PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON

Size: px

Start display at page:

Download "PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON"

Tamsyn Parrish
5 years ago
Views:

1 GIN 'g; OF WEST VIRGINIA CHARLESTON Entered: April 2, 1993 ZASE NO PWD-42A CLAYWOOD PARK PUBLIC SERVICE DISTRICT, a public utility, Parkersburg, Wood County. Rule 42A application to increase water rates and charges and petition for emergency rate relief incidental thereto. RECOMMENDED DECISION PROCEDURE On September 18, 1992, Claywood Park Public Service District (District), a public utility, Parkersburg, Wood County, filed an application with the Public Service Commission, pursuant to Rule 42 of the Commission's Rules and Regulations for the Government of the Construction and Filinq of Tariffs of Public Utilities and Common Carriers by Motor Vehicle (Tariff Rules), seeking increased rates and charges for providing water service. Concurrently, pursuant to West Virginia Code (Code) S24-2-4a, the District filed a petition with the Commission seeking an interim emergency rate increase pending the outcome of this general rate proceeding, thereby alleging that the District is in financial distress and has sought relief in the United States Bankruptcy Court for the Southern District of West Virginia. On October 22, 1992, the Commission Referral Order was issued in this proceeding, thereby referring this matter to the Division of Administrative Law Judges for decision on or before April 15, The Commission Referral Order also directed Commission Staff to submit its report on or before February 5, Pursuant thereto, on November 13, 1992, the Administrative Law Judge (ALJ) issued a Procedural Order establishing a procedural schedule to be followed in the processing and resolution of this matter, including a February 17, 1993 hearing date. Also, on November 13, 1992, the ALJ entered an Interim Recommended Decision establishing interim emergency rates, representing a 5% increase over the District's existing permanent rates, subject to refund pending the final outcome of /this proceeding. The Commission's file of this proceeding contains several hundred signatures on petitions filed in opposition to the proposed rate increase. c On February 17, 1993, the hearing was held in this matter as scheduled before the ALJ. The District appeared by counsel, Thomas Bennett, Esquire, and John S. Bailey, Esquire. Commission Staff appeared by

counsel, Cassius H. Toon, Esquire. Over thirty of the District's customers appeared at the hearing in person pro se, and one of these customers, Pauline 0.

2 counsel, Cassius H. Toon, Esquire. Over thirty of the District's customers appeared at the hearing in person pro se, and one of these customers, Pauline 0. Rempel, was granted Special Intervenor status for the express purpose of cross-examining the various witnesses. The District presented the testimony of one witness. Commission Staff presented the testimony of one witness and presented one exhibit. Five of the Protestants presented statements in opposition to the proposed rate hike. At the hearing, it was established that the Notice of Hearing had been duly published as directed, on January 20 and 27, 1993, in the Parkersburq Sentinel and in the Wirt County Journal. The parties waived their right to file proposed findings of fact and conclusions of law, or riefs, in this proceeding, pursuant to Code (b). 1 EVIDENCE The first witness to testify in this proceeding was George Blum, who testified on behalf of the District. He stated that he is a certified public accountant employed by Cerrone & Associates, and that he prepared the Rule 42 Exhibit for the District. He stated that he also had reviewed Commission Staff's Rule 42 Exhibit. He opined that the District incurred a $93,000 negative cash flow for the fiscal year ended June 30, Additionally, a judgment in the amount of $250,000 was obtained against the District by Hanson & Associates. He indicated that he accepted Staff's recommendation since the differences between Staff's and the District's findings were relatively small and since the District's Rule 42 Exhibit was for the fiscal year ended June 30, 1991, while Staff's Rule 42 Exhibit was for the fiscal year ended June 30, He stated that the $250,000 judgment would be paid with a 40-year bond issuance which, he opined, impacts the rates very little. He opined that the Staff-recommended rates would be sufficient to operate the District and place it on a sound financial basis and, without a rate increase, the District would continue to experience a negative cash flow. He opined that the District should have sought several smaller rate increases over the years, thereby possibly avoiding the emergency situation in which the District has now found itself. (Tr., pp. 9-19).

