Senate Bill No. 119
(By Senator Love)
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[Introduced January 9, 2008; referred to the Committee on the
Judiciary.]
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A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new section, designated §24-2-11e, relating
to authorizing the Public Service Commission to protect the
consumers of failed water or failed sewer utilities by
ordering a capable water or sewer public utility to acquire
the failed utility.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new section, designated §24-2-11e, to read as
follows:
ARTICLE 2. POWERS AND DUTIES OF PUBLIC SERVICE COMMISSION.
§24-2-l1e. Power of commission to order acquisition of failed
water and failed sewer utilities.
(a) The commission may order a capable water or sewer public
utility to acquire a failed water or sewer utility if the commission, after notice and an opportunity to be heard,
determines:
(1) That the water or sewer utility is in violation of
statutory or regulatory standards, which affect the safety,
adequacy, efficiency or reasonableness of the service provided by
the water or sewer utility;
(2) That the water or sewer utility has failed to comply,
within a reasonable period of time, with any order of the
Department of Environmental Protection or Bureau for Public Health
or the commission concerning the safety, adequacy, efficiency or
reasonableness of service, including, but not limited to, the
availability of water, the potability of water, the palatability of
water or the provision of water at adequate volume and pressure;
(3) That the water or sewer utility cannot reasonably be
expected to furnish and maintain adequate, efficient, safe and
reasonable service and facilities in the future;
(4) That alternatives to acquisition have been considered in
accordance with subsection (b) of this section and have been
determined by the commission to be impractical or not economically
feasible;
(5) That the acquiring capable water or sewer public utility
is financially, managerially and technically capable of acquiring
and operating the water or sewer utility in compliance with
applicable statutory and regulatory standards; and
(6) That the rates charged by the acquiring capable water or
sewer public utility to its preacquisition customers will not
increase unreasonably because of the acquisition.
(b) Before the commission may order the acquisition of a water
or sewer utility in accordance with subsection (a) of this section,
the commission shall discuss with the water or sewer utility, and
shall give the utility a reasonable opportunity to investigate,
alternatives to acquisition, including, but not limited to:
(1) The reorganization of the failed water or sewer utility
under new management;
(2) The entering of a contract with another public utility or
a management or service company to operate the failed water or
sewer utility;
(3) The appointment of a receiver to assure the provision of
adequate, efficient, safe and reasonable service and facilities to
the public;
(4) The merger of the water or sewer utility with one or more
other public utilities; and
(5) The acquisition of the failed water or sewer utility by a
capable utility.
(c) In making a determination pursuant to subsection (a)of
this section, the commission shall consider:
(1) The financial, managerial and technical ability of the
failed water or sewer utility;
(2) The financial, managerial and technical ability of all
proximate public utilities providing the same type of service;
(3) The expenditures which may be necessary to make
improvements to the failed water or sewer utility to assure
compliance with applicable statutory and regulatory standards
concerning the adequacy, efficiency, safety or reasonableness of
utility service;
(4) The expansion of the franchise area of the acquiring
capable water or sewer public utility so as to include the service
area of the small water or sewer utility to be acquired;
(5) The opinion and advice, if any, of the Department of
Environmental Protection or the Bureau for Public Health, or both,
as to what steps may be necessary to assure compliance with
applicable statutory or regulatory standards concerning the
adequacy, efficiency, safety or reasonableness of utility service;
and
(6) Any other matters which may be relevant.
(d) Subsequent to the determinations required by subsection
(a)of this section, the commission shall issue an order for the
acquisition of the failed water or sewer utility by a capable water
or sewer public utility. The order shall provide for the extension
of the service area of the acquiring capable water or sewer public
utility.
(e) The price for the acquisition of the failed water or sewer utility shall be determined by agreement between the failed water
or sewer utility and the acquiring capable water or sewer public
utility, subject to a determination by the commission that the
price is reasonable. If the failed water or sewer utility and the
acquiring capable water or sewer public utility are unable to agree
on the acquisition price or the commission disapproves the
acquisition price on which the utilities have agreed, the
commission shall issue an order directing the acquiring capable
water or sewer public utility to acquire the failed water or sewer
utility by following the procedure prescribed for exercising the
power of eminent domain pursuant to chapter fifty-four of this
code.
(f) The commission may, in its discretion and for a reasonable
period of time after the date of acquisition, allow the acquiring
capable water or sewer public utility to charge and collect rates
from the customers of the acquired water or sewer utility pursuant
to a separate tariff.
(g) The notice required by subsection (a) of this section or
any other provision of this section shall be served upon the failed
water or sewer utility affected, the Consumer Advocate Division of
the Public Service Commission, the Department of Environmental
Protection, the Bureau for Public Health, all proximate public
utilities providing the same type of service as the failed water or
sewer utility, all proximate municipalities and municipal authorities providing the same type of service as the failed water
or sewer utility and the municipalities served by the failed water
or sewer utility. The commission shall order the affected failed
water or sewer utility to provide notice to its customers of the
initiation of proceedings under this section in the same manner in
which the utility is required to notify its customers of proposed
general rate increases.
