JUDGE GEORGE: Good morning. My name is Keith A. George. I'm an Administrative Law Judge with the Public Service Commission of West Virginia. We're here for a hearing in Case Number 04-0095-S-CN, City of Charles Town, application for a Certificate of Convenience and Necessity to make improvements to their sewer treatment plant. At this point I'll ask the attorneys to introduce themselves for the record.

ATTORNEY SHINGLETON: Thank you, Your Honor. My name is Hoy Shingleton. I am representing the Applicant, the City of Charles Town. Your Honor, I would also like to note the appearance of an attorney who is not yet --- he's not in the records of Counsel. Richard Lewis of the firm of Steptoe & Johnson will be assisting me today. He represents the City in its environmental matters, and I know that's a major issue in this case. And we thought we'd have him here to be able to discuss those matters.

JUDGE GEORGE: Thank you, Mr. Shingleton.

ATTORNEY KELSH: Your Honor, my name is James V. Kelsh, representing the Jefferson County Public Service District.

JUDGE GEORGE: Thank you, Mr. Kelsh.

ATTORNEY LEWIS: As Hoy said, my name is Richard Lewis, and I represent Charles Town.

JUDGE GEORGE: Thank you.

ATTORNEY GLOVER: David Glover, representing the City of Ranson.

JUDGE GEORGE: Thank you, Mr. Glover.

ATTORNEY PARDO: Georgiana Pardo, representing Huntfield, LC.

JUDGE GEORGE: Thank you, Ms. Pardo.

MR. BURKE: I'm Paul Burke. I'm not an attorney. I'm representing myself.

JUDGE GEORGE: Thank you, Mr. Burke.

ATTORNEY ROBERTSON: Good morning, Your Honor. My name is Ron Robertson. I'm here on behalf of the Commission Staff.

JUDGE GEORGE: Thank you, Mr. Robertson. At this point I'm going to open up the record for public comment. I'll take public comment at the beginning of the hearing and at the end of the hearing. One of my only rules is you can't go twice. You can only make public comment once. So if you make public comment at the beginning of the hearing, you can't make it again at the end. Is there anyone that would like to make public comment at this point?

MR. BURKE: Your Honor, based on the Commission's ruling last Friday, I would like to raise the question of whether there should be a new application required. I would like to make that a motion and speak to it now.

JUDGE GEORGE: Go ahead and state your motion.

MR. BURKE: My motion is to dismiss this application and to require a new application. This is so clearly a new project it might be a waste of time to have a hearing on the merits. There's no overlap between the original project and this project. The original was an effluent pipe with no blowers or digester. Now they have blowers and digester with no effluent pipe. They've also completely changed the location, so it affects different people and areas. It's not a project to replace straight pipes where a solution would be urgent, so there is time to do it right. The homes that would hook up won't even be built until the project is ready for it.

They haven't actually filed the motion to amend their application. They did send in an amendment last week, but haven't formally filed a motion. And the original Form 14 omitted what is required in this case, quote, concisely describe the nature of filing. So I think they're seeing this as they filed something and they can do anything they want, and that is not appropriate. Thank you.

JUDGE GEORGE: Mr. Shingleton, do you want to respond?

ATTORNEY SHINGLETON: Yes, Your Honor. We oppose the motion. It's true that the scope of the project has changed. I don't believe Mr. Burke has standing to object. In his Petition to Intervene he stated he was in favor of having the discharge on Evitts Run and not on the river. That's what he has stated. Although he did say that he thought others may oppose that, he himself stated that this is what he wanted. He wanted it to remain on Evitts Run. So I don't think he has standing even to make a motion.

JUDGE GEORGE: The question is party status?

ATTORNEY SHINGLETON: I'm not questioning his party status, but in his motion to intervene he said he was in favor of leaving the matter on Evitts Run. Now, he's stating that the hearing ought to be dismissed because we're going to leave it on Evitts Run. So I think he's in conflict with his own motion.

If the Court --- what I would prefer that we do --- we oppose the motion. We realize that it's because of some things that happened at the division, the Environmental Protection --- the scope of this project has changed, and it's changed twice. We were almost in a situation where we have --- if you remember the movie The Perfect Storm, we had all these things coming together. Unfortunately, they all came together --- some regulatory issues came together in the midst of our application to build this project.

What I would prefer to see or to do is what I suggested in my motion opposing his motion to delay this hearing today, is to wait, see how this case develops, how this hearing develops. If the Court feels that an additional notice is required, even an additional 30-day notice, the Court can do that.

JUDGE GEORGE: Do you believe that an additional 30-day notice is necessary?

ATTORNEY SHINGLETON: I don't think it is, but I would defer to the Court. I'd rather wait until ---.

JUDGE GEORGE: Until you make your argument that it isn't necessary.

ATTORNEY SHINGLETON: I would make the argument that it's not necessary.


ATTORNEY SHINGLETON: The project --- although the scope has changed, the scope has been reduced, and I don't think what we've done falls into the category of having to do that. Both 30-day notices in this hearing, I prepared a draft of it. The order from the Commission provides the exact wording in the notice, and so there was no effort on the part of the City of Charles Town to try to not have a complete notice. They have to notice the proposed notice was filed with the application in both cases, both the original application and the amended. And so ---.

JUDGE GEORGE: Does the notice go into detail about the engineering of the proposed project, whether there's blowers or effluent lines or ---?

ATTORNEY SHINGLETON: No, it did not. It simply said there were improvements to the existing wastewater facility. Both notices said that.

JUDGE GEORGE: That's still the case today; right?


JUDGE GEORGE: Anything else you want to tell me in response?


ATTORNEY KELSH: Your Honor, I'd like to address the motion.


ATTORNEY KELSH: In his motion, Mr. Burke said there's no overlap between the present case and the original filing. Certificate cases are more than just engineering involvement, more than engineering --- involving the engineering project itself has changed substantially. The underlying situation in Jefferson County, the need for this project has not been changed. In fact, the need for this project has already increased.

Another aspect of the certificate project is financing. Financing has changed. Why? Because of the change in the cost of the project. But the essential structure of financing has not changed since the original filing. The rate impact has not changed since the original filing. There will be no increase to Charles Town customers as a result of this project.

With respect to whether notice is required for change in a project, the requirement --- the change of the project containing the discharge stream is really more of a DEP issue than it is a PSC issue. Charles Town needs to get an NDES permit for the rock revise project. In that permit it will be required to give the public notice. That is the time to raise concerns about the change in the location of the discharge flow of the Charles Town plant. And the District opposes Mr. Burke's motion.

JUDGE GEORGE: Ms. Pardo, do you want to respond?

ATTORNEY PARDO: Not really a response, but we oppose Mr. Burke's motion.


ATTORNEY GLOVER: The City of Ranson opposes Mr. Burke's motion as recently stated by Mr. Shingleton and Mr. Kelsh.

JUDGE GEORGE: Mr. Robertson?

ATTORNEY ROBERTSON: Your Honor, the Staff, at this particular time, does also oppose Mr. Burke's motion. But also at this particular time, the Staff has had a moving target. And at this particular time you know that Staff has not filed a final recommendation.

With that, Staff is looking at and it's going to be our position today to have a little bit of time to review all of the final documents regarding both permits and also financing from Charles Town with the application. Basically I know they are going to be filing things today that have been somewhat amended. And staff needs also an opportunity to review the particular final forms of all of the agreements. And what Staff was going to do in its position today was to ask until September 10th, to file the final post hearing recommendation.

JUDGE GEORGE: Let me address Mr. Burke's motion to dismiss first and then we'll have to take up your motion. I assume that's a new motion, to have a posthearing exhibit with your substantive recommendation in it. I'll deny Mr. Burke's motion. It's not unusual in certificate applications before the Commission for engineering to change during the course of the project. The notice --- and the second notice --- the primary reason for the issuance of the second notice, if I remember correctly, is that the project cost went up, and so there was a second notice. But I think the notices provide adequate chance for the public to know that something is going on and to intervene or to appear at this hearing. There's also been a publication of this hearing. The city has provided what's been marked as Charles Town Exhibit Number One, which is an affidavit of a publication of this hearing, which the Commission has already deemed in a Commission Order to be a sufficient notice of this hearing. So I believe that the public has had adequate notice of the hearing and adequate notice of the project, and I'll deny Mr. Burke's motion to dismiss.

Mr. Robertson has suggested that he wants to file a post-hearing exhibit of Staff's substantive position at a later date. And would you remind me, Mr. Robertson, why you think that's necessary?

ATTORNEY ROBERTSON: Your Honor, it's my understanding today that there will be documents entered into the record by the City of Charles Town that does create several changes from the original filing, and there are changes to documents.

JUDGE GEORGE: Can you go into more detail for me? What documents are going to be changed? Are these issues related to engineering? Are these issues related to the financing, or do these ---?

ATTORNEY ROBERTSON: With the Staff's understanding that this particular time, a couple of things, that one, some of the things will be contingent upon, right now there is currently no Health Department Permit filed. I believe the City of Charles Town may be filing it today in the record. Also still outstanding is looking at the water quality issues that is a part of the DEP's requirement of publication, and then a 30-day comment period is my understanding. And there possibly may be also a DEP hearing. And that's something that's still contingent


JUDE GEORGE: Related to the NPDES permit?

ATTORNEY ROBERTSON: Yes, what the discharge was. It would be a permit modification.

JUDGE GEORGE: So other than a couple permits, are there other serious issues that are outstanding or that are being changed today that's not unusual for the Commission to issue Certificates of Convenience and Necessity contingent upon receipt of permits from other state bodies?

ATTORNEY ROBERTSON: The other things are going to be --- one of the things staff has a question, looking at the particular payback period, there's a question of what the term of the revenue bonds are. There is conflicting information there as to 20 or 30-year bonds. The other thing is there will be an amendment to the financing agreement between Huntfield and the City of Charles Town. There will also be amendments to the sewer service agreement that will also take place. And I know Mr. Shingleton is going to have --- possibly, in talking with him yesterday, will have red-lined agreements showing the indicated changes to all of those agreements.

JUDGE GEORGE: I think what we need to do, Mr. Robertson, is go ahead and proceed with the hearing and hold your motion in abeyance and see the significance of some of these issues. You're trying to describe them for me, but we'll see them in reality in just a little bit.


JUDGE GEORGE: So if you want to renew your motion at a later date, we'll consider it then. Are there any other preliminary issues that we need to address before we proceed to public comment? Hearing none, I'm going to ask anybody if they want to make public comment. Yes, the gentleman in the back. I've got a mic up here and a chair up here, and if you could come forward.

MR. CUMMINGS: Yes, Your Honor. I'm Jim Cummings. I live in Bakerton, and I've lived there since 1977. I have a Master's of biology from George Washington University.

JUDGE GEORGE: Mr. Cummings, feel free to sit down if you want to. What do you want to tell me this morning, Mr. Cummings?

MR. CUMMINGS: Well, I'm responding to the public notice. There's a lot --- I'm not an attorney, so I don't know the proper procedures, but I'm here as a concerned citizen and I have good technical background and understanding of the wastewater issues. I served on the EPA's special panel for sewer ---.

JUDGE GEORGE: If you move the mic a little closer, I think maybe the people in the back could hear you better.

MR. CUMMINGS: Again, I have a technical background. I'm a biologist, and I serve on the EPA's special panel for the District of Columbia's combined sewer and storm water problems. I've also been on --- more directly on the Berkley County source water assessment programs, septic and sewer subcommittee, working in many streams and issues around the metropolitan Washington area. Primarily, I see a lot of problems with wastewater treatment infrastructures that I want to comment on. Also, being a resident of the county, I do support the proposed upgrade of the wastewater treatment plant in Charles Town, which is de facto the county wastewater treatment plan. And I support it as long as these elements are included. First, there should be capacity and technology to handle the septage of the county. The waste from cleaning of septic systems is generated by about half the residents of the county, and currently we have no --- it's my understanding there's no wastewater treatment facility to handle county waste or ship out of state, out of county. And I think relying on the good will of neighboring states and counties to treat this waste is not a good plan.

The second element is I think that all associated expansion and upgrade of the sewer collection system should receive rigorous attention to the design, construction, inspection and maintenance. Sewer lines running across limestone in parts present a very significant list to the neatly vulnerable and valuable groundwater of the county. A break in the sewer line, which happens all too frequently --- I got a couple of examples. And I'm sorry I don't have a lot of copies. These are breaks that I run into in the metropolitan area. The first is a fairly minor break. They're chronic types of breaks that ran for many months before they were detected.

JUDGE GEORGE: I'm just going to pass these around to the various attorneys.

MR. CUMMINGS: The second break is a fairly large break --- several months into a stream before detection. And this was in an area, unlike limestone, where the sewage break comes to the surface. And this limestone is more likely to go down and contaminate our groundwater.

Also just to point out, there are several close-by examples. You probably heard about the recent spills that have been going on at Antietam Creek where the plans failed and seven or eight gallons of sewage went into Antietam Creek. If you think about that going into our ground water, it's a very serious health problem, immediate health problem to the surrounding county residents.

And then in 1999, in Walkersville, there was a construction accident where a backhoe operator broke a new line and over 900,000 gallons of raw sewage went into their limestone topography, creating a significant health concern for that.

JUDGE GEORGE: Was that Walkersville ---?

MR. CUMMINGS: Walkersville, Maryland. Excuse me. And I also --- the third point is I am concerned about the increased volume in pollutant concentrations that are expected to be discharged with this upgrade into the creek and making sure that that creek is protected. I guess it will be addressed in the NPDES permits. Those are the three elements that I wanted to bring before this hearing. The primary one again is the capacity of technology to handle the septage of the county.

JUDGE GEORGE: Thank you, Mr. Cummings. I'll just lodge the documents that he's provided us in the file. Additional public comment? Yes, ma'am. You may start with your name, please.

MS. RISSLER: I'm Jane Rissler, R-I-S-S-L-E-R. I have copies. I'm a native of this county and currently a resident of Greenbelt, Maryland. I am here to request that the City of Charles Town initiate a review under Section 106 of the National Historic Preservation Act to consider the potential effect of the sewer system expansion on nearby historic resources. The National Preservation Act was passed in 1966 in the wake of urban renewal and interstate highway destruction that destroyed many of the nation's historical resources. And the goal of Section 106 is the historical review process, which is what I'm asking for, is to identify historic properties, potentially affected by an undertaking, assess its effects and seek ways to avoid, minimize or mitigate any adverse effects on historic properties. The Public Service Commission's own rules require evidence of compliance with the Act in applications such as this one for sewer expansion. However, the City of Charles Town's search without explanation that Section 106 historical review process is not applicable to its sewer expansion. And I would like to explain why I disagree with that. The Preservation Act's Section 16, historical review process, applies to projects that require federal licensing and requires that the process be completed prior to the issuance of any federal crisis. The Charles Town sewer plant expansion must be licensed by the Federal Government before it can operate. The Section 106 review process is triggered when certain historic resources may be adversely affected by federally licensed projects. There are two issues here. One, whether there are historic resources in the vicinity that meet Section 106 criteria. And two, whether the possibility of adverse effects caused by a project meets Section 106 criteria.

I believe that the proposed expansion of the Charles Town sewer plant meets the Section 106 criteria for both the storage structures in the vicinity of the plant and potential adverse effects of the expansion on those structures.

Three nearby historic structures may be adversely affected.

JUDGE GEORGE: How close is Happy Retreat?

MS. RISSLER: There's a map on the last page. Happy Retreat is about one-quarter mile as the crow flies.

JUDGE GEORGE: And the Tollhouse?

MS. RISSLER: Less than a quarter mile. And Casalyst (phonetic) is about three-tenths of a mile. In addition to these structures, Happy Retreat, Casalyst and the Tollhouse of the Charles Town Turnpike, the entrance to Charles Town, one of the oldest, most historic towns in West Virginia will be marred by the expansion.

I would like to explain why I believe these structures meet the criteria for historic resources that should be evaluated by the city. First, the act defines the area subject to Section 106 review as the geographic area or areas within which an undertaking may directly or indirectly cause alterations in the character or use of historic properties. All these structures are close enough to be potentially adversely affected.

Second, the Act requires that historic properties be identified, and then you have to determine whether they are on the National Register of Historic Places or whether they are potentially eligible for placement on the list. Happy Retreat, the late 18th Century home of Charles Washington, founder of Charles Town, the brother of George, is already on the Historic Register. This house, which sits on the hill at the southern end of town is a jewel in the crown of historic Washington homes in this county and, indeed, in the state. A major tourist attraction for the county and state is the unusual number of homes built by relatives of our first president.

The Act's criteria for evaluating a property for its potential eligibility for the National Register include association with historic events and people, distinctive design or construction or potential to yield historic information. By these criteria, the other two structures, Casalyst and the Charles Town Blue Ridge Turnpike Tollhouse may be eligible for the National Register and deserve to be evaluated. Casalyst, after the 1830s was named for a Scottish man has, according to the late Doctor Miller Dishong (phonetic), a well-known Jefferson County historian, as a feature distinctive among houses of this area, a guest bathroom with a shower, as well as walls 14 inches thick and ceilings 13 feet high. Frequent famous visitors during that period were John Pendleton Kennedy, Millard Fillmore's Secretary of the Navy and Washington Irvin, who stayed at Casalyst while studying this area for his biography of George Washington. There's also evidence that William Thackery (phonetic) visited Casalyst.

Turning to the Tollhouse on Route Nine, it is, as far as I know, the last remaining tollhouse dating from the Charles Town Blue Ridge Turnpike constructed in the latter part of the 19th Century using private capital to improve commerce within the county. This small structure representing the entrepreneurial spirit of private investors joining together to build and maintain roads is an important piece of the vanishing historical record of our county and state's commercial growth.

Finally, the proposed sewer expansion fits one of the Historic Preservation Act's examples for potential adverse effects. That is, and I quote, the introduction of visual, atmospheric or audible elements that diminish the integrity of the properties' significant historic features.

The proposed 30-foot tall sewage digester introduces a visual element that diminishes the historic resources and increased over feces from the expanded sewer plant introduces an atmospheric element that diminishes the historic resources. For example, consider the view from the high grounds of Happy Retreat on a snow-covered winter day with a sewage digest projecting 30 feet in the air just a quarter mile away. Consider the increased odor and obtrusive sewer tower as visitors from all over the world make their way into Charles Town's historic district in the height of the summer tourist season.

In closing, the purpose of a Section 106 review through the state Historic Preservation Office is not to stop the project but to see if there are workable approaches to mitigate its impact and help preserve our historic and cultural heritage, which is vanishing in this county at an alarming rate. The review would determine, for example, if changing the digester's design or location or putting it behind tall trees would reduced its impact and whether there are alternative treatments that they have. The City of Charles Town was wrong in concluding that the National Historic Preservation Act's Section 106, historical review process does not apply to its proposed sewer plant. And I urge you to require the City of Charles Town to initiate that review.

JUDGE GEORGE: Thank you, Ms. Rissler. Would someone else like to make public comment? Yes, ma'am. Do you want to start with your name, please?

MS. HANEY: My name is Beth Haney, H-A-N-E-Y, and I'm a resident of Harpers Ferry.

JUDGE GEORGE: What do you want to tell me, Ms. Haney?

MS. HANEY: My name is Beth Haney, and I am the seventh generation of my family to live in Jefferson County. I recently moved back here after living in Montgomery County for 26 years. It took a long time and a lot of effort, but I finally came back home.

Once I was here, I was eager to become involved in the community. I began to attend meetings and soon realized the major problems we faced in the area. One of the meetings I attended consistently was the joint meeting of the Charles Town/Ranson Water and Sewer Departments. I have attended each meeting from the last November through July of this year. In the entire time I was the only citizen there. The rest of the meeting consisted of developers and occasionally a reporter from the Martinsburg Journal. Slowly, I began to understand the dynamics of the situation. Day after day, month after month, the only people that the water department would stand there talking to were developers that were constantly seeking more capacity. I am sure that if the meetings were any indication, they were also inundated with e-mails and phone calls on the same subject. After a while it would be very easy to forget that these people are not the only people they serve, just the ones that are most visible and vocal. It would be very easy to forget ordinary citizens such as myself because in this case they are truly the silent majority. It would also be very hard, very hard to do anything else but try and acquiesce to developers' demands because developers have legal representation and resources that, again, are not available to ordinary citizens. However, this is the time to examine who the Water Department is truly committed to serving. I feel that one of the questions that the PSC needs to ask is, is expanding the sewer and water capacity in Jefferson County truly in the public's best interest. One of the ways to answer this question is to use the yardstick that is easiest for most of us to understand, dollars and cents. What is the real bottom line for this expansion? I submit that all costs to the county should be considered, not just the simple literal cost of water and sewer. The cost to new residents in Jefferson County that expanded capacity could bring spells economic disaster for us. New houses do not pay for themselves, even with the addition of impact fees. Typical costs, $1,000 comes from each new home in annual property tax and a $7,100 one-time fee toward school construction that the county pays every year for local money $2,000 per child to operate schools, $400 per house for other spending from local taxes. And the county has to pay up front $16,000 in school construction costs per new student, $1,000 in emergency services investments per new house, $100 library investment per new house. The shortfalls were made up from high taxes on business, increased assessments and spending cuts. Now, that's just the county. In addition, the state has spent $185 million on roads in the past 50 years, $3,787 per student last year and $12 million for the new high school. I also want to add as an aside note that the $185 million on roads does not count upgrading bridges replaced from old age in Harpers Ferry and Shepherdstown. If you added that, it would be $205 million.

