BEFORE THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Pennsylvania Public Utility : Docket Numbers
Commission : R-00994868
: R-00994868C0001 - C0015
v. :
: R-00994877
Philadelphia Suburban Water Company : R-00994877C0001 & C0002
Consumers Water Company - Roaring Creek :
Division, Susquehanna Division and Shenango : R-00994878
Valley Division : R-00994878C0001 & C0002
:
: R-00994879
: R-00994879C0001 - C0004
Recommended Decision
Before
Wayne L. Weismandel
Administrative Law Judge
History Of The Proceeding
On October 29, 1999, Philadelphia Suburban Water Company and Consumers Water Company - Roaring Creek Division, Susquehanna Division, and Shenango Valley Division (PSW) filed with the Pennsylvania Public Utility Commission (Commission) Supplement No. 21 to Tariff Water-Pa. P.U.C. No. 16, containing proposed changes in rules, regulations, and rates, calculated to produce $28,000,000 in additional annual revenues, based on a future test year ending June 30, 2000, Docket Numbers R-00994868, R-00994877, R-00994878, and R-00994879, respectively. By Commission Secretarial Letter dated October 13, 1999, the 180-day filing rule had been waived until November 24, 1999.
On November 9, 1999, the Commission’s Office of Trial Staff (OTS) filed a Notice of Appearance at each of the Docket Numbers.
By Order adopted and entered December 2, 1999, the Commission ordered, among other things, that an investigation be instituted to determine the lawfulness, justness, and reasonableness of the proposed rules, regulations, and rates, and suspended the effective date of Supplement No. 21 until August 3, 2000, unless otherwise ordered by the Commission.
On December 7, 1999, PSW filed Supplement No. 22 to Tariff Water-Pa. P.U.C. No. 16, suspending the application of rates proposed in Supplement No. 21 until August 3, 2000.
During the course of the proceeding, a total of twenty-three formal Complaints were filed.[1] PSW filed either an Answer or a letter citing 52 Pa.Code §5.61(d) to each of the Complaints.
By Notice dated December 15, 1999, an Initial Prehearing Conference was scheduled for December 29, 1999, and the case was assigned to me.
By Initial Prehearing Conference Order dated December 16, 1999, the participants were ordered to prepare memoranda to be filed and served by December 28, 1999, and advised that active participants would be limited to attendees at the scheduled Initial Prehearing Conference on December 29, 1999, unless subsequently granted active participant status upon Petition to Intervene pursuant to the Commission’s regulations at 52 Pa.Code §§5.71-5.76.
Prehearing Conference memoranda were filed by OTS, OCA, OSBA, and PSW.
The Initial Prehearing Conference occurred as scheduled on December 29, 1999, attended by representatives of PSW, OTS, OCA, and OSBA. Additionally, two individuals, April Whitley and Edna M. Roth[2], attended the Initial Prehearing Conference and, at their request, were made active participants (Tr. 16-18). A transcript of the proceeding containing fifty-six (56) pages was produced.
As a result of the Initial Prehearing Conference, I issued a Scheduling and Briefing Order dated December 30, 1999, which, among other things, provided a schedule for hearings (to include Public Input Hearings in PSW’s service territory) and scheduled a Second Prehearing (Settlement) Conference for March 15, 2000. The Scheduling and Briefing Order also contained a schedule for the submission of written direct, rebuttal, and surrebuttal testimony, and a schedule for filing Main and Reply Briefs.
By Hearing Notice dated January 6, 2000, the Second Prehearing (Settlement) Conference was confirmed for March 15, 2000, and an Initial and Further Hearing to examine witnesses sponsoring written testimony was scheduled for March 20 - 24, 2000, in Harrisburg.
By Order Scheduling Public Input Hearing dated January 13, 2000, specific times and locations were established for Public Input Hearing sessions in Trevose (Bucks County), Warrington (Bucks County), Berwyn (Chester County), Media (Delaware County), and Hermitage (Mercer County), Pennsylvania, during the period February 16 - 23, 2000.
On January 27, 2000, the Philadelphia Suburban Water Large Users Group (PSWLUG)[3] filed a Petition To Intervene (Petition).
The Public Input Hearing sessions in Trevose, Warrington, Berwyn, and Media occurred as scheduled on February 16 and 17, 2000. Representatives of PSW, OTS, OCA, and OSBA, as well as Ms. Whitley and Ms. Roth attended the Trevose Public Input Hearing session. Representatives of PSW, OTS, OCA, and OSBA attended the Warrington, Berwyn, and Media Public Input Hearing sessions. A total of forty-one (41) witnesses testified, and two (2) exhibits (Farley Exhibit 1 and McKinley Exhibit 1) were admitted as evidence at these sessions. Transcripts of these Public Input Hearing sessions containing a total of 263 pages (numbered 57 through 319) were produced.
