STATE OF WEST VIRGINIA Preliminary Performance Review of the

PUBLIC SERVICE COMMISSION

A Review of the Water and Sewer Certificate Cases

OFFICE OF LEGISLATIVE AUDITOR
Performance Evaluation and Research Division
Building 1, Room W-314
State Capitol Complex
CHARLESTON, WEST VIRGINIA 25305
(304) 347-4890

Public Service Commission Background

Under West Virginia Code §24-2-11 , any public utility, person or corporation desiring to construct any plant, equipment, property or facility for furnishing water or sewer (sewer must serve twenty-five or more persons) services to the public must obtain a certificate of public convenience and necessity before beginning construction. "Ordinary extensions of existing systems in the usual course of business" are exempted from certificate of public convenience and necessity requirements. However, there is no agreement within the Public Service Commission or covered entities about what constitutes "usual course of business." An administrative rule has yet to be promulgated to settle the debate (see Issue 3).

West Virginia Code §24-2-11 also requires that the Public Service Commission (PSC) render a final decision on the certificate of public convenience and necessity within 270 days of the filing of the certificate application and within 90 days after final submission of any such application for decision following a hearing. If the projected cost of the project is greater than $50 million, the Public Service Commission must render a decision within 400 days of the filing of the certificate application and within 90 days after final submission of any such application for decision following a hearing. If a decision has not been rendered in the allotted time frame, the Public Service Commission must issue a certificate of public convenience and necessity as applied for in the application.

West Virginia Code 16-13A-25 mandates that a public service district wishing to obtain a certificate of public convenience and necessity in an effort to comply with West Virginia Code
§24-2-11 must prefile supporting information to the Public Service Commission 30 days prior to submitting the application. A public service district must also receive prior consent and approval from the Commission before contracting for any engineering services, design or feasibility studies (Code§16-13A-25).

Objective of the Public Service Commission's Review of a Certificate Case

The Public Service Commission reviews proposed water and sewer projects to assure that projects are both necessary and convenient. Although the Commission has yet to promulgate a rule defining convenience and necessity, according to an issue of Pipeline, the Public Service Commission's newsletter, the PSC interprets the terms as follows:

1. Convenience is defined as a fitness or suitability for the performance of an action or the fulfillment of a requirement.
2. Necessity is defined as the state of being in need. However, a project that is approved is not required to be an absolute necessity, only that it be reasonably necessary.

Staff engineers of the Commission are assigned the task of determining if a certificate case meets the requirements for "convenience" and "necessity," and making a recommendation to the Commission and/or the administrative law judge assigned by the Commission. The burden of proving that a project is convenient and necessary is upon the applicant. Therefore, the applicant must provide sufficient information to prove that the project is reasonably necessary, in the public's interest, financially feasible, and does not place undue economic hardship on the public it serves.

Public Service District Filing Requirements

West Virginia Code 16-13A-25 requires a public service district (PSD) 30 days prior to making formal application, to prefile its plans and supporting information for the project and publish a Class II legal advertisement to notify the public of its intentions to file. After all information has been received by the Commission and 30 days have expired, the prefile case is then ready to be converted to an actual certificate case. The applicant is then required to publish a Class I legal advertisement to notify the public of the actual filing of the case.

Non Public Service District Filing Requirements

Non PSD applicants, including municipal and private utilities, are not required to prefile their applications. Unlike PSD's, these cases are considered to be filed upon receipt of the application by the Public Service Commission. The 270 day statutory limit commences upon receipt of the application. The applicant is required to publish a Class I legal advertisement to notify the public of the filing of the case.

Process of Application by the Public Service Commission

Information Required by Applicant

A certificate of public convenience and necessity is not issued until required information is requested and approved by the Public Service Commission. While information requested is indicated by the nature of the project, it usually entails specific engineering designs, costs, projected expenses to operate and maintain once completed, the number of customers to be served, and the proposed rates to operate the facility after the project is completed. The applicant must also show proof of applicable permits required from either or both the West Virginia Department of Health and the West Virginia Division of Environmental Protection, depending on the nature of the project. Other required materials include: an affidavit to prove a Class I legal advertisement announcing the public protest period was published, an affidavit to prove the PSD published a Class II legal advertisement during prefiling, evidence of ability to pay for the project in full and an accounting report which demonstrates existing or proposed service rates will satisfy the debt service created by the proposed project.

Statutory Time Frames and Processes After Filing Application

Upon filing with the PSC, the applicant is required to publish a Class I legal advertisement announcing the beginning of the thirty day public protest period. During this time the public may file protests against the project with the PSC. In the event a protest is received, a hearing must be scheduled; otherwise the hearing may be waived.

Within ten days of the file date, the PSC's technical staff prepares and submits an internal memo to the Legal division. Within twenty days of the file date the Staff attorney then submits the initial joint staff memo which summarizes the proposed project and addresses issues important in deciding the appropriate procedural disposition of a case. The Commission's three members meet every Monday to review cases submitted and determine whether to refer the decision to the Administrative Law Judge (ALJ) or handle the case themselves.

The staff of the Public Service Commission ultimately issues a recommendation as to whether the project is convenient and necessary based on its review of submitted information. A recommended decision is reached based on all evidence submitted, and if no exceptions are filed within 15 days, the Commission removes the case from the open docket five days following expiration of the exception period and the order becomes final. Following the 15 day exception period, the five day period allows the Commission to stay or postpone the order before it becomes final as if an exception had been filed. If there are exceptions filed to the recommended decision within the allowable period, the Commission, after review of the whole record, or as supplemented by a further hearing, decides the matter in controversy and makes an appropriate order.

Compliance with 270 Day Statutory Standard

Statute requires the Public Service Commission to process all certificate of public convenience and necessity cases with an estimated cost of less than $50 million within 270 days of the filing of the application. It is important to note that certificate of public convenience and necessity cases can involve many complex issues and it is sometimes difficult to assert that one event was the sole cause for the untimely processing of a case. However, in some cases there are obvious events that very likely or more definitely delayed the disposition of a case.

Overall the Commission is meeting the 270 day requirement. Of 38 sampled cases, three cases, or 8%, exceeded this limit. Of those three, one exceeded the 270 limit most likely because the Commission had inappropriately determined the file date (see Issue 2). Had the Commission correctly identified the file date, the case likely could have been completed within the statutory limit.

The other two cases exceeded the 270 day requirement, in part, because the Commission's ALJs made orders on motions of the applicants in those cases to artificially prevent the 270 day clock from expiring. Problems compiling financial information caused one of these applicants to enter a motion that the statutory 270 day clock be "tolled" (stopped), to avoid having the case dismissed because of the ensuing deadline. Disregarding the tolling, which is not recognized by statute, the case took a total of 301 days from file date to final decision. In another case the applicant motioned to "redesignate" the file date to extend the statutory 270 day deadline. As with "tolling," statute does not provide for the "redesignation" of file dates. In all, this case required 284 days from the true file date to final decision. It is difficult to criticize the ALJs for their orders affecting the 270 day default decision deadline in these two cases, because their actions, although perhaps extralegal, likely resulted in the cases being disposed of quicker than they would have had the cases been dismissed and required to refile. It is important to note that these cases were ultimately granted certificates. However, if either case had been dismissed or substantially altered after the 270 day limit, the applicant may have had cause for litigation, since statute requires the PSC to issue a default certificate after 270 days. Because the tolling and redesignation of these cases required a motion by the applicant to do so, it is unlikely that a court would penalize the PSC for making such accommodation.