Each new house here adds to the downward spiral that continues to drain our economic vitality. However, Jefferson County is certainly not alone in experiencing this phenomenon. In a recent series in the Washington Post leaders from Montgomery, Fairfax and Loudoun County talked about fiscal goals for 2005. All of them have one thing in common, slowing residential growth. In a recent series the high cost of development was profiled. Leaders from Fairfax, Montgomery and Loudoun Counties were quoted each establishing that their new policy was to limit residential growth. And I'm quoting now from the Post. Scott Kadur (phonetic), who was supervisor of Loudoun County talked less about the environmental effects than the fiscal ones. A physical impact analysis done in preparation for new growth showed that the county could save $103 million annually by 2020 by slowing residential growth. Cutting the number of homes reduces the demand for schools and other expensive services that drain government coffers. Instead, York wanted businesses to come to Loudoun because they typically generate more in taxes than any sewage services. He said they wanted boardrooms not bedrooms.

August 8th, several jurisdictions in the Washington area had pursued strategy of attracting more work places than homes, but Montgomery County, under county executive Doug Duncan, made it an explicit goal. Duncan proposed and the county council approved in June a policy calling for faster job growth and housing growth. New residents generally cost the county money. The average household in the county pays about $6,500 in property, income and other taxes to the county, but the county spent about $8,500 a year educating the average student, not including federal or state aid. This policy is good for the tax base, Duncan said, or as a Montgomery County booklet puts it, creating workplaces faster than homes is the development strategy yielding the greatest long-term benefit.

Now, Montgomery County alone has a population of over a million people and an operating budget of millions of dollars. If a county of this size, this tax base, this operating budget feels that this is fiscally necessary, and I stress that Doug Duncan has made it explicit that this is fiscally necessary for this county, then I certainly feel it behooves Jefferson County look at the big picture. In addition, an editorial in the Washington Post, which was a follow-up to the series quoted from previously lamented the pattern of counties pushing their problems onto their neighbors.

By favoring jobs over houses, Montgomery's official policy aims for a two-percent annual growth in jobs but only 1.4 annual growth in housing. The larger flows in suburban counties do not slow the population growth, they simply create a housing deficit, inflate housing prices and deflate growth out into their neighboring poorer counties, even into West Virginia. It's time for the state to step in and help us defend ourselves from creating the same fiscal nightmare that other counties are trying to escape.

Here is an opportunity for the PSC to do just that. By looking at the big picture, you have a chance to save the state millions of dollars in highways, schools, bridges and social services. You have a chance to establish yourselves as forward thinking individuals that have really examined the true cause. Development is an economic pyramid in which a few people at the top make a lot of money and the rest of us at the bottom pay for it. The PSC's responsibility lies in protecting the general public's interest, not a chosen few who profit greatly.

In summation I would like to say that what I've said here today is not just one person's beliefs, but also those of 47 people who have authorized me to speak for them. We're just considered the iceberg. There are a whole lot of us out there who are looking to the PSC to protect the public. It is truly a chance to make a difference in the world for the greater good of the environment, the history and the people of Jefferson County.

JUDGE GEORGE: Thank you, Ms. Haney. Who else would like to make public comment? Yes, sir. Start with your name, sir.

MR. LATTTERELL: Nick Latterell. I live in Molers Crossroads. I only lived in Jefferson County for about 33 years, which is to say I am still a newcomer, always will be. During that time I have been engaged in public service one way or another. I'm a professor emeritus of biology at Shepherd College for a start, and more recently I've been one of the founders of the Jefferson County Watershed Coalition.

What I'm going to say amounts to a code to what Ms. Haney has just said. She has done a beautiful job of presenting the problem in all its various aspects. The problem we're facing in this country --- in this county, country as well, is what can be fairly called forced growth. Build it and they will come. Throw up residential housing subdivisions and this will encourage migration and build the tax base, except it's all an illusion. This is a bubbly economy that has a tax base that won't be built around to begin to defray the cost of forced growth.

I do support the upgrading of the Charles Town sewage treatment plant. Clearly, this is badly needed given the recent history of frequent and substantial failures to meet the conditions of the DEP permit. What I do question is the expansion of that system and its consequences for the county, some of which will be continuing the forced growth in the rural zone of the county. Preservation of that rural zone is critical and fundamental to the picture of the county.

Just to add a few numbers to Ms. Haney's remarks, the expansion of the sewage plant to accommodate the subdivisions of Huntfield and Norbourne Glebe which, to be glib, amount to about 5,000 new residences, and an equivalent number of new households in the county, represents a considerable cost to the public, which won't be met by the existing impact fees of $7,1000 per house to support school construction. The total cost of moving a new household into the county is on the order of $30,500 per household. Assuming that Charles Town, for example, ---.

JUDGE GEORGE: You based that number on what?

MR. LATTERELL: On figures I obtained --- I'm sorry, I haven't brought the publication with me. I obtained them from a nongovernment organization called Carrying Capacity Network. But it doesn't originate with them. They're citing another source.

JUDGE GEORGE: Thank you. I was just curious.

MR. LATTERELL: I can't quote offhand. I could bring you that publication, and I wish I had. But that cost, assuming that the City of Charles Town benefits from a $7,100 impact fee for school construction, reduces down to $23,335 per house. The total --- now, who is going to pay this. Presumably the citizens of the City of Charles Town, of which I am not one, fortunately, from that standpoint. But the total public debt that this will create is on the order of $116 million. That doesn't come due all at once, of course. You spread it out over time. It's has to be borne by --- partially at least, by future generations of Jeffersonians.

Now, for those of us in the county for an expansion of that sewer system without appropriate ordinances to protect the rural zone may accomplish --- and this seems to have been the object of a lot of recent sewer expansion schemes within the county, to simply force growth, continue to force growth into the rural zone. Well, the same considerations apply there. The public debt of $23,335 is incurred for every new house built and every new household imported into the county. If the number of houses in the rural zone is only 2,500, which is the object of this new sewage treatment plant up in --- along Creek 40, the total public debt there incurred will be on the order of $58 million. And if it reaches 9,000 houses, the total public debt incurred will be on the order of $210 million.

I think the point I'd really like to make, and I hope I made the point already, but expansion of the Charles Town sewage treatment plant or any other in the county will indirectly, without considering the cost of the expansion itself, but the indirect cost of this to the public will be enormous and the public, residents of Charles Town, concerning the expansion of their sewage treatment plant and the residents of the county ought to be consulted and be allowed to express their interest in assuming that public debt by some sort of referendum. I think the principles of democracy require this. Thank you.

JUDGE GEORGE: Thank you, Mr. Latterell. Anyone else that would like to make public comment before we go to the evidence? Yes, sir.

MR. SNYDER: My name is Lee Snyder. I didn't prepare to speak this morning, but hearing some of the public testimony, I feel compelled as a citizen of the county to express the fact that there is a crisis of sewer capacity in Jefferson County that exists today. In fact, the opponents to growth have said that the sewer line is the battle line, and they would obviously seek to stop growth in Jefferson County by stopping the expansion of sewer capacity and will go to whatever end to see that happen.

Respecting the historic perspective, I would suggest that we not destroy the future to preserve the past. The lack of sewer capacity is limiting the expansion of Jefferson County's economy. It has the potential to destroy the area's economic vitality very shortly.

We presently do not have sewer capacity for the industrial development, which everyone realizes is essential to a strong, vibrant and varied economy. We even do not have capacity for a new high school for which a bond issue has already been passed which is sorely needed to improve the education of students in Jefferson County. Clearly, sewer capacity is essential to the county's economy. The majority of the citizens of the county would feel that the expansion of utilities to meet demands would be automatic under the obligations to provide service of such utilities. The necessary sewer expansion must occur very soon to head off an economic crisis. Thank you.

JUDGE GEORGE: Thank you, Mr. Snyder. Additional public comment? Someone else that would like to make public comment? Yes, the lady in the blue.


Can I read for a neighbor that couldn't come?

JUDGE GEORGE: You can make public comment once. If you want to read a neighbor's letter or whatever, that's fine.

MS. CRAIG: My name is Sherry Craig, and I'm reading Mary MacElwee's --- she could not be here.

JUDGE GEORGE: Can you spell her name?

MS. CRAIG: It's M-A-C-E-L-W-E-E. It's Mary L. And she says my name is Mary MacElwee, and I am a

long-time resident of Jefferson County. I am single and

self-supporting and ten years away from retirement. I looked for property to buy for two years before I bought my lot to have a house built according to what I could afford before and after retirement. I specifically wanted a well and septic so that I would not have high monthly bills. I'll be on a very limited income when I retire. I strongly oppose having to hook up to any of these services because of my financial position. I also strongly oppose my taxes being raised to pay for it. I think it's very wrong to put this burden on the existing residents of this county. The Shenandoah River is one of the most beautiful attractions of our county. How is the pollution going to affect this main tourist attraction? I commute to Leesburg every day. Five years ago it took 35 minutes. Today it can take anywhere from 55 minutes to literally two hours. It is unfair to force people to live under these conditions and then expect us to not have a negative reaction. It is our right as Americans to voice our concerns for the county that we live in. Are you going to deal with raised taxes, traffic conditions, pollution and be enforced to pay and have your well and septic closed up and then have to pay for water and sewer on a fixed income. I have worked hard to pay for what I have and for what I can afford in ten years, and I'm not the only one. Please think about the existing residents of this county. Thank you.

JUDGE GEORGE: Thank you, Ms. Craig. Anyone else like to make public comment?

MR. WORMALD: Good morning. My name is Ed Wormald, W-O-R-M-A-L-D. I own property in Jefferson County and also I'm a Professional Environmental Engineer. I've been practicing engineering for 19 years, specifically the design and construction of wastewater treatment facilities for eight years. And I just want to speak out in favor of the expansion. I think it's essential for Jefferson County. I think it's in the good of the public. I think it actually protects the environment. Anybody who's followed the news over the last year, it will actually help the environment. I think it's necessary for the economy in Jefferson County.

The wastewater treatment improvements are required to care for the environment and to take care of the public good. And one person said let's delay this. There's plenty of time to wait. Actually, the time is right now. Currently, Jefferson County is in what amounts to a moratorium. There's no new objections that could be made. The economy is already suffering because of that. There's a hotel that wants to be built and can't be built.

It's the responsibility of municipal government to plan and coordinate the provision of public improvements. Water and sewer is not to be used as a growth control tool, and that is the purview of plan zoning.

With respect to protecting the environment, the Department of Environmental protection is tasked with establishing effluent limits specifically to protect stream quality. You know, in addition, the EPA has passed anti-degradation rules that are also used to make sure there's not stream degradation. And so therefore, the idea of this being pollution going into stream actually is relatively clean water being put into a river that is cleaner than the river water itself.

The option to this treatment plant expansion is no growth, which means economic recession for Jefferson County, for Charles Town, for Ranson. Currently, there's a significant retailer that wants to do a project in Ranson, and they're being held off because of sewer problems. And Doctor Steven Fuller, with the George Washington University, makes his whole career off of studying the impacts of things like this on municipalities. He frequently does studies for municipalities when he looks at the economy and specifically the effect of housing on the economy. And he looks at the secondary effects of housing on the economy, not just the initial cost of the school or the public improvements of a road or something. But when you look at the spending, recycling of money from the residents, actually housing does pay for itself, and there's a lot of misinformation going on about whether housing is an economic burden or an economic danger. I believe it's an economic danger to a community. And actually, somebody said we need boardrooms instead of bedrooms. Well, boardrooms do not locate where they can't find bedrooms. And businesses specifically locate places where they know their people can find reasonable housing for their people. And actually, when you look at economic cycles, housing always come first, then the economy grows and business thereafter. Businesses do not precede housing. They won't locate to places where they can't provide housing for their staff. So new residences actually improve the economy.

To deny the Charles Town project would mean economic recession for Jefferson County, for Ranson and for Charles Town probably for the next two to three years. And I believe this project represents an opportunity for measured, smart growth to allow the economy of this area to become strong. And it's not a situation where it will foster out of controlled growth because this is not a large project. Thank you very much for the opportunity.

JUDGE GEORGE: Thank you, Mr. Wormald. Additional public comment? Yes, ma'am.

MS. CARTER: Good morning. My name is Leslie Carter. I'm a resident of Jefferson County. I live just outside of Shepherdstown. And I did not come prepared to speak. I'll just have to speak from the heart because I feel as though I represent two residents of Jefferson County, especially those who have moved here from areas like D.C. suburbs, commonly known as Montgomery, and I've watched Montgomery County become more and more developed. And as you can see, I have no statistics backing up what I have to say, but I have seen a body of life in such suburbs, such as Montgomery County, go down as a result of poorly controlled growth. And the fact that when I was very young, Montgomery County started out as almost a resort area for those people living in D.C., and now it's an area that people are trying to escape. And as one of the speakers earlier noted coming to Jefferson County, and I see a pattern happening in Jefferson County that has overtaken Montgomery County. I would also like to point out the fact that a lot of people come to this area because of the natural attractions it offers, such as historical and the rivers themselves, but the rivers are being affected by the runoffs from factories that runs up river and also from the effluent of other cities further up river. And to increase the effluent or any inch of the river is not going to fix the river. It will actually, if anything, make it worse. Again, it just sort of flies in the face of conventional wisdom to try and clean up a river that's already polluted to dump more into it, what is harming in the first place. Thank you very much.

JUDGE GEORGE: Thank you, Ms. Carter. Additional public comment? Would you state with your name, sir?

MR. BATY: My name is Kelly Baty, B-A-T-Y. I live in the county on Kabletown Road.

JUDGE GEORGE: What do you want to tell me, Mr. Baty?

MR. BATY: I have some maps here. This map is from the U.S. GS study HOPBA (phonetic) 1978. I laid them up here, but maybe I can stand up and just kind of show it. This map is a groundwater contour map. There's a table on the side showing the depth of the ground water for over 200 wells in the county, and the depth of the water ranges from about 11 feet to over 300 feet. And as you can see, the U.S. GS has done a fine job of contouring those 200-plus wells. Now, that kind of sets the ground work for how deep is the water table in the county? It varies because of the topography and because of geology. Now, I forgot to state that I'm a hydrogeologist by trade, so I know a little bit about this that normal people would not. But the groundwater itself is variable because of the type of terrain. There's a gradient that heads towards the valley from the top of the hill, as you can well imagine. So just a --- there's one copy for each of you, if you'd like, on the panel here, and I'll leave it up here as an exhibit. I apologize for not having an easel. I didn't know how we'd be set up this morning. So I'd like to distribute a report by Chester Engineers, 1997, on the ---. The report itself states that there have been a number of repairs and problems with the sewage system in Charles Town, and it talks about the type of problems, inflow and infiltration problems, breaks in the lines, so on and so forth. The costs that are associated with that are on the first page. On the second page, which is page four of that handout, there's some facts about the development, how many linear feet of conveyance lines are put down for sewage conveyance and a number of things, and it talks about how deep those lines are laid, about six feet into the subsurface.

They're saying that the conveyance lines themselves are about, I don't know, anywhere from 10 to 15-plus feet above the water table. So they've established that it's above the water table. If there are that many breaks, where is the sewage going? It's going to the water table. And the water table itself is an unconfined water table in carstic (phonetic) terrain, which means there are sinkholes, there's subsidence, there are a number of problems in the county with sinkholes.

The last couple of pages of this handout shows where we are --- it's a U.S. GS publication slide, where we are in the geological terrain. We have the breakout in the great limestone valley and great limestone valley is indicative of carstic terrain, sinkhole. And there's a --- the last page is a sinkhole in a subdivision in the area. It's a failed sinkhole. And the sinkholes don't fail all at once, they fail like an old house fails. An old house dilapidates itself over time and all of a sudden it collapses. That's what sinkholes do pretty much.

So I wanted to voice my concern that many times sewage plants are a way to continue development in an area that hasn't been properly studied or maybe properly delineated to the problems, and especially in geological hazardous terrain. So I'm very cautious and would like the PSC to be cautious also about developing this kind of terrain.

JUDGE GEORGE: Thank you, Mr. Baty. Additional public comment? Yes, ma'am.

MS. LATTERELL: My name is Frances Latterell,

L-A-T-T-E-R-E-L-L. I live at Molers Crossroads. I really have nothing to add because of the excellent presentations by Mr. Cummings, Ms. Rissler, Ms. Haney, Doctor Latterell and Mr. Baty. I think these are all excellent reasons why we shouldn't upgrade the Charles Town sewer plant to try to prevent any more of the accidental overflows or whatever you call them, that have occurred. And I am against the expansion of it for the reasons already delineated. I can summarize probably my main objection in three words, quality of life. I feel that the greed of a few is having very deleterious effects on the quality of life of many. I worked with my husband on the Jefferson County Watershed Coalition, and we are profoundly concerned about the quality of our streams and kind of life that is in those streams indicating the degree of deterioration that occurs when there are too many people and too much stuff going into the streams, Evitts Run, Shenandoah River. And we are, of course, as Mr. Cummings has told us, needing to be concerned and have to be concerned because of the regulations about what goes into the Chesapeake Bay. As we have --- the idea of upgrading to keep our --- what is presently required, that is very important. But as for expansion, it's going to do nothing but encourage more and more houses, more and more traffic and people, pressures on the schools, which we all know about, and I just want to add my objection to the expansion of the Charles Town sewer plant. Thank you.

JUDGE GEORGE: Thank you Ms. Latterell. Any more public comment? Yes, ma'am.

MS. HUNES: My name is Barbara Hunes, and I'm a resident of Jefferson County. And I really want to just sort of --- actually, not add anything new to what's been said, but rather to say that, for me, it's been somewhat difficult to get accurate information on just what is happening with the plans for sewer systems here in this county. I have water quality concerns the same as everyone else here in this room. I would like to see the problems that we have mitigated in some way. I have cost concerns, not just with the construction costs, but of the long-range costs, maintenance failures due to underground geologic problems. And there are other adverse effects to local quality of life that can be brought about by hasty decisions here. We need to sort of learn from the lessons of our neighboring growth counties what works and what doesn't work. I'm asking that the key players here, the PSC and the PSD folks, step back and re-evaluate what you're proposing to do and find a better solution to the improvement for the wastewater. Wastewater improvements are necessary. I have to wonder what the true goals are of such an increase in capacity. While people here have said sewer can't be used to control growth, it certainly shouldn't be used as a tool to uncontrolled growth. I think that there have been at least one or two motions made earlier in the meeting that offered some relief to a hasty decision, and I ask that you give this matter more thought before making a hasty decision. Thank you.

JUDGE GEORGE: Thank you, Ms. Hunes. Additional public comment? At this point we'll proceed with the evidence.

ATTORNEY SHINGLETON: Thank you, Judge. I was going to call Doctor Steven Nichols, the superintendent of the school, but he had to leave before we could get to him. I would like to note the appearance today as a member of the public, Your Honor, Mayor Gephardt (phonetic) of Charles Town City off your left shoulder. I don't think he's going to testify, but he is here today. My first witness is Jane Arnett.

JUDGE GEORGE: I'll ask the court reporter to place you under oath.


BY ATTORNEY SHINGLETON: Q. Would you please state your name and address for the record?

A. Address is P.O. Box 14, Charles Town, West Virginia, 25414.

Q. Are you employed by the City of Charles Town?

A. Yes, I am.

Q. In what capacity?

A. City manager.

Q. As city manager, do you have anything to do with the Charles Town utility system?

A. Yes, I do.

Q. What do you do?

A. I serve as the Chairman of the City of Charles Town Utility Board, which provides water and sewage service.

Q. Charles Town is a joint utility; is that correct?

A. That's correct.

Q. You're familiar with a joint utility under West Virginia Code, Chapter Eight, Article 20?

A. Yes.

Q. So the water and sewer are combined under one board?

A. Yes.

Q. And financing is issued as joint revenue bonds?

A. Correct.

Q. You're familiar with the application and the amendments to the application filed in this case?

A. Yes.

Q. Did you sign the application on behalf of Charles Town?

A. Yes, I did.

Q. Can you tell the Judge why Charles Town needs this project?

A. Charles Town needs this project in conjunction with Ranson and Jefferson County Public Service District to which we treat flows --- the flows treated by Ranson and Charles Town, as well as the Public Service District are under an existing 1988 sewer service agreement. Those three utilities must plan and provide for expansion to accommodate growth. And we are mandated to reasonably provide that expansion as a planning tool and as a reality of growth.

Q. Now, did the three utilities or at least the utility representatives of those three entities meet on a regular basis to discuss issues of common concern for the greater Charles Town/Ranson area?

A. Yes.

Q. In fact, you have an informal joint utility board; isn't that true?

A. That's true.

Q. Biweekly, what, once a month?

A. Once a month.

Q. Did there come a time in the year 2003 when the parties came to an informal agreement that there needed to be an expansion of the existing Charles Town treatment plant?

A. Yes.

Q. I'm going to hand you ---.

ATTORNEY SHINGLETON: Judge, I'd like to have this marked as Number One, please.

JUDGE GEORGE: I've already marked the publication affidavit as Number One.

ATTORNEY SHINGLETON: Let's mark this Number Two.

JUDGE GEORGE: We'll mark this as Charles Town Exhibit Number Two.

(Charles Town Exhibit Two marked for identification.)

ATTORNEY SHINGLETON: I think I've got enough copies for all parties. If I forget handing them out during the day, just yell at me and I'll ---.

BY ATTORNEY SHINGLETON: Q. Do you have Exhibit Number Two that you're looking at right now?

A. Yeah.

Q. Can you tell me what that is?

A. This is a projection prepared by the City of Ranson and utilized in the year 2003 to try to determine what may exist in future as equivalent dwelling units, and it's the total flow from those dwelling units over a 20-year period.

Q. As you understand it, the template is put together, I think, by View Engineering; is that correct?

A. That's correct.

Q. Which is the engineer for Charles Town?

A. As well as Ranson.

Q. But this was done on behalf of Ranson, as you understand it?

A. That's correct.

Q. And it was an attempt to try to take a look into the future and see what the potential demand out there was for sewer; is that correct?

A. That's correct.

Q. And does the bottom of the first page, is that the summary page?

A. Yes. The bottom of the first page shows a potential --- equivalent dwelling units. That's inclusive of housing and business of 10,506 equivalent dwelling units.

