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Introduced Version Senate Bill 119 History

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Key: Green = existing Code. Red = new code to be enacted
Senate Bill No. 119

(By Senator Love)

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[Introduced January 9, 2008; referred to the Committee on the Judiciary.]

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A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new section, designated §24-2-11e, relating to authorizing the Public Service Commission to protect the consumers of failed water or failed sewer utilities by ordering a capable water or sewer public utility to acquire the failed utility.

Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new section, designated §24-2-11e, to read as follows:
ARTICLE 2. POWERS AND DUTIES OF PUBLIC SERVICE COMMISSION.
§24-2-l1e. Power of commission to order acquisition of failed water and failed sewer utilities.

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


NOTE: The purpose of this bill is to protect the consumers of failed water or sewer utilities by authorizing the Public Service Commission to order a capable water or sewer public utility to acquire the failed utility system.

This section is new; therefore, strike-throughs and underscoring have been omitted.
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