3 $687,770 in annual revenue, resulting in a positive cash flow of $52,503. He stated that Staff has recommended a lesser rate increase, whereby the revenues generated would be $665,510, which would produce a positive cash flow of $30,335. He opined that the District needed a rather large positive cash flow since it is a large district. Also, he stated that he had reviewed the District's plant additions over the previous five years and concluded that this amount was needed to fund the expected plant additions. He opined that Staff was attempting to recommend rates which would get the District out of bankruptcy and, at the same time, not present a rate shock to its customers. (Tr., pp ). Mr. Miller explained that Staff had recommended rates which provide the same percentage of increase for each rate block and for each schedule. He indicated that the District had requested an 11.5% increase and that Staff had recommended an 8.6% increase. He clarified that the 8.6% increase was in addition to the 5% interim rate increase, or a total of 13.6% above the current permanent rates. He indicated that it had been several years since the last rate increase, which may have contributed to the District's insolvency. However, he opined that the chief reason for the insolvency was due to the huge judgment against the District. (Tr., pp ). Mr. Miller stated that one of the adjustments made by Staff was to not allow for the hiring of additional personnel. He opined that the rates for the Deerwalk area should be higher than for the rest of the system since the debt service for this area is higher. Therefore, he advocated maintaining the present rate design. (Tr., pp ). The next witness to testify was Clifford E. Cross, who testified on his own behalf as a Protestant. He stated that he lived in an area built expressly for low income people, and that he and his neighbors could not afford a rate increase. He opined that, had the sewer rate not increased just a year ago, the water rate hike might have been acceptable. He stated that most people who live in his area have a higher water and sewer bill than their house payment. He explained that their house payments are based upon their incomes. (Tr., pp , 52). Mr. Cross expressed his outrage at the proposed 28% rate hike. He opined that the District had been sued too many times, and that it had lost each lawsuit. He opined that the District's legal fees were "out of this world". (Tr., pp ). The next person to testify was Lester Terry, a Protestant who testified on his own behalf. He complained that the District's water rates already are higher than any water rates in the area, and that now the District is seeking even higher rates. He acknowledged that the Commission determines what rates the District can charge, but he opined that what is needed is for the Commission to tell the District how to spend its money. He opined that the District was spending its income foolishly, thereby placing a heavier burden upon its customers. (Tr., pp ). The next witness to testify was John Deleruyelle, a Protestant who testified on his own behalf. He questioned why the District did not have some kind of liability insurance to protect it against lawsuits. He opined that the District was poorly managed. He opined that the

istrict's meter reading system was flawed. He opined that the District's anagement was arrogant. (Tr., pp. 64-66).

4 istrict's meter reading system was flawed. He opined that the District's anagement was arrogant. (Tr., pp ). The next witness to testify was Ronald Roberts, a Protestant who estified on his own behalf. He stated that the District had made a istake in his meter reading. He reiterated the lack of an ability to pay higher water bill by most of the District's customers. He opined that he rate hike may render Community Acres into a ghost town. He asked that he hundreds of names attached to the petition against the rate hike, and he petition, be considered when the decision was rendered in this case. Tr., pp ). The final witness to testify was Neil Bee, the Manager for the istrict. He was called as a hostile witness by Pauline Rempel, the lay epresentative for the Protestants. He basically responded to some of the uestions the Protestants had pertaining to the management of the Disrict's system. He explained that the meter reading problem was due to he fact that Community Acres had been built by a developer and that the istrict had taken over the subdivision system. He stated that the eveloper had placed many of the meters inside the homes, but had run lectrical wires outside the houses with a dial attached. He opined that hese dials are not always accurate. He stated that the District was ttempting to correct this problem. He also responded to several other nquiries which were not relevant to the proposed rate increase. (Tr., DISCUSSION Upon consideration of all of the above, the ALJ will approve the taff-recommended rates. The ALJ fully recognizes the vast number of ustomers who have protested this rate case, and the ALJ has given all ossible consideration to the District's customers' inability to pay igher rates for water service. However, the ALJ also must consider the uty of the Commission to approve rates which will pay for the operation nd maintenance of the system, cover debt service requirements and allow or normal plant additions. The District's obvious insolvency problems ay or may not be the result of the District's alleged mismanagement, as lleged by the Protestants. However, there were not enough facts preented at the hearing for the ALJ to resolve this accusation, and a rate roceeding is not the proper forum in which to address these accusations. he thrust of this rate case must be focused squarely upon the rates ecessary to generate the revenue required to properly operate the utili- The Staff-recommended rates, set forth in Appendix A attached hereto, will be adopted since these rates have been accepted by the District and since these rates will provide sufficient revenue for the District's operations. In particular, after the District's operation and maintenance expense has been met and after its debt service has been covered, the Staff-recommended rates will provide a $30,335 positive cash flow, thereby avoiding a further possibility of insolvency and providing enough surplus for expected plant additions. Also, a total 13.6% rate increase (including the 5% emergency increase) does not represent a rate shock to the

