Public Service Commission of West Virginia 201 Brooks Street, P.O. Box 812 Charleston, West Virginia 25323 Phone: (304) 340-0300 Fax: (304) 340-0325 October 15,20 18 Ingrid Ferrell, Executive Secretary Public Service Commission PO Box 812 Charleston, WV 25323 Re: CASE NO. 18-032 1 -PSD-PC GREATER ST. ALBANS PUBLIC SERVICE DISTRICT Dear Ms. Ferrell: Enclosed for filing are the original and twelve (12) copies of the Initial Brief of Commission Staff in the above-referenced proceeding. A copy has been served upon all parties of record. LL W/bg Enclosures H:\LWANSLEY\WORDUO 18\18-032 1 -PSD-PC\InitialBrief.doc Sincerely, JA 2,4&4 7 Lisa I,. Wansley Staff Attorney West Virginia State Bar I.D. No. 5554
PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON CASE NO. 18-0321-PSD-PC GREATER ST. ALBANS PUBLIC SERVICE DISTRICT INITIAL BRIEF OF COMMISSION STAFF October 15,20 18 Prepared By: Lisa L. Wansley Staff Attorney WV State Bar ID No. 5554
PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON CASE NO. 18-0321-PSD-PC GREATER ST. ALBANS PUBLIC SERVICE DISTRICT INITIAL BRIEF OF COMMISSION STAFF Legal Staff continues to support the final recommendation drafted by Karen Buckley, Utilities Analyst 11, which was filed on August 13, 2018. Legal Staff respectfully requests that the Chief Administrative Law Judge adopt Utilities Staffs findings and recommendations, which include that the Greater St. Albans Public Service District would spend an additional $171,111 in the first two years to provide its own billing, collection and clerical services. Staff respectfully requests that the Greater St. Albans Public Service District s petition to uncouple from City of St. Albans Municipal Corporation be denied. I. PROCEDURAL HISTORY On March, 12, 2018, Greater St. Albans Public Service District (District) filed a petition for consent and approval to uncouple from the City of St. Albans Municipal Corporation (MUC), for the purpose of providing billing, collection and clerical services. In a May 7, 2018 Order the Commission added MUC as a respondent, Additionally, the Commission referred this case to the Division of Administrative Law Judges with an October 9, 2018 due date.
MUC filed an answer to the petition on May 25, 2018. MUC opposed the petition to uncouple indicating that to remove billing and associated income makes the remaining duties uneconomical. MUC stated that the uncoupling will most likely cause the District to require greater rates from MUC. On June 1, 2018, Chief Administrative Law Judge Keith George ruled on Staffs April 20, 2018 Motion to Compel responses to its April 10, 2018 Interrogatories to the District. Staffs Motion to Compel a response to Interrogatory No. 11 was denied, while Staffs Motion to Compel a response to Interrogatory No. 14 was granted. The District is required to provide a response to Interrogatory No. 11 if and when it obtains information relevant to this Interrogatory. The Chief Judge noted that it was informative that the District has not examined the costs associated with the proposed plan to sever its billing relationship with the City. The Chief Judge continued that the burden of proof that the proposed severing of the relationship is in the public interest lies with the District, Further, the Chief Judge stated It is difficult to understand how the District rationally decided to petition the Commission to sever its billing relationship with the City without having conducted at least a preliminary exploration of a plan to perform the billing and collecting service. On July 11, 2018, Staffs final memorandum was filed. Utilities Staff noted that the District has not met its burden of proof by failing to provide its cost estimates to provide the billing and collecting services on its own. Therefore, Utilities Staff was unable to recommend approval of the District s petition to uncouple from MUC. Utilities 2
