avrke ruscak LLP ATTORNEYS AT LAW May 14, 2015 VIA ELECTRONIC FILING

Transcription

1 H avrke cikeri cst M S. ruscak LLP ATTORNEYS AT LAW Thomas J. Sniscak (717) x224 tjsniscak()hmsieai.com Christopher M. Arfaa (717) x231 cmarfaah Whitney E. Snyder (717) x260 wesnyder(i1h msieai.com 100 North Tenth Street, Harrisburg, PA Phone: Fax: May 14, 2015 VIA ELECTRONIC FILING Rosemary Chiavetta, Secretary Pennsylvania Public Utility Commission P. 0. Box 3265 Harrisburg, PA RE: Cornwall Borough, Lebanon County, Municipal Authority v. Borough of Cornwall; Docket Nos. C $ and P ; and, Petition of the Borough of Cornwall for a Declaratory Order That its Provision of Water Service to Isolated Customers Adjoining Its Boundaries Does Not Constitute the Provision of Public Utility Service Under 66 Pa. C.S. 102; Docket No. P CORNWALL BOROUGH MUNICIPAL AUTHORITY S MOTION FOR CONSOLIDATION Dear Secretary Chiavetta: Enclosed, for filing in the above-captioned proceedings, you will find the Cornwall Borough, Lebanon County, Municipal Authority s ( Authority ) Motion for Consolidation. A copy of this document has been served in accordance with the attached Certificate of Service. MAILING ADDRESS: P.O. BOX 177$ HARRISBURG, PA 17105

2 Rosemary Chiavetta, Secretary Pennsylvania Public Utility Commission May 14, 2015 Page 2 Thank you for your attention to this matter. hesitate to contact me. If you have any questions, please do not Very truly yours, Thoma niscak Christopher M. Arfaa Whitney E. Snyder Counselfor Cornwall Borough, Lebanon County, Municipal Authority TJS/das Enclosure cc: Per Certificate of Service

3 BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION CORNWALL BOROUGH, LEBANON COUNTY, MUNICIPAL AUTHORITY vs. Docket No. C Docket No. P BOROUGH OF CORNWALL PETITION OF THE BOROUGH OF CORNWALL FOR A DECLARATORY ORDER THAT ITS PROVISION OF WATER SERVICE TO ISOLATED CUSTOMERS Docket No. P ADJOINING ITS BOUNDARIES DOES NOT CONSTITUTE THE PROVISION OF PUBLIC UTILITY SERVICE UNDER 66 PA. C.S. 102 NOTICE TO PLEAD TO THE BOROUGH OF CORNWALL: PLEASE TAKE NOTICE THAT YOU HAVE TWENTY (20) DAYS FROM THE DATE OF SERVICE OF THE ATTACHED MOTION WITHIN WHICH TO FILE AN ANSWER OR OTHER RESPONSE TO THE MOTION. FAILURE TO FILE A RESPONSIVE PLEADING WITHIN THE TIME ALLOWED MAY RESULT IN A RULING ON THE MOTION ADVERSE TO YOUR INTERESTS. Thomas J. Sniscak, Attorney I.D Christopher M. Arfaa, Attorney I.D Whitney E. Snyder, Attorney I.D HAwKE McKE0N & SNIscAK LLP 100 N. 10th Street, P.O. Box 1778 Harrisburg, PA Tel. (717) tj sniscak@hmslegal.com cmarfaa@hmslegal.com wesnyder@hmslegal.com Attorneysfor the Cornwall Borough, Lebanon County, Municipal Authority

4 BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION CORNWALL BOROUGH, LEBANON COUNTY, MUNICIPAL AUTHORITY Docket No. C vs. Docket No. P BOROUGH OF CORNWALL PETITION OF THE BOROUGH OF CORNWALL FOR A DECLARATORY ORDER THAT ITS PROVISION OF WATER SERVICE TO ISOLATED CUSTOMERS Docket No. P ADJOINING ITS BOUNDARIES DOES NOT CONSTITUTE THE PROVISION OF PUBLIC UTILITY SERVICE UNDER 66 PA. C.S. 102 CORNWALL BOROUGH MUNICIPAL AUTHORITY S MOTION FOR CONSOLIDATION Pursuant to 52 Pa. Code 5.81(a) and 5.103(b), the Cornwall Borough, Lebanon County, Municipal Authority (the Authority ), by its under signed attorneys, hereby moves for consolidation of the Authority s Formal Complaint and Petition for Declaratory Order ( Authority Complaint/Petition ), filed at Docket Nos. C and P , with the Borough s Petition for Declaratory Order Docket No. P ( Borough Petition ). In support of this motion, the Authority states as follows: I. INTRODUCTION The proceedings that are the subject of this motion are essentially mirror-images of each other. On April 2, 2015, the Borough passed an ordinance directing the Authority to do all things necessary to terminate itself and transfer its assets to the Borough, including a water distribution system that serves customers located outside the Borough s municipal boundaries.