Q. Now, Ms. Arnett, this is not intended to be a bible that says this is what's going to happen?

A. In no way.

Q. Is it a rough cut at trying to look at what demand might be in the future?

A. A rough picture, that's correct.

Q. Some of these things may occur, some may not?

A. That's true.

Q. It may occur on a different time scale than what developers think might happen; is that correct?

A. I believe they will occur on a different time scale.

Q. But it was an effort to try to get your hands around what might be in the future?

A. That's correct.

Q. Now, what's being --- how large of an expansion of the treatment plant is being proposed in this particular project?

A. Roughly a half a million gallons per day.

Q. Are you familiar with the term equivalent dwelling unit?

A. Yes.

Q. Can you tell us what that term means?

A. Equivalent dwelling unit has the ability to reduce down varying sizes of businesses or industrial customers to a picture of one dwelling unit in comparison.

Q. In other words, if I want to build one freestanding home, that's one equivalent dwelling unit?

A. That's correct.

Q. Now, as an equivalent dwelling unit, has there been a number of gallons per day of sewage attached to an equivalent dwelling unit?

A. Yes.

Q. What is that number?

A. This chart uses 179 gallons per day. Other recommendations are 180 gallons per day. So we're very close at 180.

Q. Have you calculated how many equivalent dwelling units can be obtained from a half a million gallons of increase in a sewer plant? Can you?

A. I don't have a calculator, but I believe it's 2,778.

Q. 2,778?

A. I'm not ---.

Q. That's at 180 gallons a day?

A. At 180 gallons.

Q. And so the proposed expansion that's the subject of this hearing is no attempt to take care of all of this growth that may or may not occur, it's to take care of about 2,800 or so potential equivalent dwelling units?

A. Correct.

Q. Now, I think you testified earlier that Charles Town owns and operates a treatment plant?

A. Yes.

Q. It provides service to its own customers; is that correct?

A. Yes.

Q. It also provides service to the City of Ranson and to the public service district?

A. That's correct.

Q. Those parties entered into an agreement in 1988; isn't that correct?

A. Yes.

Q. Tell me --- I want to talk a little bit more about growth in Charles Town. I presume you're familiar with what you think the growth is going to be in the City of Charles Town?

A. Yes.

Q. You're the city manager?

A. Yes.

Q. Can you tell me about any specific projects within the corporate limits of Charles Town that are not something pie in the sky, but are concrete, that are out there being built today?

A. The City of Charles Town currently is processing three developments, one on a larger scale, that is named Huntfield, that is scheduled at build-out to include 3,200 homes as well as businesses. On a smaller scale, there is a development known as Norbourne Glebe. I believe as of December '03 their projections were 500-plus equivalent dwelling units. And there is also a townhouse development on a smaller scale that is partially completed and is in the process of completing 141 additional units. And then I'm sorry, another even smaller development for 44 housing units. All of these are in some phase of plan review by the City of Charles Town Planning Commission.

Q. Now, Huntfield you indicated a buildout of some 3,200 equivalent dwelling units or 3,200 residences?

A. Yes.

JUDGE GEORGE: And all of those developments are within the corporate limits of Charles Town, is that what you're saying?

A. Yes.

BY ATTORNEY SHINGLETON: Q. Huntfield is 3,200 residential units, plus retail and office?

A. Correct.

Q. Does the Huntfield complex also contemplate any schools being built within the confines of the property?

A. Yes, it does, under an existing conveyance of approximately 55 acres of property by Huntfield to Jefferson County Board of Education. There is now plans in review for a high school on that conveyed property. And it would have been Doctor Nichols' testimony that it is planned to be open in three years.

Q. Are you familiar with the proposed way that the high school intends to treat its --- or have its sewage disposed of?

A. It is supposed to be served by the City of Charles Town wastewater treatment plant.

Q. Now, there is an existing sewer main from the Charles Town treatment plant to the Huntfield site; is that correct?

A. That's correct, as well as the pump station.

Q. Now, the City of Charles Town retained Chester Engineers to do this project, as the engineer for this project; is that correct?

A. That's correct.

Q. That firm has now changed its name to View Engineering?

A. True.

Q. And we're going to ask at a later time today one of their engineers to talk about the technical aspects of this project; is that correct?

A. Correct.

Q. You've asked John Kunkle of J.C. Kunkle & Associates to act as your accountant and CPA in this project?

A. Yes.

Q. And he will be asked to testify later today about financial issues?

A. True.

Q. Has the Division of Environmental Protection put the City of Charles Town on notice as to what it believes its remaining capacity is in its existing treatment plant?

A. Yes.

ATTORNEY SHINGLETON: I ask that that be marked as --- I guess it would be Number Three.

JUDGE GEORGE: Mark it as Charles Town Exhibit Number Three.

(Charles Town Exhibit Three marked for identification.)

BY ATTORNEY SHINGLETON: Q. You have Exhibit Number Three in front of you, Ms. Arnett?

A. Yes.

Q. Can you tell me what that is?

A. That is a letter from Mike Johnson, the assistant director of the West Virginia Division, Department of Environmental Protection, dated February 10th, 2004, provided to the City of Charles Town, the current available capacity of 150,000 remaining in the Charles Town wastewater treatment plant.

Q. Do you know, has Charles Town made any hook-ups to its treatment plant by any of the three entities since the issuance of this letter of February 10th?

A. Yes.

Q. Do you know about how many connections have been made?

A. Not off the top of my head. What I do know is that I calculated approximately 115,000 gallons remaining today.

Q. 115,000 gallons of capacity remaining today?

A. Yes.

Q. Which would mean that about 35,000 gallons have been consumed since February the 10th; does that sound about right?

A. Yes.

Q. Now, you've been working with the Division of Environmental Protection, you being the City of Charles Town, to develop the permitting and the construction drawings to move forward with this project; isn't that correct?

A. Yes.

Q. You mentioned earlier a 1988 agreement between the three utilities. In this project are you proposing an amendment to that agreement?

A. Yes.

ATTORNEY SHINGLETON: I'm going to ask that this be marked as Number Four, Judge.

(Charles Town Exhibit Four marked for identification.)

BY ATTORNEY SHINGLETON: Q. Do you have that document before you, Ms. Arnett?

A. Yes.

Q. Can you tell me what this is?

A. This is an amendment that determines the method by which the three utilities will utilize this new capacity.

Q. Okay.

ATTORNEY SHINGLETON: Now, Your Honor, if I might, to clarify this agreement was submitted some months ago to the Public Service Commission. As a result of the recent change in the scope of the project, the cost of the project came down and it necessitated some changes in this agreement, and they've been redlined. I have not provided a clean copy for those looking at the agreement. You'll see a mark over in the margin every place I've made a change. I left the change --- I left everything in so it would be easier today at least to see where the changes are.

JUDGE GEORGE: So we'll quickly go over those changes?


BY ATTORNEY SHINGLETON: Q. Can I go through this with you, Ms. Arnett. Page two, paragraph one, you see where the changes have been made?

A. Yes.

Q. It refines the definition of the project; is that true?

A. That's true.

Q. Down on page or paragraph two, the ---.

JUDGE GEORGE: The only thing the first paragraph change did was eliminate the language that referred to the effluent line from ---


JUDGE GEORGE: --- the Shenandoah River?

BY ATTORNEY SHINGLETON: Q. Paragraph two reduces the scope of the project and cost from $6,000,000 to $2,500,000?

A. True.

Q. Over on the next page, paragraph B, which is on the third page, there's a number, $12.34 scratched out, and number $6.10 inserted; is that correct?

A. Yes.

Q. That's the only change there, two places?

A. True.

JUDGE GEORGE: That's regarding debt service for the project costs?

A. That's regarding one of the methods to finance this project.

BY ATTORNEY SHINGLETON: Q. If I might, let me go through and point out the changes, and I'll ask her a question about it.


BY ATTORNEY SHINGLETON: Q. I think that's the only change, isn't it, Mr. Arnett?

A. True.

Q. There's a mark on the next-to-the-last page, but I think that's because the signature block got moved to another page.

JUDGE GEORGE: Very minor changes?


A. Pardon me?

JUDGE GEORGE: It was very minor changes. I wasn't asking you. I was asking her.

A. That's correct.

BY ATTORNEY SHINGLETON: Q. Now, we're going to have Mr. Kunkle testify in greater detail about financing questions, but is it true that the agreement contemplates two methods for paying the debt service on the bonds?

A. I believe there's three methods.

Q. Okay. All right. Three methods.

JUDGE GEORGE: And your accountant will clarify those or ---?

ATTORNEY SHINGLETON: Your Honor, I could ask her the questions, but Mr. Kunkle can go through it and ---.

JUDGE GEORGE: Whichever is faster.

ATTORNEY SHINGLETON: I think it would be better for him. He's got the financial exhibits to back up his assumptions.

BY ATTORNEY SHINGLETON: Q. Now, this document has been circulated among the three entities; isn't that true?

A. Yes.

Q. Now, one of the elements backing up this agreement --- let me back up and ask the question differently. Is it one of the goals in this project not to impose rate increases on the customers of Charles Town, Ranson or the district to pay for what's thought to be a growth-related project?

A. That's correct.

Q. That was the goal of all three utilities in trying to put together a financing mechanism for this project?

A. True.

Q. And as a result of that, has Charles Town negotiated a proposed agreement with Huntfield, LC, a developer in the project area?

A. Yes.

Q. And the purpose of that is to guarantee the debt service in the first few years of the project until growth will pay for the debt service?

A. That's correct.

ATTORNEY SHINGLETON: I'd like to have this marked, Your Honor, I guess, as Number Five. Your Honor, again, this is a redline revision to a document which was submitted several months ago to the Commission.

JUDGE GEORGE: This is among those changes that concerned Mr. Robertson earlier?


(Charles Town Exhibit Five marked for identification.)

BY ATTORNEY SHINGLETON: Q. Ms. Arnett, I'd like to go through, just so we can point out the changes. Again, there's a red line --- if you go to the third page, Ms. Arnett, down at the bottom, paragraph D, EDU Fee, do you see that paragraph?

A. Yes.

Q. There's a number, it's $6.10 per EDU?

A. That's correct.

Q. I believe it had been $12.34?

A. Yes.

Q. Go over onto page four, paragraph two, the number of the Letter of Credit guarantee has been changed to $700,000; is that correct?

A. Yes.

Q. It previously was $1,700,000?

A. That's correct.

Q. Go to page --- the next paragraph, five, the end of paragraph five of the next page. Again, the number, about $700,000?

A. Correct.

Q. I believe that's the only change?

A. Yes.

ATTORNEY SHINGLETON: Now, again, Your Honor, I intend to ask Mr. Kunkle some more of the details of this, but we ---.

JUDGE GEORGE: Very well.

BY ATTORNEY SHINGLETON: Q. The purpose of this agreement is not to oppose a rate increase of all the existing customer bases of any of the three utilities to pay for this expansion project?

A. True.

Q. Now, has Huntfield been granted any exclusive rights to capacity in the proposed expansion as a result of signing this agreement?

A. No.

Q. Is it still Charles Town's position that this project needs to go forward?

A. Yes, it is.

Q. Now, I know I'm going to touch on this with other witnesses, but we've had a tumultuous time since January dealing with the DEP and changing the permitting process; haven't we?

A. Yes.

Q. And I called it a perfect storm earlier in my opening comment. It's been frustrating to the City of Charles Town; is that true?

A. True.

Q. To its engineer?

A. Yes.

Q. To its lawyer?

A. Yes.

Q. And its accountant?

A. Yes.

Q. As well as the public?

A. And the city manager.

Q. And the city manager. But even with all the twists and turns, it's still Charles Town's statement today that it needs to go forward with this project along the lines outlined in the application and the amendments to the application?

A. Yes.

ATTORNEY SHINGLETON: I have no further questions of this witness, Your Honor.

JUDGE GEORGE: Very well. Don't go anywhere. Mr. Kelsh, Cross Examination?



BY ATTORNEY KELSH: Q. Good morning, Ms. Arnett. Your title again with the Charles Town Joint Utility Board is?

A. Chairman.

Q. Chairman. And how long have you served in that capacity?

A. Since the combined utility came in 1998.

Q. And in that time, have you become familiar with the duties incumbent upon the Joint Utility Board as a public utility?

A. I believe the duties incumbent upon the Joint Utility Board or function are their operations as separate utilities under the Public Service Commission. It has been a formalized process that we hold these public joint meetings, but there are no legal actions taken by a joint board, per se, but rather by individual authorities.

Q. But you're generally familiar with the obligations of a public utility; correct?

A. Yes.

Q. And would you agree that one of the fundamental duties of a public utility is duty to serve?

A. Yes.

Q. And we have, for example, rural electrification in this country where electric is distributed throughout the country. Nearly everybody has access to electricity; correct?

A. Correct.

Q. And that came out of a new public utility; right?

A. Yes.

Q. Because of their duty to serve; correct?

A. Correct.

Q. And you're under similar duty to extend service; right?

A. That's correct.

Q. Do you believe it would be a proper exercise of the authority and the legal rights and responsibilities of the Charles Town Utility Board to say I want to expand the plan even though the people want service because we're concerned about quality of life issues in Jefferson County?

A. I would agree with that statement, yes.

Q. Isn't there another body that's supposed to address the quality of life issues?

A. Yes.

Q. Wouldn't you think that would be better addressed at the Jefferson County Planning Commission?

A. Yes.

Q. Many of the people who have filed a protest in this case have suggested that the expansion of the Charles Town plant be postponed for a year. You mentioned earlier that the remaining capacity at Charles Town is 115,000 gallons per day currently?

A. That's correct.

Q. And isn't it correct that not all 115,000 gallons is available to serve customers, that is Charles Town wants to preserve a buffer to make sure it doesn't exceed its permitting capacity; correct?

A. That's correct.

Q. And what is the amount that Charles Town wants to hold back?

A. 20,000 gallons per day.

Q. So really, 95,000 gallons per day left today to give to new customers?

A. Yes.

Q. And you say it's since February 10th, about 35,000 gallons of a new capacity has been consumed by new customers?

A. Yes.

Q. And February 10th was roughly about six months ago; correct?

A. Correct.

Q. So the rate right now is about 70,000 gallons per year; would you agree with that?

A. No, I wouldn't, because the environment to which the 35,000 gallons has been allocated has been very restrictive, so that caution has certainly been a part of the 35,000 gallon allocation and a lot of overview --- it would not be the normal circumstance for any six-month period, I don't believe.

Q. To go back further, around December of 2003, the Health Department discontinued issuing permits to subdivisions for sewer collections; correct?

A. Correct.

Q. That was due, in large part, to concern about the availability of capacity of Charles Town treatment plants?

A. True.

Q. And then on February 10th of this year, as your Charles Town Exhibit Number Three, the DEP, in consultation with the Health Department, agreed that there was some remaining capacity at the Charles Town treatment plant?

A. Yes.

Q. And the Health Department could resume issuing permits to subdivisions that would have their wastewater treated at the Charles Town plant?

A. Right.

Q. There is a holdup for a period of months there because of the Health Department's refusal to issue permits for the subdivisions; correct?

A. That's correct.

Q. And there's been a further holdup since March 24, 2004 with other capacities at the Charles Town plant; correct?

A. Correct.

Q. We have a hearing tomorrow in a case involving Jefferson County Public Service District's request for a moratorium. Charles Town has intervened in that case; correct?

A. Correct.

Q. And Charles Town has signed a joint stipulation that has been filed in the case that would provide for releasing that remaining capacity ---

A. Correct.

Q. --- on a first-come-first-serve basis? And I don't want to go too far into that.

JUDGE GEORGE: I appreciate that, Counselor.

BY ATTORNEY KELSH: Q. But you would agree with me that capacity has not been parceled out during the ordinary course of business since March 24 of 2004 by three utilities?

A. True.

ATTORNEY KELSH: That's all the questions I have of this witness.

JUDGE GEORGE: Thank you, Mr. Kelsh. Mr. Burke?

MR. BURKE: Thank you.


BY MR. BURKE: Q. Ms. Arnett, I have some questions that may be better answered by one of the other witnesses, but I'll start with you because you're closest to the operation. And if you'd rather that I direct them to one of the other witnesses, that would be fine. Will there be extra pumping costs if this project is built?

A. That might be better answered by an engineer who can separate the pieces of equipment that are now necessary and those that have been removed from the project as a result of the removal of the river line or effluent line to the Shenandoah River.

Q. Will there be extra maintenance costs?

A. Yes.

Q. Will there be a reserve for replacement of the digester and blowers?

A. Yes.

Q. Your pro forma adjustments to the O&M costs, why isn't there any money for maintenance and reserves?

A. I believe that's better answered by the CPA who prepared the Rule 42.

Q. Does Huntfield guarantee the operating, maintenance and reserve costs?

A. No.

Q. Are Charles Town, Ranson and the PSD, therefore, at risk for the operating, maintenance and reserve costs?

A. I do not believe so in light of the projections of growths and the limited accommodations that we are providing for the overall picture as presented in a previous exhibit.

Q. Has anyone analyzed the financial --- how this project would affect the financial situation of Ranson and the PSD?

A. You would have to ask those two utilities.

Q. So you don't know of any such analysis?

A. I'm not aware of an analysis that has been presented in this case.

Q. Thank you. Has anyone analyzed the cost to convert families from septic to sewer? You heard the letter read from Ms. MacElwee.

A. I'm sure there are analyses. If you're asking me if I have prepared one, no.

Q. And they're not part of this case?

A. No.

Q. Has anyone analyzed, as part of this case, the cost to the state for new roads and schools compared to the taxes received?

A. No.

Q. Last week the City Council approved a tariff increase. In very broad terms, what was the purpose of that tariff increase? What will it be spent for?

A. In very broad terms, the increase will cover operation cost increases since 1998. The Sewer Department in the City of Charles Town has been operating somewhat on the rate and debt coverage, the rate --- I'm sorry, the coverage ratio of the Water Department because it is a legally combined system. It is the desire of the City of Charles Town Utility Board, as well as the Mayor and Council, to present a stand-alone debt service coverage of the ratio as required by the Public Service Commission for its sewer department.

Q. So this is for debt service or operating?

A. There must be in all utilities a --- the bond documents held by the City of Charles Town require that the rates are sufficient to cover 115 percent of the debt ratio, debt coverage, after operations and maintenance cost. That 115 percent target is not currently being met by the sewer department on its own.

Q. Your going level adjustments, why isn't there more --- a new set was submitted in August, including the recognition of this tariff increase, and yet there is no more operation and maintenance expense included in this latest submission that there have been in older submissions. Why was that, if that was the purpose of the increase?

A. I'm not following, but I will defer to John Kunkle, the CPA, to clarify the most recent submittal to the Public Service Commission Rule 42.

Q. The engineer's report in this project has two

--- it's page 13 of the main plan addendum if anyone wants to refer to it. The two projections of growth, the high estimate and low estimate. At the low estimate, which is about 17,000 gallons per day per year, how soon will the costs of this project be covered, the O&M and reserve costs, not the capital?

A. I do not have the answer to that.

Q. Of the possible homes listed on Charles Town Exhibit Two, how many have final plan approval?

A. I do not have the answer to that.

Q. Of the ones in Charles Town, do you know how many have final plan approval?

A. No.

Q. Are there some that do not have final planning approval?

A. Yes.

Q. Now, I want to refer to the PSC checklist, which is in the PSC regulations. And the city's application back in January went through item by item trying to answer. I'm looking for the answers to, first as a group, items 3C, 13A and 14F, which are the detailed engineering for the O&M costs, the detailed budget calculations and supporting calculations for the O&M costs, and the effect on personnel that might be needed. I haven't found those in any of the documents. Have I missed them or who could tell me where those are?

A. I would defer to the engineer who prepared the documents that were submitted.

Q. However, similarly then I'm looking for items 14G and H, which are a description of the maintenance and the replacement reserves.

A. Again, I defer.

Q. Again, I'm looking for items eight and 15C and D, which are identification of customers to be served. There was a statement that the city would only have --- would not have any new customers. Is that still the case?

A. But for one development that is 44 housing units that perhaps was missed by the engineer, I'm not aware that that was a City of Charles Town customer, not a public service district customer. That is true.

Q. You have ---.


JUDGE GEORGE: Do you have an objection?

ATTORNEY SHINGLETON: I do from the way he's phrasing the question. I think the application says as a result of a project, will new customers come on board directly. I think --- I believe the Public Service Commission application form in that situation is talking about a new sewer line someplace, not a sewer plant itself. There are no sewer collection mains proposed by Charles Town in this project.

JUDGE GEORGE: That's probably a correct estimation of what the Commission is looking for in that case, but you may proceed.

BY MR. BURKE: Q. Item nine, the bond ordinance, will there be one?

A. Yes.

Q. And has it been submitted yet?

A. No, that has not. Normally the procedures that we follow under the Public Service Commission, we must wait for their approval before that process can begin.

Q. Item 22, the financial effect on other utilities, has that been provided, estimated?

A. Could you explain other utilities.

Q. I'm thinking of the PSD in Ranson.

A. No.

Q. Item 23, historic review compliance, there was a statement, as Ms. Rissler said, that it was not applicable. Has there been anything else provided since then?

A. No.

JUDGE GEORGE: Do you know the city's position or the utility's position on why that is not applicable?

A. Again, I would defer to the engineer who would have done a more thorough review of that section, 106, to determine its eligibility requirement or noneligibility.

JUDGE GEORGE: Very well. Go ahead.

BY MR. BURKE: Q. While we're on that then, I would refer you to the engineer's letter in the record last January concerning permits, dated January 15th, and it has a list of permits. And the very last item, SHPO, as to the previous city projects, Chester Engineers will send a project location map rather than engineering drawings to the city for transmitting to SHPO. For the court reporter, SHPO is S-H-P-O, State Historic Preservation Office. Has Chester sent a project location map for transmitting to SHPO?