Staff recommended that this case be dismissed. Legal Staff joined in the dismissal recommendation. Further, Staff noted in its final memorandum that after Utilities Staff completed the final memorandum, the District filed Greater St. Albans Public Service District s Answers and Responses to Staffs First Data Requests Second Supplement. Staff stated that it was reviewing the recent filing and would file a Second Final Joint Staff Memorandum if necessary. On August 13,2018 Staffs second final memorandum drafted by Karen Buckley, Utilities Analyst 11, Utilities Division was filed. Staff reviewed the District s supplemental answers to Staffs interrogatories that were filed on July 11, 2018. Utilities Staff noted that in the first two years the District would spend an additional $171,111 to do its own billing and collecting. Utilities Staff stated that the rate impact will be substantial and is not beneficial to rate payers. Utilities Division recommended denial of the District s petition to uncouple from the City of St. Albans. A hearing was held on September 25, 2018 at the Public Service Commission in Charleston, West Virginia. Chief Administrative Law Judge George presided. The District, MUC and Staff were represented by counsel. 11. DISCUSSION Legal Staff supports the final recommendation drafted by Karen Buckley, Utilities Analyst 11, Utilities Division, which was filed filed on August 13, 2018. (See Staff Exhibit No. 3). Legal Staff respectfully requests that the Chief Administrative Law Judge adopt Utilities Staff s findings and recommendations, which include that the 3
District would spend an additional $17 1,111 in the first two years to do its own billing, collection and clerical services. Legal Staff respectfully requests that the District s petition to uncouple from MUC be denied. The main issue in this case is whether the District s petition to uncouple from MUC may be properly granted. The Chief Administrative Law Judge noted that in a June 1, 2018 order in this case, the burden of proof that the proposed severing of the relationship is in the public interest lies with the District. Filings in this case and testimony at the hearing revealed that while the District seeks to uncouple from MUC, both MUC and Staff oppose this request. Importantly, Staff witness Karen Buckley, Utilities Analyst 11, Utilities Division performed an analysis of the uncoupling request in this case. Ms. Buckley reviewed, among other things, annual reports and the District s responses to interrogatories to compute the additional cost to the District to uncouple. (Tr., p. 272). Ms. Buckley testified that the uncoupling of the District from MUC would cost $17 1,111 the first two years (Tr., p.273 and Staff Exhibit No. 3). Ms. Buckley stated that the increased cost after year two would be approximately $72,000 annually (Tr., p. 282). In response to the Chief Judge s question, Ms. Buckley testified that she did not see any benefit in the uncoupling of the District from MUC. (Tr., p. 273). MUC has provided billing, collection and clerical serviced for the District since at least September of 1990 pursuant to a revised service agreement. (See District Exhibit No. 1). This agreement on page one discusses MUC treating wastewater for the District. This agreement on page 5 and paragraph 9 discusses MUC providing billing services to 4
the District. The agreement on page 22 of paragraph 7 reveals that this agreement shall remain in effect until all revenue bonds are paid in full, or until terminated by mutual agreement of the parties or in forty years. Since the revenue bonds have not been paid in full, the parties have not mutually agreed to terminate the agreement and forty years has not passed, this agreement is in force. The supplemental agreement between the parties was signed in May of 2000. (See District Exhibit No. 2). This agreement notes that the original September of 1990 agreement provided for wastewater treatment, maintenance and billing services. The supplemental agreement dated May of 2000 involves the MUC taking over the day to day office operations so that the District can close its office to save money. This agreement allows for either party to terminate the supplemental agreement. However, this agreement has a five year term and expired in May of 2005. The District voted to terminate the supplemental agreement on July 3, 2017. (Tr., p. 21 and District Exhibit No. 3). MUC continues to provide the District the contracted services. The District currently pays MUC $2.01 per customer for these services. (Tr.? p. 19). Troubling filings and testimony at the hearing revealed that MUC failed to deposit 113 checks from the District totaling approximately $1.6 million. (Tr., p. 27). These checks were for treatment, billing and collection services provided to the District by the MUC. (See District Exhibit No. 4). These checks, dated from June of 2011 to April of 2016 were voided by the District in April and May of 2016. (See District Exhibit No. 4). The District subsequently reissued checks to MUC for the aforementioned costs. (Tr,? p.32). The District had no idea that its checks were uncashed and not deposited until 5