5 On April 8, 2015, since section 1 102(a)(5) of the Public Utility Code requires the Borough to apply for and obtain a certificate of public convenience from the PUC prior to acquiring or operating the facilities used to serve customers outside the Borough s limits, the Authority filed its Complaint/Petition to ensure that the transfer and termination are accomplished in accordance with this requirement. Two days later, on April 10, 2015, the Borough filed its own Petition, seeking an order declaring that the Borough is not a public utility, and thus not subject to any Commission oversight, notwithstanding its continued provision of water service beyond its borders after acquiring and operating the Authority s water system. Both proceedings involve largely the same set of factual circumstances and the same fundamental legal question concerning the Borough s obligations under the Public Utility Code. finally, the fact that the complaint portion of the Authority Complaint/Petition may raise additional issues should not prevent consolidation, since the parties have agreed to litigate the complaint portion only after the petition portion of the Complaint/Petition and the Borough Petition have been finally Section 1 102(a)(5) provides as follows: Upon the application of any public utility and the approval of such application by the commission, evidenced by its certificate of public convenience first had and obtained, and upon compliance with existing laws, it shall be lawful: (5) For any municipal corporation to acquire, construct, or begin to operate, any plant, equipment, or other facilities for the rendering or furnishing to the public of any public utility service beyond its corporate limits. 66 Pa. C.S (a)(5); see In re Cliv oflebanon, 101 Pa. P.U.C. 541 (May 15, 2006) ( Approval under 66 Pa. C.S. I l02(a)(5) is required prior to when a municipality, enabled by 53 Pa. C.S. 5622(a), or by any other enabling statute, acquires plant, equipment or facilities from a municipal authority it created and will use such plant, equipment or facilities to provide public utility service beyond its corporate limits in addition to approval to begin to render or furnish public utility service beyond its corporate limits. ); Public Service Water C o. v. Pennsylvania Pith. Util. Comm n, 645 A.2d 423, 427 (Pa. Cmwlth. 1994) (Commission must approve application for certificate of convenience before a transfer of facilities for regulated service); Middletown Township v. Pennsylvania Pub. Util. Comm h, 482 A.2d 647 (Pa. Cmwlth. 1984) (municipality must obtain a certificate of convenience prior to acquiring utility assets). 3

6 adjudicated by the Commission. Therefore, these proceedings should be consolidated for hearing and adjudication in the interests of conserving Commission and party resources and ensuring consistent results. II. FACTUAL AND PROCEDURAL BACKGROUND A. The Borough Ordinance The Authority, is a municipal authority organized by the Borough of Cornwall and existing under Pennsylvania Municipal Authorities Act2 (the Authorities Act ). The Authority currently serves 47 water customers outside of the Borough s municipal boundaries. In addition, the Authority has historically been open to serving additional customers outside of the Borough and indeed has contracts to serve 25 new homes in West Cornwall Township when they are constructed. At 8:00 in the morning on Thursday, April 2, 2015, the Borough adopted Ordinance , which directs the Authority to do all things necessary to transfer its assets to the Borough and effect its own termination. Since the Authority serves water customers beyond the Borough s municipal boundaries, the water system cannot be transferred to the Borough except pursuant to a certificate of public convenience granted by this Commission3 after finding or determining that the granting of such certificate is necessary or proper for the service, accommodation, convenience, or safety of the public. 4 In cases such as this one, involving the transfer of existing utility operations, the Public Utility Code requires the party to whom the assets and service obligations are being transferred to be legally, technically and financially 253 Pa. C.S. 5601, etseq. 66 Pa. C.S. I 102(a)(5). 66 Pa. C.S. 1103(a). 4

7 that fit. 5 However, Ordinance ignores this requirement and purports to order the Authority immediately to take all steps necessary to effectuate the transfer of all of its assets... to the Borough. (Ordinance ) On the afternoon of April 2, 2014, after the adjournment of the Borough meeting, the Borough s Special Counsel sent a peremptory letter to the members of the Authority Board demanding immediate compliance with the Ordinance and in effect asserting, incorrectly, that Ordinance stripped the Authority of its powers and duties under the Authorities Act: On behalf of the Borough the Authority is hereby directed to immediately comply with the directives of the Borough as set forth in... the Ordinance,... and immediately being the process of effectuating its termination. Additionally, the Authority is hereby ordered to immediately cease any activities and the expenditure of any funds in connection with such activities are contrary to the Borough s directives as set forth in the Ordinance. This expressly includes, but is not limited to, any outlay of funds in connection with [the hiring of special counsel and an engineering/rate/finance expert] which was allegedly approved by the Board of the Authority at its meetings held on March 23, 2015 and March 30, The purpose of the Authority is now expressly limited to conducting activities in furtherance of the Borough s directive to terminate and we strongly caution you against approving any course of action that is inconsistent with that stated purpose. Thus, any action you take that is contrary to the directives of the Borough in the Ordinance is contrary to the Authorities Act, see 53 Pa. C.S. 5612(a.l)(l).6 B. The Authority Complaint/Petition. In re UGI Utilities, Inc., 101 Pa. P.U.C. 737 (Aug. 18, 2006). Although fitness or ability are not specific statutory requirements, they have developed by judicial and administrative interpretation of Section 1102 of the Code, 66 Pa. C.S (certification of transferee required for transfer), and Section 1103(a) of the Code. Mobi fone ofnortheastern Pennsylvania, Inc. v. Pennsylvania Ptth. Util. Commn, 67 Pa.Cmwlth. 219, 222, 446 A.2d 1001, 1003 n.1 (1982) (citations omitted). 6 This letter is attached as Exhibit G to the Authority Complaint/Petition. 5

