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Citizens’ Complaint about Water Pricing
in Shenandoah Junction
IN THE
ADMINSTRATIVE LAW COURT OF KEITH A. GEORGE
Date: May 6, 2002
CASE NO.
01-1603-W-PC-CN
JEFFERSON UTILITIES,
INC.; SJPW, INC, and
SHENANDOAH JUNCTION PUBLIC WATER, INC.
Application for certificate of convenience and necessity to transfer Shenandoah
Junction Water System to Jefferson Utilities, Inc. ; for interim operating
authority; to charge emergency. Interim, and permanent rates; to construct a
main; and to enter into various agreements.
Howard G. James, PO
Box 166, Shenandoah Junction, WV, 25442
George F. Nichols, PO
Box 69, Shenandoah Junction, WV, 25442
Robert Lanham, PO Box
22, Shenandoah Junction, WV, 25442
Eleanor Ann Shirley,
PO Box 176, Shenandoah Junction, 25442
Douglas Stolipher,
1602 Roper Road, Charles Town, 25414
` EXCEPTION BRIEF BY SHENANDOAH JUNCTION
PARTIES, LISTED ABOVE, TO JUDGE KEITH A. GEORGE’S RECOMMENDED DECISION
ENTERED APRIL 24, 2002
Background:
Shenandoah
Junction is within in one quarter of a mile of the County’s only high school, a
currently being constructed new middle school and proximate to several proposed,
planned and in construction subdivisions, totaling 1000 homes. Jefferson County is the third most rapidly
growing county in West Virginia.
Shenandoah Junction
Water Users are a small working and retired community of approximately 224
families. These families, until the
Public Service Commission (PSC) approved
a new water rate increase to a $30.00 minimum with a $4.96 charge per
1000 gallons, had been paying water rates of $3.00 per 1000 gallons with a
$6.00 minimum every two months. This
interim rate of $4.96 has now been proposed to increase by the Recommended
Decision to a Pre Project rate of $5.68 per 1000 gallons and a Post Project
rate of $7.21 per 1000 gallons, with a 3000 minimum gallons bill each month.
The sharp rate increases
were occasioned by two factors. One is
that Jefferson Utilities was operating at an annual deficit with respect to
Shenandoah Junction of $31,844 with an annual revenue of $37,640.
The second factor is
that Jefferson Utilities, along with Shenandoah Junction Public Water (SJPW)
and Shasta had agreed in a Land Sales Contract of 31 acres, with the Jefferson
County School Board Authority, to provide water service from a water tank of
500.000 gallons capacity for increased water flow and pressure for the new
schools fire suppression requirements.
This in turn required a new 12 inch main from the Burr Industrial Park
to Shenandoah Junction. It should be
noted that the Shenandoah Water Users, at this time were satisfied with the
water service and were not in any respect a party to this agreement.
Additionally, at TR 51
and TR 52, Lee Snyder of Jefferson Utilities stated that increased water
potential to service new subdivisions would be built into the new 12 inch main
to extend “future expansion” in “anticipation of growth”. The additional growth factor was also noted
by Judge Keith George when he commented on as EVIDENCE on RECOMMENDED DECISION
page 5 last paragraph that, “The 12 inch main is sized for additional growth.”
Issues: The Shenandoah
Junction Water Users have the following major concerns [ See
Stolipher
Exhibits No. 4 and No. 5] over Judge Keith George’s recommended
water rate increases:
Why should Shenandoah Junction Water Users have their water rates
unfairly and so sharply increased?
The Shenandoah
Junction Water User families with a Public Service Commission (PSC) approved
Post Project rate of $7.42 over the beginning of the year rate of $3.00 per
1000 gallons will result in an increase of 247 %. This clearly is a rate that is being applied too fast. Most importantly, the Post Project rate of
$7.42 over the interim Pre Project rate of $5.68 is essentially representative
of the share of the cost assigned to Shenandoah Junction Water Users for the
new 12 inch water main which they do not require.
Additionally, it
should be noted that once a month billing vice bimonthly billing represents an
increase for the minimum water user of $24.00 a month or an increase of 400%.
Should not the School Board/Seller pay for new water service?
JUI has also requested the PSC to
approve a 12 inch water main from Bardane to the new ninth grade school which
will be funded with a $305,000 bank loan.
The problem is that Shenandoah Junction does not need a 12 inch water
main and should not be required by the PSC to bear any portion of the
associated cost. The water main is
exclusively required by the school for fire protection, the cost should be
borne by the School Board.
