Update of the
PRELIMINARY PERFORMANCE REVIEW OF THE
PUBLIC SERVICE COMMISSION
The PSC begins the 270 day statutory
time standard when the water and sewer
case information has been reviewed
rather than when its received
Sampled cases show the prefile period
consistently extended past the statutory
period for water and sewer certificate
of convenience and necessity cases
Codification of certificate of convenience
and necessity rules, case law and policies
is insufficient to disclose the certification
process, rules and precedents
Issue Area 1: The PSC begins the 270 day statutory
time standard when the water and sewer case information has been reviewed
rather than when its received.
The 1998 report stated the PSC was not properly denoting the file date for certificate cases. West Virginia Code §24-2-11 states that an order must be issued by the PSC within 270 days of filing. For a municipality or private utility, filing occurs when the applicant submits an application. For a public service district, it is 1) 30 days from public notification of prefiling, or 2) the date all required supporting information has been received, whichever occurs last.
In this evaluation of sampled cases, 18 of 36 cases with file dates were found to have been assigned an incorrect file date. One case was a municipality and the other seventeen were public service districts. The file dates are set by the date the Commission declares it ready for filing, rather than when the information was received. The longest time frame for a case identified in this study was one declared to be filed 86 days after the actual file date. The effects of discrepant file dates can be significant. Two cases were found to be in excess of the 270 day default certificate statutory period based on the file date as determined by the Office of the Legislative Auditor. If these cases had been dismissed after the 270th day (instead of issued certificates) the utility may have had cause for litigation since the statute requires the PSC to issue a default certificate. In addition, because milestone dates for the disposition of individual cases are often based upon what is understood to be the 270th day based on the erroneous file date, the disposition of some cases is delayed because the understood 270th day postdates the actual 270th day. Another effect is the loss of governmental accountability. By claiming discretion to determine file dates anytime after an application has been submitted, the PSC is removing what should be an objective process. The current practice of establishing file dates has a disparate effect upon public service district applicants, which accounted for 17 of the 18 (94%) cases found to have file date discrepancies.
The Public Service Commission should recognize the actual file date as the official file date on its Notice of Filings.
Level of Compliance: Partial compliance
Issue Area 1 dealt almost exclusively with public service districts. Although the PSC did not specifically comply with our recommendation, they have compiled proposed rules of procedure which will, in effect, resolve the problem. The PSC proposed rules, dated 01/24/00, should become effective within the end of the year and will significantly change the prefiling process.
This proposed rule (See Appendix A) basically lets the public service district (PSD) applicant determine when it makes an actual filing and the statutory time limit begins. The PSC staff will assist the PSD as usual in getting its information in order during the prefiling period, but it will be the PSD's decision as to when they believe they are ready to file. In effect, the Notice of Filing will be the date the PSD notifies the PSC of its intentions to file, not once the PSC staff determines it to be ready. The PSD will still have to prefile with the PSC and submit an affidavit of publication to satisfy all legal requirements, but they will decide when it becomes an actual filing. In the event an application is filed prematurely by the PSD applicant, the PSC will give the PSD limited time to get their case in order or it will be dismissed.
Therefore, the recommendation of the initial review will be a moot point since the PSC will no longer determine the file date for PSD's. Once this proposed rule becomes effective it is the Legislative Auditor's position that the Public Service Commission will be in compliance with the recommendation.
However, based on 1999 cases reviewed during the update, the Commission is still using the date of the "Notice of Filing" as the official date of filing instead of the date staff confirms receipt of necessary information. Table 2 details the discrepancies noted between the date staff receives all required information for a filing and the official date of filing prepared at the request of the Legal Division. As with the initial review, in which all but one of the cases with discrepant file dates were PSD's, the update revealed the same disparate treatment of PSD's.
The amount of days of the discrepancies have decreased overall. The
range of discrepancies of the initial review was from 4 days to 86. The
updates range in discrepancies is 5 days to only 34 days. In addition,
the PSC has improved the percentage of discrepant PSD cases per the updated
review since 80% were discrepantly designated as filed versus 89% in the
Discrepant File Dates
Date staff noted case was ready for filing
Notice of Filing
Issue Area 2: Sampled cases show the prefile period consistently extended past the statutory period for water and sewer certificate of convenience and necessity cases.
