing and the Staff recommended rates. The District also submitted a proposed Commission Order. 7. Staff recommended Step 1 Rates and Step 2 Rates are slightly less than the District proposed rates that 8. Staff recommends that the District s leak adjustment rate also be increased to $1.80 per 1,000 gallons ~ 1 4

7 IT IS FURTHER ORDERED that if the scope, design, financing or cost of the project changes, Harpers Ferry-Bolivar Public Service District must petition the Public Service Commission for approval of such changes prior to commencing construction. However, if the project cost or financing changes do not require a rate change, the District s certified public accountant may file a verified statement to that effect, in lieu of such petition. IT IS FURTHER ORDERED that Harpers Ferry-Bolivar Public Service District file with the Commission a certificate of substantial completion for each contract awarded for the project as soon as it becomes available, but no later than ten days after the issuance of such documents. IT IS FURTHER ORDERED that Harpers Ferry-Bolivar Public Service District file with the Commission s Tariff Office an original and no less than six (6) copies of a proper tariff reflecting the rates herein approved within thirty (30) days of the date of substantial completion. IT IS FURTHER ORDERED that, if the project requires the use of the Division of Highways rights-of-way, Harpers Ferry-Bolivar Public Service District fully comply with all relevant rules and regulations of the Division of Highways. IT IS FURTHER ORDERED that, upon entry hereof, this proceeding shall be removed from the Commission s active docket of cases. IT IS FURTHER ORDERED that the Commission s Executive Secretary serve a copy of this order upon Staff by hand delivery, upon all parties of record who have filed an e-service agreement with the Commission by electronic service and upon all other parties by United States Certified Mail, return receipt requested. A True Copy, Teste, Ingrid Ferrell Executive Secretary ~ 1 6