In all, this review of sampled cases has found that the Public Service Commission is generally meeting the 270 day default decision time standard. In interpreting the 270 day standard it is important to understand, as stated by PSC staff in a Pipeline article, "...270 days is the statutory time frame for the largest certificate cases." In other words, the most difficult cases should require no more than 270 days, while easier cases such as those with no protests, no interveners, and no hearings can be completed much more quickly. Another important consideration in assessing timeliness is that much of the processing of a case can occur before or after the 270 day period. Examples include: the time required to make a Class II advertisement prior to prefiling, the time required to have an engineering contract approved by the PSC to begin work on what will eventually be a certificate case, the time required to prefile (sample average 152 days), the 30 day notice period for those who observe it, and the time required for reopening cases for cost and specifications modifications. These time costs can be significant and must be viewed in a broad context.

Importance of Timely Certificate Processing

To emphasize the importance of the timely processing of certificate of public convenience and necessity cases the following discussion has been included to inform the reader of important public health and economic development concerns. There are countless reasons that utilities could seek certificates of public convenience and necessity for system improvements and therefore countless effects that can be associated with the delay of those projects. Because certificates must be issued for certain water and sewer improvements, delayed certificates can result in the delayed mitigation of important health and environmental concerns, delayed provision of services necessary for economic development and delayed alleviation of matters concerning public convenience. This section also serves to witness the importance of the certificate process, in that an important component of the certification process is the analysis of potential customers which remain unserved by proposals as submitted, which through the PSC's efforts are ultimately served in the approved versions.

Drinking Water

In West Virginia, approximately 556,024 citizens, or 30% of the State's 1,828,140 population do not receive drinking water from public water systems, but primarily from individual homeowner wells. In 1995, the Rural Utilities Service of the USDA (RUS) conducted a needs assessment for rural safe drinking water, known as Water 2000. In the Water 2000 study, West Virginia ranked 4th of all states in the total number of households with critical and serious needs. West Virginia ranked 5th in the total estimated costs of these needs, despite the State's relatively small population, small geographical size and abundance of water.

Untreated or poorly treated drinking water can cause waterborne disease and other health problems. Waterborne diseases are caused by the following micro-organisms:

  1. Bacteria. Bacteria are the most widely distributed life forms. Key bacterial pathogens responsible for waterborne disease include Legionella, Salmonella typhi, Shigella and Vibro cholerae.
  2. Viruses. Viruses are inactive when outside a living host cell. Viruses linked to waterborne disease have protein coats that provide protection from environmental hazards. Unlike bacteria and protozoa, they contain only one type of nucleic acid (RNA or DNA). Key pathogens include hepatitis A and Norwalk virus.
  3. Protozoa. Protozoa, common in bodies of water are much larger than bacteria and viruses. To survive harsh environmental conditions, some species can secrete a protective covering and form a resting stage called a "cyst." Encystment can protect protozoa from drinking water disinfection efforts and facilitate the spread of disease. Key protozoa being studied as agents of waterborne disease include Giardia and Cryptosporidium.

Some common waterborne diseases are discussed in Table 1. Waterborne diseases cause acute illness which can result in death. There is little public health information on the prevalence of waterborne disease. Unlike influenza, measles and other diseases, health care providers are not required to report incidents of waterborne disease. In addition, because symptoms resemble those of other maladies, the diagnosis of waterborne disease can also be difficult.


Table 1
Some Waterborne Diseases of Concern in the United States


Disease Microbial Agent General Symptoms
Amebiasis
ProtozoanAbdominal discomfort, fatigue, diarrhea, flatulence, weight loss
CampylobacteriosisBacterium (Campylobacter jejuni)Fever, abdominal pain, diarrhea
CholeraBacterium (Vibrio cholerae)Watery diarrhea, vomiting, occasional muscle cramps
CryptosporidiosisProtozoan (Cryptosporidium parvum)Diarrhea, abdominal discomfort
GiardiasisProtozoan (Giardia lamblia)Diarrhea, abdominal discomfort
HepatitisVirus (hepatitis A)Fever, chills, abdominal discomfort, jaundice, dark urine
ShigellosisBacterium (Shigella species)Fever, diarrhea, bloody stool
Typhoid feverBacterium (Salmonella lyphi)Fever, headache, constipation, appetite loss, nausea, diarrhea, vomiting, appearance of an abdominal rash
Viral GastroenteritisViruses (Norwalk, rotavirus and other types)Fever, headache, gastrointestinal discomfort, vomiting, diarrhea

As mentioned previously, low quality drinking water can have other detrimental health effects. Table 2 summarizes the health effects of several contaminants, drinking water standards and sources of such contamination.

Table 2
PRIMARY DRINKING WATER STANDARDS

Contaminants
Health Effects
MCL
Sources
Microbiological
Total Coliforms (Coliform bacteria, fecal
coliform, streptococcal, and other bacteria)



Not necessarily disease producing themselves, but can be indicators of organisms that cause assorted gastroenteric infections, dysentery, hepatitis, typhoid fever, cholera, and others; also interfere with disinfection process.

See
Regulations


human and animal fecal matter



TurbidityInterferes with disinfection1 to 5 NTUerosion, runoff, and discharges
Inorganic Chemicals
Arsenic

Dermal and nervous system toxicity effects
0.05
geological, pesticide residues, industrial waste and smelter operations
BariumCirculatory system effects1
CadmiumKidney effects0.01geological, mining and smelting
ChromiumLiver/kidney effects 0.05
LeadCentral and peripheral nervous system damage; kidney effects; highly toxic to infants and pregnant women0.05leaches from lead pipes and lead based solder pipe joints

MercuryCentral nervous system disorders; kidney effects0.002used in manufacture of paint, paper, vinyl chloride. used in fungicides, and geological
NitrateMethemogiobinemia ("blue-baby syndrome")10fertilizer, sewage, feedlots, geological
SeleniumGastrointestinal effects0.01geological, mining
SilverSkin discoloration (Argyria)0.05geological, mining
FluorideSkeletal damage4geological, additive to drinking water, toothpaste; foods processed with fluoridated water
Organic Chemicals
Endrin