8 The Borough had not secured the Commission s approval, evidenced by its certificate of public convenience first had and obtained,... to acquire... or begin to operate the Authority s water distribution system outside the Borough s municipal limits, as required by section 1102(a)(5) of the Public Utility Code.7 Nor had the Borough filed tariffs with the Commission so that it may lawfully collect its rates from the Authority s extraterritorial customers. Moreover, despite the assertions of Borough counsel, the Authority retained its authority and responsibility under the Authorities Act to protect the interests of its customers. Therefore, on April 8, 2015, the Authority filed the Complaint/Petition to ensure that the transfer of the Authority s water distribution system to the Borough, as directed by Ordinance , complies with these requirements. The formal complaint set forth in the Authority s Complaint/Petition and docketed as No. C $ comprises 93 numbered paragraphs and requests that the Commission: 66 Pa. C.S (a)(5). 1. Order the Borough to cease its efforts to terminate the Authority and acquire its assets until the Borough obtains the certificate of public convenience required by law to acquire and operate water facilities to serve customers outside the Borough s municipal boundaries; 2. Order the Borough to comply with the law by filing (a) an application for a certificate of public convenience with the Commission to acquire and operate water facilities to serve customers outside the Borough s municipal boundaries, and (b) the tariffs required to charge rates for providing water service outside its municipal boundaries; 3. Hold evidentiary hearings and public input hearings on the Borough s fitness to acquire the Authority s water system and proposed rates; 4. Order the Borough to refund any illegally collected rates for water service provided by the Borough prior to the granting of a certificate of public convenience and the filing of Commission approved tariffs; [and] 6

9 5. Order fines and penalties upon the Borough for each day it is in violation of the certificate of public convenience and tariff requirements of the Public Utility Code, should the Commission deem such fines and penalties warranted.... $ The petition for declaratory order set forth in the Authority s Complaint/Petition and docketed at No. P incorporates all of the allegations of the Authority Complaint9 and requests that the Commission 6. Declare: a. That the Commission has jurisdiction over the Borough s acquisition of the Authority s facilities and provision of water service to extratenitorial customers; b. That the Borough s attempt to acquire the Authority s water distribution system, which serves customers outside the Borough s municipal boundaries, prior to obtaining a certificate of public convenience from the Commission is contrary to law; c. That the Borough may not collect charges from extraterritorial customers pending decisions on its application for a certificate of public convenience and its filing of tariffs with the Commission; and d. That any charges for water service collected from customers outside the Borough s limits prior to the grant of a certificate of public convenience and the filing of tariffs with the Commission will be subject to refund On April 9, 2015, the Authority served seven discovery requests on the Borough in the Complaint/Petition proceeding. On April 20, 2015, the Borough served objections to each and every one of the discovery requests. The Authority filed a motion to dismiss the objections and to compel answers to five of the seven discovery requests on April 27, On May 4, 2015, the Borough filed an answer to the motion. $ Complaint/Petition at Complaint/Petition 94 (incorporating the averments of paragraphs 1-93 by reference). 10 ComplaintlPetition at 30. The Complaint/Petition also requests that the Commission [g]rant such further relief as may be necessary or appropriate. IcL at 31. 7

10 On April 21, 2015, the Office of Consumer Advocate (OCA) filed a Notice of Intervention and Public Statement, stating that the Consumer Advocate will participate in the Authority Complaint/Petition proceeding to ensure that the requirements of the Public Utility Code are being met and that the interests of the customers residing outside of the Borough are protected. On April 29, 2015, the Borough filed an answer and preliminary objections to the Authority Complaint/Petition. Among other things, the Borough argues that the Commission lacks jurisdiction to determine the Borough s obligations pursuant to Section 1 102(a)(5) of the Public Utility Code because the termination of the Authority and transfer of the water system to the Borough, as required by Ordinance , have not yet occurred. The Authority filed its answer in opposition the Borough s preliminary objections on May 11, C. The Borough Petition On April 10, 2015, two days after the Authority filed its Complaint/Petition, the Borough filed its own Petition for Declaratory Order. The Borough Petition barely acknowledges, much less addresses, the requirements of Section 1102(a)(5) of the Code. Instead, it requests a ruling that the Borough s provision of water service to the Authority s extraterritorial customers will not constitute service to or for the public under the Public Utility Code, thus removing such service from the Commission s jurisdiction and excusing the Borough from all regulatory requirements: [TJhe Borough of Cornwall respectfully requests that the Pennsylvania Public Utility Commission issue a Declaratory Order concluding that the provision of water service by the Borough of Cornwall to a small, defined, privileged, and limited group of Notice of Intervention and Public Statement of the Office of Consumer Advocate Pursuant to 71 P.S. Section 309-4(e), Docket Nos. C $ and P , filed April 21, $

