H. B. 3210
(By Delegates Stemple, Moore, Barker and Perry)
[Introduced January 9, 2008; referred to the
Committee on Finance.]
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.
§24-2-11e. Power of commission to order acquisition of failed
water and failed sewer utilities.
(a) Acquisition generally. -- 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) 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) Alternatives to acquisition. -- Before the commission may
order the acquisition of a water or sewer utility in accordance
with subsection (a), the commission shall discuss with the water or
sewer utility, and shall give such 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.
(5) The acquisition of the failed water or sewer utility by a
capable utility.
(c) Factors to be considered. -- In making a determination
pursuant to subsection (a), 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 and/or Bureau for Public Health 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.
(6) Any other matters which may be relevant.
(d) Order of the Commission. -- Subsequent to the
determinations required by subsection (a), the commission shall
issue an order for the acquisition of the failed water or sewer
utility by a capable water or sewer public utility. Such order
shall provide for the extension of the service area of the
acquiring capable water or sewer public utility.
(e) Acquisition price .-- 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) Separate tariffs. -- 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) Notice. -- The notice required by subsection (a) 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) Burden of proof. -- The commission staff shall have 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 shall have 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 shall have the
opportunity and burden of proving its financial, managerial or
technical inability to acquire and operate the small water or sewer
utility.
(i) Plan for improvements. -- 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 such other state or local agency as the commission may direct.
The commission shall give the Department of Environmental
Protection or 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) Limitations on liability. -- Upon approval by the
commission of a plan for improvements submitted pursuant to
subsection (i) 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 shall not be liable for any
damages beyond the aggregate amount of five 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 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; or
(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.
(k) Limitations on enforcement actions. -- Upon approval by
the commission of a plan for improvements submitted pursuant to
subsection (i) 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 shall not be subject to any
enforcement actions by state or local agencies which had notice of
the plan if the basis of such 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) Clean Water Assessment Fund. -- 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 legislation, 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 thirty-first day of March, the
thirtieth day of June, the thirtieth day of September and the
thirtieth day of December each year in the Clean Water Assessment
Fund with the West Virginia Infrastructure and Jobs Development
Council, a sum equal to 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 deems appropriate. Disbursements
from the fund shall 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: Provided, That any
disbursement from the fund must have prior approval by an order of
the Public Service Commission.
(m) Definitions. -- As used in this section, the following
words and phrases have the meanings given to them in this
subsection:
"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.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.