Nervous system/kidney effects
0.0002
insecticide used on cotton, small grains, orchards (canceled)
LindaneNervous system/kidney effects0.004insecticide used on seed and soil treatments, foliage application, wood protection
MethoxychlorNervous system/kidney0.1insecticide used on fruit trees, vegetables
2,4-DLiver/kidney effects0.1Herbicide used to control broad-leaf weeds in agriculture, used on forests, range, pastures, and aquatic environments
2,4,5-TP SilvexLiver/kidney effects0.01Herbicide (canceled in 1984)
ToxapheneCancer risk0.005fuel (leaking tanks), solvent commonly used in manufacture of industrial chemicals, pharmaceuticals, pesticides, paints and plastics
Carbon tetrachloridePossible cancer0.005common in cleaning agents, industrial wastes from manufacture of coolants
p-DichlorobenzenePossible cancer0.075used in insecticides, moth balls, air deodorizers
1.2-DichloroethanePossible cancer0.005used in manufacture of insecticides, gasoline
1.1-DichloroethyileneLiver/kidney effects0.007used in manufacture of plastics, dyes, perfumes, paints SOCs
1.1.1-TrichloroethaneNervous system problems0.2Used in manufacture of food wrappings, synthetic fibers
Trichloroethylene (TCE)Possible cancer0.005waste from disposal of dry cleaning materials and manufacture of pesticides, paints, waxes and varnishes, paint stripper, metal degreaser
Vinyl chlorideCancer risk0.002polyvinylchloride pipes and solvents used to join them, waste from manufacturing plastics and synthetic rubber
Total trihalomethanes (TTHM) (chloroform, bromoform, bromo-dichloromethane, dibsromochloromethane)Cancer risk0.1primarily formed when surface water containing organic matter is treated with chlorine
Primary contaminants, such as those listed in Table 2 are those which, in excessive amounts, may cause acute or long-term health problems. Examples of regulated contaminants are lead, arsenic, nitrate, mercury, radionuclides and micro-organisms which may cause waterborne disease outbreaks such as Typhoid Fever, Giardiasis, Infectious Hepatitis and Cryptosporidiosis. Chronic exposure to herbicides, pesticides and volatile organic contaminants may cause long-term adverse health effects.

Secondary contaminants are not directly associated with health problems but do represent important concerns. Typically, excessive iron, manganese and sulphur can make water unpalatable or, in extreme cases, unusable. These contaminates can cause potable water to have a foul taste and smell, can cause fixture and laundry staining, and damage plumbing and appliances. Excessive iron and manganese may interfere with the disinfection process which is vital to assuring destruction of harmful micro-organisms. As a general rule, ground water is corrosive and can cause high concentrations of lead and copper (from lines and joints) in drinking water.

Besides regulated and unregulated contaminants, water utilities must also be concerned about maintaining sufficient water pressures. Low water pressure complaints are common with small water systems and are caused by excessive line leakage, inadequately sized lines, line deterioration, high customer usage and/or non-engineered systems. Low pressures are a major public health concern because they allow contamination of the system from backflow connections associated with heating system boilers, car washes, laboratories, funeral homes, nursing homes, hospitals and other commercial/industrial users.

Delays in issuing certificates of public convenience and necessity for drinking water improvements can result in exposures to harmful chemicals and/or pathogens, which can result in illness or death. In addition, matters of preference are also important. Few citizens, if any, enjoy drinking water with high levels of manganese, iron and sulphur. Delays in processing cases can translate to the extended inconvenience of iron stained clothes and rotten egg lemonade.

Wastewater

Wastewater is both a public health and environmental concern. Wastewater contamination of drinking water sources, such as homeowner wells, can cause waterborne diseases. Wastewater contamination of watersheds presents the same hazzards to those using streams, rivers and lakes for recreational purposes, such as swimming, waterskiing and fishing. Children are especially prone to swim and play in contaminated waters. In addition, ecosystems can be adversely affected by the discharge of untreated or poorly treated human wastes.

The DEP Office of Water Resources' 1996 Water Quality Status Assessment found that 86 surveyed streams (20 %) within the Guyandotte River Basin were in violation of the state water quality standard for fecal coliform bacteria. The Guyandotte River at Huntington violated the fecal coliform standard in 81% of the samples collected. The report describes the problem as being of even greater magnitude in the Big Sandy/Tug Fork Basin, as 77 (35%) of the streams were reported to be in violation of the fecal coliform standard. The Tug Fork River at Fort Gay exceeded the fecal coliform standard in 62% of the samples taken.

The presence of untreated and poorly treated domestic sewage is also a severe problem in other river basins of the state. As stated in the 1996 Water Quality Status Assessment,

...One alarming example is presented in the ambient monitoring data from the West Fork River at Enterprise, which displayed fecal coliform violations in 92 percent (22 of 24) of the samples taken during this reporting period...

Other ambient stream networks with fecal coliform violations in excess of 25% of samples drawn include the Tygart Valley River above Beverly (58%), Coal River at Tornado (50%) and Kanawha River at Winfield Locks and Dam (29%). Several tributaries of the New River within the boundaries of the New River Gorge National River have been found to regularly violate the fecal coliform standard as well.

As discussed earlier, fecal coliform and other pathogens present because of the discharge of untreated or under treated domestic sewage into watersheds pose serious public health threats. Delays in sewage system expansions and improvements caused by inefficient evaluation of certificate of public convenience and necessity cases can result in the exacerbation of an already dire public health problem.

Commercial/Industrial

At the request of State economic development officials, the Bureau of Public Health evaluated the State's public water systems in 1995 to find out how many community water systems had the excess capacity to reliably provide an extra two million gallons of water daily. According to a publication of the West Virginia Infrastructure and Jobs Development Council entitled Public Water Systems: An Inventory and Report on Current and Future Needs, this type of water demand is sought by industrial and commercial planners in evaluating West Virginia for expanded or new business operations. The study found that only 9 of the 644 community systems (1.4%) had the excess capacity to meet this level of demand.

Whether a certificate is to expand capacity to attract new business, meet the needs of existing business, or maintain excess capacity for economic development, the timeliness of the Public Service Commission's disposal of certificate applications could be a deal maker or breaker. With economic development comes jobs, tax dollars, an infusion of money into the State and local economies and linkages.

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.

A review of water and sewer certificate of public convenience and necessity cases found that 18 of 36 cases were not correctly deemed as filed as defined by Code. The consequences of recognizing incorrect file dates are significant. Recognizing the incorrect file date for cases sampled in this study caused delay in processing cases, loss of governmental accountability, and disparate treatment of public service districts. In addition, the potential exists for a project to receive a default certificate through court action if the Public Service Commission mistakenly denied or dismissed a project beyond the 270th day.

Chapter 24, Article 2, Section 11 of the West Virginia Code states in part: "The commission shall render its final decision on any application...within two hundred seventy days of the filing of the application..." This requirement is relevant to all projects with a projected total cost of less than $50 million and failure to meet the time standard results in the default award of a certificate for that project.

In addition, West Virginia Code 16-13A-25 specifies prefile requirements for public service districts when seeking certificates of public convenience and necessity as follows:

Thirty days prior to making formal application for the certificate, the public service district shall prefile with the public service commission its plans and supporting information for the project and shall publish a Class II legal advertisement... (emphasis is added)

Upon receipt of required information the case is filed with the Commission and the 270 day statutory limit should begin. The Public Service Commission is using the date of receipt of memos produced by the Legal Division subsequent to the receipt of the necessary information to establish the official filing date through a "Notice of Filing."

