H. B. 2565
(By Delegates Amores, Faircloth,
Compton and Cann)
[Introduced March 17, 1997; referred to the
Committee on the Judiciary.]
A BILL to amend and reenact sections one and seven, article two,
chapter twenty-four of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; and to
further amend and reenact said article by adding thereto a
new section, designated section seven-a, all relating to
giving the public service commission jurisdiction over sewer
systems servicing one or more persons or firms other than
the owner of the sewer system; creating the small public
utility customer protection act; and allowing the public
service commission to order acquisition of small water,
sewer and gas utilities under certain circumstances
affecting the quality of service to customers.
Be it enacted by the Legislature of West Virginia:
That sections one and seven, article two, chapter
twenty-four of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, be amended and reenacted; and that said article be further amended by adding thereto a new
section, designated seven-a, to read as follows:
ARTICLE 2. POWERS AND DUTIES OF PUBLIC SERVICE COMMISSION.
§24-2-1. Jurisdiction of commission; waiver of jurisdiction.
The jurisdiction of the commission shall extend to all
public utilities in this state, and shall include any utility
engaged in any of the following public services:
Common carriage of passengers or goods, whether by air,
railroad, street railroad, motor or otherwise, by express or
otherwise, by land, water or air, whether wholly or partly by
land, water or air; transportation of oil, gas or water by
pipeline; transportation of coal and its derivatives and all
mixtures and combinations thereof with other substances by
pipeline; sleeping car or parlor car services; transmission of
messages by telephone, telegraph or radio; generation and
transmission of electrical energy by hydroelectric or other
utilities for service to the public, whether directly or through
a distributing utility; supplying water, gas or electricity, by
municipalities or others; sewer systems servicing twenty-five
one or more persons or firms other than the owner of the sewer
systems; any public service district created under the provisions
of article thirteen-a, chapter sixteen of this code; toll
bridges, wharves, ferries; solid waste facilities; and any other public service: Provided, That natural gas producers who provide
natural gas service to not more than twenty-five residential
customers are exempt from the jurisdiction of the commission with
regard to the provisions of such the residential service:
Provided, however, That upon request of any of the customers of
such the natural gas producers, the commission may, upon good
cause being shown, exercise such authority as the commission may
deem determine appropriate over the operation, rates and charges
of such the producer and for such the length of time as the
commission may consider to be proper: Provided further, That the
jurisdiction the commission may exercise over the rates and
charges of municipally operated public utilities is limited to
that authority granted the commission in section four-b of this
article: And provided further, That the decision-making
authority granted to the commission in sections four and four-a
of this article shall, in respect to an application filed by a
public service district, be delegated to a single hearing
examiner appointed from the commission staff, which hearing
examiner shall be authorized to carry out all decision-making
duties assigned to the commission by said the sections, and to
issue orders having the full force and effect of orders of the
commission.
The commission may, upon application, waive its jurisdiction and allow a utility operating in an adjoining state to provide
service in West Virginia when:
(1) An area of West Virginia cannot be practicably and
economically served by a utility licensed to operate within the
state of West Virginia;
(2) Said The area can be provided with utility service by a
utility which operates in a state adjoining West Virginia;
(3) The utility operating in the adjoining state is
regulated by a regulatory agency or commission of the adjoining
state; and
(4) The number of customers to be served is not substantial.
The rates the out-of-state utility charges West Virginia
customers shall be the same as the rate the utility is duly
authorized to charge in the adjoining jurisdiction.
The commission, in the case of any such utility, may revoke
its waiver of jurisdiction for good cause.
§24-2-7. Unreasonable, etc., regulations, practices and
services; receivership; procedures respecting receivership; appointment and compensation of receiver; liquidation.
(a) Whenever, under the provisions of this chapter, the
commission shall find any regulations, measurements, practices,
acts or services to be unjust, unreasonable, insufficient or unjustly discriminatory, or otherwise in violation of any
provisions of this chapter, or shall find that any service is
inadequate, or that any service which is demanded cannot be
reasonably obtained, the commission shall determine and declare,
and by order fix reasonable measurements, regulations, acts,
practices or services, to be furnished, imposed, observed and
followed in the state in lieu of those found to be unjust,
unreasonable, insufficient, or unjustly discriminatory,
inadequate or otherwise in violation of this chapter, and shall
make such the other order respecting the same as shall be just
and reasonable.