11 customers who reside in close proximity to, but outside of, its municipal limits, and who take service under the same rates, terms, and conditions as customers who reside inside the Borough s limits, does not constitute the provision of public utility service pursuant to Section 102 of the Pennsylvania Public Utility Code because it is not service to or for the public and does not subject the Borough to the jurisdiction of the Commission. 2 The Borough served the Petition on the Bureau of Investigation and Enforcement, the Office of Consumer Advocate, and all customers taking extraterritorial water service on the Borough s [sic] system on April 10, On April 17, 2015, the Borough effectuated service upon the Authority under the Commission s rules. 4 On April 20, the OCA filed an answer in opposition to the Borough Petition, submitting that the petition should be denied or, alternatively, referred to the Office of Administrative Law Judge for development of additional facts.15 On April 29, 2015, the Borough filed its Resolution , which it adopted at public meeting held on April 29, The non-binding resolution expressed the Borough s current intention (a) to continue to serve the Authority s 47 and the 28 known additional extraterritorial customers, but (b) to reject any requests for additional extraterritorial service connections. On May 7, 2015, the Authority filed its answer and new matter in opposition to the Borough Petition. The answer and new matter requests that the Borough Petition be denied. In the alternative, it requests that the Commission: 12 Borough Petition at Letter dated April 10, 2015 from counsel for the Borough to the Secretary transmitting Petition and Certificate of Service, Docket No. P l 1, filed Apr. 17, See Supplemental Certificate of Service of Borough of Cornwall, Docket No. P , filed Apr. 17, Answer of the Office of Consumer Advocate to the Petition of the Borough of Cornwall for a Declaratory Order, Docket No. P , filed Apr. 20,

12 1. Consolidate the proceeding with the Authority s Complaint and Petition proceedings at Docket Nos. C and P Order the Borough to serve the Petition on every water service provider serving areas abutting the Borough s municipal boundaries, including without limitation the Quentin Water Company and the City of Lebanon Authority. 3. Hold evidentiary hearings to resolve issues of fact disputed by the Borough and the Authority. 4. Declare: a. That the Commission has jurisdiction over the Borough s acquisition of the Authority s facilities and provision of water service to extraterritorial customers; b. That the Borough s may not acquire the Authority s water distribution system, which serves customers outside the Borough s municipal boundaries, prior to obtaining a certificate of public convenience from the Commission is contrary to law; c. That the Borough may not collect charges from extraterritorial customers pending decisions on its application for a certificate of public convenience and its filing of tariffs with the Commission; and d. That any charges for water service collected from customers outside the Borough s limits prior to the grant of a certificate of public convenience and the filing of tariffs with the Commission will be subject to refund; and 5. Grant such further relief as may be necessary or appropriate. 6 B. Related Litigation in the Lebanon County Court of Common Pleas On the same day that the Borough filed its Petition with the Commission, it also filed a complaint in mandamus and motion for preliminary injunction against the Authority in the Lebanon County Court of Common Pleas, seeking, among other things, to prevent the Authority from expending the funds necessary to represent itself and the interests of its customers before 16 Answer In Opposition And New Matter Of Cornwall Borough, Lebanon County, Municipal Authority, Borough Petition, Docket No. P-20l , at (filed May 7, 2015). 10

13 the Commission. 7 The Authority subsequently filed a complaint and a motion for preliminary injunction against the Borough in the same court challenging the enactment and enforcement of Ordinance under the Sunshine Act.18 A hearing on the competing motions was held on April 15, 2015, which resulted in the negotiation and entry of an agreed order resolving the motions, permitting the Authority to continue its participation in these proceedings, and staying the civil proceedings pending final rulings by the Commission on the claims set forth in the Authority Complaint/Petition and the Borough Petition. 9 III. THE AUTHORITY COMPLAINT/PETITION AND THE BOROUGH PETITION SHOULD BE CONSOLIDATED FOR PURPOSES OF HEARING AND ADJUDICATION Section 5.81(a) of the Commission s Rules of Practice and Procedure provides for consolidation of proceedings involving common questions of law or fact: The Commission or presiding officer, with or without motion, may order proceedings involving a common question of law or fact to be consolidated. The Commission or presiding officer may make orders concerning the conduct of the proceeding as may avoid unnecessary costs or delay. 20 The Authority Complaint/Petition proceeding (which now includes the issues posed by the Borough s preliminary objections and answer) and the Borough Petition proceeding (which 173oroitgh of Cornwall et al. v. cornwall Borough, Lebanon Co., Mun. Auth., et al., Action No (filed Apr. 10, 2015). 18 Cornwall Borough, Lebanon Co., Mun. Auth v. Borough of Cornwall et al., Action No (filed Apr. 10, 2015). 9Borotigh of Cornwall et al. v. Cornwall Borough, Lebanon Co., Mun. Auth., et al., Action Nos , (Pa. Ct. Common Pleas, Leb. Co., entered Apr. 16, 2015) ( Agreed Order ) (a copy of this Order is attached hereto as Exhibit A). This order is a public record of which the Commission may take both judicial notice and official notice. 66 Pa. C.S. 33 1(g), 332(e); 52 Pa. Code Pa. Code 5.8 1(a). 11