Table 3 below describes the discrepancies noted in a review of 36 randomly sampled cases from calendar year 1996. The receipt date in the second column of Table 3 represents the date the information necessary to satisfy a filing was "received." This date is the actual file date, but as evidenced in the table, this date was not recognized as such for half (50%) of the relevant cases sampled. The Notice of Filing is a legal document used by the Executive Secretary's Office to set an "official" date of filing. The third column of the table denotes the date declared to be the official file date by the Notice of Filing in each case. The difference between the actual file date (the date the required information was received) and the date declared to be the file date is reflected in the
last column.

Table 3
File Dates for Water and Sewer Certificate of Convenience and Necessity Cases


Case
Application/ Information Receipt Date at PSCDate of
Notice of Filing From PSC
Difference of Days Between Filing and Notice of Filing
1
35134351417
235340353444
3352053521914
435404354095
5355373555518
6353743546086
735530355377
8354883550618
935487354958
1035527355347
1135524355284
1235524355284
13354783550630
1435304353128
15352743529218
1635561355698
17355613557918
18353263538761

Graph 1

Table 4 contains a brief description of the 18 projects represented in Table 3.

Table 4
Nature of Cases Represented in Table 3
Case No. 1
Application for a certificate of convenience and necessity to construct a 1,000,000 gallon per day treatment plant, a 423,000 gallon storage tank and related facilities, and for approval of financing incidental thereto.
Case No. 2
Application for a certificate of convenience and necessity to construct approximately 14,100 feet of six-inch water main, to construct a 100,000 gallon water storage tank, to install 8 fire hydrants, to install a booster pump station to provide water service to approximately 150 new customers.
Case No. 3
Application for a certificate of convenience and necessity to upgrade/extend its Whitman Creek Water System to provide potable water service for 30 new customers and the Southwestern Regional Jail in the Community of Whitman Creek, Logan County, and for approval of financing and rates and charges incidental thereto.
Case No. 4
Application for a certificate of convenience and necessity to provide potable water service in the Lincoln County Communities of Upper Limestone Branch, Daisy, Toney, Green Shoals Branch, Ferrellsburg and Harts by constructing 65,000 linear feet of 8-inch and smaller diameter distribution lines, one 300,000 gallon water storage tank, forty-two fire hydrants, individual customer meters and all necessary valves, controls and appurtenances.
Case No. 5
Application for a certificate of convenience and necessity to make sewer improvements, by construction of 10,000 GPD wastewater treatment plant and 950 linear feet of collection line, and 4,500 linear feet of 8" PVC SDR 35 sanitary sewer line to provide sewer service to approximately thirty-five customers.
Case No. 6
Application for a certificate of convenience and necessity to construct a 350 gallon per minute water treatment plant to replace the existing water treatment plant.
Case No. 7
Application for a certificate of convenience and necessity to extend the District's water lines and to operate its water system for approximately 265 new customers along State Route 129 and approximately 60 new customers along White Water Road in Nicholas County.
Case No. 8
Application for a certificate of convenience and necessity to upgrade the water plant to provide water service to unserved customers at Teays Hollow and Cow Creek, Putnam County, and for approval of rates and charges and financing incidental thereto.
Case No. 9
Application for a certificate of convenience and necessity to construct and operate a water distribution system consisting of 8,500 linear feet of 2", 8,770 linear feet of 6", and 14,000 linear feet of 8" water mains, one 183,000 gallon water storage tank, a 200 GPM water treatment plant, two 200 GPM high service pumps, one 580 GPM filter backwash pump, one filter backwash water decant basin, one 35 GPM recycle pump, sludge drying beds and all necessary valves, controls and appurtenances.
Case No. 10
Table 4
Nature of Cases Represented in Table 3
Application for a certificate of convenience and necessity to construct a new treatment facility and to extend sanitary sewer service to approximately 130 residents in Issacs Run and along Route 33 from I-77 west to Welltech, Inc., in Jackson County. (Filed 4/15/97).
Case No. 11
Application for a certificate of convenience and necessity to construct a water line extension to serve the Weyerhauser facility located within the District's current boundaries, and to construct a water storage tank to provide additional storage capacity and emergency fire protection for the Districts existing system at or near Heater, Braxton County, and for approval of financing incidental thereto.
Case No. 12
Application for a certificate of convenience and necessity to construct a sewer line extension to serve the Weyerhaeuser facility located at or near the Community of Heaters, Braxton County, situate within the District's current boundaries, and to serve approximately 145 new customers who are residents of the Town of Flatwoods, Braxton County, and for approval of financing incidental thereto.
Case No. 13
Application for a certificate of convenience and necessity for the construction, operation and maintenance of water supply and transmission improvements for its water distribution system, consisting of approximately 6.6 miles of 8" and 6" waterline, two booster stations, two water storage tanks and a new well, and for the expansion of the existing water treatment plant.
Case No. 14
Application for a certificate of convenience and necessity to construct, operate and maintain a new eight inch water line extending from the existing lines of the Clay-Roane Public Service District at the intersection of State Route 4 and the Ovapa Road or Summers Fork in Clay County to the lines of the Town of Clay, 2.56 miles north on State Route 4, to serve the area near Varneytown in Clay County, including a portion of the Procious Public Service District and portions of an area served by the Town of Clay, formerly within the Maysel Public Service District.
Case No. 15
Application for a certificate of convenience and necessity to construct a 138,000 gallon water storage tank with approximately 550 linear feet of 8" water line and to install a 350 GPM water booster pump station, valves, and appurtenances to tie into the District's distribution system.
Case No. 16
Application for a certificate of convenience and necessity to construct 3,050 feet of 6" sewer line, 20,400 feet of 8" line, six duplex submersible grinder pump stations, three simplex submersible pump stations, one thousand feet of 1.5" force main, 1,500 feet of 2" force main, 825 feet of 3" force main, necessary clean out and a 50,000 G.P.D. treatment plant to provide sewer service to 214 residential customers.
Case No. 17
Application for a certificate of convenience and necessity to construct a new water storage tank, water mains and booster pump at Shady Grove, Glade Farms, Hazelton, and Bruceton.
Case No. 18
Application for a certificate of convenience and necessity to allow the District to construct and operate a water distribution system extension in the Sams Creek and Chesterville areas of Wood County consisting of approximately 10.7 miles of 8", 6", 4" and 2" water lines to service approximately 96 customers.

For this sample of water and sewer cases, the largest discrepancy between the date the required information was physically filed and the notification of filing was 86 days. In one case, the required materials from the applicant were received on November 6, 1996. On January 29, 1997, a memorandum from a staff attorney in the Legal Division to the Executive Secretary explained, in its entirety:

In an Internal Memorandum dated January 29, 1997, Staff has advised that information they were awaiting from the District has arrived. In fact, Staff further states that the information has been in their possession for some time as they were awaiting resolution of some Department of Health - Office of Environmental Health Services concerns and were not aware that the information was already in their possession. Staff now recommends that this prefiling be converted to a formal certificate application on or after this date. All concerns of the Department of Health have been resolved and a permit has been issued for this project. (Emphasis added).