A. Not formally, no.

Q. And is there a waste load allocation for the project from DEP?

A. I would defer to the engineer on that question.

Q. And your original filing again on Form 14, there's a requirement by the PSC's standard form to concisely describe the nature of funding. And I see you have some boilerplates, which is also in their standard form, that this is for general improvements of the system. But beyond that boilerplate language, the PSC asks for this, describe the nature of filing. Has that been described?

A. I believe it has certainly ---.

Q. I'm asking specifically in the Form 14.

A. In the Form 14, I don't know.

Q. I now want to turn to some discharge information.

MR. BURKE: Your Honor, I have a chart of discharge which I would like to submit as an exhibit. Can I do that now so that I can ask the witness about it?

JUDGE GEORGE: You can show her the document. You can go ahead and have it marked if you're going to try to get it in as an exhibit through testimony later.

MR. BURKE: Thank you.

JUDGE GEORGE: You have plenty of copies, I trust.

MR. BURKE: I'm hoping I can find them.

JUDGE GEORGE: Each of the attorneys need one, and I need two. Mark this as Burke Exhibit Number One.

(Burke Exhibit One marked for identification.)

JUDGE GEORGE: I've marked this as Burke Exhibit One.

MR. BURKE: Are you ready, Your Honor?

JUDGE GEORGE: You may proceed. Thank you.

BY MR. BURKE: Q. To lead you through, I have down the left-hand side of the first page the dates, each month, from October 2002 to last July. And then various numbers from your flow report, discharge monitoring reports. And in the left half of the page there's a group of columns calls nitrogen ammonia. And looking at those, there are a number of violations in winter of 2003 and again violations in late winter of 2004. I should say exceedences. I know there's a question at law whether these are truly violations, but they are higher than the permit limit. Can you explain, why did you discharge ammonia higher than the permit limits in the last two winters?

ATTORNEY SHINGLETON: Your Honor, it might be addressed by

---. She can answer if she can.

MR. BURKE: All of these questions she might indeed defer. But since the operator ---.

JUDGE GEORGE: Ms. Arnett, do you want to answer that, or do you want to ---?

A. I believe I would defer to the engineer for specific --- to address specific violations.

JUDGE GEORGE: Do you think he'd be aware of violations, particular violations, the last year and a half, two?

A. I'm not sure. I would perhaps defer, I think, on a general note. As certainly the city manager, there have been explanations for these exceedences. And as I understand them, as a nonengineer, that would be my testimony.

BY MR. BURKE: Q. In April, the city said that the lack of

in-house --- I'm referring to the third page of this package of exhibits, a short letter from your superintendent of the wastewater treatment plant. And about the very middle of the paragraph it says since we no longer do in-house testing, we did not get the results from our lab until the following week. So my question is, are you now testing in-house or are you still not testing in-house?

A. We are testing in-house.

Q. You are?

A. Yes.

Q. The following letter is a letter from Mr. Lewis saying that you would monitor the influent to identify --- I should find this for you. On the second page, the last sentence of the big paragraph, city will continue to monitor the influent to identify any irregular discharges and respond accordingly. Did you find any irregularities in July?

A. In July ---.

Q. 2004.

A. Not that I'm aware of.

Q. And would you be aware?

A. On some occasions, yes.

Q. Is there a manager of the plant, the Charles Town plant?

A. Yes, there is a superintendent.

Q. Is that still Mr. Furr?

A. Yes.

Q. Now, I'm turning to BOD, which is also on this first page, at the far right side. Charles Town Exhibit Three, from DEP says we agree the existing treatment system is capable of adequately handling a 1.2 millions a day with loading concentrations of 500 milligrams per liter BOD Five. Why did the plant exceed permit limits for BOD nine times between November 2002 and May 2003?

A. Again, I'll defer to the engineer.

Q. The reason, to explain to the Judge and to you why I'm asking this, I don't want to get into a box where the engineer says, oh, that was an operational machine and he doesn't know. So at least we'll try. If you know anything about it, by all means offer it. If not, we'll hear the engineer.

In February 2004, in the engineering manual, it says you were again sampling around the system to find BOD sources. Do you have any results from that new sampling around the system?

A. Not with me today, nor are we prepared to provide testimony for that.

Q. Have there been results?

A. I don't know.

Q. Do you know how many times sampling has been done? Is this something that a few samples have been taken, maybe none yet, a few every week?

A. I don't know.

Q. Who would know?

A. Well, I think that was a cooperative effort, and the public service district was certainly involved. We were attempting to look at the pump station as well. I do not have that information today.

Q. How often do you, the City of Charles Town, inspect restaurant grease traps?

A. I don't have a specific number of times, but I can assure you that we do inspect grease traps.

Q. Is there a formal goal of inspecting every grease trap once a year, once a month?

A. No written procedures, no.

Q. And do you have an annual sewer line cleaning and root removal program?

A. We have purchased recently a $30,000 sewer jetter (phonetic) in cooperation with the City of Ranson, and it is being utilized.

Q. Is the engineer familiar with the extent of its use?

A. I don't know.

Q. Are you familiar with the extent of its use?

A. I do not have records on the exact dates that the sewer jetter is used, no.

Q. Do you know if it's used most days?

A. No, it's not used most days. Most weeks, yes.

Q. And is it normally used when people find a blockage or suspect a blockage, or is it used on a proactive, routine cycle through the system?

A. I would say both.

Q. On bacteria, and again, this may probably be an engineer issue, do you know why the plant exceeded bacteria limits eight months out of December 2002 to December 2003?

A. Again, I would defer to the engineer.

Q. Do you have knowledge of how sludge is taken away from the plant and the plan applied is prevented from reaching streams?

A. No.

Q. Do you know what the permit limits on sludge will be under the Chesapeake Bay Program?

A. No.

Q. Is there more traffic in Charles Town now than ten years ago?

A. Yes.

Q. Were you at a Charles Town Council meeting last week?

A. Yes.

Q. Did the Street Committee report on efforts to get the Department of Highways to put in some turn lanes and other road improvements in Charles Town?

A. Yes.

Q. Who would pay for those road improvements?

A. The State Department of Highways.

MR. BURKE: No other questions. Thank you.

JUDGE GEORGE: Thank you, Mr. Burke. Mr. Pardo?

ATTORNEY PARDO: No questions, Your Honor.

JUDGE GEORGE: Thank you. Mr. Glover?

ATTORNEY GLOVER: Just a couple quick questions.


BY ATTORNEY GLOVER: Q. Mr. Arnett, we talked briefly earlier about the 1988 sewer service agreement between the three utilities?

A. Yes.

Q. It's my understanding in that agreement there's allegations among the three utilities for a capacity plant; is that correct?

A. Yes, that's correct.

Q. Charles Town Exhibit Four talks about amendments to the sewage service agreement?

A. Yes.

Q. It's my understanding in that amendment --- three utilities that there will be a continuation of a so-called allocations of the new treatment capacity plant; is that correct?

A. Yes.

Q. Thank you.

JUDGE GEORGE: Mr. Robertson?

ATTORNEY ROBERTSON: Yes, Your Honor. I have several questions.


BY ATTORNEY ROBERTSON: Q. Ms. Arnett, I'm going to go right now with what Mr. Burke was asking this particular --- such as nitrogen, ammonia, and also the BOD violations that the City of Charles Town sewer plant has incurred earlier on. Has there been a fix to that currently or is this something that you're going to fix within the certificate process?

A. I think I would say there has been a fix to those problems but for the perhaps illegal, quote, unquote, hit that any wastewater treatment plant may experience. This proposed project will only enhance those fixes that have already been completed, to answer your question.

Q. So somewhat in a summary or just a nutshell that, one, with the sewer plant upgrade, it's your understanding that it will --- the water quality discharge from the plant will be improved?

A. That's correct.

Q. Also, this particular project also expands the treatment plant capacity?

A. Yes.

Q. So there's really a dual function there?

A. That's correct.

Q. What I'm making reference to, if you need to look at, is the City Exhibit Number Five. It's the agreement between the City of Charles Town and also with Huntfield.

A. Yes.

Q. Were you a part of that, looking at the negotiations of this agreement with Huntfield?

A. Yes.

Q. I reference you over to the definition page on page two of this agreement.

A. Which exhibit is that, I'm sorry?

Q. It's Exhibit Five. What I'm getting into is, number one, it says definitions in about the middle of the page.

A. Yes.

Q. And it talks about the capital --- about the monthly debt service?

A. Correct.

Q. Are the particular blanks going to be filled in at some later time?

A. Yes.

Q. Do you know when that information will be available?

A. Those numbers could certainly be estimated for the benefit of Staff. However, the actual numbers

I don't believe will be able to be completed until the post reading of the bond ordinances, bond ordinances and bond issues. The bond cost could change up until the day of closing.

Q. Right. But it's sort of hard for Staff to even process even good estimates if we don't have the numbers; would you agree with that?

A. Yes.

Q. Also, do you know where Attachment A to this debt service schedule exhibit is? It's not provided within this document.

A. The Attachment A would come from a bond order.

ATTORNEY SHINGLETON: I object. It's going to be the debt service schedule. What's the exact amount of bond going to be determined would be if the underwriter would provide us a debt service schedule, which probably wouldn't occur until a few days before the bonds are actually sold within a few days.

ATTORNEY ROBERTSON: But even with an estimated cost, we still don't have an exhibit to process from a Staff perspective.

A. I could provide Staff that exhibit.


BY ATTORNEY ROBERTSON: Q. Looking at the ---.

JUDGE GEORGE: That would be a normal loan amortization-type schedule.

A. Yes. It would only be a projection based on what we believe to be the cost today.

JUDGE GEORGE: And that's the issue that we're missing, is the cost today. I mean, once you get the cost today, you can just run it through your personal computer even.

BY ATTORNEY ROBERTSON: Q. What I'm going to ask you to do now is looking at the City's Exhibit Number Four --- first of all, I also would ask you, and I can provide you a copy, but you are familiar with the --- I believe it's 1988 sewer service agreement?

A. Yes.

Q. And what I'm going to hand you --- and this looks at the particular 1988 sewer service agreements. Look at the highlight portion where I'm looking at it ---

ATTORNEY SHINGLETON: Can you tell me what you're looking at?

BY ATTORNEY ROBERTSON: Q. --- capital E, about the limitation of use for the total 1.2 million gallons.

ATTORNEY SHINGLETON: This is the '88 agreement, which is not an exhibit. Do you want to make it an exhibit?

ATTORNEY ROBERTSON: I want to make just a reference to that.

JUDGE GEORGE: She's just looking at Exhibit Number Five.

ATTORNEY ROBERTSON: Right. And she has a copy of the 1988 agreement.

JUDGE GEORGE: She may, okay.

BY ATTORNEY ROBERTSON: Q. Basically, with that particular agreement there was an allocation of capacity. There was an allocation of capacity in that particular agreement; is that correct?

A. I don't know if it was an allocation, but it was a determination in 1988 of the shares of capacity that each of the three utilities would have.

Q. Right. And as stated in the agreement, there was 330,000 going to Ranson, the 470,000 going to Charles Town, and the 400,000 going to the public service district, which would mean the Jefferson County Public Service District?

A. Correct.

Q. And that does add up to 1.2 million gallons, the current level of the treatment plant?

A. Yes.

Q. Then what I'm going to make reference to is back to the City's Exhibit Number Five --- excuse me, City's Exhibit Number Four. First of all, obtained in that particular agreement, and this is the amendment, I'm looking at page two and under paragraph one with this requirement, and then the last sentence in the paragraph one. These particular shares are going to be apportioned equally according to the amendment; correct?

A. Correct.

Q. Is there reason for the differences of having different allocation factors in the 1988 agreement and now equally sharing the additional 500,000 gallons of expanded capacity?

A. I can't speak for the drafters of the 1988 agreement and the differences in the allocation. The primary reason today that we would allocate one-third, one-third, one-third is that since my tenure here, I've not charged that operations and maintenance cost on any other basis but one-third, one-third, one-third. I could speculate, but I'll just leave it at the basis for this one-third is primarily in the ten years of charge back methodology, it's one-third.

Q. And with that, you're aware, and Charles Town is an intervener in our case that we have tomorrow?

A. Yes.

Q. And you're aware that also Charles Town has entered into a stipulation looking at a first-come, first-service basis in that particular case for the remaining capacity of the 1.2 million gallons?

A. Well, I'm aware, but I would also like to clarify that I believe the remaining capacity and request that you're asking about deal with requests from developers. It does not deal with the capacity on hand for utilities themselves. I believe the case tomorrow deals with those connections directly from individual requestors.

JUDGE GEORGE: I'm not sure I understand the distinction. I'm talking to her. Can you explain to me the distinction? I mean, what capacity does the utility need other than to serve its customers?

A. The distinction is, Mr. Robertson, is first-come-first-serve basis. The defined apportionment in this agreement in paragraph one is to specific utilities. So the distinction is those that hook up first-come-first-serve basis, no matter what the utility. And the three utilities' ability to plan with some certainty of available capacity that each utility would have in this instance.

JUDGE GEORGE: I really don't want to get into tomorrow's case, but if all the developers come to Charles Town first and you run out of your third, the next developer that comes, you're still going to be able to serve them, is that right, as long as there's still capacity on the system?

A. Yes. The next developer that comes would then be under a supplemental statement in this agreement that says those utilities that have capacity who have planned for it need to be requested so that their plans are not taken over, so to speak, for Charles Town in your question.

JUDGE GEORGE: Go ahead, Mr. Robertson.

BY ATTORNEY ROBERTSON: Q. With that, in your opinion, do you think with the equally-shared agreement with all three utilities, then do you think then the utilities are actually reserving capacity of the 500,000 gallons?

A. Absolutely not because of the statement I just made to the Judge, that a utility, any of the three utilities, can request of another utility that has capacity a portion of that available capacity. So there is no reservation. And in theory, one utility could consume all half a million gallons.

Q. But what if that other utility says no, you can't get our allocation, then we do have reservation of capacity?

A. I don't think that this agreement allows for that but rather allows for each utility to have some reasonable methods to plan for future improvement within their own boundaries.

JUDGE GEORGE: We do want to be careful not to litigate tomorrow's case today and have to litigate it again tomorrow. So unless this ties directly into this CM project, let's move on to more fertile territory.

ATTORNEY ROBERTSON: Thank you, Your Honor.

BY ATTORNEY ROBERTSON: Q. Paragraph one of the City's Exhibit Number One (sic), that also --- that I guess from the original filing of the amendment to the sewer agreement, when Mr. Shingleton has added additional blowers and digesters with that, that's what he's added in there, that is the part, too, that has changed this project scope; is that correct?

A. Yes.

Q. With that --- and that's also what has changed the cost of the project?

A. Yes, in part.

Q. When you're saying in part, how do you mean in part?

A. You have to take the cost change in conjunction with the deletion or line out. If you just say it's changed just because of the blowers and digesters, it's changed certainly as a result of the removal of the effluent line.

JUDGE GEORGE: Did the project, as originally filed, have the effluent line going into the Shenandoah and it didn't have the blower and the digesters; is that right?

A. Yes.

JUDGE GEORGE: And then at some point along the line, they decided to put the blower and the digester in there as an addition; is that right?

A. At the request of the division Department of Protection.

JUDGE GEORGE: And then later still they decided they didn't need to move the effluent line to the Shenandoah?

A. I believe that's the process that took place, yes.


BY ATTORNEY ROBERTSON: Q. I believe you told Mr. Shingleton there was --- with this agreement that there was a three-prong approach or a --- I don't know how else to say it, but there was three addition of how this particular project would be paid for; is that correct?

A. Yes.

Q. Could you actually go through those? I believe that is ---.

JUDGE GEORGE: Well, we were saving that for Mr. Kunkle.

ATTORNEY SHINGLETON: Mr. Kunkle I thought might be the better witness. You can ask her, but ---.

ATTORNEY ROBERTSON: I would like to go ahead and ask Ms. Arnett, if I could.

JUDGE GEORGE: Keep it brief. I'm not going to listen to it twice. If the accountant is going to go into detail, I don't want you to go into detail.

BY ATTORNEY ROBERTSON: Q. Basically it's paragraph three in this amended agreement, the City Exhibit Number Four. Could you just briefly explain? I guess there's items that have A, B, that go through to generally explain --- these will all be like contributions towards the project; is that --- that's my understanding. Is that ---?

A. I think these are more than contributions. They're means by which the City of Charles Town pays this debt. The first is the capital improvement fee, which this agreement indicates is on appeal at the Public Service Commission. The second would say to the City of Charles Town in its calculations to take six hours and ten cents per every new equivalent dwelling unit that is connected and utilize with this half a million gallons of capacity and apply that $6.10 to the debt.

Q. And it's your understanding that that's something that Mr. Kunkle will expand on further as to the calculations?

A. Yes, as to the specific calculation.

Q. Okay.

A. Finally, the debt service on a monthly basis will be billed or charged, invoiced to Huntfield to cover both principal and interest that is not covered by the previous two paragraphs.

Q. Okay. With that ---.

JUDGE GEORGE: What happens if the Commission doesn't accept the capital improvement fee?

A. Then the project can be paid by paragraph B and C.


BY ATTORNEY ROBERTSON: Q. With those particular components we have A, B and C, the three components. Then can you tell me why we have paragraph D?



JUDGE GEORGE: Is it just a safety net, Ms. Arnett?

A. I think it's a safety net that was asked and requested by the Jefferson County Public Service District to be inserted so that perhaps the general manager of the PSD could be answer why their request was honored and this was placed in on behalf of the PSD.

BY ATTORNEY ROBERTSON: Q. So is it your understanding in reading paragraph D that if --- I'll say the calculations in A, B and C, if they actually come short as to the revenues needed, that then D will kick in?

A. Yes.

Q. And as the Judge said, that will be looking at really a safety net?

A. Yes.

Q. And with that, is it my understanding or your understanding with that then that will be passed on to all sewer customers of Charles Town, Ranson and the district equally?

A. Yes.

ATTORNEY ROBERTSON: Thank you, Ms. Arnett.

JUDGE GEORGE: Any Redirect, Mr. Shingleton?



BY ATTORNEY SHINGLETON: Q. In following up to Ron's question, let me give you a hypothetical. The project was goes forward, the money's borrowed, the economy goes to hell in a handbasket, Huntfield fails, the Letter of Credit is used up, there's still money owed on the project, there's no new customers, there's very few new customers. The debt service would ultimately have to be borne by the existing customer base; isn't that correct?

A. Yes.

Q. I believe further --- other witnesses are going to testify that if the improvements are made to the treatment plant but if you don't have any new customers, you won't have much of an increase in capacity of the plant; isn't that true?

A. True.

Q. Is it your understanding that the quality of the discharge at or about the same level as it is today the plan will result in a much greater quality and discharge that exists today at the plant?

A. Yes.

Q. And so that for those people who have said that they're in favor of the enhancement to the plant but not the expansion of the plant, without regard to the money, they would have what they wanted, which is a much, much higher quality of discharge of the effluent in the stream?

A. True.

Q. And I believe you have asked Mr. Kunkle to try to take up that scenario this afternoon and give some evidence of an estimate of what the rate impact would be?

A. Yes.

Q. But your understanding is the rate impact would be eight to ten percent?

A. That's correct.

Q. And your current customers pay what, about $18, $20 a month?

A. No.

Q. Today's tariff, not what's proposed, but today's tariff?

A. Approximately, yes.

Q. And so we think Mr. Kunkle is going to testify perhaps if the worst occurred, the improvements made, no growth was to pay for, you may be looking at, at least Charles Town's customers, at a $2 or $3 a month increase?

A. That's correct.

Q. To increase the quality of the district?

A. Correct.

Q. Now, although you did indicate that the way this project was designed, there should be no financial impact on Charles Town or the PSD or Ranson; isn't that correct?

A. That's correct.

Q. And that the financing --- this project was put together, the financing of it has been discussed with representatives of Ranson and the district ---

A. Yes.

Q. --- isn't that correct?

A. That's correct.

Q. And they've indicated their consent to the type of financing being proposed in this case?

A. Yes.

Q. Is it your understanding --- Mr. Burke asked a question of any personnel impacts, that there will be no increase in staffing at the plant as a result of this upgrade?

A. I believe that's true.

Q. And I believe that the initial Rule 42 Exhibit, as amended, has shown a line item --- I believe an increase of $90,000 for increased O&M expenses as a result of this project?

A. Which will be further expanded on by either the engineer or CPA.

Q. Mr. Burke, in his exhibit, had listed out some of the exceptions or the violations, excursions, if you will, on your permit. I'd like to touch kind of briefly on it, if you could, since you brought it up. The purpose of this plan expansion is really to --- I mean, its primary purpose was to increase capacity and to deal with demands; is that correct?

A. That's correct.

Q. Have the excursions that occurred in the past year at the Charles Town treatment plant in your opinion been resolved?

A. Yes.

Q. Can you tell us --- I'd like to take you through a little bit of history of the plant. But the plant was expanded in what, --- not expanded, but there was some retrofitting done in 2001?

A. That's correct.

Q. Money was borrowed and all three entities paid for it?

A. Yes.

Q. And the purpose of that 2001 improvement was what?

A. To enhance the operations of that plant so as to be compliant with the NDPES permit.

Q. You were having problems pre-2001 with meeting your discharge limitations; isn't that correct?

A. Yes.

Q. And the primary purpose of the 2001 improvement was to fix those problems?

A. That's correct.

Q. During the construction phase of that 2001 improvement, were there any excursions that resulted during that construction process?

A. Yes. During the construction period there were excursions as a result of unexpected difficulty with groundwater in that area as well as some soft water programs. With any new --- with any revisions or enhancements to an existing plant that must operate 24 hours a day, there are always going to be unforeseen difficulties. And we certainly had our share, including software problems as well as sewage, groundwater problems.

