PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON COMMISSION ORDER

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1 PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON At a session of the PUBLIC SERVICE COMMISSION OF WEST VIRGINIA in the City of Charleston on the 3 lst day of October, CASE NO PSWD-PC JEFFERSON COUNTY COMMISSION Petition for consent and approval of dissolution of Jefferson County Public Service Districts. COMMISSION ORDER The Cornmission requires additional information to be filed and grants several petitions to intervene. BACKGROUND On March 23, 2017, the Commission granted a certificate of public convenience and necessity to Jefferson County Public Service District, pursuant to W. Va. Code $ , for a $6.9 million project to upgrade its sewer collection and transmission system and approved an increase in rates upon completion of the project. Jefferson Co. PSD, Case No PSD-PC-CN, Comm n Order at 1-25 & attachments. During the public comment period, the Jefferson County Commission filed a letter in opposition to the proposed certificate project, reflecting a three to two vote of the County Commissioners. Two County Commissioners filed letters in support of the project. Jacquelyn Milliron, an intervenor in the certificate case, filed an appeal of the Commission Order with the West Virginia Supreme Court of Appeals. On June 9, 20 17, the West Virginia Supreme Court upheld the Commission Order that granted the certificate. County Commission petition to dissolve PSD, On April 6, 2017, the Jefferson County Commission enacted an Order in which the County Commission proposed, pursuant to W. Va. Code $16-13A-2, to dissolve Jefferson County PSD contingent upon the City of Charles Town (Charles Town) presenting a plan to acquire the PSD customers and assets. The Charles Town plan would be ratified by the County Commission, subject to the consent and approval of the Public Service Commission. The vote to propose the dissolution of the PSD passed by a I

2 three to two vote. The County Commission Order also required that notice be published of a public hearing scheduled for May 4, On April 7, 2017, the County Commission filed its Order and Notice of a Public Hearing with the Public Service Commission, and Case Number PSWD-PC was opened. On April 10, 20 17, Jefferson County Commissioner Patricia Noland filed a letter opposing dissolution, noting that the Public Service Commission approved the certificate on March 23, 2017, the County Commission proposed to dissolve the PSD on March 30, 2017, and the same County Commissioners who voted to propose the dissolution had opposed the PSD s certificate application. Commissioner Noland wrote that the County Commission sent a letter containing notice of the proposed dissolution to the agencies that were funding the certificate project. She asserted that the letter by the County Commission was an attempt to derail the certificate project. Commissioner Noland argued that the Order of the Public Service Commission in the certii-icate case rejected the County Commission position that consolidation would be more difficult, if not impossible, after the certificate project was completed. She asserted that it was not in the best interest of current or future residents and businesses to dissolve the PSD until an acceptable consolidation plan was in place. On April 10, 2017, the County Commission filed a copy of the letter that it sent to funding agencies. The letter advised that the County Commission (i) opposed the certificate project because the additional debt would make sewer consolidation very difficult, if not impossible, and (ii) approved a motion to dissolve the PSD and sell its assets to Charles Town, contingent upon a plan being ratified by the County Commission. Dissolution of the PSD also would be subject to the consent and approval of the Public Service C omin i ssi on. On April 1 1, 20 17, the PSD filed a letter that it had mailed to the funding agencies advising that representatives of the PSD, Charles Town, the City of Ranson (Ranson) and the County Commission had been meeting to consider a plan of consolidation or merger that would not require the dissolution of the PSD. The PSD also asserted that the County Commission action and notice to the funding agencies was premature. On April 17, 2017, Jefferson County Commissioner Jane Tabb filed a letter opposing dissolution. She asserted that the County Commission Order was a reaction to the Public Service Commission s approval of the certificate project. She advised that there had been two meetings of the County, Ranson, Charles Town and the PSD to create I Jefferson County Commission President Peter Onoszko and Commissioners Josh Compton and Caleb Hudson voted yes to dissolve the PSD. Commissioners Patricia Noland and Jane Tabb voted no. 2