The Notice of Filing was entered on February 24, 1997, and deemed the file date to be January 31, 1997; 86 days after the applicant had satisfied its filing requirement, the case was formally recognized as being filed.

This case is illustrative of how file dates are established by the PSC. Note that the memo directs the Executive Secretary to convert the case to file status "on or after this date." The date the applicant satisfied the conditions necessary to obtain filing status is the only reasonable file date.

The effects of discrepant filing dates can be significant. Obviously, using the wrong filing date for a case can result in failure to meet the statutory 270 day default decision deadline. In this sample of 38 cases, two cases exceeded the 270 day limit for this reason. One case in which there is a file date discrepancy of 61 days, required a total of 273 days from the date of filing (as determined by the Office of the Legislative Auditor) to final order. The case was ultimately granted a certificate. However, if the case had been dismissed or substantially altered after the 270 day limit, the applicant may have had cause for litigation since statute requires the PSC to issue a default certificate after 270 days. Another case had a file date discrepancy of only four days, but required a total of 301 days to dispose of the case. Due to other circumstances causing the case to exceed the statutory limit by 31 days, the four day discrepancy of the filing date is somewhat immaterial.

Besides the risk associated with exceeding the 270 day default decision deadline, applying the wrong filing date can result in unnecessary delays in the processing of cases. Managers faced with deadlines frequently begin with an absolute deadline and work backward to establish a schedule for resolving a project. This is a common and acceptable approach. However, if this approach is applied to certificate cases having actual file dates that predate the presumed file dates, the case's scheduled disposition will also be delayed accordingly. Delayed cases translate into delayed projects which mean that citizens will be waiting longer for water and sewer service; potential health hazards are endured for an additional period of time (i.e. consumption of unsafe drinking water; water and ground pollution by untreated sewage; swimming/recreation hazards; etc.); and delays and barriers to economic development occur.

Another effect of the inappropriate establishment of file dates is the loss of governmental accountability. Citizens have the right to expect its government to be fair and responsive. The current process for determining file dates is neither. The Internal Revenue Service and West Virginia Department of Tax and Revenue do not set filing dates as the dates they get around to reviewing the returns. Moreover, complaints, motions and writs are filed in our judicial system on the date received or otherwise defined. By claiming discretion to determine file dates anytime after an applicant has submitted a completed application, the Public Service Commission is removing what should be an objective process.

All of the file date discrepancies identified here, with the exception of one case, were filings by public service districts. Of the 38 cases in the sample, 23 were public service districts. Of the 23 public service district cases, two cases were withdrawn/dismissed prior to reaching filing status; one unusual case was not required to prefile because the utility was already operating without a certificate; and another case has been in prefile status since November 6, 1996, leaving 19 PSD cases in which a file date was actually assigned. Of these 19 cases, 17 or 89% had a discrepancy in file date, compared with 1 of 15, or 7% of the cases filed by municipalities and private utilities. This demonstrates disparate treatment of public service districts. If anything, the PSC should maintain a higher standard of assistance to public services districts, as directed by West Virginia Code §24-1-1b, which requires the Public Service Commission to "provide legal, engineering, financial and accounting advice and assistance to public service districts."

Conclusion

The current practice of filing cases with the PSC does not provide accountability for timely processing of cases. Time standards cannot be used to apply to cases that become official only after bureaucratic initiative is sufficient to make the case "official." Applicants are at the mercy of an unknown system that may allow for random events to control the case, without regard to good intentions of PSC staff. Fairness and equal treatment of applicants would require cases to be officially filed when received in the PSC.

Recommendation 1

The Public Service Commission should recognize the actual file date as the official file date on its Notice of Filings.
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.

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 which averaged 307 days required twice as much time as Class III and IV municipalities which required 153 and 169 days respectively. Thus, the prefile requirement causes substantial delays in case disposition and discriminates against public service districts.

In 1986 the Legislature passed legislation which required public service districts to prefile sixty days prior to an actual filing of a certificate case. The statutory requirement was reduced to 30 days effective June of 1996, which occurred in the middle of the sample period for this performance evaluation. The current language of West Virginia Code 16-13A-25 reads in part as follows:

Thirty days prior to making formal application for the certificate, the public service district shall prefile with the public service commission its plans and supporting information for the project and shall publish a Class II legal advertisement in a newspaper or newspapers of general circulation in each city, incorporated town or municipal corporation if available in the public service district, which legal advertisement shall state...

Purpose of Prefile Requirement

The purpose for the requisite prefile period for public service district cases is twofold. First, the prefiling requires a Class II advertisement that educates the public about public debt that will be incurred and the terms of that debt; public service properties to be acquired or constructed and the cost of the same; anticipated new rates; and the date the PSD plans to file the formal application with the Public Service Commission. The second reason is to give the Public Service Commission time to get the file in order, prior to the actual filing to expedite the processing of the case. The presumption is that public service districts are less able to submit a complete filing than private utilities and municipalities. While the reasons for requiring prefiling are laudable, this evaluation has found no support for its continuation.

The prefiling period runs from the prefile date to the file date, at which time a file is said to convert to file status. By common interpretation at the Public Service Commission, which is consistent with statute, the prefile date is the date of the second publication of the Class II legal advertisement. Since a Class II legal advertisement requires a first publication at least seven days prior to the date of second publication, it is important to understand that there is additional time added by the prefiling requirement.

Effect of Prefile Period

For our sample of 38 cases, 23 were public service district applications. Of the 23 public service district cases, one case was withdrawn by the applicant prior to reaching filing status; one case was dismissed by the Commission prior to reaching filing status; and one unusual case was not required to prefile, because the utility was already operating without a certificate, leaving 20 cases to analyze the effect of prefiling.

In 100% of the relevant sampled cases, the prefiling period exceeded the statutory time period. Table 5 denotes the lengths of the prefiling periods, the applicable statutory guidelines, and the differences between the two for each of the 20 relevant cases from the random sample.

Table 5
Prefile Periods of Public Service Districts Compared with Statutory GuidelinesÝ

Case
Statutory Time Standard (In Days)Prefile Period
(In Days)
Difference ý
(In Days)
130399
2304111
3309666
4306333
5304818
6607010
730495465
830301271
930366
10607010
11304515
1260396336
1330147117
14609535
153011080
16304111
1760442382
1860295235
196011151
206010545
Ý Original prefile period requirement was 60 days, which changed to 30 days in June 1996.
ý Calculated difference between standard and actual prefile period.

The average number of days in excess of the statutory prefile duration is 110 days. It is significant that the sample standard deviation of 144 days reflects a tremendous amount of variation from one case to the next. The smallest difference between the implied time standard and the actual duration of a prefile period was six days and the largest, 465, with a range of 459 days.