Q. In other words, during the construction process, you had to reprogram the software. Until you did it, there was some bugs in the software that led to some discharge excursions; isn't that correct?

A. Correct.

Q. After you've made the improvements of 2001, was there a time right after that when the plant experienced some difficulties resulting from the Staff getting up to speed on the differences with the new plant?

A. I believe so, yes.

Q. Can you think of any other particular items? Wasn't there a problem with the UV system?

A. We had a problem through the years since 1998 with the cleaning of the glass that surrounded the UV lights.

Q. Just for edification, your understanding, what does ultraviolet light do in a sewage treatment process? Do you know?

A. Well, it has the ability to kill off, if you will, the fecal coliform that would be discharged into Evitts Run.

Q. So ultraviolet light shines through a glass or a plexiglass of some type, through the waste stream, and it kills bad things in the waste stream?

A. True.

Q. You have to clean the glass with some type of a solvent?

A. That's correct.

Q. Did the plant realize the problem at that time in that area?

A. We have, over a five-year period, realized the problem, identified solutions and have now come up with a cleaner that does address this and has been effective since, I believe, January of this year.

Q. If I'm not mistaken, up until this last year, where you fixed the problem, you were following the manufacturer's recommended maintenance procedure for taking care of the equipment?

A. That's true.

Q. And it wasn't working adequately?

A. That's correct.

Q. How did you come to find a new method to clean the ultraviolet equipment?

A. We, in cooperation with another vender and supplier of chemicals, determined a solution that would, in fact, clean the glass to properly allow the UV lights to work.

Q. And since then, what has been the result?

A. Since then, I don't want to say we haven't had any luck. We have had no violations. I want to say we've had no violations as a result of iron buildup on a UV light.

Q. What is Nocardia?

A. Nocardia is, in layman's terms, a bad bacteria.

Q. And this sometimes gets in treatment plants?

A. It's noted for specifically SBR treatment plants.

Q. And did Charles Town's treatment have a problem with Nocardia infection?

A. Yes.

Q. And are you aware of what steps were taken to fix that problem?

A. The operators during times when Nocardia basically took over were able to identify a solution that allowed the plant to more quickly kill off, if you will, the bad bacteria. That solution has now been used by the DEP as a referral to other utilities throughout the state as a remedy for quickly removing the Nocardia when it does appear.

Q. So you've become the poster child for fixing Nocardia in West Virginia, how to do it. You're involved in a Circuit Court case right now where Mr. Lewis is representing Charles Town, in the Circuit Court of Jefferson County?

A. Yes.

Q. The Plaintiff is the Division of Environmental Protection?

A. Yes.

Q. And it has alleged these violations that we've just been speaking of over a period of time?

A. Yes.

Q. Are you aware, does that complaint allege any continuing violation of these specific types of complaints?

A. No.

Q. Does it allege any ongoing and/or continuing violation of any of your discharge permits?

A. No.

JUDGE GEORGE: Do you know what the DEP is trying to do? Are they trying to --- have they approached you in settlement and wanted you to do certain activities or improvements to the plant?

A. Not as a result of that case. It is preliminary, I would say, but there have been no --- the request of DEP to take immediate action on any of these items and I've been compliant to our best ability.

JUDGE GEORGE: So you don't know what the purpose of the DEP litigation is, I mean, as far as what they want you to fix?

A. They're not asking for fixes, Your Honor. They're asking, at this point, for civil penalties.

JUDGE GEORGE: You may proceed.


BY ATTORNEY SHINGLETON: Q. Mr. Burke, in his Cross, touched on the rate increase, that Charles Town City Council has adopted a rate increase for sewer customers?

A. Yes.

Q. At its last --- I think the second reading within its last council meeting?

A. That's correct.

Q. Is that rate increase in any way related to this project?

A. No.

Q. If this project were not to go forward for any reason, would the City of Charles Town's utilities or the sewer sites still need that same rate increase?

A. Yes.

ATTORNEY SHINGLETON: No further questions.

JUDGE GEORGE: Mr. Kelsh, any Recross?


JUDGE GEORGE: Mr. Burke, do you have any Recross?

MR. BURKE: Can I have one second to check this DEP case?


MR. BURKE: I don't have copies as I didn't think it would come up, but let me give this to Ms. Arnett ---


BY MR. BURKE: Q. --- and ask you to look at paragraph 15.

ATTORNEY SHINGLETON: Can you identify what that is?

MR. BURKE: This is the basic pages of DEP's complaint in Circuit Court. The actual complaint has a large package of violation reports, which I don't have copied here.

BY MR. BURKE: Q. Could you read 15, paragraph 15, and consider again whether DEP is concerned about continuing violations?

A. To tell you the truth, I'm not sure what this paragraph says. I would have to defer to an attorney on this one. I think your question might --- I don't know who you can ask, but I'm not aware in my own mind of any DEP requirement that we do something different today than what we did the day before this was filed other than they're seeking civil penalties for previous violations.

Q. Could you read the paragraph 15?

A. The City of Charles Town's failure to achieve the discharge limitations contained in the permit is a violation of the permit and the WPCA. Unless enjoined, these violations of the permit and of the WPCA will continue. Plaintiff is, therefore, entitled to injunctive relief, enjoining further violations and to appropriate civil penalties for each day of each violation, pursuant to Section 22 of the WPCA.

Q. Thank you.

MR. BURKE: Your Honor, would you like me to make copies of this over lunch?

JUDGE GEORGE: I don't think it's necessary.

MR. BURKE: No other questions.


ATTORNEY PARDO: None, Your Honor.


ATTORNEY GLOVER: No questions, Your Honor.

JUDGE GEORGE: Mr. Robertson?

ATTORNEY ROBERTSON: I have two quick questions for Ms. Arnett.


BY ATTORNEY ROBERTSON: Q. Ms. Arnett, was the reason for this sewer rate increase, was that attributed to debt service issues, this current rate increase?

A. In part.

Q. And then my other follow-up question is, is it more attributed to O&M?

A. In part.


JUDGE GEORGE: You may step aside.

A. Thank you, Your Honor.

JUDGE GEORGE: We're going to take a lunch break. According to my watch, it's 12 after 12:00. And at 12 after 1:00 I intend to start with or without anybody but the court reporter.


JUDGE GEORGE: It's time to go back on the record. I appreciate everyone's prompt return from lunch. Mr. Shingleton, you may call your next witness.

ATTORNEY SHINGLETON: Mr. David Choate, please.


BY ATTORNEY SHINGLETON: Q. Please give us your name, address, please?

A. David Choate. I'm with View Engineering, and address is 400 Professional Drive, Suite 380, in Gaithersburg, Maryland, 20879.

Q. Are you a licensed engineer?

A. I am a Professional Engineer.

Q. Give me just a brief summary of your professional and educational background?

A. I've got a Bachelor's degree and a Master's degree in environmental engineering. I'm a Registered Professional Engineer. And I've been with formerly Chester Engineers and View Engineering for approximately nine years, been doing work in and around for Charles Town for the last seven or eight years.

Q. My next question, you are familiar with the Charles Town wastewater treatment plant?

A. I am.

Q. Did you do some work on the 2001 ugprade to that plant?

A. Yes. I was the lead engineer on that upgrade.

Q. And with regard to this proposed project, what has been your involvement with View Engineering?

A. I've been the project manager, overseeing the design effort with regards to plan improvements.

Q. And so you were the person at View Engineering in charge of the overall --- being in charge of the implementation --- the drawing of the plans, filing, the preparation of all these facilities plans and so forth?

A. That's correct.

Q. And if the project is improved, you'll be the person overseeing the construction of the facility on behalf of Charles Town?

A. That's correct.

Q. I want to hand you some documents.

ATTORNEY SHINGLETON: First, if we could mark that. I suspect it's Number Six, Judge.

JUDGE GEORGE: I believe that's correct. We're marking the wastewater treatment plant facility plan addition as Charles Town Six.

(Charles Town Exhibit Six marked for identification.)

BY ATTORNEY SHINGLETON: Q. Do you have that in your possession?

A. Yes.

Q. Can you identify that, please?

A. Yes. This is the facility plan addendum we wrote with the name Chester Engineers in April of 2002.

Q. Okay.

ATTORNEY SHINGLETON: I'm going to ask, Judge, that this be marked as Charles Town Seven.

JUDGE GEORGE: I'm marking a facility plan addendum dated May 2004 as Charles Town Exhibit Seven.

(Charles Town Exhibit Seven marked for identification.)

BY ATTORNEY SHINGLETON: Q. And what is this document?

A. This was another facility plan addendum we did for the wastewater system, as View Engineering, dated May 2004.

Q. This came out as a result ---?

MR. BURKE: Excuse me.

JUDGE GEORGE: Do you have an objection?

MR. BURKE: On Charles Town Six there's a blank page.

JUDGE GEORGE: Very well. What page is missing, Mr. Burke?

MR. BURKE: Seven. I do have a copy if that's ---.

ATTORNEY SHINGLETON: Seven is this chart. Is everybody missing page seven?

JUDGE GEORGE: It didn't come out in the copying ---.

ATTORNEY SHINGLETON: I'm wondering if we could --- while I get these others introduced, if I could run back there and have somebody make copies of this one sheet.

JUDGE GEORGE: That would be fine. If we could stay on the record and keep going, that would be better.

BY ATTORNEY SHINGLETON: Q. Number Seven, the facilities plan addendum of May of '04 dated, that was required after the blowers and digesters were added to the project. Is that what that represents?

A. That's correct.

ATTORNEY SHINGLETON: I'm going to hand you what will be marked, I guess, as Eight, Judge.

(Charles Town Exhibit Eight marked for identification.)

BY ATTORNEY SHINGLETON: Q. Now, what is Number Eight?

A. Number Eight is the design manual, basically the engineering calculations associated with the stage one upgrades which were previously defined as both the blower and digester additions at the treatment plant and also the effluent line to the river.

Q. Tell me in layman's terms what does this project now consist of? What are you going to do? What's proposed to be done at the treatment plant?

A. We're going to add two blowers to the SPR system, basically the same size as the existing three blowers, which will basically provide supplemental oxygen to the SPRs as needed to both handle additional incoming loading as well as future capacity. In addition to that upgrade, we're going to be also replacing the dissolved oxygen, analyzers and controllers. And then on the solids handling side of things, we're going to be adding an approximate 600,000 gallon aerobic digester to enhance digestion and reduce the total amount of solids.

Q. How does a sewer plant work? Can you tell me? Do you got little bugs that eat the sewage, is that what happens?

A. This particular facility is --- produces bad reactor, basically three basins. There are active bacteria in each one of those basins. The wastewater comes in, goes through a headworks process to take out grit and then there's a fine screen to take out any floating solids, large floating solids. Once it comes into the reactor, the bugs basically consume a portion of the pollutants in the water, effectively remove the BOD concentration, the ammonia nitrogen. Those then are taken into the cell, past the bugs, the bugs are then allowed to settle and green water is decanted off the top and sent through the disinfection process before it's discharged in the stream.

And then on the solids handling side, those bugs only have a certain lifespan basically. They need to be continuously wasted to allow more room for more bugs to grow. And they're sent to a digester, ultimately to the process that presses them into a fine cake.

Q. Now, does the City of Charles Town have what from the Division of Environmental Protection at the present time a waste load allocation to make discharges into Evitts Run?

A. They do. Their existing permit is essentially an allocation of pollutant discharge. They're allowed to discharge a certain amount of mass pollutants of various waste characteristics who have inspected their waste load allocations.

Q. Defined as so many pounds per day or --- is that the way it's ---?

A. That's correct.

Q. Will these plan upgrades and the expansion of this plant by 500,000 gallons a day require a new waste load allocation?

A. As I understand it, no. A permit modification will be required because there's going to be an increase in flow going through the treatment plant and there's going to be a change to the process. But the amount --- the massive pollutant that's discharged at Evitts Run will remain the same. As a result, as the flow is increased, the required effluent concentrations will decrease proportionately such that the total mass discharge will be constant or less.

Q. This project started out, if I'm not mistaken, by building an effluent line to the Shenandoah River; is that correct?

A. That's correct.

Q. When did that process begin, at least in your mind, as far as --- began the preliminary design?

A. It really began before we did the last upgrade, when we were in the original planning process. Prior to the 2001 upgrade, we were looking at expanding the facility to handle flow for the next 20-plus years in the service area. At that time, the plan documents went in for the effluent line. The decision was made not to expand the facility at that time. At that time, the effluent line was essentially set aside and we just focused on the upgrade to the facility, maintaining the current 1.2 MGD capacity.

Q. As the project is now put together, we're going to stay on Evitts Run, why was the project --- why did you stay on Evitts Run from day one?

A. There was previously a water quality standard with regards to primarily nitrogen that really made it extremely stringent to increase the discharge to Evitts Run in terms of any additional capacity going to Evitts Run. It made it more economically feasible to basically pipe the effluent to the Shenandoah River, a much larger body of water. But at that time, the water quality standards that were in place, was allowed a higher, more of a discharge limit.

Q. And another witness is going to testify later, but do you understand that the water --- that these limitations established by the state have changed?

A. That's correct.

Q. And as a result of that, that it now makes economic sense, as well as qualitative sense, to remain at Evitts Run?

A. That's correct.

ATTORNEY SHINGLETON: Before I continue, Judge, this is the missing page for Exhibit Six.

JUDGE GEORGE: Let's mark it as Exhibit Nine.

(Charles Town Exhibit Nine marked for identification.)

JUDGE GEORGE: You may proceed.

BY ATTORNEY SHINGLETON: Q. In these documents, Mr. Choate, you made reference on a couple of occasions of BOD and planning or designing of the plant to meet certain BOD levels. What is BOD?

A. BOD is a waste characteristic that essentially measures the oxygen demand that would be consumed in terms of milligrams per liter by active bacteria in the wastewater. And that test is measured over five days. Essentially at the start of the five-day period, we measure the dissolved oxygen levels in a sample bottle of water and put it in a controlled environment, and at the end of five days you measure how much that dissolved oxygen level has dropped. And then from there you can do a calculation to determine the BOD of the wastewater. It's a very representative waste characteristic of sewage, one of the main design criterias.

Q. If you can remember, what were the design characteristics of the 2001 upgrade? Do you recall what those were?

A. In terms of influent B or D concentration, we use a value of 400 milligrams per liter, based on the statistical analysis of the influent waste characteristics of the previous years leading up to that upgrade.

Q. Did history prove that that level 400 was an adequate level?

A. The level of 400, in terms of published levels, if you will, or on textbook characteristics, that represents extremely strong wastewater. At that time we believed it to be a very, very conservative number. The previous design was designed to give you about 175 milligrams per liter, so certainly a conservative level. We used that same design criteria in our initial draft plan documents for this next upgrade.

In, I believe, late 2003 DEP came back to us and said no, in the last calendar year we've observed even higher values than 400. They want us to use a higher value. So as a result, we've used new design values of 500 milligrams per liter BOD. Also, our suspended solids concentration increased to 350 milligrams per liter.

Q. Now, your reports make mention of the fact that there have been occasional spikes in BOD with that plan, as high as 900; isn't that true?

A. I believe in excess of 900 on some occasions.

Q. In your design of this, of these proposed upgrades, how have you taken that into account?

A. Basically the design is --- when you design a facility, you're designing to your high end of your average loading. If you get spikes in BOD, the bugs that are in those reactive basins, they will consume that BOD. There may be a short term sag in oxygen in the basin, but basically your design criteria is to make sure you have enough oxygen on a long-term basis that you can sustain those bugs. Those bugs live in an aerobic environment, and you need to kill oxygen on a long-term basis. But the spikes of the SPR reactors are designed to handle those spikes and can effectively treat higher BOD coming in. Basically, will consume that BOD, BOD per cell mass, per cell growth, within the basin. It's going to increase --- you may have to adjust your sludge wasting on a long-term basis. But you know, short-term spikes in BOD have not impacted SPR noticeably.

Q. This plant is designed to have how many basins in it?

A. Three.

Q. I'm trying to phrase my question that I can understand it and everyone else. Does the wastewater coming into this plant move literally just through like one channel or does it get split up into more than one channel?

A. The wastewater that comes in is split between three basins. So it flows to all three basins. It's split evenly within the basins. They're completely mixed reactive basins outside of very small selectors on the front of the basins. Once they get into the main part of the basin, they're completely mixed. So essentially any high, heavy loading that does come in, you also have the impact that that's going to be essentially diluted. You've got basically, roughly, a 24-hour detention on an average basis within those three basins. So you know, any very short-term spike when BOD comes in will effectively be dammed out over the course of 24 hours because you have normal daily fluctuations in the BOD. It's very typical.

Q. So the BOD's occasional spikes, I think you were testifying you got two ways to deal with this spike. One is you're going to separate influent into three basins so that everything is not --- any given slug of sewage, if you will, in one ten-minute area is not going to go through the plant as one unit. It gets diffused into three different units?

A. That's correct.

Q. And then those basins will retain, on average, the water in there or the sewage in there for a 24-hour cycle?

A. That's correct.

Q. And those two will have the effect of diffusing any spikes that you might have?

A. That's true.

Q. Is this plant going to be operated manually or with computer systems or how will the thing be operated?

A. The system is essentially fully automated in the sense that there's a --- we'll call it a PLC, or programmable logic controller, that automatically sequences through each one of the SPR reactors. Each basin is set up to aerate for a period of time, then the air is shut off to that basin, the bugs are allowed to settle, and then the decanter acts --- kicks in. During the decant cycle, the clean water is decanted off the top of the basin. That essentially completes the cycle. From there it shifts to the next basin. So all three reactors are essentially in a different phase of that cycle at any given time. And the computer will basically control the sequencing of all those basins as it goes around the clock, 24 hours a day, 365 days a year.

Q. I should have asked you this earlier, but the purpose of these blowers is to increase --- is to do what?

A. The blowers provide oxygen to the bacteria that are in the reactors.

Q. They literally blow air into the water?

A. There's a series of diffusers along the bottom of each reactor. Basically the air is --- the blower, if you will, essentially a compressor, blows air through piping into a series of diffusers. The diffusers bubble up air through the reactors. That dissolved oxygen that's in that air is basically absorbed by the bugs that are in the reactor as it bubbles up to the surface.

Q. And more oxygen does --- what's the effect of having more oxygen in this soup, if you will.

A. Well, on a long-term basis, you need to provide enough oxygen to sustain a healthy bacteria population in that basin. If you had a pollutant coming in, BOD being one example, that was basically --- the BOD coming in was in excess of the oxygen that the system could supply. Over a long-term basis, your dissolved oxygen levels would drop. You would have --- your bacteria population essentially would become unhealthy. You'd get organisms growing in there, filaments, bacteria. Different types of bacteria don't settle as well as what's considered a healthy population of sewage bacteria. And your performance of your treatment system goes down. So basically the additional oxygen that's being provided as part of this project is essentially a safeguard against the higher BOD loading that's been observed over the last year.

Q. The existing equipment --- the other parts of the plant that exist today, will they be adequate to service up to 1.7 million gallons a day of influent into this plant?

A. Yes. As part of the facility plan, the May 2004 facility plan, we basically go through on a unit-by-unit basis the entire treatment facility and analyze it, whether the capacity of each system is going to be adequate for the higher flows. And the short answer is yes. The headworks influent pumping, disinfection, all that is adequate to handle the additional flow.

Q. What is a belt press?

A. A belt press basically takes digested sludge and takes it from approximately a one to two percent solvent concentration, basically presses the water out of that sludge, gets it up into the range of 20 percent or greater of solids, essentially reducing the total volume of sludge that needs to be ultimately disposed of.

Q. I believe the meeting you're referring to --- you calculated that the existing belt press would be adequate to handle this additional flow up to 1.7 MGD?

A. That's correct. There are some operations that have been increasing a little bit. Basically, with these upgrades, by adding the aerobic digester, a supplemental aerobic digester, the quality of sludge we expect during the belt press would be dramatically increased. Right now, it's fairly watery sludge that's sent to the belt press, which is essentially limiting the amount of sludge we can send to the press. The press is graded basically with two regards, both hydraulically from the hill, that can be pumped through the press, and also solid fluid, how many gallons per hour can be pushed into the press. Right now, we're essentially limited by the gallons per minute that can be sent to the press. Once we get better, thicker sludge onto that press, we're going to be able to process more pounds per hour and the existing press will be adequate to handle each flow.

Q. In designing the present upgrade proposed in this project, have you taken into account the future scenario of the remaining tertiary treatment, number one? And number two, we're going to have to eventually deal with the Chesapeake Bay issue regarding nitrates and ---. Are those items that you've taken into account in laying out the design of this plant?

A. Yes. The SBR reactor is to ultimately be retrofitted to handle, you know, any Chesapeake Bay requirements that may ultimately come about. Supplemental mixers will be need to be added --- chemical addition. So nothing that's being proposed as part of this project is something that can't be essentially reused down the road, even if those cases need to be retrofitted. With regards to any tertiary treatment that's required, it's a limited site. Ultimately, tertiary treatment will be required on that site. You know, we need to think about how well that's going to fit on the space. It is going to be very tight, restrictive stuff.

Q. In fact, it may require --- eventually, they could require the acquisition of more water?

A. It very well may, yes.

Q. Are any federal licenses required --- have they been required in improving the construction or operation of this plant that you're aware of?

A. Not that I'm aware of.

Q. So the State will issue all of the licenses that need to be issued, one of them will state dates?

A. Yes, sir. I believe that's correct.

ATTORNEY LEWIS: I'd like to mark this, Your Honor, as whatever the next exhibit is.

JUDGE GEORGE: Exhibit Ten.

(Charles Town Exhibit Ten marked for identification.)

BY ATTORNEY LEWIS: Q. I'm not sure if you've seen this because it just came in. Would you take a moment and examine that? I just want to ask you a couple questions about it.