3 a framework to move toward consolidation. Commissioner Tabb argued that the proposed dissolution of the PSD did not provide assurances that (i) ratepayers would be protected, (ii) sewer capacity issues would be resolved in a low cost, timely manner and (iii) a transition strategy would be crafted to facilitate the debt issues of the certificate project. On May 4, 2017, the County Commission conducted a public hearing on its proposal to dissolve the PSD. The hearing was continued until July 6, On July 7, 2017, the County Commission filed (i) the County Commission s July 6, 2017 Order of Dissolution (by the same three-two vote), subject to the consent and approval of the Public Service Commission, (ii) Charles Town Resolution that provided the terms for a Purchase Agreement under which Charles Town would acquire the PSD assets and customers, and (iii) the Notice for the July 6, public hearing on the proposal to dissolve the PSD. The County Commission stated that it planned to file the proposed Purchase Agreement within 60 days. On July 12, 20 17, Charles Town filed a Motion to Intervene, asserting that it had a legal interest in this case because, if the dissolution was approved, the PSD assets and liabilities would be transferred to Charles Town. On August 3, 2017, Herbert E. Withers filed comments in opposition to the proposed dissolution of the PSD. On August 9, 2017, the PSD filed a Petition to Intervene, asserting that (i) the County Commission action to dissolve the PSD was intended to prevent the construction of the certificate project and (ii) the PSD s interest could not be adequately represented by any other party. The PSD noted that the County Commission did not intervene in the certificate case and the Supreme Court denied the appeal of the certificate Order. On August 11, 2017, Ms. Milliron filed written comments and asserted that counsel for the PSD was biased or had a conflict of interest. She stated that she was not requesting to intervene at this time, but was objecting to the PSD s choice of legal counsel. On August 11, 2017, Commission Staff filed its Initial Memo and recommended that (i) the County Commission file any proposed Acquisition Agreement, as well as proof that the County Commission provided the required notice of its dissolution proceedings and (ii) the Public Service Commission grant the Charles Town and PSD Petitions to Intervene. Staff also asserted that an issue in this proceeding would be the authority of the County Commission to dissolve the PSD on its own initiative and without the vote of the PSD board under W. Va. Code tj 16-13A-2. On August 15, 2017, the Jefferson County Citizens for Economic Preservation (Citizens) filed a Motion to Intervene. Citizens is a non-profit corporation of residential and commercial land developers, builders and related service industry providers. Its 3

4 members have numerous projects already in construction or planning phases that depend upon the certificate project. Citizens asserted that its members would suffer economic harm if the certificate project was not built. On August 15, 2017, Shenandoah Junction Public Sewer, Inc., filed a Petition to Intervene. Shenandoah Junction provides sewer service to 160 customers in Jefferson County and needs to connect to the PSD facilities, but there is not enough capacity to connect unless the certificate project is constructed. Shenandoah Junction asserted that the County Commission appeared to intend to prevent the PSD from constructing the certificate project. The fate of Shenandoah Junction s customers and the affordability of adequate sewer service to those customers would be affected by the outcome of the dissolution case. On August 28, 2017, Charles Town filed a letter asking the Public Service Commission to prohibit Citizens from requesting information from Charles Town through Freedom of Information Act requests. On September 1 1, 20 17, Arcadia Land, Inc., filed a Petition to Intervene. Arcadia develops residential and commercial properties and the Harvest Hills and Norborne Glebe subdivisions of Arcadia depend on the PSD sewage collection system. Arcadia has projects in construction or the final planning stages that would be served by the certificate project and has devoted capital and made financial commitments in reliance upon the upgrade that was authorized in the certificate proceeding. Almost 140 letters have been filed in support of the County Commission plan to dissolve the PSD, most of them as a form letter. On October 5, 2017, Staff filed a Further Joint Staff Memorandum and continued to recommend that (i) Charles Town and the County Commission file any proposed Acquisition Agreement and (ii) the County Commission file proof that the notice required by statute had been provided. DISCUSSION Petitions to intervene Charles Town, as the proposed grantee of the PSD assets and liabilities, has a legal interest in this matter. The PSD, as the entity that the County Commission voted to dissolve, clearly has a legal interest in this matter. Furthermore, Citizens, Shenandoah Junction and Arcadia, who each rely upon utility services provided by the PSD, including the services that are to be upgraded as a result of the certificate project, each have a legal interest in this matter. The Commission will grant their Petitions to Intervene. Rule 12.6.e of the Commission Rules of Practice and Procedure, 150 C.S.R. Series 1 provides, 4