It must be noted that the PSC cannot convert a case unless the applicant submits the necessary information. Prior to January 1998, the Public Service Commission rarely dismissed stagnant cases that had been in prefile status for excessive periods of time. Therefore, much of the delay in converting these cases rests with the applicants. However, the timely dismissal of stagnant cases by the Public Service Commission can afford staff more time on ready projects. As of September 1997, the PSC has adopted a more aggressive policy on dismissing stagnant prefilings. Because of the policy's newness, there are too few cases available to examine the effect of this policy.

As mentioned earlier, informing the public about pending certificates of public convenience and necessity is one of two reasons for the prefile period. West Virginia Code §16 13A-25, the prefile statute, requires public services districts to publish a Class II advertisement within 30 days of the expected file date. However, West Virginia Code §24-2-11 requires all types of utilities to publish a Class I advertisement providing notice of a 30 day public protest period. This advertisement occurs just days after a case is filed. Under current law, public service districts must publish a Class II advertisement making the public aware of its intent to file an application. Within 30 days of that advertisement the PSD may then be converted to file status and soon thereafter required to publish a Class I legal advertisement announcing the public protest period. These advertisements are duplicitous. The Legislature should consider eliminating the duplicitous advertisement required under West Virginia Code §16-13A-25.

This performance review raises questions about the effectiveness of the prefile period. Public service districts' applications, when converted to file status, averaged 167 days to final decision, while private and municipal cases with no prefile requirement averaged just 13 days more, i.e.,180 days. In theory, the prefile period should decrease actual processing time significantly since the supporting information is required before the statutory 270-day time standard begins, unlike private and municipal applicants, which only have to submit an application to start the statutory time frame.

Table 6 compares the disposition of certificate of public convenience and necessity cases...

Table 6
Public Service Districts vs. Class III and IV Municipalities Processing Times
UtilityPrefiling DaysDays After FilingTotal
PSD 139100139
PSD 241261302
PSD 3 9679175
PSD 4 63226289
PSD 5 48273321
PSD 67067137
PSD 7495ongoing495+
PSD 8301142443
PSD 936215251
PSD 1070301371
PSD 11 45201246
PSD 12396152548
PSD 13 147161308
PSD 149595190
PSD 15110159269
PSD 1641102143
PSD 17442141583
PSD 18295236531
PSD 1911183194
PSD 2010595200
Class III 1not required165165
Class III 2not required185185
Class III 3not required119119
Class III 4not required144144
Class IV 1not required150150
Class IV 2not required183183
Class IV 3not required246246
Class IV 4not required147147
Class IV 5not required146146

...of all public service districts and class III and IV municipalities in the random sample. Certificates filed by Class III and IV towns were compared with public service districts because the customer base and relative size of the utilities lend to good comparison.

Table 7 shows that despite the prefile period, the time required to work cases from filing to final order differed from PSD's by an average of no more than 10 days with the sample's Class III towns at 153 days, PSDs in the middle at 163 days and Class IV towns at 169 days. If the prefile period were effective at getting cases ready by causing the supporting information to be on file at the time of filing, one would expect the time between the file date (case conversion) and the final decision to be considerably less than that for Class III and IV towns which represent comparably-sized utilities. Parkinson's Law that "work expands to fill the time available for its completion..." may be a factor since the PSC has 270 days to dispose of a PSD case despite the amount of time required to move it through prefile status and all accomplished during that time. With the average prefile period at 152 days, no apparent benefit in the time required to get a case through from file date to final decision, duplicitous advertisements, and average total processing time more than twice that of Class III towns, there is currently no justification for continuing requisite prefiling for PSDs.

Table 7
Summary of PSD-Class III and IV Comparison

Utility Type
Average Prefile Days
(Standard Deviation)
[Range]
Average File Days
(Standard Deviation)
[Range]
Average Total Days
(Standard Deviation)
[Range]

Public Service Districts
152
(147)
[459]
163
(73)
[234]
307
(143)
[446]

Class III Towns
0
(0)
[0]
153
(28)
[66]
153
(28)
[66]

Class IV Towns
0
(0)
[0]
169
(40)
[100]
169
(40)
[100]

The effects of this issue are not unique from those discussed elsewhere in this report. Delays in processing cases translate into delayed potable water and adequate sewer service to citizens; potential public health hazards are not resolved (i.e. consumption of unsafe drinking water; water and ground pollution by untreated sewage continues; swimming/recreation hazards continue; etc.); and delays to economic development impact the community. In addition, the existence of the prefile period results in disparate treatment of public service districts.

Table 8 contains a brief description of the 20 projects represented in Table 6.