5 ~ District's customers, in the opinion of the ALJ. Staff has pared down the District's proposed 16.5% rate hike by eliminating all expenditures which Staff believed to be excessive. FINDINGS OF FACT 1. Claywood Park Public Service District filed an application with the Commission, pursuant to Rule 42 of the Commission's Tariff Rules, seeking increased rates and charges for providing water service to its customers. (See, Application, filed September 18, 1992). 2. The District also sought emergency interim rate relief due to its bankruptcy and resulting financial distress. Pursuant thereto, the ALJ granted a 5% rate hike pending the outcome of the instant proceeding. (See, Application, filed September 18, 1992; Interim Recommended Decision, entered November 13, 1992). 3. Hundreds of customers have filed protests against the proposed rate hike. (See, Commission's file). 4. The District experienced a negative cash flow of up to $93,000 for the fiscal year ended June 30, (See, Testimony of George Blum, Tr., pp. 9-19). 5. In addition to the District's negative cash flow, a judgment against the District in the amount of $250,000 was obtained by one Hansen & Associates. (See, Testimony of George Blum, Tr., pp. 9-19). 6. The District has accepted the Staff-recommended rates as reasonable. Also, the District intends to pay the $250,000 judgment with a 40-year bond issuance, thereby resulting in a minimal effect upon rates. (See, Testimony of George Blum, Tr., pp. 9-19). 7. The Staff-recommended rates would generate approximately $665,510 in additional revenues, which is $47,452 above going-level, thereby resulting in a positive cash flow of $30,335. Staff has characterized its recommended increase as 8.6% above the emergency interim rates, or 13.6% above the District's permanent rates. (See, Testimony of Jack L. Miller, Tr., pp ; Staff Exhibit No. 1). 8. The Staff-recommended rates would increase each rate block for each rate schedule by the same percentage of increase, thereby keeping the rates for the Deerwalk area higher than for the rest of the District's system. (See, Testimony of Jack L. Miller, Tr., pp ). 9. Staff has adjusted the proposed rates by paring all proposed expenditures which Staff opined are not necessary, but has allowed a sufficient cash flow surplus to accommodate the expected plant additions, to cover the debt service requirements and to properly operate and maintain the system. (See, Testimony of Jack L. Miller, Tr., pp ). 10. Over 40 customers appeared at the hearing in protest to the proposed rate hike, thereby opining that the District is poorly managed;

6 that the current rates are too high; that the recent sewer service rate increase makes a water service rate increase unacceptable; that many of the District's customers' house payments are less than their combined water and sewer payments; that the Commission should tell the District how to spend its money instead of just increasing the rates; and voicing other complaints which were not relevant to the instant proceeding. (See, Testimony of Clifford E. Cross, Tr., pp ; Lester Terry, Tr., pp ; John Deleruyelle, Tr., pp ; and Ronald Roberts, Tr., pp ). CONCLUSION OF LAW For all of the reasons set forth in Findings of Fact Nos. 4, 5, 6, 7, 8 and 9, it is reasonable to approve the Staff-recommended rates. ORDER IT IS, THEREFORE, ORDERED that the application filed with the Commission on September 18, 1992, by Claywood Park Public Service District, pursuant to Tariff Rule 42, seeking increased rates and charges for providing water service, be, and the same hereby is, approved, to the extent and only to the extent recommended by Commission Staff, as set forth in Appendix A attached to this Recommended Decision, for all service rendered after this Recommended Decision becomes final. IT IS FURTHER ORDERED that the District shall file with the Commiswithin ten (10) days of the Recommended Decision becoming final, a roper tariff setting forth the rates and charges hereby 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. 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