(b) If the public service commission shall determine that
any utility is unable or unwilling to adequately serve its
customers or has been actually or effectively abandoned by its
owners, or that its management is grossly and willfully
inefficient, irresponsible or unresponsive to the needs of its
customers, the commission may petition to the circuit court of
any county wherein the utility does business for an order
attaching the assets of the utility and placing such the utility
under the sole control and responsibility of a receiver:
Provided, That nothing contained in this section may be construed
to prevent the public service commission from exercising the
powers provided to it in section seven-a of this article. If the court determines that the petition is proper in all respects and
finds, after a hearing thereon, that the allegations contained in
the petition are true, it shall grant the same and shall order
that the utility be placed in receivership. The court, in its
discretion and in consideration of the recommendation of the
commission, shall appoint a receiver who shall be a responsible
individual, partnership or corporation knowledgeable in public
utility affairs and who shall maintain control and responsibility
for the running and management of the affairs of such the
utility. In so doing, the receiver shall operate the utility so
as to preserve the assets of the utility and to serve the best
interests of its customers. The receiver shall be compensated
from the assets of said the utility in an amount to be determined
by the court.
Control of and responsibility for said the utility shall
remain in the receiver until the same can, in the best interest
of the customers, be returned to the owners, transferred to other
owners or assumed by another utility or public service
corporation: Provided, That if the court after hearing,
determines that control of and responsibility for the affairs of
the utility should not, in the best interests of its customers,
be returned to the legal owners thereof, the receiver shall
proceed to liquidate the assets of such the utility in the manner provided by law.
The laws generally applicable to receivership shall govern
receiverships created pursuant to this section.
§24-2-7a. Small public utility customer protection act;
definitions; acquisition of small water, sewer and gas utilities.
(a) As used in this section, the following words and phrases
have the following meanings:
(1) "Capable public utility" means a public utility which
regularly provides the same type of service as the small water
utility, the small sewer utility or the small gas utility to one
thousand five hundred or more customer connections, regardless of
whether or not it is proximate, which is not an affiliate of the
small water utility, the small sewer utility or the small gas
utility and which provides adequate, efficient, safe and
reasonable service. A public utility which would otherwise be a
capable public utility except for the fact that it has fewer than
one thousand five hundred customer connections may elect to be a
capable 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 small sewer
utility, the small water utility or the small gas utility to be
acquired.
(2) "Small sewer utility" means a public utility which
regularly provides sewer service to five hundred or fewer
customer connections.
(3) "Small water utility" means a public utility which
regularly provides water service to five hundred or fewer
customer connections.
(4) "Small gas utility" means a public utility which
regularly provides gas service to five hundred or fewer
customers.
(b) The public service commission may order a capable public
utility to acquire a small water, sewer or gas utility if the
public service commission, after providing notice and an
opportunity to be heard, determines:
(1) That the small water, sewer or gas utility is in
violation of applicable state or federal law or regulatory
standards, which affect the health, safety, adequacy, efficiency
or reasonableness of the service provided by the small water,
sewer or gas utility;
(2) That the small water, sewer or gas utility has failed to
comply with applicable federal or state laws or directives
related to the health, safety, adequacy, efficiency or
reasonableness of service within the period of time set forth by
the law or directive. A finding that a utility has failed to comply with a law or directive may be based upon, but is 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, the ability to meet established wastewater
discharge limitations, unacceptable levels of inflow and
infiltration or the availability of natural gas at adequate
volume and pressure;
(3) That the small water, sewer or gas utility cannot
reasonably be expected to furnish and maintain healthy, adequate,
efficient, safe and reasonable service and facilities in the
future;
(4) That alternatives to acquisition have been considered in
accordance with subsection (e) of this section and have been
determined by the public service commission to be impractical or
not economically feasible;
(5) That the acquiring capable public utility is
financially, managerially and technically capable of acquiring
and operating the small water, sewer or gas utility in compliance
with applicable federal and state statutory and regulatory
standards; and
(6) That the rates charged by the acquiring capable public
utility to its preacquisition customers will not increase
unreasonably because of the acquisition.
(c) In making a determination pursuant to subsection (b) of
this section, the public service commission shall consider:
(1) The financial, managerial and technical ability of the
small water, sewer or gas 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 small water, sewer or gas utility to assure
compliance with applicable federal or state statutory and
regulatory standards concerning the health, adequacy, efficiency,
safety or reasonableness of utility service;
(4) The expansion of the franchise area of the acquiring
capable public utility so as to include the service area of the
small water, sewer or gas utility to be acquired;
(5) The opinion and advice, if any, of the division of
environmental protection and division of health as to what steps
may be necessary to assure compliance with applicable federal and
state statutory or regulatory standards concerning the health,
adequacy, efficiency, safety or reasonableness of utility
service;
(6) Any other matters which may be relevant including
continued complaints from customers regarding quality of service.