A. Okay.

BY ATTORNEY LEWIS: Q. You read that document. Can you tell me what it purports to be?

A. It is a granting of a permit to upgrade the existing waste water treatment plant from 1.2 million gallons per day to a 1.75 million gallons per day facility.

Q. You understand that the West Virginia Bureau of Environmental Health Services has to issue a construction permit to make the proposed improvements?

A. Yes.

Q. And that's what this is from the Health Department?

A. That's correct.

ATTORNEY LEWIS: No further questions.

JUDGE GEORGE: Mr. Kelsh, Cross Examination?



BY ATTORNEY KELSH: Q. Mr. Choate, what is the expected construction time for this project from beginning to end?

A. At the time the notice was issued --- received records, construction time is probably in the six-month time frame.

Q. Okay. There has been an expectation that this project will be completed and operational by December 2005. Do you believe that deadline can still be met?

A. Well, anything that happens between now and when the notice to proceed is issued --- and that's certainly something that I don't have a lot of control over, but if notice to proceed is issued by the spring of 2005, that's certainly something that could be met.

ATTORNEY KELSH: Thank you. That's all the questions I have of this witness.



BY MR. BURKE: Q. Mr. Choate, will there be extra pumping costs?

A. Pumping costs associated with this cost on an annual basis, is a very, very nominal --- when I say nominal, I mean less than $1,000 per year, there will be substantially additional electrical costs associated with blowers with regards to the new digester that is proposed.

Q. About how much are we talking about?

A. I believe we calculated the cost to be approximately $83,000 per year, on an annual basis.

Q. I notice $90,000 in the category of disinfection supplies --- what's the word there? Does that include the electricity?

A. I'm not sure what falls into that category of disinfection supplies.

Q. Okay. Do you expect substantial disinfection supplies in a literal sense?

A. No. If you look at the additional O&M costs associated with this project, the vast majority of the cost is the electrical cost I mentioned in regards to the blowers. We also expect there will be potentially an actual decrease in cost initially with regards to sludge disposal and lime. I think he said lime, because we ultimately will have less --- fewer solids processed in the facility.

Q. The only pumping that I could think of that would be extra would be pumping it up into this 30-foot above ground digester; am I right in my understanding?

A. That's correct, yes.

Q. And when you say pumping would be less than $1,000 in electricity and $3,000 for the blowers --- what is the pumping cost to pump it up into the digester?

A. Less than $1,000 per year.

Q. And are you talking about electricity here or where it turns the pumps?

A. Electrical pumps, yes.

Q. That's also included?

A. Yes.

Q. What about maintenance?

A. Maintenance that's --- there are two existing pumps that are currently operated right now, the two sludge pumps we have. There wouldn't necessarily be an increase in maintenance costs associated with those pumps above and beyond what the maintenance costs are today. And I'm not exactly familiar with the specifics of the maintenance costs outside the power consumption costs. That's the only thing I can speak to.

Q. Do parts of the pump wear out and need to be renewed?

A. Sure.

Q. And so that's when you increase your spare parts issue, the labor?

A. It shouldn't. It shouldn't. We are not adding any additional sludge pumps. We're reusing additional sludge pumps that are operated on a regular basis right now. We have an existing aerobic digester there. We have existing sludge pumps with the presses all there. And we'll be adding a supplemental aerobic digester.

Q. I thought the current sludge digestion basins are kept on record.

A. From the SPRs to the digesters, we then pump from the existing digesters to the belt press.

Q. So you will now pump to new digester?

A. We will pump --- no. We still flow by gravity to the existing digester, use that as essentially the first stage of the digestion process. From there, pump to the new digester.

Q. So that's it? And that's more pumping than you have done?

A. Well, yes. But from there we can see that very little pumping comes from this digester to our old pumps.

Q. The digester, does it have its own maintenance costs, repainting, seals?

A. Really, no. No. It will be a fiberglass --- or glass-lined steel tank. It doesn't have any repainting costs associated with it. We're going to be using course bubble diffusers, which have an extremely long life cycle. The blowers will have some O&M costs associated with them in terms of greasing them, spare parts, belts, that type of thing. Not substantial.

Q. What is the life expectancy of the digester and blowers?

A. Certainly 20-plus years, if not 30-plus years.

Q. Do you have to repaint the outside of the digester?

A. No.

Q. What is it?

A. As I mentioned, it's a glass-lined steel tank. It's basically the process of essentially chemically bonding in a factory this glass coating to the steel shell of the tank, and then it's bolted together. It's a non-painted tank.

Q. You've said a couple times, glass-lined.

A. Yes.

Q. Does that mean there is glass bonded on both the inside and the outside?

A. That's correct.

Q. Thank you. That was my misunderstanding.

A. Okay.

Q. So if it lasts 20-plus years, there needs to be a reserve of some sort, say, 120 per year for replacement?

A. I can't answer that. I think that would have to be reserved for the panel.

Q. Are you familiar with the recent tariff increase and what it would be used for in terms of operations and maintenance?

A. No. And believe me, I'm familiar with the specifics of how it will be applied.

Q. The PSC checklist has an item, 3C, which says the project related adjustments to operation and maintenance have to be supported by detailed engineering calculations. Have you provided those in any of the filings?

A. Engineering calculations have been provided to the city's account in preparation of these exhibits. I'm not aware of any that were submitted directly to the PSC.

Q. And that's detailed in the engineering calculations?

A. That's correct.

Q. Item 14G says a detailed O&M budget --- no, that wouldn't be G. Yes, G, description of all maintenance requirements. Have you prepared or have you seen a description of the maintenance associated with this project?

A. No, I can't say that there is a detailed listing of the maintenance requirements. Certainly the upgrades are outlined in the planning documents, which explain all the improvements that are required.

MR. BURKE: Could we hand him Burke Exhibit One?

BY MR. BURKE: Q. Could you familiarize yourself with --- did you look at this?

A. I did.

Q. All right. Could you explain why you discharged ammonia higher than the permit limits in the past two years?

A. I speculated more than here because --- I can't answer specifically what the exact cause of this was. But I can say with quite a bit of confidence that the ammonia violations that occurred in January, February, April, 2003 were the result of filamentous bacteria that developed in the basins that basically prevented adequate treatment in those basins. That situation has since been corrected. With regards to the suspended solids ---.

Q. No, let's stick just with ammonia.

A. Okay.

Q. This year, there was a nine-week period that just shows up there as one set of whole numbers. As a matter of fact, the DEP inspector said nine weeks. What was the reason for this here, if it was not the filamentous bacteria?

A. There could be a number of factors that could cause that violation. It could be not enough oxygen provided. It could be misbalanced --- a mixed liquid concentration in the basins. So there are two things that could potentially cause that. It could've been some other pollutant just came in and caused the process upset and it caused the system basically --- it took a couple months to basically bring us all back online.

Q. Why does it take that long to come back online?

A. It's a biological system, as essentially every other waste water system out there is. It takes a while to ultimately grow and produce a mature, healthy population.

Q. Is there any way to speed up that process? The recovery process is what I'm talking about, after an upset happens.

A. Really, it just takes time, more than anything else.

Q. Would heat help in winter?

A. That kind of bacteria are extremely sensitive to the cold temperatures, but as it gets warmer, their reaction time goes up substantially. But to keep the actual waste water as narrowly a feasible amount in a feasible process, the amount of waste water coming in and just the kinetics involved with taking a tremendous amount of energy. That's what you're ultimately getting at.

Q. You're saying it would help the process, but you're suggesting it would be too expensive to do or worthwhile. About how much would you --- what's the difference in temperature of these basins in warmer months versus colder months, because presumably the liquid coming in from the ground pipes is about the same temperature all year round?

A. No, sir.

Q. No, it's not?

A. No. In the winter months, your average sewage temperature could be in the neighborhood of five to eight degrees Celsius; in summer months, 20 degrees Celsius, 23 degrees Celsius.

Q. Would heating the air be more practical than heating the liquid?

A. That ---.

Q. The air that you're blowing through so that the bacteria, when they consume the air they get a little bit warmer?

A. No. You --- the transfer efficiency of heat between air and water is --- it would take a tremendous amount of air.

Q. You'll notice that in July, the ammonia concentration peaked at --- yes, at 13.2, where the limit is 11.9. Do you know why that happened in July 2004?

A. Right. Again, that's on a --- that column represents, presumably, a daily max. Why it peaked up for a single day, I certainly can't comment on it with regards to that. I was not at the facility. I don't know specifically what may have happened in the operations that particular day. And for the month, it was within the permit limits.

Q. Isn't there a permit limit on the maximum?

A. There is on a weekly basis. I don't know what this column represents. It just says mass.

Q. This is as reported on the Charles Town discharge function report, the maximum of the four monthly readings that were taken.

A. Again, with regards to specifics on that month, I can't comment. Again, I mentioned it could've been not enough oxygen. It could've been an upset at the mix liquor. It could've been something that came down the pipe that caused the process to upset.

Q. Do you know how often the effluent is tested each month?

A. We have an online sampler that continuously pulls samples and produces a composite sample, and I believe that's sent out on a daily basis. That is what the permit requirements are. I could be wrong on the exact sampling requirements.

Q. I can lend you the permit if that will help refresh your memory.


A. Flow is continuous ---.

BY MR. BURKE: Q. Ammonia is all I'm asking about.

A. Ammonia requirement is once per week.

Q. So if at least one of the observations was at this reported 13.2, is that taken to mean that approximately a quarter of the time? Is that intent of four samples, that they represent the whole number?

A. Statistically, I don't know if you could make that statement. I am not sure what the intent of the permit requirements are. That's something ultimately DEP issues. They determine the sampling frequency requirement for each particular facility.

Q. In April, Charles Town said that there was a week's delay in finding the in-house testing. Because there was no in-house testing, there was a week's delay in getting the information as our next set of testing is now done in-house. When something like this permit excursion happens, do you get notified?

A. The superintendent of the waste water plant and I speak on a regular basis, so there's no formal process for notifying me, but I'm generally aware if there's an upset.

Q. Were you aware of this upset?

A. I can't recall specifically.

Q. It was just last month.

A. I was out of town. To be perfectly honest, I was out of town quite a bit last month.

Q. And in June, as I again mentioned earlier, Mr. Lewis' letter said that the City would monitor the effluent to identify any irregular discharges. Have you seen any of that effluent monitoring results? Ammonia we're talking about.

A. Since June, I'm not aware if I have.

Q. Okay. I think Ms. Arnett had not seen it, and you have not seen it. Do you know who would have seen it?

A. No, sir., I do not.

Q. BOD, and you talked about the current plant after the upgrade can handle BOD averaging 500 parts per million. Am I understanding that correctly? That's shown up in this February letter that is Charles Town's Exhibit Three.

A. Right. I should note the two blowers that are going to be added ---.

Q. I'm just talking right now.

JUDGE GEORGE: You asked him after the upgrade.

BY MR. BURKE: Q. Oh, I mean after the 2001 upgrade.

A. That's correct.

MR. BURKE: Thank you for the clarification.

A. Yes.

BY MR. BURKE: Q. So it can handle 500 parts per million?

A. Yes.

Q. Okay. So why didn't the plant exceed --- the upgrade happened when? Am I right, it was 2001?

A. It came online late 2001.

Q. Okay. So between November '02 and May of '03, the plant exceeded permit limits for BOD nine times. Why, since it's supposed to be designed to handle this waste stream?

A. Again, I think most of these excursions can date back to the problem I had with filamentous bacteria, which caused a problem at the settling plant, which was ultimately a result of initial operation, when it was brought online late 2001. Winter of 2002 may not have been a certain representative winter and the system was really bringing itself up to speed. The population --- the bacteria population there was growing. It may have taken until the winter of 2003, when you have extremely cold temperatures, when bugs are more susceptible to process upsets, to notice a process upset. The operations group is responding accordingly and, you know, for the most part addressed filamentous bacteria problems. With regards to individual months when there may be excursions, you know, it could be, again, a matter of an upset in the level of mixed liquor that the operator needs to adjust to to inhibit settling, could cause a BOD excursion.

Q. What is mixed liquor?

A. Mixed liquor is basically the colony of bacteria in the reactors.

Q. In the SPR basins?

A. Uh-huh (yes).

Q. In February, related to this Charles Town Three letter from DEP, you --- or I guess it was Chester at the time, calculated that the current plant can meet the 500 BOD limit?

A. That's correct.

Q. How much safety margin is in those calculations? And I have them if you need to review that document.

A. Sure. I'll take a look at it.

Q. It's a thick document. I think it's only one page, but I'll let you see what you need to see in that.


A. To give a short answer to that is really impossible. There's safety factors that apply to each one of the variables throughout the process. There's a safety factor, for example, applied to the effluent conditions that are used, into the kinetic reaction rates. So all those safety factors are kind of inherent in the complex set of equations. It's not essentially one set of equations that spit out the magic answer, if you will, on how much air to supply. So, you know, there certainly is safety factors in the effluent conditions and the kinetic values that are used.

Q. Let me take that back so it doesn't get lost. Thank you. The October 1997 facility plan, with lots of addendums --- now I'm asking about the very original facility plan.

A. Okay.

Q. It says, operators are unable to hold an optimal food to microorganism, F to M, ratio, because the influent loading rates are constantly changing.

A. Okay.

Q. Does that sentence make sense to you?

A. On a short-term basis, that may be true. On a long-term basis, you're basically --- one of the primary goals of an operator is to adjust its liquor levels to maintain an F to M ratio at a reasonable range. At that time, they did not have any digestion to speak of. They had an inadequate belt filter press. They really did not have the ability to remove solids at the rate they needed to from the plant and couldn't make those adjustments. So the food portion of the ratio, F to M is food to mass, that is always going to fluctuate. It's the operator's job to control the M portion of the ratio. And at that point in time the operators really did not have that flexibility and ability.

Q. So as I understand what you're saying, a peak of high strength effluent comes in and you need more organisms to digest it. But you can't keep those organisms there all the time with that high level, because then you'll have a trough of the influent and there'll be too many organisms?

A. Right.

Q. You need the organisms to match what's coming in?

A. Right. It's available to a lot of different variables.

Q. How do they adjust the number of organisms or the mass of the organisms?

A. The number of organisms will naturally grow. If you have your BOD increasing, your food portion of the ratio is increasing, the bugs will naturally grow at a very fast rate to account for that increase food ratio.

Q. In a matter of minutes, hours, weeks?

A. In a matter of hours, to days, to weeks, ultimately. You never, in a waste water treatment plant, want to make quick, sudden adjustments. It's really an art, if you will, and you make lots of planning between adjustments. So if they see those BOD concentrations go up or go down over an extended period of time, you adjust your mass accordingly. There's a lot of other factors that play into it, and see how well your sludge is settling, calculate your sludge age, look under a microscope at the population of your bacteria, see how healthy they look. And all those factors factor in on how much sludge you're wasting. So it isn't a --- there isn't an easy answer to that question either, unfortunately.

Q. It sounds like you don't adjust it hour-to-hour. If this week's BOD is higher than last week's, they'll raise the population. But if this hour's BOD is higher than an hour ago, they don't try to manipulate it that fast?

A. No, that's correct. You don't even have that type of feedback necessarily initially anyway.

Q. Is it possible to measure BOD on the influent on a continuous basis?

A. No. BOD is a five-day test. Once you pull a sample, you're going to send it to the lab, and it's going to take them five days to run it.

Q. Your main plan ---

MR. BURKE: Judge, this is Charles Town Seven.

BY MR. BURKE: Q. --- says that five out of the 60 observations of influent BOD were outliers over 900 parts per million?

A. Uh-huh (yes).

Q. So that's eight percent?

A. (Indicates yes).

JUDGE GEORGE: You need to respond verbally.

A. Yes.

BY MR. BURKE: Q. Will the new system be able to handle those peaks eight percent of the time?

ATTORNEY LEWIS: It's asked and answered on Direct. I believe he's already testified how it works.

JUDGE GEORGE: I'll give him one time to ask that, but he's already asked that and he's answered it. You can ask it one more time.

BY MR. BURKE: Q. I'm asking about the over 900, if they happen every 12 days?

A. Yes, the bugs will consume that BOD coming in and over a long-term basis, there needs to be enough oxygen to support that bacteria population in the basins.

Q. Can you cite two or three permit numbers, or maybe you can provide them for the record, where this iceas-type --- for the reporter, that's I-C-E-A-S, it's a type of plant. This iceas-type of plant handles that much BOD that often. Some examples.

A. No, I can't offhand.

Q. Have you, in the past, obtained that information, specific examples of working plants in permit histories?

A. This facility has a historic high-level influent of BOD. In my experience, the average BOD coming in is higher than any other municipal plant I've ever seen. Statewide, regardless, though, the ---.

JUDGE GEORGE: Can I have an explanation for that? I mean, do we understand why it's such a high level?

A. No. Dating back to the mid-'90s, we've done a sampling program throughout the system to see if we could identify a particular source. We could not. I mean, it's really pretty much system wide.

JUDGE GEORGE: Very well. Go ahead.

BY MR. BURKE: Q. In February this past year City said you were, again, sampling around the system to find BOD sources. How many samples have been taken and what are the results?

A. I do not know that. City personnel was going about doing that sampling.

Q. Do you know how often any of the three utilities inspects restaurant grease traps?

A. No, I do not know that.

Q. Is it right that a malfunctioning grease trap or a lack of a grease trap would let grease out that would show up as a high BOD?

A. Assuming you increase your oil and grease concentrations, whether it would actually increase BOD is probably a subjective answer. To a certain extent, possibly yes, depending on the type of oil and grease. There has not been significant evidence at the treatment plant of an ongoing grease problem, no.

MR. BURKE: I'd like to have another exhibit marked as Burke Two.

(Burke Exhibit Two marked for identification.)

BY MR. BURKE: Q. This is the sewer system evaluation survey from October '97 done by Chester, so done at the same time as the facility plant.

A. Okay.

Q. I'll wait until you get a copy. Would you turn to page one?


ATTORNEY SHINGLETON: Your Honor, this documents speaks for itself. It's dated October 1997. It was almost seven years ago. I'm wondering the relevance of today's ---.

MR. BURKE: There were recommendations in here for dealing with the influent problems, serious influent problems, serious pollution problems, and I want to check if those recommendations are now --- have been carried out.

JUDGE GEORGE: This is a hearing on the pending application for a Certificate of Convenience and Necessity, and it seems to me that we're spending an awful lot of time on particular environmental issues in the past, and now we're getting farther and farther into the past. I'm not sure of the relevance. Do you have a response?

MR. BURKE: The relevance is I'm trying to show that they are not managing the plant in a thorough enough way based on even their own recommendations to prevent pollution, and therefore should not be trusted with a 46 percent increase.

JUDGE GEORGE: I'll let you inquire briefly.

MR. BURKE: Thank you, Your Honor.

BY MR. BURKE: Q. On page one, the last paragraph, about the middle --- fourth line, the last word before the fourth line, Chester recommends that these defects be adjusted. And before that, it talks about non-leaking, cracked or broken pipes, numerous sewer segments with organic grease and debris. Chester recommends adjusted and a regular sewer line cleaning program be established by each jurisdiction. Well, has that been done?

A. I'm not aware. I don't know.

Q. And you are a consultant to two or three of the jurisdictions?

A. We are a consultant to two of the jurisdictions. But with regards to their day-to-day operations, we don't oversee that.

Q. And on bacteria, why did the plant exceed bacteria limits December 2002 to December 2003?

A. I believe that was previously addressed. The conclusion was that there was essentially fouling of the lenses in the disinfection system. We switched cleaning agents and the situation has started to alleviate itself.

Q. Does the plant still have a bypass to divert flows over three million gallons a day into Evitts Run without treatment?

A. There is a bypass in place with a flow meter installed on that line. A flow meter was installed as part of the 2001 upgrades. Basically, to reach a level where flow would ever enter that bypass with a hydraulic profile, most of the facility would have to be entirely flooded out before we would ever bypass into that pipe.

JUDGE GEORGE: Has it happened since you installed the flow meter?

A. As far as I know, it's never happened since the flow meter's been installed.

BY MR. BURKE: Q. Do you know at what level it reaches the bypass, what level it ---? In other words, talking about incoming flow, if it's too much for a minute or an hour, or if it goes to the bypass, what's the instantaneous rate that would hit the bypass?

A. The effluent waste water pumps are designed, all the headworks are designed to handle in excess of 4.8 MGD, the lowest capacity of the headwork system on the effluent pumps. So above 4.8 million gallons a day, in theory the system may start to back up. But again, there's storage capacity in excess of that such that, before it ever backs all the way up to the point of overflowing a weir and entering the bypass, it would be well, well in excess of 4.8 million gallons a day for a sustained period of time.

Q. So was that weir changed after this October '97 plan? Because at that point they said it was a three million gallons a day instantaneous?

A. Yes.

Q. Thank you.

A. The downstream process was changed to handle higher flow.

Q. The bypass does still exist. Do you have an NPDES permit for it?

A. The bypass goes to the existing effluent pump station, and I believe it's addressed in their existing NPDES permit.

Q. And the permit lists the equipment at the plant; right?

A. For the most part, it gives somewhat of an inventory of the equipment, I believe.

Q. Does it mention this bypass?

A. Again, I ---.

Q. Could you refer to the first page ---

A. Sure.

Q. --- where it lists various items in the plant. Is the bypass listed there?


A. I don't see it on this first page, but that's not to say it's not on the 50-plus pages of the report.

BY MR. BURKE: Q. Understood. When this project is built, will the blowers and digester need to be added to that first page also?

A. Presumably, yes.

Q. Are you familiar with the federal law called the Clean Water Act?

A. Yes.

Q. And to your understanding, when you get a State Water Pollution Permit, is it a permit under the National Pollutant Discharge Elimination System?