5 When two or more intervenors have substantially similar interests and positions, the Commission may, in order to expedite the hearing, limit the number of parties who may cross-examine, make and argue motions, or object on behalf of such intervenors. The real estate developers that have separately been granted intervenor status may have substantially similar interests and positions. If the Commission conducts a hearing in this matter, the parties should be aware that the Commission may invoke Procedural Rule 12.6.e to facilitate the processing of this case. Status of certijkate proceeding The letter from the County Commission to the funding agencies and the letters filed by the two county commissioners who oppose dissolution link the County Commission decision to dissolve the PSD with the Commission recent determination to grant a certificate for the project to upgrade the PSD s sewer system. In this proceeding, the PSD should file an update of the status of the certificate project. Applicable statutes The proposed dissolution of the PSD must comply with several statutes, but it is not clear whether the parties to this matter agree on which statutes apply. Within thirty days of the date of this Order, each of the parties shall file a pleading that addresses, at a minimum, the applicability in this matter of the following code sections: 1. W. Va. Code $ , which provides that the Public Service Commission must grant its prior consent and approval to the transfer of utility assets; 2. W. Va. Code $ 16-13A-2, which provides that the County Commission may, under certain circumstances, including obtaining the consent of the Public Service Commission, dissolve a public service district; and 3. W. Va. Code $ 16-13A- 1 Sa, which provides that the board of a public service district may, under certain circumstances, including obtaining the consent of the County Commission and the Public Service Commission, sell the utility assets. If any party asserts that the Commission should consider a statutory provision that is not listed above, the pleading must identify that statute and explain why the statute applies in this case. 5

6 Additional information More than ninety days have passed since the County Commission indicated that it would file a Purchase Agreement for the Public Service Commission to review. The Commission cannot consider whether to grant the request to dissolve the PSD until the Purchase Agreement has been filed. Furthermore, the file does not yet contain the Affidavits that are necessary to evidence compliance with the notice requirements of W. Va. Code $16-13A-2. The County Commission should file the Affidavits and the Purchase Agreement within thirty days of the date of this Order. Challenge to PSD counsel In the comments filed on August 11, 2017, Ms. Milliron argued that the PSD s selection of legal counsel posed a bias or the appearance of a conflict of interest because (i) counsel asserts that it knows the mind of the Jefferson County Commission and (ii) PSD counsel represented the Public Service Commission in the appeal in the certificate case, and the Public Service Commission is the regulatory body that will determine the outcoine of the dissolution case. We have reviewed the documents cited by Ms. Milliron and disagree with her position. In the Petition to Intervene, the PSD presented its view of the case to argue why the request to intervene should be granted. The statement in the Petition to Intervene that the County Commission intended to dissolve the PSD to prevent the certificate project from being constructed does not limit the ability of the County Commission, which is represented by its own counsel, to fully present its own legal position during the dissolution case. The statement in the Petition to Intervene of the PSD s position does not amount to evidence of bias on the part of PSD counsel. Furthermore, the PSD and the Public Service Commission had separate counsel throughout the appeal of the certificate Order. When PSD counsel stated in the filing with the Supreme Court that he had been authorized to represent that counsel for the PSC supports the contents of this letter, that statement expressly acknowledged that PSD counsel had obtained consent from the Public Service Commission counsel to advise the Supreme Court that the PSD and the Public Service Commission had the same position in regard to Ms. Milliron s petition for reconsideration. FINDINGS OF FACT I. On March 23, 201 7, the Public Service Commission granted a certificate of public convenience and necessity to Jefferson County PSD, pursuant to W. Va. Code $ , for a $6.9 million project to upgrade its sewer collection and transmission system and to increase rates upon completion. Jefferson Co. PSD, Case No PSD-PC-CN, Comm n Order at 1-25 & attachments. 6

