PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON

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1 c ORIGINAL ENTERED. OF WEST VIRGINIA CHARLESTON Entered: March 18, 1992! F %; I I- CASE NO PSWD-PC MONROE COUNTY COMMISSION County Plan of Public Service Districts in Monroe County. RECOMMENDED DECISION PROCEDURE Pursuant to West Virginia Code 16-13A-lb, all county commissions were directed to conduct a study of all public service districts which have their principal offices within their counties and to develop a plan relating to the creation, consolidation, merger, expansion or dissolution of such districts, or the consolidation or merger of management and administrative services and personnel of such districts, and present the plan to the Public Service Commission for approval, disapproval or modification. Each county commission in the State was given the option of electing to either perform its own study or request that the Public Service Commission perform the study. Each county commission electing to perform its own study was given one year from the date of election to present its plan to the Public Service Commission. For each county where the county commission elected not to perform its own study, the Public Service Commission was directed to conduct a study of such county and was to establish a schedule for such studies upon a priority basis, with the counties perceived to have the greatest need of creation or consolidation of public service districts receiving the highest priority. Upon completion by the Public Service Commission of its study, the Public Service Commission's county plan was to be submitted to the appropriate county commission for review and comment. Each county commission was given six months in which to review the study conducted by the Public Service Commission, suggest changes or modifications thereto, and present a revised plan to the Public Service Commission. All county plans, whether a Public Service Commission study, were to be approved, disapproved or modified by order of the Public Service Commission, in accordance with rules and regulations to be promulgated by the Public Service Commission. Upon issuance of the order of the Public Service Commission on the county plan, the order and county plan are to be implemented by the county commission. On December 1, 1986, the Public Service Commission issued General order No , which promulgated final rules to be followed in the L

2 County Plan process. These are the rules referenced in West Virqinia Code S 16-13A- lb. The Monroe County Commission opted to request that the Staff of the Public Service Commission prepare a county plan of public service districts for Monroe County pursuant to West Virginia Code $16-13A-lb. On June 5, 1992, Danny L. Ellis, Chief Utilities Manager, Public Service District Division, filed one copy of the Monroe County PSD Plan (PSD Plan) with the Executive Secretary of the Public Service Commission. The PSD Plan replaced the Monroe County Plan draft previously prepared by Commission Staff. The PSD Plan contained a cost-benefit analysis of merger, consolidation and/or centralization of the Monroe County public service districts and contained final recommendations related thereto. Mr. Ellis' Memorandum also noted that copies of the Monroe County PSD Plan had been forwarded to the Monroe County Commission, Gap Mills Public Service District, Moncove Lake Public Service District, Red Sulphur Public Service District, the West Virginia Department of Natural Resources, the West Virginia Department of Health, the West Virginia Housing Development Fund, and the Commissioners of the Public Service Commission. The PSD Plan was forwarded to the Monroe County Commission and the Monroe County public service districts by certified mail on that date, to initiate the commencement of the six-month review period for the PSD Plan required by West Virginia Code S16-13A-lb. The Memorandum also noted that it was Mr. Ellis' understanding that the Executive Secretary's office would initiate a formal case for this proceeding upon receipt of the Monroe County PSD Plan. On June 7, 1992, the above-styled and numbered proceeding was established for the County Plan of Monroe County. On June 12, 1992, the Commission issued its Referral Order in this matter, referring this proceeding to the Division of Administrative Law Judges and requiring the Division of Administrative Law Judges to render its decision in this case on or before July 2, On June 16, 1992, a Procedural Order was issued in this matter, explaining that the six-month review period for comments on the Staff's Monroe County PSD Plan must expire, or the Monroe County Commission and the Monroe County public service districts must submit their comments in advance of the end of the six-month review period, prior to any procedural schedule being established in this case. The Administrative Law Judge noted that the six-month review period would expire on or about December 5, 1992, and that a procedural order establishing publication requirements and a hearing schedule would be issued thereafter. The Order further noted that, if the Monroe County Commission and the three Monroe County public service districts submitted their comments on the Monroe County PSD Plan prior to the end of the six-month review period, this proceeding could be set for hearing and publication requirements could be established more expeditiously. On June 28, 1992, Gap Mills Public Service District filed a letter with the Public Service Commission, indicating its agreement with the I' PUBLIC SERVICE COMMISSBON