14 now includes the claims asserted in Authority s affirmative requests for relief) clearly involve common questions of law and fact, including without limitation the following: Whether the Borough s provision of water service to customers beyond its corporate limits constitutes [d]iverting, developing, pumping, impounding, distributing, or furnishing water to or for the public for compensation within the meaning of Section 102 of the Public Utility Code;2 Whether the Borough s provision of water service to customers beyond its corporate limits constitutes the rendering or furnishing to the public of [a] public utility service within the meaning of Section 11 02(a)(5) of the Public Utility Code;22 Whether, in light of the peremptory commands of Ordinance and the Borough s vigorous efforts to compel compliance by the Authority, the Commission has jurisdiction to issue a declaratory ruling determining the Borough s obligation to obtain a certificate of public convenience authorizing its acquisition of the water system pursuant to Section 11 02(a)(5) of the Public Utility Code; Whether the Borough s Resolution , which states the Borough s intentions to continue service to existing extraterritorial customers but not to extend service to any additional extraterritorial customers, confirms or negates the public character of the continued service provided to existing extraterritorial customers; Pa. C.S. 102 (definition of Public Utility ) Pa. C.S. I 102(a)(5). 12

15 Whether the Borough s resolution to charge inside and outside customers the same rates protects the Authority s extraterritorial customers against rate discrimination; Whether the Authority s extraterritorial customers require the protection of Commission regulation for reasons other than prevention of rate discrimination; and Whether the Borough intends to fund municipal operations with extraterritorial customers payments by commingling municipal and water service functions. Some of these questions were not expressly raised in both the Authority Complaint/Petition and the Borough Petition. However, the responsive pleadings filed by each party raise many of the same issues raised in their initial pleadings. As a result, the parties advocacy in each proceeding will to a large extent duplicate their advocacy in the other proceeding. This will result in an unnecessary drain on both party and Commission resources and may create a risk of inconsistent results. Conversely, consolidation of these proceedings is in the public interest because it will conserve party and Commission resources and eliminate any risk of inconsistency. It may appear that the proceedings are incompatible because the Authority Complaint/Petition, unlike the Borough Petition, includes claims for mandatory relief beyond a declaratory order. However, this is not the case. As set forth above, in the related litigation before the Lebanon County Court of Common Pleas, the Authority and the Borough have agreed not to litigate the claims for mandatory relief asserted in the formal complaint portion of the Authority Complaint/Petition until the Commission rules on the parties claims for declaratory 13

16 relief set forth in their respective petitions for declaratory orders. Therefore, consolidation would provide the added benefit of ensuring coordination of these interlocking proceedings. IV. CONCLUSION For all of the foregoing reasons, the Authority respectfully requests that the Commission enter an order consolidating the above-captioned proceedings at Docket Nos. C , P and P for hearing and adjudication. Dated: May 14, 2015 Respectfully submitted, Thomas J. Sniscak, Attorney I.D Christopher M. Arfaa, Attorney I.D Whitney E. Snyder, Attorney I.D HAwKE McKEON & SNIscAK LLP 100 N. 10th Street P.O. Box 1778 Harrisburg, PA Tel. (717) tj sniscak@hmslegal.com cmarfaa@hmslegal.com wesnyder@hmslegal.com Attorneys for the Cornwall Borough, Lebanon County, Municioal Authority 14