(d) The division of environmental protection or the division of health may petition the public service commission, asking the
public service commission to initiate the process of acquisition
as set forth in this section. The public service commission may
also, upon petition from the consumer advocate division or upon
its own motion, initiate the process of acquisition as set forth
in this section.
(e) Before the public service commission may order the
acquisition of a small water, sewer or gas utility, it shall
discuss the petition with the small water, sewer or gas utility.
The public service commission, by order, shall give the utility
a reasonable opportunity, of not less than sixty days nor more
than one hundred twenty days, to investigate alternatives to
acquisition, including, but not limited to:
(1) Reorganization of the small water, sewer or gas utility
under new management;
(2) Entering into a contract with another public utility or
service company to operate the small water, sewer or gas utility;
(3) Appointment of a receiver to assure the provision of
adequate, efficient, safe and reasonable service and facilities
to the public;
(4) Merger of the small water, sewer or gas utility with one
or more other public utilities;
(5) Acquisition of the small water, sewer or gas utility by a capable public utility through an agreement entered into
voluntarily by the small water, sewer or gas utility and a
capable public utility.
(f) Subsequent to the determinations pursuant to subsection
(b) of this section, the public service commission may issue an
order for the acquisition of the small water, sewer or gas
utility by a capable public utility. If necessary, the order
shall provide for the expansion of the service area of the
acquiring capable public utility.
(g) The price for the acquisition of the small water, sewer
or gas utility shall be determined by agreement between the small
water, sewer or gas utility and the acquiring capable public
utility, subject to a determination by the public service
commission that the price is reasonable. If the small water,
sewer or gas utility and the acquiring capable public utility are
unable to agree on the acquisition price or the public service
commission disapproves an agreed upon acquisition price, the
public service commission shall issue an order directing the
acquiring capable public utility to acquire the small water,
sewer or gas utility and for the small water, sewer or gas
utility to sell at a price to be determined by the public service
commission following a full hearing. Factors to be considered in
determining price may include, but are not limited to: 1) The number of customers served by the small public utility; 2) the
cost of connecting the two systems, if necessary; 3) the
financial profile of the small public utility; 4) the condition
of the production or treatment facilities and distribution or
collection system of the small public utility; 5) the economic
profile of the community served by the small public utility; and
6) the value or benefits the small public utility brings to the
customers of the acquiring capable public utility. The right of
eminent domain does not apply to the acquisition of a public
utility by another public utility pursuant to this legislation.
An order issued by the public service commission hereunder is
appealable to the circuit court presiding in the county wherein
either utility is located.
(h) The public service commission may, in its discretion and
for a reasonable period of time after the date of acquisition,
allow the acquiring capable public utility to charge and collect
rates from the customers of the acquired small water, sewer or
gas utility pursuant to a separate rate, approved by the public
service commission.
(i) The public service commission may, in its discretion,
appoint a receiver to protect the interests of the customers of
the small water, sewer or gas utility. Any appointment shall be
by order of the public service commission, which order shall specify the duties and responsibilities of the receiver.
(j) The public service commission shall serve the notice
required in this section upon the small water, sewer or gas
utility affected, the consumer advocate division of the public
service commission, the division of environmental protection, the
division of health, all proximate capable public utilities
providing the same type of service as the small water, sewer or
gas utility, and all municipalities served by the small water,
sewer or gas utility. The public service commission shall order
the affected small water, sewer or gas utility to provide notice
to its customers of its water, sewer or gas services of the
initiation of proceedings under this section by publication of a
Class II legal advertisement in accordance with chapter
fifty-nine, article three, section one of this code.
(k) The public service commission has the burden of
establishing a prima facie case that the acquisition of the small
water, sewer or gas utility would be in the public interest and
in compliance with the provisions of this section. Once the
public service commission determines that a prima facie case has
been established:
(1) The small water, sewer or gas utility has the burden of
proving its ability to render healthy, adequate, efficient, safe
and reasonable service at just and reasonable rates; and
(2) A proximate and capable public utility providing the
same type of service as the small water, sewer or gas utility has
the opportunity and burden of proving they are financially,
managerially or technically incapable of acquiring and operating
the small water, sewer or gas utility.