West Virginia Code §16-13a-25 requires public service districts to prefile 30 days prior to filing an application for a certificate. As a part of the prefile requirement, the Code requires public service districts to publish a Class II legal advertisement during the prefiling stage, though the advertisement is duplicitous of another required once filing status is achieved. The prefile period was established to provide the public early notice of forthcoming projects and to allow the PSC greater control to ensure complete filing with the ultimate goal of expediting the process.
In 100% of the relevant sampled cases, the prefiling period required by §16-13A-25 exceeded the statutory time period. Prefile periods for sampled cases ranged from 36 to 495 days and averaged 152 days in length. Compared with sampled certificate cases for Class III and IV municipalities which represent comparably-sized utilities which are not required to prefile, public service district cases required just as much processing time from file date to final decision, despite prefile periods averaging 152 days. On the basis of total processing time, public service district cases averaged 307 days and required twice as much time for certificate decisions as Class III and IV municipalities, which required 153 and 169 days respectively. In September 1997, the PSC adopted a new policy for managing the prefile period. Because of the newness of the policy, there are too few cases to gauge the policy's impact. The Legislature should consider repealing the redundant prefile advertisement and requiring the updating of this review in the 1999 Interim to determine whether the prefile requirement should be continued or repealed.
Because of its redundancy with West Virginia Code §24-2-11, the Legislature should consider amending West Virginia Code §16-13A-25 to repeal the prefile advertisement for Public Service Districts.
Level of Compliance: Requires Legislation
The Public Service Commission should expedite the prefile process, dismiss stagnant or poorly constructed prefilings and expedite the processing of cases after conversion to filed status.
Level of Compliance: In Compliance
Effective October 19, 1998, the PSC modified its staff structure and case processing procedures (See Appendix B). The change has allowed for more flexible assignment of certificate cases between the Utilities Division and the Water and Wastewater Division (WWD). The Class A publicly owned utility cases will be initially assigned to the Utilities Division and the caseload of Class B, C and D publicly owned utilities will initially be assigned to the WWD. The memo states that since workload may become unbalanced, flexibility in assignment of cases between Divisions will be maintained. So if it becomes necessary, cases may be assigned to the Utilities Division or the WWD. The memo goes on to state that the Divisions will establish a cooperative procedure to assure that workload is reasonably balanced between Divisions.
This change in case processing appears to have had a positive effect
in certificate case processing. The PSC has decreased the average time
of the prefile period and the processing of cases after conversion. The
average prefile period for the initial review was 152 days versus 78 days
for the update. This is a 49% decrease in the prefile period. Table 3 below
shows the date of the beginning of the prefile period and the conversion
date by the PSC. In addition, the PSC is now more aggressive in dismissing
poorly prepared or stagnant prefile cases. Of the 11 PSD cases reviewed,
two were recommended by staff for dismissal.
Prefile Period of Sample Cases
|Case||Prefile Date||Conversion Date||Days|
*Recommended dismissal by staff due to inadequate filing.
The applicant responded, however, with the necessary information and the
case was allowed to proceed.
One of the two cases was never actually dismissed since the applicant responded with the necessary information. The PSC staff has shown they are no longer allowing stagnant prefilings to stay on the PSC docket.
The processing of cases after conversion has also shown improvement
for PSD's and upon actual filing for non PSD's. Table 4 below shows the
difference in average processing times for case processing between the
initial review and the update. There were four cases that were still active
within our sample. Two of the active cases are PSD's, one is a private
water association and the fourth is a municipal utility. However, three
of these cases are in their final stages of completion while the municipal
utility's case has recently gone to hearing. Final stages means staff has
filed their Final Internal Memorandum stating their recommendations (See
Appendix C). The active cases were not included for calculating average
of time to final orders since none have been issued to date.
Initial Review Statistics vs. Update Review Statistics
|Initial Review Average (1996 cases)||Update Review
Average (1999 cases)
Because of its nonuse, potential for causing delay of a ready case and lack of justification for notice, the Legislature should consider repealing the 30 day notice requirement in Chapter 24, Article 2, Section 11 .
Level of Compliance: Requires Legislation
Issue Area 3: Codification of certificate of convenience and necessity rules, case law and policies is insufficient to disclose the certification process, rules and precedents.