17 V IfflIIIXEI

18 CORNWALL BOROUGH, LEBANON COUNTY, MUNICIPAL AUTHORITY, Plaintiff, vs. IN THE COURT Of COMMON PLEAS OF LEBANON COUNTY, PENNSYLVANIA CIVIL DIVISION -U Cl, r1 I Cm - z rnc U:, BOROUGH OF CORNWALL,, Lebanon County, Pennsylvania, COUNCIL OF THE BOROUGH OF CORNWALL, JOHN KARINCH, ANTHONY FITZGIBBONS, GERALD BOUGHTER, BETH YOCUM, JOE KEANEY, JR., STEVEN LEVENGOOD and AL BRAN DI, JR.,, NO :3,. >9- CD C) m Defendants. r Or CORt.ALL, Plaintiffs, IN TIlE CQURT OF COI MON P1 FAS OF LEBANON COUNTY, PENNSYLVANIA CIVIL DIVISiON vs. CORNWALL BOROUGH, LEBANON COUNTY, MUNICIPAL AUTHORITY, eta!. NO Defendants ORDER AND NOW, to wit, April 15, 2015, after consideration of the comments of counsel and the terms of the Order proposed by counsel and set forth below: The Motion for Consolidation filed on behalf of the Cornwall Borough, Lebanon County, Municipal Authority (the Authority ) is granted; The Motion for Preliminary Injunction filed on behalf of the Authority is withdrawn and therefore denied as moot; The Motion for Special and Preliminary Injunctive Relief filed on behalf of the Borough of Cornwall (the Borough ) is withdrawn and therefore denied as moot. It is hereby Ordered as follows:

19 having been established by the Authority s duly adopted budget for Costs or body having jurisdiction over the sewer or water operations, not to exceed, in the ( ) which are not identified in the duly adopted budget for fiscal year The Authority shall not undertake any new capital projects in the current fiscal year in any matter before this Court. aggregate, $25,000, without consent of the Borough which shall not be before the Pennsylvania Public Utility Commission and any related appeals or advice and representation with regard to the proceedings currently pending U. Payment for past and continued representation by the following parties: I. Hawke McKeon & Sniscak LLP ii. Howard J. Woods, Jr. & Associates, CLC, subject to paragraph 5 below. unreasoably withheld; c. Emergency costs or costs to meet regulatory requirements by an agency b. All expenses identified in the duly adopted budget for fiscal year ; current number of Authority employees; a. Normal and current salaries and benefits for the 2. The Authority will not incur any costs outside the ordinary course of business, such costs injunction imposed thereby is lifted. incurred in the ordinary course of business include: These parties may be retained to provide services to the Authority, including 2015 (attached as Exhibit A) without the consent of the Borough, which shall not be resolving all existing proceedings pending before the Public Utility Commission; parties receive a final and unappealable order from the Public Utility Commission (with the exception of the previously identified water customers in Alden Plan), until the 5. The Authority shall not accept any additional extraterritorial water or sewer customers the consent of the Borough, which shall not be unreasonably withheld (9/1/2015-8/31/2016) which: (a) have not already been documented in 4. The Authority shall not include any new capital projects in the budget for fiscal year unreasonably withheld. meeting minutes prior to August 31, 2015; and (b) or cause the capital budget to increase by more than ten percent (10%) above the prior year s capital budget without 1. The Order entered April 10, 2015 in this matter is rescinded and the temporary

20 an agency having jurisdiction over the Authority s water or sewer operations. Borough s Petition and upon the Authority s Petition for a Declaratory Order. resolving all existing proceedings pending before said Commission. Levengood, which Mr. Levengood acknowledged, welcomes and recognizes Mr. Levengood as a member of the Board of the Authority. single Action No Court. 13. The two actions currently filed under Action Nos and are 14. These proceedings shall be stayed and held in abeyance pending further Order of the pursue the Complaint filed before the PUC until such time the PUC rules on the hereby consolidated for all future actions. Any future filings shall be made under the 11. The Authority, via the April 6, from its Executive Director to Mr. Steven 12. The Borough shall not seek to impose personal liability upon individual members of the 10. The Borough acknowledges and thanks Mrs. Kathleen Schaeffer for 25 years of PUC actions filed by the Borough and the Authority. Woods, P.E., relative to the Authority s PUC complaint until such time the PUC rules on 8. The Authority agrees that it will not incur any additional costs for its engineer, Howard a final and unappealable order from the Pennsylvania Public Utility Commission 7. The Authority shall not issue any bonds or incur debt obligations until the parties receive 9. The Borough agrees that it will not oppose the Authority s participation in the pending Council, which shall not be unreasonably be withheld. renegotiate construction security agreements, without the consent of the Borough the Borough s Petition for Declaratory Order. The Authority also agrees that it will not agreements, (b) negotiate any new developers agreements, or (c) negotiate or 6. The Authority agrees that it shall not (a) negotiate or renegotiate any inter-municipal provided this shall not apply if the Authority is directed to serve any such customers by exemplary service to the Authority and the Borough pro bono publico and her selfless dedication to the public interest. The Borough acknowledges that her conduct has been Authority that she previously occupied. The Borough holds Mrs. Schaeffer in the highest Authority for incurring or causing the Authority to pay any of the costs identified above. entirely consistent with Mr. Levengood s appointment to the seat on the Board of the regard and regrets any offense caused by a contrary interpretation of its advocacy in this proceeding.