Table 8
Nature of Cases Represented in Table 6
Case No. 1
Application for a certificate of convenience and necessity to provide potable water service in the Lincoln County Communities of Upper Limestone Branch, Daisy, Toney, Green Shoals Branch, Ferrellsburg and Harts by constructing 65,000 linear feet of 8-inch and smaller diameter distribution lines, one 300,000 gallon water storage tank, forty-two fire hydrants, individual customer meters and all necessary valves, controls and appurtenances.
Case No. 2
Application for a certificate of convenience and necessity for the construction, operation and maintenance of water storage, metering and transmission improvements for its existing water distribution system, consisting of approximately 1.6 miles of twelve-inch water transmission lines, one water storage tank and metering improvements.
Case No. 3
Application for a certificate of convenience and necessity to construct a new water storage tank, water mains and booster pump at Shady Grove, Glade Farms, Hazelton, and Bruceton.
Case No. 4
Application for a certificate of convenience and necessity to construct and operate a water distribution system consisting of 8,500 linear feet of 2", 8,770 linear feet of 6", and 14,000 linear feet of 8" water mains, one 183,000 gallon water storage tank, a 200 GPM water treatment plant, two 200 GPM high service pumps, one 580 GPM filter backwash pump, one filter backwash water decant basin, one 35 GPM recycle pump, sludge drying beds and all necessary valves, controls and appurtenances.
Case No. 5
Application for a certificate of convenience and necessity to allow the District to construct and operate a water distribution system extension in the Sams Creek and Chesterville areas of Wood County consisting of approximately 10.7 miles of 8", 6", 4" and 2" water lines to service approximately 96 customers.
Case No. 6
Table 8
Nature of Cases Represented in Table 6
Application for a certificate of convenience and necessity to construct a water line extension to serve the Weyerhauser facility located within the District's current boundaries, and to construct a water storage tank to provide additional storage capacity and emergency fire protection for the District's existing system at or near Heaters, Braxton County, and for approval of financing incidental thereto.
Case No. 7
Prefiling of information related to an upcoming certificate of convenience and necessity application for a sewer collection system that will serve 152 residential and 8 commercial customers.
Case No. 8
Application for a certificate of convenience and necessity to extend its existing water system along West Virginia Route 20 and the Littlesburg Road and to the communities of Duhring and Flipping and to construct a 150,00 gallon tank near the Lorton Lick Road; and for approval of financing for the project.
Case No. 9
Application for a certificate of convenience and necessity to construct a 350 gallon per minute water treatment plant to replace the existing water treatment plant.
Case No. 10
Application for a certificate of convenience and necessity to construct a sewer line extension to serve the Weyerhaeuser facility located at or near the Community of Heaters, Braxton County, situate within the District's current boundaries, and to serve approximately 145 new customers who are residents of the Town of Flatwoods, Braxton County, and for approval of financing incidental thereto.
Case No. 11
Application for a certificate of convenience and necessity to make sewer improvements, by construction of 10,000 GPD wastewater treatment plant and 950 linear feet of collection line, and 4,500 linear feet of 8" PVC SDR 35 sanitary sewer line to provide sewer service to approximately thirty-five customers.
Case No. 12
Application for a certificate of convenience and necessity to extend the District's water lines and to operate its water system for approximately 265 new customers along State Route 129 and approximately 60 new customers along White Water Road in Nicholas County.
Case No. 13
Application for a certificate of convenience and necessity to construct 3,050 feet of 6" sewer line, 20,400 feet of 8" line, six duplex submersible grinder pump stations, three simplex submersible pump stations, one thousand feet of 1.5" force main, 1,500 feet of 2" force main, 825 feet of 3" force main, necessary clean out and a 50,000 G.P.D. treatment plant to provide sewer service to 214 residential customers.
Case No. 14
Application for a certificate of convenience and necessity to construct a 138,000 gallon water storage tank with approximately 550 linear feet of 8" water line and to install a 350 GPM water booster pump station, valves, and appurtenances to tie into the District's distribution system.
Case No. 15
Application for a certificate of convenience and necessity for the construction, operation and maintenance of water supply and transmission improvements for its water distribution system, consisting of approximately 6.6 miles of 8" and 6" waterline, two booster stations, two water storage tanks and a new well, and for the expansion of the existing water treatment plant.
Case No. 16
Table 8
Nature of Cases Represented in Table 6
Application for a certificate of convenience and necessity to construct approximately 14,100 feet of six-inch water main, to construct a 100,000 gallon water storage tank, to install 8 fire hydrants, to install a booster pump station to provide water service to approximately 150 new customers.
Case No. 17
Application for a certificate of convenience and necessity to construct a new treatment facility and to extend sanitary sewer service to approximately 130 residents in Issacs Run and along Route 33 from I-77 west to Welltech, Inc., in Jackson County. (Filed 4/15/97).
Case No. 18
Application for a certificate of convenience and necessity to upgrade the water plant to provide water service to unserved customers at Teays Hollow and Cow Creek, Putnam County, and for approval of rates and charges and financing incidental thereto.
Case No. 19
Application for a certificate of convenience and necessity to upgrade/extend its Whitman Creek Water System to provide potable water service for 30 new customers and the Southwestern Regional Jail in the Community of Whitman Creek, Logan County, and for approval of financing and rates and charges incidental thereto.
Case No. 20
Application for a certificate of convenience and necessity to construct, operate and maintain a new eight inch water line extending from the existing lines of the Clay-Roane Public Service District at the intersection of State Route 4 and the Ovapa Road or Summers Fork in Clay County to the lines of the Town of Clay, 2.56 miles north on State Route 4, to serve the area near Varneytown in Clay County, including a portion of the Procious Public Service District and portions of an area served by the Town of Clay, formerly within the Maysel Public Service District.

Thirty Day Notice Period

In addition to the prefiling requirement, there is also a requirement in Chapter 24, Article 2, Section 11 which requires a 30 day notice to the Commission before application by any applicant.

Chapter 24, Article 2, Section 11 of the West Virginia Code states,

Any public utility, person or corporation subject to the provisions of this section shall give the commission at least thirty days' notice of the filing of any such application for a certificate of convenience and necessity under this section: Provided, That the commission may modify or waive the thirty-day notice requirement (emphasis added).

The Commission does not require this notice period and few applicants do provide this notice. However, those applicants who are not aware of this, withhold their applications for 30 days for no purpose.
Conclusion

The prefile requirement was adopted to provide notice to the public that PSD projects are being discussed and to assure the completeness of a filing upon conversion to file status, with the ultimate goal of expediting the process. Because the average prefile period is 152 days, and cases take as long to get through the file period as comparable cases that are not required to prefile, this review has found that the prefile requirement is the most significant reason for untimely case disposition. In addition, prefiling requires duplicitous advertisements and an average total processing time that is more than twice that of Class III municipalities (307 PSD, 153 Class III). The 30 day notice is consistently not required by the PSC and creates unnecessary delay to unknowing applicants.

In light of the PSC's new policy to control the prefile period, a recommendation which would have encouraged the Legislature to consider repealing the entire prefile requirement was withdrawn in the exit conference in which the first draft of this report was discussed with the agency. The Commissioners have pledged improvement in this area through the new policy and further reform. The Commissioners are in agreement that at a minimum, the redundant prefile requirement should be repealed. Elimination of this requirement will allow the Commission to dismiss premature prefilings without causing public service districts to have to republish costly Class II legal advertisements when proposals become ready for submission. A 1999 Interim update of this issue could determine if the new policy has been effective in substantially reducing the length of the prefile period and expediting the disposition of cases after conversion. At that time a better informed recommendation concerning the continuation or repeal of the prefile requirement can be made.

Recommendation 2

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.

Recommendation 3

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.

Recommendation 4

Because of its nonuse, potential for causing delay of a ready case and lack of justification for notice, the Legislature should consider repealing of the 30 day notice requirement in Chapter 24, Article 2, Section 11 . Issue Area 3:The PSC does not have adequately codified rules, case law and policies governing the granting of certificate of public convenience and necessity decisions.

Publishing Commission Cases and Orders

The PSC has not published Commission case orders since 1986. In 1991, the Legislature repealed a requirement that the "acts and proceedings of the commission" be part of the Commission's annual report. Although the PSC does retain the orders and case records, both paper copies and microfilm (through 1997), they are not convenient for public access. The PSC presents a "Management Summary Report" to the Joint Committee on Government and Finance of the West Virginia Legislature. This report does list some general orders but is not inclusive of case facts.

Although the commission is not bound by previous orders, they can be and are used as precedent. The following is an excerpt of a "Petition for Reconsideration and Clarification of Commission's April 18, 1997 Order" dated May 19, 1997, submitted by Counsel of the Public Service Commission, which states in part:

This language is not only troublesome, but is particularly perplexing to the Staff since in Case No. 94-1123-PWD-CN, Pendleton County Public Service District, the Commission appeared to chastise its Chief Administrative Law Judge, because as in the instant case, the Staff in Pendleton reviewed the Districts rates within the confines of a certificate proceeding. The Commission in Pendleton explicitly stated that, "We wish to make clear that it is proper for Staff to review rates in a certificate case. It is also appropriate for Staff to recommend a unified tariff in a certificate proceeding..." Nevertheless, in spite of these policy pronouncements, the Commission appears to have done a 180 degree retreat. In other words, the exclusion of non-related project costs as the Commission has done in its April 18, 1997 order, appears to invalidate the Commission's assertions in Pendleton.