7 Ronnie Z. McCann Administrative Law Judge

8 CLAYWOOD PARK PUBLIC SERVICE DISTRICT - WATER CASE NO PWD-42A APPROVED RATES SCHEDULE NO. 1 APPENDIX A Sheet 1 of 3 Applicable in entire territory served, except Deerwalk Extension area. AVAILABILITY OF SERVICE Available for general domestic, commercial and industrial service. RATE (For two months consumption) First 6,000 gallons used in two-month period $3.52 per 1,000 gallons Next 14,000 gallons used in two-month period $2.58 per 1,000 gallons Next 20,000 gallons used in two-month period $1.99 per 1,000 gallons Next 60,000 gallons used in two-month period $1.76 per 1,000 gallons All Over 100,000 gallons used in two-month period $1.41 per 1,000 gallons MINIMUM CHARGE (For two months billing) No bill will be rendered for less than the following amounts, according to the size of the meter installed, to-wit: I1 5/8-inch meter 1-inch meter 1-1/2-inch meter 2-inch meter 3-inch meter 4-inch meter 6-inch meter PRIVATE FIRE PROTECTION SERVICE For Private Fire Hydrants For Sprinkler Systems BILLING PROCEDURE $ bi-monthly $ bi-monthly $ bi-monthly $ bi-monthly $ bi-monthly $ bi-monthly $1, bi-monthly $ 15.00/per month per tap $ 50.00/per month Monthly meter reading and billing of all rental property accounts, and industrial, commercial or school accounts requesting monthly billing. On all other accounts, meter reading and billing shall be on bi-monthly basis. TRAILER COURTS House trailers, eithert mobile or immobile, located on sites other than a park or court shall be billed in the same manner as any other family or business unit. TAP FEE - $ D OF lh"'"'* I

9 APPENDIX A Sheet 2 of 3 CLAYWOOD PARK PUBLIC SERVICE DISTRICT - WATER CASE NO PWD-42A APPROVED RATES SCHEDULE NO. 1 - continued CHARGE FOR RECONNECTION Whenever the supply of water is turned off for violation of rules and regulations, non-payment of bills, or fraudulent use of water, the utility shall make a charge of $20.00 for reestablishing service. DELAYED PAYMENT PENALTY The above schedule is net. On all current usage billings not paid within twenty (20) days, ten percent (10%) will be added to the net current amount unpaid. This delayed payment penalty is not interest and is to be collected only once for each bill where it is appropriate. -2-

10 .. I APPENDIX A Sheet 3 of 3 CLAYWOOD PARK PUBLIC SERVICE DISTRICT - WATER CASE NO PWD-42A APPROVED RATES SCHEDULE NO. 2 Applicable in Deerwalk Extension Area only. VAILABILITY OF SERVICE Available for general domestic, commercial and industrial service. (For two months consumption) irst 6,000 gallons used in two-month period $7.33 per 1,000 gallons 14,000 gallons used in two-month period $5.39 per 1,000 gallons 20,000 gallons used in two-month period $4.22 per 1,000 gallons ext 60,000 gallons used in two-month period $3.75 per 1,000 gallons 11 Over 100,000 gallons used in two-month period $2.93 per 1,000 gallons I PINIMUM CHARGE (For two months billing) No bill will be rendered for less than the following amounts, acording to the size of the meter installed, to-wit: 5/8-inch meter 1-inch meter 1-1/2-inch meter 2-inch meter 3-inch meter 4-inch meter 6-inch meter DELAYED PAYMENT PENALTY $ bi-monthly $ bi-monthly $ bi-monthly $ bi-monthly $ bi-monthly $1, bi-monthly $2, bi-monthly I The above schedule is net. On all current usage billings not paid ithin twenty (20) days, ten percent (10%) will be added to the net amount unpaid. This delayed payment penalty is not interest and collected only once for each bill where it is appropriate. $ RECONNECTION CHARGE Whenever the supply of water is turned off for violation of rules and regulations, non-payment of bills, or fraudulent use of water, the utility shall make a charge of $20.00 for reestablishing service. I'

In the matter of increased sewer rates

OF WEST VIRGINIA AT CHARLESTON CASE NO. 93-1097-PSD-42T BERKELEY COUNTY PUBLIC SERVICE SEWER DISTRICT, a public utility, Martinsburg, Berkeley County. In the matter of increased sewer rates and charges.