21 that this order has been entered in this case. You are hereby notified PUR UAiTTO RULE 236 JUDITHA HUBER ; LAWCLERK THOMASJ.SNISCAK CC: CAROLSTEINQUR YOUNG BY THE COURT: proceedings before the Public Utility Commission described above and any related appeals, or (b) October 15, The parties shall file a status report upon the earlier of (a) final disposition of the

22 WATER FUND BUDGET REVENUES INTEREST PLAN REVIEW FEES 4, WATER RENTS 487, ,105 DEBT SERVICE 88, TAPPING FEES 67, WATER CAPITAL 108, METERS 8, OTHER WATER REVENUES 2, MISCELLANEOUS TRANSFERS - FEES COLLECTED 108,424 Not actual income TRANSFERS - TAPS 67,500 Not actual income TOTAL WATER REVENUES 766,973 ADMINISTRATION 401,000 SALARIES & WAGES 90, PROFESSIONAL SERVICE CHARGES MATERIAL& SUPPLIES GENERALEXPENSE 2, COMMUNICATION EXPENSE INSURANCE & BONDING 3, OFFICE UTILITIES 6, MAINTENANCE & REPAIRS 3, AUDITING SERVICE 3, LEGAL EXPENSE 5, ENGINEERING EXPENSE 7, CONSULTING SERVICE LVFBTANKLOAN-INT 34, LVFB TANK LOAN - PRINCIPAL 54, EMPLOYMENT COSTS 33, PENSION FICNMEDICARE 6, UNEMPLOYMENT COMRINSUR. 821 TOTAL ADMINISTRATION 264,331 WATER TREATMENTIDIST MATERIAL& SUPPLIES 1, EQUIPMENT 4, METERS 11, TRAINING WATER PURIFICATION 3, CITY WATER PURCHASE 250, COMMUNICATION EXPENSE VEHICLE OPERATING EXPENSE 4, UTILITIES 27, MAINTENANCE & REPAIRS 23, TRANSFER - TAPS 67, TRANSFERS - FEES COLLECTED TOTAL - WATER COST 502,642 TOTAL REVENUE 766,973 TOTAL EXPENSE 766,973 YEAR END SURPLUS 0

23 WATER ( ) AUTHORITY PROJECTS CAPITAL FUND RECONCILIATION BUDGET Current Investments Expenditures Income Balance Water Capital Improvements $392,296 Anticipated Interest $134 Transfer from Revenue $11,100 **Total Water Investments $403,530 Abandonment of main from MV tanks to Rexmont Rd $6,000 Available Beginning of Year $397,530 Fiscal Year Capacity Fees 25 $270 $67500 Agreement with Alden & Manor $2,700 Capital charges to customers $108,424 Interest $900 Total Income for coming budget year $577,054 Projects -Annual Utility Service Company - tank contract $37,000 Misc. Water valves, hydrants & pipe (as needed) $20,000 Waterline ROW tree clearing $3,500 Projects Slated for 20 14/2015 PAX Water Mixer (2 of 4) $26,000 Valves, hydrants & curb stop repairs (2 014) $10,000 Pump and Motor pump stations (remaining 3) $6,000 Goosetown Water Line (through creek) $25,000 Done Purchase filing cabinet - Directors office $1,000 Generators overhauled and load test $5,974 Done Purchase Honda push mower $300 Capital Improvement Allocations Sinkhole Fund $0 Vehicle Fund $7,000 Meter Replacement Fund $10,000 Misc. Water valves, hydrants & pipe $20,000 Waterline ROW tree cleating $3,500 Rt Main replacement $5,000 TotalAllocation Slated for 2013/2014 $174,274 Available Year End 2014 $402,780 4/15/15

24 WATER ( ) DEDICATED RESERVES BUDGET Current Investments Expenditures Income Balance Sink hole reseives (current budget) $15,000 Vehicle reserves (current budget) $30,000 Meter replacement reserves $10,000 Waterline ROW clearing $7,000 Rt 322/72 Main Replacement $1 00,000 Miscellaneous valves, hydrants & pipe (as needed) $20,000 Interest Accrued $602 Anticipated Interest $840 Avdiab g. Of New Year $Th3,442 Fiscal Year Transfers allocated from Capital Water Meter replacement reserves $70,000 Vehicle reserves $7M00 Sink hole reserves Waterline ROW clearing $3,500 Rt 322/12 Main Replacement $ 000 Miscellaneous valves, hydrants & pipe (as needed) $ Total Transfers $39,500 Expenditures - Purchase of truck $15,000 Total Expenditures $15,000 Available Year End 2015 by reserve $207,942 Sink hole reserves $15000 Vehicle reserves $16,000 Meter replacement reserves $20,000 Waterline ROWclearing $10,500 Rt Main Replacement $1 05,000 Miscellaneous valves, hydrants & pipe (as needed) $40,000 4/15/15