By Order Granting Permission To Intervene dated February 18, 2000, PSWLUG was admitted as an active participant intervenor in the case (PSWLUG’s Petition being unopposed).
The Public Input Hearing sessions (2:00 p.m. and 7:00 p.m.) in Hermitage occurred as scheduled on February 23, 2000. Representatives of PSW, OTS, OCA, and OSBA attended both Hermitage Public Input Hearing sessions. A total of five (5) witnesses testified at these sessions. Transcripts of these Public Input Hearing sessions containing a total of 59 pages (numbered 320 through 378) were produced.
By Second Prehearing (Settlement) Conference Order dated February 28, 2000, the participants were ordered to prepare memoranda to be filed and served by March 10, 2000, and advised that only active participants who timely complied would be permitted to cross-examine witnesses at the Initial and Further Hearing.
OTS, OCA, OSBA, PSWLUG, and PSW filed second Prehearing (Settlement) Conference memoranda.
The Second Prehearing (Settlement) Conference occurred as scheduled on March 15, 2000, attended by representatives of PSW, OTS, OCA, OSBA, and PSWLUG. Neither April Whitley nor Edna M. Roth attended the Second Prehearing (Settlement) Conference. The active participants present requested that the Initial and Further Hearing be re-scheduled to March 22 - 24, 2000, to permit continued settlement negotiations to occur on March 20 and 21, 2000. No transcript of the Second Prehearing (Settlement) Conference was prepared, it being held “off-the-record” for settlement purposes.
By Cancellation Notice dated March 15, 2000, the Initial and Further Hearing dates of March 20 and 21, 2000, were canceled.
The Initial and Further Hearing convened as scheduled on March 22, 2000. Representatives on behalf of PSW, OTS, OCA, OSBA, and PSWLUG were present and prepared to proceed. Neither April Whitley nor Edna M. Roth appeared. In accordance with agreements made at the Second Prehearing (Settlement) Conference, PSW Statements 8, 9, 10, 10-R, and 11-R and the written testimony of Representative Curt Schroder of the Pennsylvania House of Representatives[4] were admitted by stipulation of the active participants present.
Three of PSW’s witnesses testified and were made available to the other active participants for cross-examination. When the Hearing re-convened after the lunch recess, the active participants present informed me that they had reached a comprehensive negotiated settlement of the case. Consequently, statements and exhibits sponsored by the active participants present were identified and admitted into the record by stipulation. The active participants present requested that the remaining two days’ schedule be cancelled.
The written testimony and Exhibits admitted as evidence on March 22, 2000, are described as follows:
By PSW:
a.) Statements 1 through 10.
b.) Statements 3S and 6S.
c.) Statements 1-R through 7-R, 10-R, and 11-R.
d.) Exhibits 1, 1-A, 3-B, 3-C, 3-C(a), 3-D, 3-D(a), 3-D(a)Revised, 3-D(b), 3-E, 3-E(a), 4-A, 4-B, 5-A, 6-A, 6R-A, 6S-A, 30-A, 30-A(a), 30-B, 50-A, 50-B, and 50-C.
A total of 21 Statements and 23 Exhibits.
By OCA:
a.) Statements 1 and Appendix A, 2 and Appendices A, B and C, 3 and Appendix A, and 4.
b.) Statements 1-S through 4-S.
c.) Schedules JRW-1 through JRW-10.
d.) Schedules JRW-1S and JRW 2S.
e.) Schedules MJM-1 through MJM-16.
f.) Exhibit 4 (Schedules GM-1 through GM-8).
g.) Exhibit 4Revised (revising a part of Schedule GM-8)
A total of 8 Statements and 30 Exhibits.
By OTS:
a.) Statements 1 and Appendix A, 2 and Appendix A, and 3 and Appendix A.
b.) Statement 1SR and 2SR.
c.) Exhibits 1, 1SR, 2, and 3.
A total of 5 Statements and 4 Exhibits.
By OSBA:
a.) Statements 1 and Appendix, 2, and 3.
A total of 3 Statements.
A transcript of the Initial Hearing held on March 22, 2000, containing ninety-five (95) pages (numbered 379 through 473) was produced.
By Cancellation Notice dated March 22, 2000, the Further Hearing scheduled for March 23 and 24, 2000, was canceled.
By Order Reclassifying Participants dated March 23, 2000, April Whitley and Edna M. Roth were reclassified from active to inactive participants because of their failure to attend any but one of the six Public Input Hearing sessions, their failure to submit any written testimony, their failure to submit the required Second Prehearing (Settlement) Conference memorandum, their failure to attend the Second Prehearing (Settlement) Conference, and their failure to attend the Initial and Further Hearing on March 22, 2000.
On April 3, 2000, a Joint Petition For Settlement Of Rate Investigation (Joint Petition) was filed. The Joint Petition was executed by, or on behalf of, all active participants.