(h) The commission staff has the burden of establishing a
prima facie case that the acquisition of the water or sewer utility
would be in the public interest and in compliance with the
provisions of this section. Once the commission determines that a
prima facie case has been established:
(1) The water or sewer utility has the burden of proving its
ability to render adequate, efficient, safe and reasonable service
at just and reasonable rates; and
(2) A proximate public utility providing the same type of
service as the failed water or sewer utility has the opportunity
and burden of proving its financial, managerial or technical
inability to acquire and operate the small water or sewer utility.
(i) Any capable water or sewer public utility ordered by the
commission to acquire a failed water or sewer utility shall, prior
to acquisition, submit to the commission for approval a plan,
including a timetable, for bringing the failed water or sewer
utility into compliance with applicable statutory and regulatory standards. The capable water or sewer public utility shall also
provide a copy of the plan to the Department of Environmental
Protection, Bureau for Public Health and other state or local
agency as the commission may direct. The commission shall give the
Department of Environmental Protection and the Bureau for Public
Health adequate opportunity to comment on the plan and shall
consider any comments submitted in deciding whether or not to
approve the plan. The reasonably and prudently incurred costs of
each improvement shall be recoverable in rates only after that
improvement becomes used and useful in the public service.
(j) Upon approval by the commission of a plan for improvements
submitted pursuant to subsection (i) of this section and the
acquisition of a failed water or sewer utility by a capable water
or sewer public utility, the acquiring capable water or sewer
public utility is not liable for any damages beyond the aggregate
amount of fifty thousand dollars, including a maximum amount of
five thousand dollars per incident, if the cause of those damages
is proximately related to identified violations of applicable
statutes or rules by the failed water or sewer utility.
This subsection does not apply:
(1) Beyond the end of the timetable in the plan for
improvements;
(2) Whenever the acquiring capable water or sewer public
utility is not in compliance with the plan for improvements; or
(3) If, within 60 days of having received notice of the
proposed plan for improvements, the Department of Environmental
Protection or Bureau for Public Health submitted written objections
to the commission and those objections have not subsequently been
withdrawn.
(k) Upon approval by the commission of a plan for improvements
submitted pursuant to subsection (i) of this section and the
acquisition of a failed water or sewer utility by a capable water
or sewer public utility, the acquiring capable water or sewer
public utility is not subject to any enforcement actions by state
or local agencies which had notice of the plan if the basis of the
enforcement action is proximately related to identified violations
of applicable statutes or regulations by the failed water or sewer
utility.
This subsection does not apply:
(1) Beyond the end of the timetable in the plan for
improvements;
(2) Whenever the acquiring capable water or sewer public
utility is not in compliance with the plan for improvements;
(3) If, within sixty days of having received notice of the
proposed plan for improvements, the Department of Environmental
Protection or Bureau for Public Health submitted written objections
to the commission and those objections have not subsequently been
withdrawn; or
(4) To emergency interim actions of the commission or the
Department of Environmental Protection or Bureau for Public Health,
including, but not limited to, the ordering of boil-water
advisories or other water supply warnings, of emergency treatment
or of temporary, alternate supplies of water.
(l) To assist public utilities acquiring and repairing failed
water or sewer utilities, the commission shall establish a Clean
Water Assessment Fund with the West Virginia Infrastructure and
Jobs Development Council. Each water and sewer utility shall, by
the end of the first full quarter after the effective date of this
section, assess on the bill of each water and sewer customer ten
cents per thousand gallon of usage per month. Each water and sewer
utility shall, thereafter, deposit quarterly, no later than the
last day of March, June, September and December, in the Clean Water
Assessment Fund with the West Virginia Infrastructure and Jobs
Development Council a sum equal to the ten cents per thousand
gallons billed per month per customer in that quarter. The West
Virginia Infrastructure and Jobs Development Council shall file a
quarterly report with the Public Service Commission stating the
amount of money received from each utility. The West Virginia
Infrastructure and Jobs Development Council may disburse moneys, in
the form of loans or grants, as the council considers appropriate.
Disbursements from the fund may be for the sole and only purpose of
assisting capable public utilities acquiring failed water or sewer utilities with the rehabilitation of the failed utility. Any
disbursement from the fund must have prior approval by an order of
the Public Service Commission.
(m) As used in this section "capable water or sewer public
utility" means a public utility which regularly provides the same
type of service as the failed water utility or the failed sewer
utility to four thousand or more customer connections, which is not
an affiliated interest of the failed water utility or the failed
sewer utility and which provides adequate, efficient, safe and
reasonable service. A public utility which would otherwise be a
capable water or sewer public utility except for the fact that it
has fewer than four thousand customer connections may elect to be
a capable water or sewer public utility for the purposes of this
section regardless of the number of its customer connections and
regardless of whether or not it is proximate to the failed sewer
utility or failed water utility to be acquired.
NOTE: The purpose of this bill is to protect the consumers of
failed water or sewer utilities by authorizing the Public Service
Commission to order a capable water or sewer public utility to
acquire the failed utility system.
This section is new; therefore, strike-throughs and
underscoring have been omitted.