25 SEWER FUND BUDGET - ( ) REVENUES INTEREST PLAN REVIEW FEES SEWER RENTS 594, DEBT SERVICE TAPPING FEES 102, SEWER CAPITAL SEWER PERMIT FEES W.CORN.TRANS CHG 3, MISCELLANEOUS TRANSFERS - FEES COLLECTED 0 Not actual income TRANSFERS - TAPS 102,500 Not actual income TOTAL SEWER REVENUE 702,088 EXPENDITURES ADMINISTRATION SALARIES &WAGES PROFESSIONAL SERVICE FEES MATERIAL& SUPPLIES 3, GENERAL EXPENSE 2, COMMUNICATION EXPENSE INSURANCE & BONDING 3, OFFICE UTILITIES 6, MAINTENANCE & REPAIRS 3, AUDITING SERVICE 3, LEGAL EXPENSE 5, ENGINEERING EXPENSE 5, ,000 EMPLOYMENT COSTS 33, PENSION 7, FICNMEDICARE UNEMPLOYMENT COMRINSUR. 821 TOTAL ADMINISTRATION 172, MATERIAL & SUPPLIES EQUIPMENT DAIRY RD. PUMPSTATION COSTS-NC 5, COMMUNICATION EXPENSE VEHICLE OPERATING EXPENSE 4, UTILITIES MAINTENANCE & REPAIRS 4, TRAINING CITY OF LEBANON-USAGE CHARGE 395, N.CORNWALL-TRANS.CHARGE 14,569 TOTAL SEWER COLLECTION 427, TRANSFERS -TAPPING FEES 102, TRANSFERS - FEES COLLECTED 0 TOTAL TRANSFERS 102,500 TOTAL REVENUES 702,088 TOTAL EXPENDITURES 702,088 YEAR END SURPLUSIDEFICIT 0

26 SEWER AUTHORITY PROJECTS CAPITAL FUND RECONCILIATION BUDGET Current Investments EXPENDITURES INCOME BALANCE Sewer Capital Improvements $693,680 Anticipated Interest $280 Transrer 1mm Revenues $14637 Less Allocated money $0 **Total Sewer Investments $708,597 Year End Balance Forward $708,597 Fiscal Year 201 4/2015 Capital charges to customers $0 Capacity Fees (taps sold) $102,500 Interest $1540 Total Income far budget year $104,040 Projects -Annual Main Repairs/Replacement $20,000 Right-of-Way Clearing $5,000 Projects - Slated for this year Televising Sewer Mains (5 years) $30,000 Purchase filing cabinet - Directors office $1,000 Purchase Honda push mower $300 North Cornwall Township (per 0 & M agreement) $7,000 Capital Improvement Allocations Sinkhole Fund $0 Vehicle Fund $1,000 Meter Replacement Fund $10,000 North Cornwall Township (future projects) $10,000 Main Repairs/Replacement $15,000 TotalAllocatj@n Slated for 2014/2015 $84,300 Available Year End 2015 $728, WER /2015

27 DEDICATED RESERVES BUDGET Current Investments EXPENDITURES income BALANCE Sink hole reserves (beginning balance) $15,000 Vehicle reserves (beginning balance) $30,000 Meter replacement reserves $10,000 North Cornwall Improvements $20,000 Interest Accrued (over the years) $831 Anticipated Interest $480 Available Beg. Of New Year $76,311 Anticipated Interest $480 Fiscal Year Transfers allocated from Capita! Meter replacement reserves $10,000 Vehicle reserves $1,000 Sink hole reserves $0 North Cornwall Improvements $70,000 Projects Slated for Total Transfers $21,480 Purchase truck with plow $15,000 Available Year End 2015 by reserve $82,791 Sink hole reserves $15,000 Vehicle reserves $16,000 Meter replacement reserves $20,000 North Cornwall Annual Improvements $30,000 4/15/15

28 5th BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION CORNWALL BOROUGH, LEBANON COUNTY, MUNICIPAL AUTHORITY, Complainant/Petitioner Docket No. C vs. BOROUGH OF CORNWALL, Respondent Docket No. P CERTIFICATE OF SERVICE I hereby certify that I have this day served a true and correct copy of the foregoing document upon the parties, listed below, in accordance with the requirements of 52 Pa. Code 1.54 (relating to service by a party). VIA ELECTRONIC AND FIRST CLASS MAIL Adeolu A. Bakare Andrew S. Ziegler McNees Wallace & Nurick, LLC 100 Pine Street P0 Box 1166 Harrisburg, PA abakare()rnwn.com azieler(irnwn.corn Steven Gray Office of Small Business Advocate Commerce Building 300 North Second Street, Suite 202 Harrisburg, PA sgray(pa. gov Christine Hoover Erin Gannon Office of Consumer Advocate 555 Walnut Street Forum Place Floor Harrisburg, PA Cl-Ioover(paoca.org EGannonCiipaoca.org Johnnie Simms, Esquire Bureau of Investigation and Enforcement Peimsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street, 2 Floor West Harrisburg, PA iosimms(,pa.gov DATED: May 14, 2015 fhoma J. Sniscak Christo phr M. Arfaa Whitney E. Snyder