A. It is issued by the State, titled the National Pollutant Discharge Elimination System Water Pollution Control Permit.

Q. Thank you. Do you know what the permit limits on sludge will be under the Chesapeake Bay Program?

ATTORNEY SHINGLETON: Objection. It's irrelevant to this hearing. We're not designing this plant or proceeding today to meet the Chesapeake Bay discharge limits.

MR. BURKE: On Direct Examination ---.

ATTORNEY SHINGLETON: Well, yes, I said it was designed --- it could be installed. But that's not --- we don't have to meet that standard, though.

JUDGE GEORGE: I think you asked the witness if he knew what the standards would be, and he'd have to have a very good crystal ball to predict future standards, I mean, in exact detail that you ask him the question. I do think it's an improper question. Why don't you move on?

MR. BURKE: Thank you.

BY MR. BURKE: Q. Are you involved in the review of new collector pipes?

A. I didn't hear, Paul, new ---?

Q. New collector pipes.

A. Our firm does do plan review for the City, for new subdivisions within their service area.

Q. And for Ranson, also?

A. Yes, for Ranson, also. I'm not sure if we review all the plans for Ranson.

Q. Do you have or require fine scale mapping of subsidence zones to avoid them with pipes so we don't get a situation like Mr. Baty presented?

ATTORNEY KELSH: I don't see the relevance of this.

JUDGE GEORGE: I sustain that. I was going to move even without an objection. I mean, this is not a case that's involving collection lines. This is a case that's involving an upgraded treatment plant. Inquiring as to whether Mr. Choate's involved in designing collection lines and whether he's avoiding sink holes is simply irrelevant, so you need to move on.

BY MR. BURKE: Q. Will the digester release more volatile organics than are released now?

A. I do not believe so.

Q. Could the digester be placed underground as a technical matter.

A. Practically, pure civil engineering standpoint, sure, anything can be done. It's really not a practical solution on the site given the required volume that's necessary for adequate sludge digestion. We've got a fairly tight footprint on the site which requires the same amount of volume, certain amount of depth. This area is a roughly low area. There's, as we know from the last upgrade, fairly high groundwater level. To dewater that site and to install the digester below grade would be economically prohibitive, and I don't believe advantageous from an environmental standpoint either.

Q. If additional land were required, could it --- is there some flexibility in where it could be placed from an engineering standpoint?

A. Yes.

Q. And I assume there's no engineering problem with putting trees around it?

A. No.

Q. Again, depending on if land was available.

A. Well, yes. I mean, certainly you don't want to put --- it's an active treatment plant. There's literally hundreds of pipes running across the site, and certainly we don't want to plant trees in the middle of a treatment plant that could potentially --- you know, the roots could damage those pipes and cause a much greater environmental problem than a cellular species associated with a digester.

MR. BURKE: Thanks very much, Mr. Choate.


ATTORNEY PARDO: No questions.


ATTORNEY GLOVER: No questions, Your Honor.

JUDGE GEORGE: Mr. Robertson?

ATTORNEY ROBERTSON: I have a couple of questions, Your Honor.


BY ATTORNEY ROBERTSON: Q. First of all, Mr. Choate, are you a licensed engineer in the State of West Virginia?

A. No, in the State of Virginia and the State of Maryland.

Q. Also, can you tell us right now what is the status of the DEP NPDES permit modification?

A. I cannot tell you the exact status on that permit modification, no. We've submitted plans to DEP. We've responded to questions from them. With regards to the specific status of where that is in the process within DEP, I'm not sure.

Q. Right. But as making comments back to DEP, do you know what the remaining parts of the process is to get the permit modification approved?

A. I believe we've addressed all of their comments. I'm not sure, from an engineering standpoint, whether anything else needs to be done.

Q. But there is, I believe, like a 30-day comment period for permit modification?

A. Yes. I'm not sure where we are in that cycle.

Q. But that has been a part of the DEP's process?

A. As I understand it, yes.

Q. Okay.

ATTORNEY ROBERTSON: I'm going to make a reference --- I don't know if we have the City's Exhibit Number Ten. It's the health --- the State ---.

ATTORNEY SHINGLETON: The Health Department permit.

MR. BURKE: He's got my copy of the permit. Let's keep that out.

BY ATTORNEY ROBERTSON: Q. With this particular Health Department Permit, this is for the construction of the blowers and the digester; is that correct?

A. That is correct.

Q. Can you state the date of the State of West Virginia of the Environmental Health Services, the date of this permit?

A. August 20th, 2004.

Q. And as I read into the permit language itself, it talks about, in the second phrase, looking at it, it says, major work will consist of the additional of two 24-30, then SCFM blowers for the sequential batch reactor system. It then has the aerobic digester, the 568 gallon aerobic digester. Then it says, with two 2,300 SCFM blowers. My understanding of this project --- and as further explanation, I thought there were two blowers that were going to produce more oxygen with the basins. Then we have an additional two blowers that are a part of the digester unit?

A. That's correct. It's an aerobic digester.

Q. Okay. You can see where I got a little bit confused, because I'm looking at four blowers as opposed to two blowers. Thank you for that explanation. Going to City's Exhibit Number Seven, and if you go to page 19, and then we have an appendix --- and let me see, that's Appendix A. We have an Appendix B, which is called Stage One of Rate Cost, and then you have attached, Stage One Improvements. Are you with me?

A. (Indicates yes).

Q. In this list, dated at the left-hand bottom corner of this, dated May 12th, 2004, was this your project summary at that particular time? Did you put this project summary together?

A. Yes, I assisted in the completion of this project, financial summary.

Q. Right. And with that particular project, there is a total cost of approximately --- a little bit over $5.7 million; is that correct?

A. That's correct.

Q. With that, that is still including the effluent line that was going to go down to the Shenandoah River?

A. That's correct.

Q. Okay. And now that has been taken out of this reduced scope of the project?

A. Yes.

Q. Have you prepared a revised project budget looking at the digester and the particular additional two blowers? Have you provided a revised project budget?

A. Yes, I have.

Q. And do you know when or if that was submitted to the Staff or the Commission?

ATTORNEY SHINGLETON: Your Honor, if I may object, it was submitted as part of my letter. I'm not sure of the date, Your Honor. It was a couple weeks ago. There were two or three pages attached to it. I will be glad to provide other copies if you take a break so I can make more copies and distribute them.

BY ATTORNEY ROBERTSON: Q. I'm going to hand you a letter that's dated from Mr. Shingleton --- his date is August 17th of 2004. And there is an exhibit, let's call it Exhibit A. And is that part of your revised project budget?

A. Yes, sir.

Q. And within that particular project budget, you, I believe, in both the blowers and also looking at the digesters, all of the project costs, you've allowed for a ten percent contingency; is that correct?

A. That's --- can I see it again?

Q. Okay. Sure.


A. That is correct.

BY ATTORNEY ROBERTSON: Q. And then, as I reviewed some other information from Mr. Kunkle, we have probably a contingency of about 20 percent. Do you have an explanation of the reason for your ten percent contingency versus Mr. Kunkle's 20 percent contingency with this project?

A. No, I don't. I mean, basically I provide those cost estimates to my client. A contingency is, to a certain extent, a safety factor. They ultimately, then, decide with their accountant if additional factors of safety need to be applied with regards to the estimate.

Q. One other question I had, with talking and testifying, with Mr. Burke especially, there was one thing that you said, there was a glass-lined tank. Was that actually part of the digester where it's just

glass-lined? I'm just trying to get a further explanation.

A. Yes. The digester is a steel tank, a concrete base, steel shell tank, and those steel shells have a glass coating on them, both inside and outside.

ATTORNEY ROBERTSON: Thank you. I have no further questions, Your Honor.

JUDGE GEORGE: At this point we'll take a ten-minute break.


JUDGE GEORGE: Back on the record. Mr. Shingleton?


JUDGE GEORGE: Any Redirect?


JUDGE GEORGE: Very well. You may step aside.

ATTORNEY SHINGLETON: Our next witness, Your Honor, is Mr. Eli McCoy. I'm going to let him be examined by Mr. Lewis.

JUDGE GEORGE: Very well.


BY ATTORNEY LEWIS: Q. Mr. McCoy, can you state your name and address for the record?

A. Lavely Eli McCoy, 16 Lance Drive, Charleston, West Virginia, 25311.

Q. Mr. McCoy, you are going to be testifying as an expert on water quality and regulatory affairs in West Virginia. And with that in mind, what I'd like for you to do is provide background of your education and your work experience.

A. I have a Bachelor's of Science degree in Zoology from Washington University. I have a Master's in Biological Science from Washington University, and a Ph.D. from the University of Louisville, with an emphasis in aquatic ecology and aquatic quality.

Q. Ending with your educational experience, what has been your work experience coming forward?

A. I went to work in 1979 for the then Office of Water Resources in the Department of Natural Resources as an aquatic biologist. I assumed various levels of responsibility in that organization involving water quality monitoring, up through permitting, planning, basic plans, et cetera. I have served as deputy chief for that operation and also chief of that organization for a number of years. I then served as a deputy director for the Department of Environmental Protection, and later served as director of the agency for approximately two years.

Q. And what is your present position?

A. I am vice-president of environmental consulting, consulting with an engineering firm in Charleston, West Virginia, by the name of Potesta & Associates.

ATTORNEY LEWIS: Your Honor, Mr. McCoy is an expert on water quality, stream quality and regulatory affairs, based on background?

JUDGE GEORGE: Is there any party that has an objection to that? I'll certainly recognize Mr. McCoy as an expert. You may proceed.


BY ATTORNEY LEWIS: Q. Mr. McCoy, it's been a long day with lots of discussion about what we're here for today. I'm going to try and summarize what I can in some of my questions, rather than ask you to regurgitate some of the issues we've already heard about. As you know, one of the reasons we're here today is to discuss the modifications to the waste water treatment plant. Earlier there was discussion about the fact that the original plans for the waste water treatment plant included a line to the Shenandoah River. Could you explain why that line would have been proposed based on the regulations that were in place at that time?

A. Primarily because of economics. The regulations that were in place at the time of that design for ammonium nitrogen had two standards that protected, one was a clogged line and one was human health. The human health standard would result in a permit that was much more stringent to meet, and so when an engineer is deciding how one would meet that standard, there are a number of options that one considers. You evaluate the economics of treating it there, adding additional treatment, tertiary treatment. Using those types of treatment. Or looking for a larger stream where the mixing would be such that you could get a more favorable permit. And the economics of those two decisions or that evaluation drives where one goes.

And so consequently, one would assume that the economics of providing tertiary treatment on-site were much in excess of what the line would give you going to the Shenandoah.

Q. What you're saying, basically, is that the water quality standards in place at the time the decision was made, imposed a much more stringent length for one of the parameter groups if the discharges continue on Evitt's Run; is that correct?

A. Yes, sir.

Q. As was mentioned earlier, the perfect storm of events with regard to water quality, inherently occurred this year when there were changes to the water quality standards. Could you explain a little bit about the changes in ammonia nitrogen water quality standard that occurred in West Virginia this year and how did that would impact Evitt's Run?

A. Yes. Basically, West Virginia is one of the few States --- perhaps maybe the only State in Region Three, that has an ammonia human health criteria. And so EPA really, I don't think, has even recommended the standard for human health for ammonia nitrogen. And so what has happened is, the that Environmental Health Board in West Virginia has initiated a change in water quality standards, which virtually keeps in place a water quality standard for ammonia nitrogen, a criteria for quality of life. But has proposed to delete the water quality criteria for human health for ammonia nitrogen. And so that standard has been through the legislative rule making review process. It has passed the legislature, and that set of water quality standards, that change, is currently before EPA. And if the rumors on the street are to be believed, approval of that package is expected sometime in the near future.

Q. And the human health criteria for ammonia nitrogen was in place for what purpose --- or what would be the purpose of a human health criteria in the water quality standard?

A. Typically, it would be to protect for a portable water supply.

Q. And are you aware of any portable water supply in the vicinity of the waste water treatment plant downstream of Evitt's Run?

A. No, sir, I am not.

Q. So the purposes of Evitt's Run, even if a human health criteria were in place, wouldn't serve any environmental perks?

A. No, there would be no practical purpose in having that standard or that criteria applied to that particular stream.

Q. So the elimination of the human health standard in the State of West Virginia allows for a different effluent discharge concentration at Evitt's Run under the water quality standards; is that what you're saying?

A. Yes. The elimination of that will allow the State to issue a water quality based effluent run and a permit that will be protective of quality of life, and will not address the human health issue because that criteria would really no longer apply with that settlement.

Q. Mr. McCoy, did have the opportunity to evaluate and observe conditions of Evitt's Run and seeing the waste water treatment plant of Evitt's Run?

A. Yes, sir, I have.

Q. Can you describe the environmental stream quality and conditions and liken impacts to those condition?

A. Evitt's Run appears to be in a, from what I've read and what I've observed, to be a perennial stream that receives a roughly a frequency of 1.2 million gallon a day treated discharge on the Charles Town Waste Water Treatment Plant. Anything further in answer to that question?

Q. Is Evitt's Run impacted by, potentially impacted, by other discharge sources?

A. Certainly, there are a variety of non-effluent sources that impact Evitt's Run. Historically, most of the point sources in the nation have come online and treated that to a high quality, sufficient for meeting water quality standards. If you ask any water quality professionals, they would tell you that probably 70, if not more, percent of the water quality standard violations that one sees throughout the State are related to non-effluent, typically don't have to get permits. So there are a host of, probably, storm water discharges, animal fecal loss of one sort or another, agricultural practices, those types of activities along the length of Evitt's Run that impact it in some way.

Q. What would be the measure that you would be used to measure the --- held for Evitt's Run anywhere along its line; what parameter?

A. You could --- typically, when you're looking at those types of impacts, you're concerned about dissolved oxygen, as much as anything from most toilets.

Q. And discharges from a waste water treatment plant typically impact dissolved oxygen based on what parameters?

A. The modeling that is done, that predicts what dissolved oxygen concentration will appear in stream are primarily based on BOD and ammonia-nitrogen.

Q. And you heard earlier, the process by which the determination to stay on Evitt's Run versus building a line to the Shenandoah included a calculation that included the mass loadings of BOD and ammonia nitrogen remains the same even at a higher level; is that correct?

A. Yes. If one looks at the permit limits currently in place for those two parameters to have a flow of 1.2 million gallons per day, compares that to the mass loading at 1.7 million gallons a day at the projected new permit limits of 20 BOD and four

ammonia nitrogen, the limits of the mass balance of pollutants going to the stream is less. Now in addition to that, if the one models the dissolved oxygen sag, would be predicted to occur in stream, and the dissolved oxygen stag is really a practical impact of those pollutants. It's a measure of how much one expects the oxygen to drop from its ambient level that its worse condition from that discharge. And if one looks at that and the DO sag really is reduced by half a milligram per liter. So that model tells one that the effects of increasing that volume by half a million gallons a day and reducing the pollutant concentrations in the treated effluent actually result in better stream conditions.

Q. In stream conditions we're usually concerned about cases of the loss of dissolved oxygen or low-flow conditions; is that correct?

A. Yes.

Q. So when we are considering that the pollutant level doesn't increase, when the mass pollutant level doesn't increase, but the actual flow increases, your conclusion is that the impact on the stream is that the additional flow will have provided an opportunity to improve water quality at Evitt's Run?

A. From a dissolved oxygen standpoint, that's certainly correct. There's an additional value in having the additional flow in the stream, in that aquatic organisms benefit from a wet habitat, the greater wetted habitat, the more opportunities for the organisms to expand and take advantage of those. Certainly, that additional flow from that waste water would make it less likely that low-flow conditions would occur or endure as long as they might in stream.

Q. And have you had the opportunity to confer with the West Virginia's DEP on these matters?

A. Yes, I have.

Q. And are they reaching the same conclusion with regard to flow and dissolved oxygen that you developed?

A. Yes. They have run the same models and basically had those identical numbers.

Q. Moving on to the determining process. So far, what has been discussed is the impact of this change wherein an additional flow had a reduced concentration, as the abilities to improve the water quality at Evitt's Run. Obviously, that process needs to have public comments as well. From an environmental permit standpoint, can you describe the permit process that Charles Town would have to go through from here on in order to obtain permission to activate this plan?

A. Certainly. I believe that there is a permit application currently for the agency that's been prepared. That application will, in all probability, be amended at some point. The agency will then prepare a draft permit modification for that proposed activity. That will then be put out for a 30-day public notice of hearing. The public will be given an opportunity to offer comments on that proposed draft permit. The agency can then, following that public comment period, either act on the permit application. Or they may elect to have a public hearing if someone wants to raise the issue of interest, and the director determines that it's in the public interest to have one.

Q. So for purposes of determining the ultimate final environmental impact there is still another process to be had before Charles Town can proceed?

A. Certainly. You will have to have that modification to the permit before you can proceed to construct the activities to propose the facility onsite.

Q. And one question was raised earlier was whether or not the permit that is going to be issued to Charles Town, assuming this process goes forward as we hope, would be a State-issued permit or some kind of

federal-issued permit. Can you explain what type of permit that is?

A. Basically, only one type of water pollution control permit is issued in the State, and this is the State Water Pollution Control Permit. In 1982, the MPPBS, of the federal program, was delegated to the State of West Virginia. And so when West Virginia issues a permit, it is a program and a permit that's delegated to the State by the federal government for implementation of the federal conglomerate.

Q. So in other states, certain other states, the federal EPA can issue a federal MPPB permit?

A. There is a number of states and/or territories in which the federal government is still the primary personal agent for a conglomerate.

Q. But in West Virginia, the federal government does not issue any of these permits?

A. No.

Q. A question that was raised earlier as well regarding sludge disposal practices. Could you describe for me how sludge disposal practices are regulated for Charles Town?

A. Well, first there will be a section in their permit that address sludge disposal. It will have certain requirements, it'll list certain metals limitations, a variety of your typical regulatory approaches to controlling the use of materials. Now, in addition to that, there is a whole series of regulations that have been developed for handling and reuse of sewage sludge. So there is a body of regulations out there that govern that. These activities, while they're included in that permit, are routinely inspected by the agency. They can come on the sites, they can file inspection reports, they can take enforcement actions for noncompliance.

Q. So any inspection reports that might have suggested improper sludge disposal would be something that would be in the agency's file?

A. They should be all part of the facility record.

Q. And any review of the facility record at the agency should include any suggestions of improper sludge disposal?

A. Yes, sir.

Q. Another question that was raised earlier was the question regarding sampling frequency, and it was suggested that a sample that a sample that occurs --- a sample taken once a week might be representative of more than that day. Do you have an opinion in that regard?

A. Typically, that sample is representative of what passed through that sampling device that particular day. So in my opinion, it's representative of that day.

ATTORNEY LEWIS: That's all. Thank you.


ATTORNEY KELSH: No questions.



BY MR. BURKE: Q. Mr. McCoy, you mentioned that the purpose of human health criteria were basically portable water supply. Are you referring to the ammonia human health criteria, or would that also cover the bacteria in the water?

A. The ammonia, sir.

Q. For bacteria, would it also cover swimmers?

A. The ---.

Q. Concerning human health issues?

A. I don't remember exactly the way the standards were for bacteria, let's say 200 geometric, meaning five samples, 400 max, ten percent of the time, I think those are the standards, regardless of human health, but applied across the board that is the same standard.

JUDGE GEORGE: Could you address his question about swimming? Does the swimming issue, is that affected by human health standards or by the aquatic life standards, or by diver standards?

A. That standard for fecal chloroform concentrations is intended to be protective of water contact recreation.

JUDGE GEORGE: Thank you.

BY MR. BURKE: Q. And you mentioned it's pretty much applied across the board, if they had a 46 percent increase in their flow, will they, therefore, be allowed to discharge 46 percent more bacteria? The same concentration, but more volume?

A. There will be more. Mass isn't really the word for it, because there's no mass. The concentration cannot exceed. Those standards will remain the same for the permit. There will be more coddlings that will exit that waste water treatment plant.

Q. In proportion to the flow?

A. Correct.

Q. Thank you. On the sample design, you said that if they take a sample --- is bacteria generally taken as a grab sample or spread over time?

A. Bacteria are samples --- a grab sample always. You can never composite those those.

Q. And so if you say, it always, the sample on one day represents only that day, what's the purpose? What do we know then about the bacteria on the next day?

A. You really don't.

MR. BURKE: No further questions. Thank you.


ATTORNEY PARDO: I don't have any.


ATTORNEY GLOVER: No questions, Your Honor.

JUDGE GEORGE: Mr. Robertson?

ATTORNEY ROBERTSON: I have just a couple of quick questions, Your Honor.


BY ATTORNEY ROBERTSON: Q. Mr. McCoy, with the permit process doing to DEP and things, then eventually with it --- is that published to get the 30-day comment period, with your understanding?

A. Certainly, yes.

Q. And it would be up here in the local paper?

A. There will be a required --- I believe, it's a three-day public notice period in a paper of general circulation that's approved by the Secretary of State's office for --- of that type of legal ad in the area.

Q. Okay. So it will be a legal ad?

A. Yes, sir, it is.

Q. And then that starts the 30-day comments?

A. It says --- yes, it does. And it will have a time on there that the agency will accept comments until such-and-such a day.

Q. So it's time specific?

A. Yes, sir.

Q. Okay. Just one other question I have, looking at this particular review of this project, you said, one, this is going to ensure better water quality issue at the discharge once the sewage is treated. Then, did I understand you correctly, that also, that in your expert opinion, that giving the increase flows, which means expanding the capacity, there will also be a benefit from that?

A. Certainly. If you were to go to the waste water treatment plant and take a sample of it and go out and put it in a drinking water glass, and take the glass and fill it with tap water from the tap and look at it, they're virtually indistinguishable. You probably couldn't look at them and tell the difference, in terms of the clarity.