The PSC has not published Commission case orders since 1986. Internal policies dictating procedures for each division within the Commission are piecemeal, noncomprehensive and as a whole, unofficial. The PSC does not have pertinent information codified as administrative rules with respect to certificate of convenience and necessity cases. In filing a certificate of convenience and necessity, the applicant is at the mercy of the system. If the applicant is unable to obtain information that is relevant to the task at hand, its ability to provide a complete application, or litigate its case, can be impaired. The PSC does not have its internal procedures formally documented. The lack of formal procedures leaves many functions performed by the PSC open for interpretation by individual staff members. This can create confusion and delays. The PSC should publish its orders on the Internet to improve public access, and promulgate rules on the certificate process and procedures and internal procedures for evaluating applications.
The PSC should publish Commission orders on the Internet to allow for public access. In designing the access, the PSC should provide for the execution of Boolean searches and sorts by year, case type and case number. This is an inexpensive way to give the public access to this information.
Level of Compliance: In Compliance
The PSC now has its orders and recommended decisions posted by month on its web site. The site also has search capabilities to find specific cases. The Commission noted that it has had positive feedback from interested parties since it implemented this feature on its web site.
The Public Service Commission should promulgate rules on the certificate of public convenience and necessity process and procedures, and on internal procedures for staff processing of a certificate case.
Level of Compliance: Partial Compliance
As mentioned previously in the report, the PSC has compiled proposed rules specifically revising the prefiling period procedures and revising the checklist (See Appendix A) in filing a certificate case. This gives the applicant a detailed list of necessary information to submit to the PSC for certificate cases. With the availability of PSC orders now online, the proposed rule, PSC training seminars and a very detailed checklist of necessary information to submit for certificate cases within the rules, it appears the PSC has made the certificate process more visible.
However, the PSC failed to address a key element within this issue regarding the definition of ordinary course of business and is in non compliance with this aspect of the recommendation. The new proposed rules do not define ordinary course of business as the report specified as lacking in the Commission's Rules of Practice and Procedure.
The PSC informed the Legislative Auditor this is due to the fact that a definition of ordinary course of business was attempted during the spring of 1997 and failed. The PSC stated it failed because a job which is ordinary course of business for one utility may not be ordinary course of business for another. This is due to the varying sizes, operations and methods of various utilities.
In addition, due to the role of the PSC as a regulatory agency of utilities, they have concerns that a specific definition would allow utilities to avoid correspondence with the PSC. A certain ratio, minimum dollar amount or minimum pipe extension to determine ordinary course of business could allow utilities to plan projects to specifically avoid PSC scrutinization.
Recommendation 6 also dealt with internal procedures of the PSC. The Executive Secretary of the PSC has completed a procedure manual for all tasks and job descriptions of Executive Secretary personnel. A procedures manual dated 1986 for the WWD Case Control Section was also reviewed by the Legislative Auditor. In addition, the PSC has produced memos for the restructuring of certificate case processing and time deadlines for each division in flow chart form depicting the required flow of information through various PSC divisions.
The Legislative Auditor believes the PSC's current internal procedures make clear each divisions responsibility and the time deadlines for completing tasks. But the PSC should make an effort to assure every division has a thorough, updated version of internal procedures. These procedures should provide PSC employees a general guide denoting the objective for requesting certain information from applicants and how Division directors expect these objectives be achieved. The procedures should be updated when necessary and adhered to in a prudent manner. Some material received by the Legislative Auditor as internal procedures appeared to be more of a tool to assure all information is obtained for the project versus what the PSC employee should do with it to complete their task.
In view of the highly specialized and ever changing nature of utility laws and regulations, the PSC should contact the West Virginia State Bar, and within it, the committee on continuing legal education to determine interest in the PSC offering continuing legal education credits (CLEs) in utility law and procedures. Likewise, the PSC should contact the Board of Accountancy and the Board of Registration for Professional Engineers to determine the interest in the PSC offering continuing education for accountants and engineers. With few exceptions, attorneys, accountants and engineers handle virtually all aspects of certificate filings. If these professionals are better informed of the Commission's policies and procedures they will be better equipped to serve their clients and improve the timeliness of their certificate applications.
Level of compliance: Planned Compliance
The Commission stated that they have been reluctant to contact the applicable
licensure boards to offer continuing education since it is currently revamping
its Rules of Practice and Procedure. This is because any education seminars
would revolve around the Commission's Rules of Practice and Procedure.
The PSC is waiting to implement any education seminars until the proposed
rules are final.