November of 2015. (Tr., p. 29). Complicating the situation was the fact audits had not been timely completed for 2013, 2014 or 2015. (Tr., p.32). The District believed that MUC was responsible to complete audits of the District. Current St. Albans Mayor, Scott James testified that the check issue between the parties has been resolved. (Tr., p. 255). Remedial measures include Mayor James personally delivering the deposits to the bank and plans to provide deposit slips to the District. (Tr., p. 255). Mayor James acknowledged that he is ultimately responsible for the operation of MUC. (Tr., p. 264). Mayor James does not think that the proposed uncoupling is a good decision for the District s customers. (Tr., p. 265). Michael Griffith, President of Griffith and Associates testified at the hearing that he previously performed accounting work for both the MUC and the District. (Tr., p. 173). Mr. Griffith is no longer responsible for the District s accounting work. (Tr,, p. 173). He thinks it is a positive step that both utilities now have different accountants. (Tr,, p. 200). Accountants from Griffith and Associates were aware District checks were not being deposited for several years. (Tr., p. 177). Griffith and Associates attempted to resolve the check issue with a MUC office employee from 2012 until 2015. They did not inform the Mayor of St. Albans or the District until 2015 about the check issue. (Tr., p. 178). Mr. Griffith has 22 years of utility experience. He has never experienced another utility holding onto checks, and agrees it is an unreasonable utility practice. (Tr., p. 201). Lastly, Mr. Griffith noted that years ago the District was almost placed in receivership due to nonpayment of WDA debt. (Tr., p. 202). 6
Legal Staff takes this opportunity to inform the parties that free Public Service Commission seminars are available to aid them in providing utility service. The PSD Board Member, Utility Office Works and Municipal/Association Seminars may be appropriate. Feel free to contact the Water and Waste Water Division at the Public Service Commission or go online at www.psc.state.wv.us.com to sign up for seminars. Apparently, MUC has resolved the long term undeposited check issue. MUC has taken steps to ensure the check issue does not reoccur in the future. If future issues arise in the manner that MUC provides billing, collections or wastewater treatment for the District, the District may file a formal complaint at the Public Service Commission. Importantly, the record does not reflect that the District has a well conceived plan to provide billing and collection services. The additional cost of $17 1,111 for the first two years and $72,000 annually thereafter is a cost that should not be placed on the District's customers. Further, the District previously was almost placed in receivership. Based on the facts presented, uncoupling the District from MUC at this time will adversely affect the public. For these reasons, Legal Staff recommends that the uncoupling petition be denied. 111. CONCLUSION Legal Staff continues to support the final recommendation drafted by Karen Buckley, Utilities Analyst 11, which was filed on August 13, 2018. Legal Staff respectfully requests that the Chief Administrative Law Judge adopt Utilities Staff's findings and recommendations, which include that the District would spend an additional $171,111 in the first two years to provide its own billing, collection and clerical services. 7
Legal Staff respectfully requests that the District's petition to uncouple from MUC be denied. Respectfully submitted this the 15'" day of October 20 18. STAFF OF THE PUBLIC SERVICE COMMISSION OF WEST VIRGINIA By Counsel, v " 2 %LA Lisa L. Wansley W.Va. State Bar I.D. No. 5554 8
PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON CASE NO. 18-0321-PSD-PC GREATER ST. ALBANS PUBLIC SERVICE DISTRICT CERTIFICATE OF SERVICE I, Lisa L. Wansley, Staff Counsel for the Public Service Commission of West Virginia, hereby certify that I have served a copy of the foregoing Initial Brief of Commission Staff upon all parties of record by First Class United States Mail, postage prepaid on this the 1 5 h day of October 20 18. Christopher D. Negley, Esq. Counsel, Greater St. Albans Public Service District Shuman, McCuskey & Slicer PLLC PO Box 3953 Charleston, WV 25339 Timothy J. LaFon, Esq. Counsel, City of St. Albans Ciccarello, Del Giudice & LaFon 1219 Virginia Street East, Suite 100 Charleston, WV 25301 3 d LISA L. WANSLEY W. Va. State Bar I.D. No. 5554