7 2. On June 9, 2017, the Supreme Court of Appeals of West Virginia upheld the Commission Order that granted the certificate to Jefferson County PSD. 3. On April 7, 2017, the Public Service Commission opened Case Number PSWD-PC to consider the proposal by the Jefferson County Commission to dissolve Jefferson County PSD. 4. On July 6, 2017, the Jefferson County Commission, by a 3 to 2 decision, voted to dissolve the Jefferson County PSD. Jefferson Co. Comm n Order of Dissolution (filed July 7, 2017). 5. On July 12, 2017, Charles Town filed a Motion to Intervene. 6. On August 9, 20 17, the Jefferson County PSD filed a Petition to Intervene. 7. On August 15, 2017, the Jefferson County Citizens for Economic Preservation filed a Motion to Intervene. 8. On August 15, 2017, Shenandoah Junction Public Sewer, Inc. filed a Petition to Intervene. 9. On September 1 1, 20 17, Arcadia Land, Inc. filed a Petition to Intervene. CONCLUSIONS OF LAW 1. Charles Town, as the proposed grantee of the PSD assets and liabilities; Jefferson County PSD, as the entity that the County Cornmission has proposed to dissolve; and Citizens, Shenandoah Junction and Arcadia, who rely upon utility services provided by the PSD, including the services that are to be upgraded as a result of the certificate project, each have a legal interest in this matter. The Commission should grant those Petitions to Intervene. 2, Because the certificate project approved in Case Number PSD- PC-CN is linked to the decision of the Jefferson County Commission to dissolve the PSD. the PSD should file an update on the status of the certificate project. 3. Because it is not clear whether the parties to this matter agree on which statutes apply, the parties should file a pleading that addresses the applicable code sections. 4. The County Commission should file the Affidavits that are necessary to evidence compliance with the notice requirements of W. Va. Code $16-13A-2 and the Purchase Agreement. 7

8 5. The statement in the PSD Petition to Intervene that the County Commission intended to dissolve the PSD to prevent the certificate project from being constructed does not limit the ability of the County Commission to fully present its own legal position during the dissolution case and does not amount to evidence of bias on the part of PSD counsel. 6. The PSD and the Public Service Commission had separate counsel throughout the appeal of the certificate Order. ORDER IT IS THEREFORE ORDERED that the Petitions to Intervene filed by Charles Town, Jefferson County PSD, Citizens, Shenandoah Junction and Arcadia are granted. IT IS FURTHER ORDERED that within thirty days of the date of this Order, Jefferson County PSD shall file in this proceeding an update of the status of the certificate project that was approved in Case Number PSD-PC-CN. IT IS FURTHER ORDERED that within thirty days of the date of this Order, the parties to this case shall file a pleading that addresses, at a minimum, the applicability of W. Va. Code $$ , 16-13A-2 and 16-13A-18a. If any party asserts that the Commission should consider any other statute, such party's pleading shall identify the statute and explain why it applies in this case. IT IS FURTHER ORDERED that the County Commission shall file the Affidavits that are necessary to evidence compliance with the notice requirements of W. Va. Code A-2 and any Purchase Agreement within thirty days of the date of this Order. IT IS FURTHER ORDERED that Ms. Milliron's Objection to the PSD's choice of legal counsel is denied. 8

9 IT IS FURTHER ORDERED that the Executive Secretary of the Commission serve a copy of this Order by electronic service on all parties of record who have filed an e-service agreement, and by United States First Class Mail on all parties of record who have not filed an e-service agreement, and on Commission Staff by hand delivery. CLWlsk %.doc Ingrid Ferrell Executive Secretary