3 1 ultimate conclusion of the Staff Monroe County PSD Plan, i.e., that the existing Monroe County public service districts should not be merged or consolidated. On February 10, 1993, Staff Attorney Drexel M. Vealey forwarded to the Executive Secretary of the Commission comments previously received by Commission Staff from the Monroe County Commission, the Red Sulphur Public Service District and the Gap Mills Public Service District in response to the Staff-prepared Monroe County PSD Plan. The County Commission's response was filed with the Commission on October 21, The hearing scheduled for March 10, 1993, was held as scheduled, with Commission Staff appearing by Staff Attorney Drexel M. Vealey, Esquire. The Monroe County Commission was present by its three members and the Gap Mills Public Service District and Red Sulphur Public Service District were each present at the hearing by board members as well. At the hearing, the Monroe County Commission verified that the required publication and notice had been provided as directed in the Procedural Order of February 3, 1993, although the actual affidavits of publication were not yet available from the newspaper. Commission Staff presented the testimony of one witness, Conrad Bramley, a Utility Financial Analyst in the Public Service District Division of the Public Service Commission. Mr. Bramley prepared the Staff Monroe County PSD Plan and that Plan was received into evidence as Staff Exhibit No. 1. The Monroe County Commission presented no testimony in this matter, although the President of the Monroe County Commission indicated that the Monroe County Commission agreed with the Staff-prepared PSD Plan. No member of the public appeared at the hearing for the purpose of making any statement of protest or any other comment with respect to the Staff-prepared Monroe County PSD Plan. At the conclusion of the hearing on March 10, 1993, this matter was submitted for a decision. DISCUSSION Monroe County currently has two active public service districts and various municipalities and private systems providing water and sewer service. At the time of the original Staff investigation of the Monroe County public service districts, there were five authorized public service districts, although two districts were paper districts and one district provided service to only a handful of customers. As of the time of the writing of this decision, Lindside Valley Public Service District has been merged into Red Sulphur Public Service District; Moncove Lake Public Service District has been dissolved; and approval for the dissolution of

4 Waiteville Public Service District has been granted by Recommended Decision entered contemporaneously herewith in Case No PSWD-PC. When the decision in Case No PSWD-PC becomes final, there will then be only two public service districts in Monroe County, Gap Mills Public Service District and Red Sulphur Public Service District. Commission Staff estimates that approximately 43% of the Monroe County population is served by the water systems currently operating in the county, while only approximately 26% of the Monroe County population is currently served by a sewer system. (Staff Exh. No. 1, Chapter 11, generally). The Staff-prepared Monroe County PSD Plan, received into evidence as Staff Exhibit No. 1, contains two groups of recommendations. The first group of recommendations is set forth at the end of each separate District chapter, consisting of the investigative findings and conclusions of the Public Service District Division pertaining to the operations of the specific public service districts in Monroe County. (Staff Exh. No. 1, Chapters 111, IV and V). The second group of recommendations made by Commission Staff involves the Staff analysis of the feasibility of consolidation, merger, centralization, dissolution or expansion of the existing public service districts in Monroe County. These recommendations are located in Chapter VI1 of Staff Exhibit No. 1. As noted, previously, there are currently two active public service districts operating in Monroe County. The Gap Mills Public Service District owns and operates a water system serving approximately 140 residential and 15 commercial customers in the areas of Moncove Lake Road, Gap Mills and Route 8. The system has approximately ten miles of transmission and distribution main. The District employs three individuals on a part-time basis. (Staff Exh. No. 1, Chapter 111). The Red Sulphur Public Service District provides water and sewer services partly through its own facilities and partly through facilities owned by the Town of Peterstown. The District provides water service to approximately 813 residential customers, 21 commercial customers and one resale customer in the areas of the Town of Peterstown and vicinity and also 25 residential customers in Giles County, Virginia. Sewer service is provided to approximately 618 residential customers and 21 commercial customers in the Town of Peterstown and vicinity. The water system contains approximately 14 miles of transmission and distribution main, two booster stations and three water storage tanks. The sewer system consists of a wastewater treatment plant, approximately 14 miles of collection line and two lift stations. The District employs two individuals on a fulltime basis and one individual on a part-time basis. Red Sulphur Public Service District also maintains an office. (Staff Exh. No. 1, Chapter V). With respect to consolidation, merger, or centralization of the operations of the Monroe County public service districts, Staff's review and analysis has determined that no consolidation, merger or centralization of the operations of Gap Mill Public Service District and Red Sulphur Public Service District should occur at this time. The Staff cost-benefit analysis of merging the Gap Mills and Red Sulphur Public Service Districts indicated that such an action would not be cost-effective. The inflation-adjusted ten-year net cost resulting from such a merger is estimated