On September 18, 1997, the Commission made an order which rejected the rates established with the April 18, 1997, order and cited cases to explain to staff that there was reasoning due to prior orders involving this public service district. Without access to these prior orders for review, it is difficult for private attorneys to effectively represent their clients in cases brought before the Commission without having an idea of how the present Commission stands on particular cases.

Internal Procedure Documentation

Internal policies dictating procedures for each division within the Commission are piecemeal, noncomprehensive and as a whole, unofficial. Audit staff was unable to obtain written internal procedures from the Executive Secretary's Office, although the Executive Secretary did explain that the PSC was in the process of producing such procedures. Neither the Utilities Division nor the Water and Wastewater Division have unified, comprehensive policies and procedures for processing certificate cases. There are however, piecemeal memoranda and newsletter articles which set policy and procedures. Because memoranda and newsletter articles were written in different years and were intended to stand alone, they contain some outdated and conflicting information. The memoranda and newsletter articles typically address narrow aspects of the processing of a case and are not compiled with other memoranda and newsletters representing standing policy and procedures. Lack of effective policy and procedures can result in loss of productivity, dispensing inaccurate advice, making incorrect decisions, compromised ability for managers to hold subordinates accountable, as well as other problems.

One such case related to employee turnover resulted in an 84 day delay after the death of an employee. In another situation, a case was reported to have been idle on the desk of an employee of the case control section for approximately three months without management's knowledge that the case was not being processed. Staff noted in an October 30, 1996, memo that upon receipt of necessary information it would convert the case. The information was received by the Commission on November 6, 1996. As of November 25, 1996, staff was still assisting the District in converting the prefiling per the "Final Joint Staff Memorandum." On January 28, 1997, the utility's attorney made a status inquiry and was informed by staff that the case had been on an employee's desk and they were not aware the case was not progressing as expected. On January 29, 1997, staff filed a memo explaining that the information had been received, had been in its possession for some time and that the case was ready for conversion.

Management controls to track the progress of cases could have alerted management of the delay in this case. It was also noted during this case evaluation that the information submitted on November 6, 1996, was not listed by the Executive Secretary's Office on the case docket. The failure to record this on the docket sheet left the case control section and anyone else in the Commission unaware that the information had been received unless they received a physical copy of the information. The case docket sheet available to the entire Commission is the database which details all documentation that passes through the Executive Secretary's Office.

One of the cases reviewed contained an internal memorandum stating,

The final engineering report and final plans/specifications have not been submitted. Upon receipt of the necessary information, staff will recommend conversion by way of a further final staff memorandum.

It was noted that there were no final engineering reports or final plans and specifications in the file, yet it was converted. When subsequently questioned as to whether the final plans and specifications were ever received, a division director at the PSC responded, "The preliminary engineering report is typically the only report. There is not a final report, nor would it be expected that there would be." Thus, staff was not in consensus with management and the case was unnecessarily delayed due to the lack of internal policy.

There are no documented procedures or agreements regarding direct confirmation of funding from sister State agencies. In cases where funding was in question, the Public Service Commission routinely requested funding verification from the applicant. In some cases, this is the most efficient approach. In others, such as cases where grants and loans are made by sister State agencies, all parties would be better served by the PSC contacting the funding agency directly to obtain verification of funding. In some cases, obtaining verification of funding from the funding agency would make the process a little quicker and would give the PSC a higher standard of evidence.

As an example, in one of the sampled cases, Public Service Commission staff sent a formal interrogatory to an applicant requesting a commitment letter from the State of West Virginia Revolving Loan Fund. In obtaining direct confirmation from the funding source, the evidence would be more credible and the applicant would not have to pursue and submit more information than is necessary.


Administrative Rules Regarding Certificate of Public Convenience and Necessity Cases

The PSC does not have pertinent information codified as administrative rules with respect to certificate of public convenience and necessity cases. West Virginia Code §24-2-11 , entitled "Requirements for certificate of public convenience and necessity" states in part,

The Commission shall prescribe such rules and regulations as it may deem proper for the enforcement of the provisions of this section: and, in establishing that public convenience and necessity do exist, the burden of proof shall be upon the applicant.

The Commission provided some articles in its newsletter Pipeline, however, despite the statutory mandate quoted above, the Public Service Commission has not promulgated a rule delineating the certificate of public convenience and necessity process, including the definitions of "convenience and necessity." Publication of the Commission's interpretation of "convenience" could reduce problems between the applicant's engineers and the Commission's engineers which have the duty of determining convenience. Although the engineers involved may be well qualified, their opinions on what is necessary to fulfill the service requirements of a utility's customers conveniently may vary greatly.

Criteria which determine whether a project of a utility requires a certificate of public convenience and necessity are not addressed in rules and regulations. According to statute, if a project is an ordinary extension of existing systems in the usual course of business, it is exempt from the requirement of receiving a certificate. The Office of the Legislative Auditor realizes the definition of ordinary course of business will vary with each utility and job due to the varying sizes and natures of jobs. However, given the statutory exemption of normal course of business, it is imperative that guidelines be published. Guidance on a decision to file for a certificate should not be left to an article in a newsletter. There may be occasions when filing is not necessary, but the PSC may not be inclined to dismiss a case filing based on it being in the normal course of business.

The Commission does not have policy dictating treatment of applications submitted with joint applicants. One of the sampled cases had a private utility and a public service district as co applicants. The applicants filed their application December 2, 1996. On February 26, 1997, the Administrative Law Judge (ALJ) administering the case determined that because a public service district was a co-applicant, the district applicant must prefile. The ALJ further ordered that the file date be deemed as the 31st day following the date of the second prefiling publication. The second date was March 17, 1997. The result of the postponed prefiling requirement caused unnecessary delay.

During our interviews with applicants, there was concern regarding policy within the Commission. Applicants claimed they can call the PSC and get several different answers to the same question. This is because many pertinent factors regarding certificate cases are open for PSC staff interpretation and can lead to inconsistent responses and confused applicants.

Conclusion

Information regarding Commission cases, internal procedures and codification of rules and regulations is not sufficient for efficient and effective case disposal within the PSC. As evidenced by sampled cases, there were discrepancies between actual procedures and perceived procedures. Staff's inability to refer to written procedures can create different answers to the same question and confusion among utilities as to the PSC's stance on particular issues. Documented procedures will allow for more consistency regarding the treatment of cases within the Commission and lessen the probability that case information is lost or not reviewed properly. The lack of availability of past case orders is a barrier to outside parties seeking understanding of the current, or past commission decisions regarding specific types of cases. Lack of codification of pertinent issues regarding certificates of convenience and necessity cases can hinder an applicant's ability to prepare for submission of their projects.

Recommendation 5

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.

Recommendation 6

The Public Service Commission should promulgate rules on the certificate of public convenience and necessity process and procedures, and on internal procedures for making certificate decisions.

Recommendation 7

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.