(l) Any capable public utility ordered by the public service
commission to acquire a small water, sewer or gas utility shall,
prior to acquisition, submit to the public service commission for
approval a plan, including a timetable, project scope, and
estimate of costs for bringing the small water, sewer or gas
utility into compliance with applicable federal and state
statutory and regulatory standards within one hundred twenty
days of the public service commission's order of acquisition.
The plan for improvements shall incorporate the preapplication
format required by the West Virginia infrastructure and jobs
development council. The timetable contained in the plan may not
extend for a period greater than two years. The capable public
utility shall also provide a copy of the plan to the division of
environmental protection, division of health and other state or
local agency as the public service commission may direct. The
division of environmental protection and the division of health
have thirty days to comment on the plan. The public service
commission shall consider any comments submitted by the division of environmental protection and the division of health and shall
issue an order approving or disapproving the plan within ninety
days. The public service commission shall propose a rule subject
to legislative approval which provides an accelerated method for
allowing immediate increases in operation and maintenance
expenses for purposes of making immediate and necessary repairs.
The repairs may be of an interim nature as identified by the
capable public utility: Provided, That nothing in this section
precludes the issuance of a certificate of convenience and
necessity when applicable.
(m) The acquiring capable public utility shall receive
priority recommendation from the West Virginia infrastructure
and jobs development council for infrastructure fund assistance
for the purpose of preparing the plan for improvements pursuant
to the requirements of this section and applicable state statutes
and regulations. Additional acquisition incentives that the
public service commission may consider, may include, but are not
limited to:
(1) An acquisition adjustment which would be amortized as an
expense over a ten-year period;
(2) Deferral of acquisition improvement costs where the
costs are of too great a magnitude to be absorbed by ratepayers
at one time; and
(3) A plant improvement surcharge to be imposed on customers
of the acquired utility; or
(4) Use of an operating ratio as an interim measure for
setting rates where little or no rate base exists for the
acquired utility.
(n) Upon approval by the public service commission of a plan
for improvements submitted pursuant to the requirements of this
section and the acquisition of a small water, sewer or gas
utility by a capable public utility, the acquiring capable public
utility may not be held liable for any penalties beyond the
aggregate amount of fifty thousand dollars, including a maximum
amount of five thousand dollars per incident, if the cause of
those penalties is proximately related to identified violations
of applicable federal or state statutes or regulations by the
small water, sewer or gas utility prior to acquisition and during
the period of time in which the plan for improvements is being
developed. The provisions of this subsection do not apply:
(1) Beyond the end of the timetable in the plan for
improvements;
(2) Whenever the acquiring capable public utility is not in
compliance with the plan for improvements; or
(3) If, within thirty days of having received notice of the
proposed plan for improvements, the division of environmental protection or the division of health submits written objections
to the public service commission and those objections are not
withdrawn.
(o) Upon approval by the public service commission of a plan
for improvements submitted pursuant to the requirements of this
section, and the acquisition of a small water, sewer or gas
utility by a capable public utility, the acquiring capable public
utility which had notice of the plan may not be subject to any
enforcement actions by state or local agencies, within the
framework of applicable federal or state regulations, if the
basis of the enforcement action is proximately related to
identified violations of applicable statutes or regulations by
the small water, sewer or gas utility. The provisions of this
subsection do not apply:
(1) Beyond the end of the timetable in the plan for
improvements;
(2) Whenever the acquiring capable public utility is not in
compliance with the plan for improvements;
(3) If, within thirty days of having received notice of the
proposed plan for improvements, the division of environmental
protection or the division of health submitted written objections
to the public service commission and those objections are not
withdrawn; or
(4) To emergency interim actions for the protection of
public health under the applicable jurisdictions of the public
service commission or the division of environmental protection or
any state or local division of 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.
(p) Upon approval by the public service commission of a plan
for improvements submitted pursuant to the requirements of this
section and the acquisition of a small water or sewer utility by
a capable public utility, the acquiring public utility shall own
the small water or sewer utility. The acquiring capable public
utility shall receive priority for grant and loan programs under
the review of the West Virginia infrastructure and jobs
development council, including priority for infrastructure fund
grants and loans, within the framework of applicable federal and
state statutes and regulations, for the purpose of implementation
of the plans for improvements. The public service commission
may, additionally, determine that the acquiring capable public
utility is eligible for other financial incentives as set forth
in this section.
NOTE: The purpose of this bill is to allow the public
service commission to order acquisition of small water, sewer and
gas utilities where it is warranted, for the purpose of
protection of the customers, to give the public service
commission jurisdiction over sewer systems serving one or more
customers other than the owner of the sewer system, and to
provide that receivership authority does not prevent the
authority to order acquisition.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.