5 to be $200,969. The primary reason for the high net cost following merger is the increase in personnel cost. Other factors contributing to that increase in cost are increased billing expenses and transportation expenses. The merged districts' annual revenue requirement would increase by approximately $0.89 per customer per month, assuming the expense adjustments occurred as projected by Staff. Further, there is no significant improvement in customer services which can be seen to arise out of the merger. The second Staff recommendation in this Chapter indicated that the Waiteville Public Service District should be dissolved if the Monroe County Commission has no current plans for developing water or sewer services within that District's designated boundaries. As mentioned previously, the dissolution of Waiteville Public Service District is being addressed in Case No PSWD-PC. The third recommendation made by Commission Staff is that areas within Monroe County which are not currently within the boundaries of operating districts and are not presently receiving centralized water or sewage services should be provided with such services as the need arises through the expansion of current districts, if that is proven to be cost-effective. The goal of this recommendation is to prevent the unnecessary creation of new districts, if existing district services can be extended at equal or lower cost to the customers. The fourth Staff recommendation is that the plan be updated by Commission Staff as additional information becomes available. (Staff Exh. No. 1, Chapter VII). Upon consideration of all the above, the Administrative Law Judge is of the opinion that the Monroe County PSD Plan prepared by Commission Staff and filed with the Executive Secretary's Office on June 5, 1992, should be adopted at the county plan for public service districts in Monroe County, as required by West Virginia Code 16-13A-lb, since the Staff-prepared Monroe County PSD Plan appears to adequately address all the requirements of the West Virginia Code and Commission General Order No The Monroe County Commission shall be directed to comply with the recommendations in the Staff-prepared County Plan regarding the expansion of existing public service districts, to the extent feasible, rather than creating new public service districts to serve currently unserved areas of Monroe County. Additionally, Gap Mills Public Service District and Red Sulphur Public Service District will be directed to implement the Staff recommendations set forth in the investigative findings regarding those specific Districts in the Staff Monroe County PSD Plan and the specific implementation schedule for the correction of those deficiencies shall be established in the Monroe County Commission's implementation plan. The Monroe County Commission's implementation plan should contain an explanation of the various corrective measures implemented by those two public service districts and, to the extent that any of the corrective measures are still in the process of being finalized or to the extent that any deficiency cannot be corrected at this time, an explanation and estimated completion and correction schedule for those measures should be included. The Monroe County Commission, Gap Mills Public Service District and Red Sulphur Public Service District should contact the Public Service District Division of the Public Service Commission for advice and counsel, as needed, regarding any matter set forth in the Monroe County PSD Plan. Finally, following completion of all of the county plans for the counties surrounding Monroe County, if Commission Staff believes that multi-county action involving Monroe County may I1

6 /I be necessary or appropriate, Commission Staff should make the appropriate filing. FINDINGS OF FACT 1. The Monroe County Commission and the two active public service districts in Monroe County have been served with copies of the Staffprepared Monroe County PSD Plan and none of those parties indicated any objection to the Plan and all of the parties supported, generally, the recommendations contained therein. (See, Case File generally; Comments filed October 21, 1992). 2. At the hearing in this matter, the Monroe County Commission indicated that it supported the Monroe County PSD Plan. Additionally, representatives of the active public service districts were present and they indicted that there was no opposition to the Staff plan. (See, Transcript generally). CONCLUSIONS OF LAW 1. The Staff-prepared Monroe County PSD Plan, filed with the Executive Secretary of the Public Service Commission on June 5, 1992, complies with the requirements of West Virginia Code S16-13A-1 et seq., and Public Service Commission General Order No , to the extent possible, and represents a reasonable plan for public service districts in Monroe County. 2. The Staff-prepared Monroe County PSD Plan should be adopted as the county plan of public service districts for Monroe County, pursuant to West Virginia Code S16-13A-lb, et seq. 3. The Monroe County Commission and all affected public service districts shall be required to comply with all of the recommendations set forth in the Monroe County PSD Plan, in accordance with the terms of said Plan, pursuant to a schedule to be mutually worked out between the Monroe County Commission, the affected public service districts and the Public Service District Division of the Public Service Commission. ORDER IT IS, THEREFORE, ORDERED that the Staff-prepared Monroe County PSD Plan, filed with the Executive Secretary of the Public Service Commission on June 5, 1992, be, and it hereby is, approved and adopted as the county plan of public service districts for Monroe County, pursuant to West Virqinia Code $16-13A-1 et seq., and said plan shall be implemented, in all respects, by the Monroe County Commission and the Monroe County public service districts, unless a request for a waiver of any of the provisions of said plan is filed with the Public Service Commission and granted. 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.

7 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. Any party may request waiver of the right to file exceptions to an Administrative Law Judge'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 Administrative Law Judge's Order or Decision the order of the Commission sooner than five (5) days after approval of such waiver by the Commission. MKM:dfs Melissa K. Marland Chief Administrative Law Judge