Related to the question as to who
should pay for New School water is the fact that the New School thirty acre land Sales Contract for $210,000.00 between Seller, Shasta
Corporation owned by Herb Snyder, and the School Board included several
commitments. See Stolipher Exhibit N0.
2. One was in regards to the Purchaser
being able to obtain utilities. Another
contingency was in regards to the Purchaser being able to obtain “…an agreement
for service from a water utility owning a water tank which shall have a
capacity of at least five hundred thousand gallons of water [for fire protection]
…” The Shenandoah Junction Water
Users were in no way a party to the school land sale and in no way benefited
from this sale. Consequently, the
Shenandoah Junction Water Users, should now in no way be required by the PSC in
a water rate increase to assist in paying for a contract contingency that did
not include them as an interested Party.
It is of interest to note that the anticipated cost of the proposed 12
inch water main to provide the required fire protection at $305,000 far exceeds
the land sale cost of $210,000
It should also be noted that the
Sales Contract specified that the “…water service utility owning a water tank…”
should provide the water service. It is
not believed that Jefferson Utilities Inc. does in fact at this time own the
Bardane Water Tank located in Burr Industrial Park.
Finally, the School Board Authority
should have been made a party to the
water rate increase hearing as it was
the school boards purchase of the land and negotiations with Shasta and
Shenandoah Junction Public Water that resulted in the requirement for a 12 inch
water main.
Why such an over sized water main and why should future growth be
subsidized by current water users?
Another, problem with the requirement
for a 12 inch main is that the pipe is considerably oversized for even a new
school situation. JUI did not state to
the PSC that JUI had earlier agreed to provide water to a nearby proposed
Harvest Hill 392 home subdivision as well as a 192 home Daniel’s Forest
subdivision with an eventual build-out in both subdivisions approaching 1000
homes. Further, in the commitment of
JUI to provide water service to Harvest Hill Subdivision, JUI stated that “The
Shenandoah Junction System has ample pipe size and source capacity to serve the
approximate 400 lots proposed for this project.” See Stolipher Exhibit No.
3. So the 12 inch water main as
justified by JUI is apparently only a New School requirement.
Since the City of Charles Town is
only requiring a 12 inch water main to service the new 3200 home Huntfield
subdivision and several schools, the question again is how many new users are
eventually planned beyond Harvest Hill, which does not need a 12 inch water
main? Further, should current customers
of JUI/SJPW subsidize new subdivisions whose water service costs could and
should be borne by the developers and the new occupants? It should also be noted that the planned
sale cost of new homes in Harvest Hill has been stated to be around $225,000
and the homes in Shenandoah Junction are estimated to have an average value of
$85,000. This is another point of
unfairness under PSC regulations that requires current users to fund water
service extensions
How much water service debt should the PSC endorse and should not
water service in Jefferson be managed by the PSD?
It is also noted that JUI does not
own the Bardane Water Tank, and proposes to buy SJPW, where water treatment is
currently uncertified, for $1.00 with
“…substantial debt obligations.” The
propriety of the PSC authorizing JUI to construct a 12 inch water main with the
necessity for acquiring a $305,000 bank loan, in addition to servicing the
current debt load for both JUI and SJPW is questionable. Moreover, should JUI be approved to purchase
the Bardane Water Tank, this would result in another substantial debt
obligation by JUI of $300,000.00 Should the PSC permit a water service company
to over-extend water services to the possible long term detriment of the entire
County-wide public water system?
Additionally, Judge Keith George
noted in the RECOMMENDED DECISION page 8 last paragraph that there was
additional debt totaling $180,000 now owed by JUI to Shasta Corporation. This debt was not considered in the RECOMMENDED
DECISION and pending water rate increases.
Should this debt be approved as Capital Improvements the Shenandoah
Junction would have their water rates raised again by approximately $5.00 per
month
Related to the significant debt load
for Jefferson Utilities discussed above is the possibility of new state-wide
mandated additional water treatment filtration requirements. These new costs are currently unknown, but
could be expensive and another unscheduled debt burden for Jefferson Utilities
and perhaps an additional cost to the already burdened water user.
Moreover there are four other public water services owned by
Jefferson Utilities that have serious debt and operational problems. This Court
is aware of these problems in the PSC denial of Jefferson Utility Inc., CASE NO. 00-1492-W-PC of 2 July 2 2001, proposing
to provide water service to Huntfield.
See Stolipher Exhibit No. 6. Again the question is should not the public
interest be protected in assuring that a privately owned public service company
is on sound financial ground and will be able to provide utility service for
the indefinite future? Should not the
PSC require the Jefferson County PSD to centrally manage and operate the entire
public water system for Jefferson County for the benefit of all it’s citizens
under some sort of combined Private, Municipal, and County owned water service
facilities?