Also on April 3, 2000, PSW sent a copy of the Joint Petition, including statements in support thereof by PSW, OTS, OCA, OSBA, and PSWLUG, to the entire service list.
On April 4, 2000, in accordance with the provisions of 52 Pa.Code §69.406, I sent a letter to the entire service list requesting comments or objections regarding the Joint Petition. My letter also included a signature page for any inactive participant who desired to join in the Joint Petition. Service list members were advised that they had to submit comments or objections not later than April 14, 2000. Additionally, my letter provided telephone numbers for representatives of PSW, OCA, OSBA, and PSWLUG if recipients had any questions about the Joint Petition.
On April 6, 2000, PSW, on behalf of all active participants, filed a reformatted Appendix B (amortizations reflected in the settlement rates) to the Joint Petition. At the request of OTS, Appendix B to the Joint Petition was reformatted to include additional information concerning the amortizations. The reformatting made no change to the annual amortization amounts.
I received four (4) timely responses to my letter of April 4, 2000. None of the responding parties requested a severance and hearing of their Complaint.
Joseph E. Toughill (R-00994868C0005) submitted a fully executed signature page, joining in the Joint Petition. Mr. Toughill’s signature page was filed April 10, 2000.
William Borst (R-00994868C0010) submitted a fully executed signature page, joining in the Joint Petition. Mr. Borst’s signature page was filed April 12, 2000.
David Schnell (R-00994868C0015) submitted a fully executed signature page, joining in the Joint Petition. Mr. Schnell’s signature page was filed April 11, 2000.
Ivan Leidy (R-00994879C0004) submitted a letter dated April 6, 2000. Mr. Leidy’s letter was filed April 11, 2000. Mr. Leidy did not include any facts, affidavits, argument or relevant legal analysis as substantiation of his objection to the proposed settlement agreement. Nor did Mr. Leidy request, and support a request with appropriate information and legal argument concerning the implications of denial of a continued opportunity to litigate the matter in lieu of settlement, a severance and hearing of his Complaint. My letter of April 4, 2000 had specifically included these requirements regarding objections to the proposed settlement and requests for continued litigation.
In as much as these were the only timely responses received, and they did not request a further hearing, no further hearing in this case need be scheduled.
A true and correct copy of the Joint Petition, including the supporting statements of PSW, OTS, OCA, OSBA, and PSWLUG, is attached hereto and made a part hereof.
Terms And Conditions Of The Joint Petition
The Joint Petition submitted by PSW, OCA, OTS, OSBA, and PSWLUG, provides for a settlement of all issues. The settlement provides for an increase in rates designed to produce an increase in annual revenues of $17 million, as opposed to the proposed increase of approximately $28 million which would have been produced by Supplement No. 21 filed October 29, 1999. This equates to a nearly forty percent (40%) reduction of the increase originally sought. Put another way, the increase in annual operating revenues provided for in the Joint Petition is approximately 9.4% as opposed to the 15.5% increase originally sought.
Due to varying rate levels in the PSW divisions, customers will be differently impacted under the settlement rates. However, a comparison of the present, the originally proposed (in PSW’s Supplement No. 21 filed October 29, 1999), and the settlement rates (in the Joint Petition) for a 5/8-inch metered residential customer consuming 4,700 gallons per month in PSW’s Main Division (the largest division, serving approximately 74% of PSW’s customers) is in some degree representative for all similar residential customers. That customer has a present rate of $26.01, an originally proposed rate of $30.77 (an 18.3% increase), and a settlement rate of $28.81 (a 10.8% increase), a significantly reduced increase.
In PSW’s Roaring Creek Division, the settlement rates increase the customer charges toward those of the Main Division, while the first consumption block charge is reduced toward the Main Division first consumption block charge. The overall effect of these changes is an approximately $650,000 reduction for the Roaring Creek Division.
Public fire settlement rates remain at existing levels, except for the Bristol and Hatboro areas. In those two areas the settlement rates provide an increase to move the rate toward the statutory cap of 25% of the cost of service.
Settlement consumption charges for the Main Division’s residential customers provide for a single block rate equal to the first consumption block. All other consumption block rates in the Main Division are increased by 11.7%, except for the fifth consumption block rate applicable to industrial customers, which is increased 8.5%.
The rate structure and rate design elements of the settlement are consistent with the goal of gradually unifying the customer charges and volumetric rates assessed customers in PSW’s various rate divisions. This movement serves commission policy.
Two other elements of the proposed settlement terms merit special mention.
Barring fundamental changes in policy or statutes that directly affect PSW’s rates as proposed in the Joint Petition, PSW agrees not to file for another general rate increase under 66 Pa.C.S. §1308(d) before April 29, 2001. Assuming the statutory suspension period would be applied to PSW’s next general rate increase filing, this “stay-out” provision protects the ratepayers from a further base rate increase for nearly two years. The regulatory goal of rate stability is advanced by this very important provision of the Joint Petition.