Where is the water?
Finally, the availability of ground
water in this area of the County is questioned. Currently, there is no water study available that would
substantiate ground water resources and at what depth, or that would access the
impact of growth and the associated lowering water table on the other 15,000
wells in the County. The PSC should be
apprised of ground water availability before approving the construction of a 12
inch water main along with the water to fill it up. Should not ground water resource availability be considered when
the PSC approves significant increases in ground water extraction and
distribution requirements?
Additionally, the Charles Town Water
Service has considerable under utilized water distribution capacity that is
upgradable to three times it’s current potential. Charles Town can provide water service some twenty miles out. Should not the PSC strongly consider more
utilization of Charles Town’s river water instead of drilling more ground water wells to meet rapidly
expanding residential growth requirements?
Should not the PSC authorize new hook up or "Capacity
Charges" as well as Two Tier Water Rates to cover the costs of water service
extensions and unusual situations?
Municipalities in Jefferson County
are authorized Capacity Charges for new water service hook ups and Private
Water Service Utilities are not. The
unfairness of a small water service community such as Shenandoah Junction
subsidizing expensive new home subdivisions should be obvious. The ability for
a water service utility to pass on the costs of water service extensions is a
reasonable cost to either the developer or home owner. Why should a Private Water Service Utility
not be authorized to charge water service hookups as a municipality is
authorized to do?
Further, there are unusual situations
where the PSC should consider a Two Tier Water Rate structure. Clearly the New School should carry the
burden of expenses related to the requirement for fire suppression and a 12
inch water main. Also, there are other
situations in Jefferson County, not related to this case where water service
could be provided, with difficulty and increased costs. The authorization of justified Two Tier
Water Rate Structures would go a long ways towards providing communities
satisfactory water services that are either lacking adequate ground water
resources or experiencing poorly designed and/or managed systems.
Summary:
The entire debt load of JUI with
respect to proposed Shenandoah Junction water rate increases needs to be
reconsidered in total and not piecemeal by the PSC. The position of the Shenandoah Junction Parties is that the
$180.000 debt owed by JUI to Shenandoah Public Water and Shasta Corporation
were essentially chargeables to operating expenses and a normal cost of doing
business. This debt should in no way be
restructured as a Capital Improvement charge to be paid for by Shenandoah
Junction Water Users in a subsequent water rate increase.
Shenandoah Junction Water Users were
not a party to the land sale by Shasta Corporation and are satisfied with the
current water service provided by JUI.
The requirements for a 12 inch water main were occasioned solely by the
Land Sales Contract between Shasta Corporation and the School Board Authority
and the desire of JUI to build additional potential into the pipeline to extend
water service to new subdivisions.
Shenandoah Junction Water Users should only pay for the fair cost of
water services currently being provided.
The provision of Jefferson County
adequate water service by JUI to Shenandoah Junction and other private system
water customers, at reasonable costs is a major problem. This unsatisfactory situation could in large
part be corrected by authorization of Capacity Charges and a Two Tier Water
Rate Structure.
Additionally, the growing problem of
potable water, as well as available ground water is a major problem due to land
use and rapid growth. Clearly the PSC
should consider requiring the Jefferson County PSD to take on new
responsibilities for central water management of all municipal, county and
privately owned public water services.
Recommendations:
That the PSC should fix the final
Shenandoah Junction water rate increase at the current interim level of $4.96
per 1000 gallons with a $30.00 per month minimum. Further, that JUI be advised
that the presented debt of $180,000, as a consequence of past operating
expenses, between JUI, Shenandoah Public Water System and Shasta Corporation,
is not chargeable as Capital Improvements and payable by increased customer
water rate charges.
That the PSC authorize a JUI second
tier water rate for the New School in consideration of required 12 inch main
and fire suppression considerations not required by Shenandoah Junction.
That the PSC mandate the Jefferson
County PSD new responsibilities for central water management of all municipal,
county and privately owned water services.
That the
PSC authorize Private Water Company Capacity Hook Up Charges and Two Tier Water
Rates for improving unusual water service situations.
Howard G.
James George
F. Nichols
PO Box, 166 PO
Box 69
Shenandoah
Jct., WV, 25442 Shenandoah
Jct., WV, 25442
Robert
Lanham Eleanor
Ann Shirley
PO Box 22 PO
Box 176
Shenandoah
Jct., WV, 25442 Shenandoah
Jct., WV, 25442
Douglas
Stolipher
1602 Roper
Road
Charles
Town, WV, 25414