Q. All right.

A. And so when you look at it --- and certainly, that doesn't give you any idea about what the concentration of the BOD or ammonia, or those other parameters in what the --- but from a visual effect, in terms of solids and turbidity, the water coming out of the plant is --- people have a misconception of it, generally. We perceive it still to be waste water, when, in fact, it's really a fairly high quality clean product for reuse and to reintroduce into the environment.

And there are benefits from having it flow in the streams, increase flow. The greater the wetted area gives habitat --- it gives more habitat area to various forms of aquatic life. The greater flow also it is a very key element in the Division of Water and Waste Management's modeling efforts to project what these impacts would be. So these increased flows give you benefits in terms of organic pollutants and dissolved oxygen-projected problems. The higher the flow, for the most part, the better the stream is going to be in terms of its dissolved oxygen regime.

ATTORNEY ROBERTSON: Thank you. I have no further questions, Your Honor.

JUDGE GEORGE: Any Redirect, Mr. Lewis?

ATTORNEY LEWIS: Just one clarification question, Your Honor, regarding the flow.


BY ATTORNEY LEWIS: Q. The flow that you're discussing that is potentially a benefit is based on a very low flow condition in the stream; is that correct?

A. Yes. The half-a-million gallons a day we've been talking about today into the Ohio River, would be meaningless. You couldn't begin to measure the difference. But half-a-million gallons over time is something that, potentially, can provide for a higher base flow and higher temperatures and more stressful environmental conditions in stream.

Q. When you compare those high flows on a marginal bases where Evitt's Run is not at low-flow conditions like during higher flow conditions, the half-a-million gallons of additional flow shouldn't have any impact on the scouring in the stream or anything of that nature; would it?

A. No, it shouldn't at all. The stream system there is from probably --- I think is 7Q-10, 3.04 or 3.05 cubic feet per second. During the storm events in the area, it probably goes up to ten times that. Some of it probably increases exponentially, somewhat. So the addition of that half-a-million gallons a day, at those higher flows, really wouldn't be noticeable, even in that system at all.



ATTORNEY KELSH: Nothing further.


MR. BURKE: Nothing further.




ATTORNEY GLOVER: Nothing, Your Honor.

JUDGE GEORGE: Mr. Robertson?

ATTORNEY ROBERTSON: Nothing, Your Honor.

JUDGE GEORGE: You may step aside. Thank you very much.

A. Thank you, sir.

JUDGE GEORGE: Do you have another ---?

ATTORNEY SHINGLETON: Yes. John Kunkle, Your Honor.


BY ATTORNEY SHINGLETON: Q. Would you please state your name and address?

A. John C. Kunkle, 164 Highline Lane, Martinsburg, West Virginia.

Q. And Mr. Kunkle, are you a principal in the firm of J.C. Kunkle & Associates, A.C.?

A. Yes, I am.

Q. Can you give us a brief summary of your educational and professional background?

A. I have a Bachelor of Science Degree --- a major in Accounting from West Virginia University. I graduated in 1981. I have a Master's in Business Administration from West Virginia University. I graduated in 1991.

Q. Are you a certified public accountant?

A. I am.

Q. And do you practice public accounting in the eastern panhandle in West Virginia?

A. That's correct.

Q. Do you have a concentration in the West Virginia utility law?

A. Yes. I've served many utilities in the eastern panhandle since 1981 in various financial consulting capacities. And I also served as a chairman of the Board of Directors of the Berkeley County Public Service Sewer District.

Q. Do you get shot at on a regular basis at public meetings?

A. Yes.

Q. Have you been retained by the City of Charles Town to prepare its financial exhibits in this particular proceeding?

A. That's correct.

Q. In fact, you've done work for Charles Town and its utility's system for many years?

A. That is correct.

Q. Have you been performing the audits for Charles Town for the last couple of years?

A. That's correct. I performed the audits for the last two years.

Q. For the utilities?

A. For the City as a whole, including utilities.

Q. I'm going to hand you what's been marked ---


ATTORNEY SHINGLETON: Not yet. But I would as ask that it be marked.

JUDGE GEORGE: Exhibit 11.

(Charles Town Exhibit 11 marked for identification.)

JUDGE GEORGE: We've marked the exhibit as Charles Town Exhibit 11. Mr. Kunkle, do you want this one, or do you have a copy?

ATTORNEY SHINGLETON: Here, take it, take it.

A. That's fine.

BY ATTORNEY SHINGLETON: Q. Take a moment and see if you are familiar with that document.


A. Yes, I am.

BY ATTORNEY SHINGLETON: Q. Can you tell me what it is?

A. It's the Rule 42 Exhibit that I prepared for the City of Charles Town Sewer Department regarding the upgrade projects to the sewer treatment plant.

Q. Now, this has the date of August the 23rd, yesterday; isn't that correct?

A. That's correct.

Q. This Rule 42 Exhibit, like our DEP process, has had a long and winding road over the last year; isn't that true?

A. That's correct.

Q. This is actually the fourth Rule 42 Exhibit you've prepared?

A. That's correct. I've had to --- as this project has moved along, I've amended the exhibit several times because of the deletion of the effluent line and cutting back other ---.

JUDGE GEORGE: Did you submit the second and third amendments to the Commission?

A. Yes. Yes. And they got ---.

JUDGE GEORGE: Do you know what date the second ---?

A. 17th of August.

JUDGE GEORGE: 17th of August was the second one. And what about the third one?

A. No, that was the third one.

JUDGE GEORGE: That was the third one?

A. They have all been submitted.

JUDGE GEORGE: Do you know when the second one was submitted?

A. One was dated May, and one was dated January.

JUDGE GEORGE: And what are the changes between the August 17th submission and this submission? I assume that this submission actually got into Staff's hands today?

A. Last night.

JUDGE GEORGE: Last night, okay. Can you tell me the difference between the August 17th and this?

A. The difference between the August 17th submission and the August 23rd submission dealt with a couple of factors. One, the presentation of the ammonia level adjustments. The City of Charles Town is in the process of going through a change in rates for the sewer department, and it was felt that it was not far enough along in the process to include that going level of adjustment at this point.

JUDGE GEORGE: So the third submission to the Commission had that rate increase in it?

A. It had that as a going level adjustment.

JUDGE GEORGE: And the fourth submission does not?

A. It --- the fourth does not.

JUDGE GEORGE: So does that go back to the way it was in the first or second?

A. That is correct.

JUDGE GEORGE: Okay. What other changes in this document versus the third submission to the Commission?

A. That was the most significant change.

JUDGE GEORGE: Were there other changes?

A. I did not bring the August 17th --- if you have a copy of it, I could briefly review it, but ---.

JUDGE GEORGE: Do you have a copy of that, Mr. Robertson, handy?


JUDGE GEORGE: The August 17th submission of the Rule 42 Exhibit?

ATTORNEY ROBERTSON: We may have ---.

JUDGE GEORGE: I assume that all of the changes related to the rate change or the tariff change ---

A. Right. That was the most significant adjustment.

JUDGE GEORGE: --- would've been just related to projected income?

A. Correct.

JUDGE GEORGE: Okay. Staff is looking to see if they can find the August 17th submission.

ATTORNEY ROBERTSON: We have one of these. This is dated with the Executive Secretary's office's stamp of August 18th.

A. Okay.

ATTORNEY ROBERTSON: And if I'm not mistaken, with that, and Mr. Shingleton may correct me, I believe that the City just filed two copies of that revised Rule 42. Mr. Lingle has one and the other one should be put in the Commission's Case File.

JUDGE GEORGE: It very well may be there.

A. That was the significant change to the report.

JUDGE GEORGE: You don't notice any other changes at all?

A. I don't notice anything that stands out to me, other than that.



BY ATTORNEY SHINGLETON: Q. Mr. Kunkle, I'd like to turn to Statement H, which is page 22. Do you have that?

A. Yes.

Q. Okay. This is a cash flow analysis, and in the next to the last column on the right makes what are called pro-forma adjustments. Can you tell the Court what that term means?

A. Essentially, those are the financial implications of constructing the upgrades to the Charles Town treatment plant.

Q. On both an income and an expense basis?

A. On both an income and an expense basis. The project is expected to require approximately $90,000 annually more in operation and maintenance expenses. We have made the assumption and expect that the project is going to cost $2.5 million and that the annual debt service on that --- finding us that $2.5 million would be $203,300 annually, that there will be a small replacement reserve requirement of $6,582 on it, and that ---.

Q. What is the reserve paying for?

A. That is a ---.

Q. Is that a service reserve?

A. No, that is a replacement reserve.

Q. The R&R reserve?

A. The R&R reserve. We expect that these costs, the debt service cost of $203,300, the $90,000 that's coming in, and the $6,582 of reserve transfers will be annually funded --- or at least initially funded by the $263,300 of operating revenues to be derived through the sewer service agreement, and secondarily through a guarantee or guarantees with developers. In addition, we expect it to be initially funded by --- because Charles Town's utilities are not separate utilities, because it is a combined water and sewer utility, initially, we expect that the project will be financed annually by a $61,000 contribution from the water company.

Q. Okay. And $60,000 of that $61,000, again, you're combining water and sewer utility; is that correct?

A. That's correct.

Q. And one of the purposes of the rate increase, which is not the subject of this hearing, which is the subject of City Council action, is to eliminate that cash transfer from the water department to the sewer department?

A. They help that.

Q. There are many purposes of the rate increase, but that's one them?

A. That is correct in that, that will completely abate the need for that contribution. And I do want to point out that the $61,000 is an amount that's needed to provide what we term, debt service coverage. It's not a need for real cash. It's just a need to provide adequate coverage.

Q. One of the requirements, if I could follow-up, of all of the bonds issued by the City of Charles Town utilities, is it not, it's that bond coverage of 115 percent?

A. Correct.

Q. What does bond coverage mean; what do you mean by that?

A. Well, in the way ---.

JUDGE GEORGE: It's already in the record. Just go on.

ATTORNEY SHINGLETON: It's in the record. I'll keep going.

BY ATTORNEY SHINGLETON: Q. I want to go back to Statement A, which is page four.

A. If I could just point out one other thing before we leave this one. The exhibit is based on the project being completed with absolutely no new customers being connected to the system.

JUDGE GEORGE: Which, you believe, is probably artificial? I mean, you expect new customers?

A. Well, I want to make that clear that the $263,300 of inter-governmental revenues and secondarily that developer's subsidies that will be needed as the project matures or ripens, will significantly decrease, perhaps very quickly, as the project matures.

BY ATTORNEY SHINGLETON: Q. Go to Statement A on here, which is page four.


BY ATTORNEY SHINGLETON: Q. In the pro-forma adjustments, there's a line item, depreciation on an annual basis of $53,000. Can you tell me what that item is?

A. That is the estimated depreciation on the cost of the new construction. It is a non-cash item. It doesn't really have a lot of significance.

Q. This check is --- I know it's depreciation. There's another way to state, it's almost identifying a replacement cost or a cost that would replace a capital asset at the time?

A. Well, in real theoretical terms, it is calling on a user that you're using $53,000 of that $2.5 million upgrade in the first year, but ---.

JUDGE GEORGE: It's largely a tax issue; isn't it?

A. But it really has no real significance in rate setting because it's always backed up because it's

non-cash. It is a good indicator to try to gauge your repair or replacement reserve against it at times to be sure that you're reserving money for future replacements, but other than that, the value of it's somewhat null.

Q. And the repair and replacement reserve is

two-and-a-half percent of revenues?

A. Correct.

Q. And you're going to increase the repair and replace reserves some $6,500 a year?

A. Correct.

Q. And that can be used to repair or replace any additions to the plant?

A. Correct.

Q. Now, I want to go to page 23 of your document. Two-thirds of the way down, you showed some assumptions, and we're going to get into debt service costs in a moment. You have a term in there of 30 years. You assumed a term of 30 years. I think we discussed before you were able to testify; is that correct or is that number 20 years?

A. I would like to, for the record, to correct that. The term that we are assuming at this point is 20 years.

Q. Now, you're familiar with the --- well, you don't know, but it's marked as Exhibits Four and Five. Exhibit Four is an amendment to the ADA Sewer Service Agreement and Number Five is the proposed debt service guarantee agreement between Charles Town and Huntfield, West Virginia. You're familiar with the financial concept of those forms?

A. Uh-huh (yes).

Q. As I understand it, there are three ways --- well, let me back up. This is an unusual bond issue; is it not? The way it's intended to be issued?

A. Yeah, it is. In 22 years I've never worked on one quite like this unit.

Q. If I might say, just to explain an ordinary bond issue from a utility, you may borrow money and pay back over 20 years; is that correct?

A. Correct.

Q. People buy tax-free bonds, and they may buy a piece of the bond that doesn't mature for 15 years; is that correct?

A. Correct.

Q. That bond document will have a call provision in it which will limit the ability of Charles Town to pay the note off early; isn't that true?

A. Correct.

Q. You have to pay a penalty if you pay it early?

A. Correct.

Q. This particular bond issue has no call limitations at all; isn't that correct?

A. That's correct.

Q. It's designed so that Charles Town --- like if you prepay a home mortgage, you can prepay the principal of this debt at any time without any penalties?

A. That's correct.

Q. And the bond underwriters have indicated that this type of bond, in the type of market we're in today, is a very saleable type of bond?

A. That's correct.

Q. Ordinarily people buy bonds and they don't want these paid off early, they want the six percent tax free locked in?

A. Correct.

Q. With the low-interest environment we're in, is it your understanding that people will buy a ten-year bond and hope to get it paid off in a year-and-a-half?

A. Correct.

Q. But they want the six-and-a-half percent interest, but they want to get it on a short-term money, so it's kind of a --- you got a conflict of forces, which has created a unique situation.

A. Yes, sir.

Q. This bond is going to get paid. If you remember the agreement, really there's four ways, but I want to concentrate on the first three. An EDU fee that's $6.10 a month has been established; are you familiar with that figure?

A. Yes, I am.

Q. In fact, you're the one who calculated it?

A. Yes.

Q. Can you tell me how you calculated that amount?

A. That fee of $6.10 was calculated by taking the maximum annual debt service on the bottom of that sheet ---.

Q. In any one year?

A. In any one year, which was $230,300, divided it by the maximum EDUs that the expansion would provide.

Q. Which is?

A. Which was $2,778, which would give you the annual debt service per EDU, which was $73.18. And if you divide that by 12, you get the monthly debt service per EDU, which is $6.10.

Q. So if I understand the agreement, all three utilities, for all customers generated after the debt issued, will pay $6.10 a month into a fee, a kitty, if you will, that will be used to pay the debt service on these bonds?

A. Correct.

JUDGE GEORGE: It comes out of your regular tariff rate?

A. Their regular user fee, correct.

BY ATTORNEY SHINGLETON: Q. Now, the second kitty of money is going to come from a capacity fee; is that true?

A. Correct.

Q. Now, you know Charles Town already has the capacity fee in place?

A. Correct.

Q. The Public Service District has filed a case with the Commission to have their fee approved; is that your understanding?

A. That's correct.

Q. And then that matter was approved by an ALJ, but it's on appeals from the Staff of Appeals to the full Commission?

A. That's my understanding.

Q. And Ransom is in the process of adopting their fee. They adopted it once and then had to make some changes in it; is that true?

A. That's my understanding.

Q. And what is that fee per equivalent revenue?

A. This is for new customers?

Q. Yes, sir.

A. $1,127.

Q. $1,127 for equivalent revenue?

A. Correct.

Q. Your understanding is, that if a new person builds a house and connects to the Charles Town system, even if they're a customer of the District, they'll pay $1,127 to connect to the system?

A. That's correct.

Q. In your understanding, how this will work is the money goes into a fee -- into another fund to pay off principal only of the bonds, buy the bonds off early?

A. That is correct.

Q. Now, is it true that at least in the beginning years of this whole process, there won't be enough cash flow by taking these two forms to pay the annual debt service?

A. That's correct.

Q. And you're familiar with a proposed debt service guarantee agreement between Charles Town and Huntfield, LC to cover whatever the short fall is in any one year?

A. Correct.

Q. I'm going to hand you ---.

ATTORNEY SHINGLETON: Well, let me first have it marked as an exhibit, Judge. This would be Number 12.


(Charles Town Exhibit 12 marked for identification.)

ATTORNEY SHINGLETON: I'm afraid I'm run short. I'll have to give it all to the Court and ---.

JUDGE GEORGE: Mr. Burke or someone needs a copy.

ATTORNEY SHINGLETON: I've got one here. I've got one to for him to share. We'll give him one.

BY ATTORNEY SHINGLETON: Q. Do you have in front of you Exhibit Number 12?

A. Yes, I do.

Q. Did you prepare this document?

A. Yes, I did.

Q. It is what, five pages?

A. Yes.

Q. And what does this document --- what's it intended to show?

ATTORNEY ROBERTSON: At this time, I would like to get a copy. I got a couple of pieces of information, but I don't know if I have the whole file of copies.


ATTORNEY ROBERTSON: Okay. Thank you, Your Honor.

BY ATTORNEY SHINGLETON: Q. What is it intended to show, Mr. Kunkle?

A. Well, a couple of things, but the primary piece of information that it is intended to present is an estimate of what the required developer's subsidy will be per year and in total for this project. And secondarily, what the debt service contribution from the customers will be annually from their $6.10 contribution.

Q. And so if I look at the first page, in the second column, you have the number of new EDUs per year; is that correct?

A. Correct.

Q. Now, if you assume on page one that we would have 225 EDUs connected a year to this system?

A. That's correct. And maybe we ought to ---.

JUDGE GEORGE: Which is consistent with historic average with these utilities.

A. Well, maybe we want to back up a second and talk only about the first four pages, but the first page, I think, is the --- well, the first page is what the Rule 42 exhibit is based on, the 225 EDUs per year. And it is the conservative and, I guess, the expected growth rate, but we did give you pages two, three, and four, which show a higher growth rate to show you what would happen to the customer contribution and the developer's subsidy at a little bit higher of growth rate.

JUDGE GEORGE: I think I remember from the impact fee hearing case that 225 was roughly the historic average for customer hook-ups with the three systems; am I remembering accurately?

ATTORNEY SHINGLETON: I don't think I recall.

JUDGE GEORGE: You don't know?

ATTORNEY SHINGLETON: That's my recollection of what the testimony said down there.

JUDGE GEORGE: But where did you pull this 225 number from, then?

A. I got that information from the client and ---.

JUDGE GEORGE: They didn't tell you how they came up with that?

A. I'm not totally --- I didn't actually state to them where that number came from.

JUDGE GEORGE: Okay. Very well. Mr. Shingleton?


BY ATTORNEY SHINGLETON: Q. So in any event, it's roughly 225 that you're assuming that these bonds would get paid off in eight years; is that about right?

A. That's correct.

Q. And the total developer's subsidy is just a little under $700,000, $678,000?

A. That's correct.

Q. If the growth rate went crazy fast, at 500 equivalent dwelling units a year, these bonds would be paid off at about somewhere between the fourth or fifth year?

A. That's correct.

Q. Now, John, it's possible --- you weren't here this morning, but I asked someone else about it. It's possible that Charles Town built this system, borrowed the money, and nobody hooked up. Unlikely, but possible?

JUDGE GEORGE: You need to respond verbally.

BY ATTORNEY SHINGLETON: Q. Is that possible?

A. Could you restate that?

Q. It's possible that Charles Town could borrow the money, build the system, and no one hooked up. Unlikely, but possible.

A. Well, sure it's possible.

Q. At my request, did you make a stack of trying to determine the rate impact on the customers, the existing customers, if such an event happened?

A. Yes.

Q. And do you have an opinion as to what the rate impact would be on Charles Town's customers in that unlikely event?

A. Well, I'd have to ask if you want to clarify the question in regards to Charles Town, as you know, has a rate change ---.

Q. Forget the rate change. I should ask one more unlikely qualification. Huntfield goes broke and the bank giving us the loan goes broke. We borrowed the $700,000, and it's gone, so we got no other place to get the money but have a rate increase.

A. I guess what I'm saying is, that with the rate change that they're undergoing, they would not need any change in rates, we're getting at, I think, less than ten percent.

Q. So if the get the rate increase that they want, that fee that's been passed by the City, there'll be no further rate adjustment. So if tthey don't get any, it'll be something less than ten percent?

A. Correct.

Q. And their current rates are less than $20 a month for each household customer?

A. Correct. $13.86.

JUDGE GEORGE: For what? For how many gallon customer?

A. Sir, I'm sorry. Wait a minute. $19.93

BY ATTORNEY SHINGLETON: Q. $19.93 for 4,500 gallon customer today. So you're suggesting a rate increase in the worst case scenario of less than $2 per month?

A. Correct.

ATTORNEY SHINGLETON: No further questions.



BY ATTORNEY KELSH: Q. Along that line of questioning in terms of whether that scenario occurred for the district. On your Exhibit Number 12 you show the principal and interest payment beginning year one of $203,300?

A. Yes.

Q. If you divide that three ways to meet all the utilities, do you agree that check comes out to be $67,766 per utility?

JUDGE GEORGE: Shaking of your head does not work.

A. Yes.

BY ATTORNEY KELSH: Q. And you will agree if you have separate checks it will be, 1,500 customers?

A. Approximately.

Q. That would result in the District needing to come up with an additional $45.17 per customer per year. Will you agree to that subject to checking?

A. Okay.

Q. And divided by a 12 month period that comes out to $3.76 per customer per month.

A. Okay.

Q. And that would be the worst case scenario assuming no one gets a sale of additional customers.

A. Okay.

ATTORNEY KELSH: Those are all the questions I have for that witness.


MR. BURKE: Again, following up on that line of questioning, could we give the witness Charles Town Exhibit Seven?


BY MR. BURKE: Q. Would you turn to page 14? There's a graph. The last sentence before the graph refers to a conservative flow projection of an annual increase of 1.67 percent. Are you with me?

A. Okay.

Q. And the graph shows that the current flow in 2003 or 2004 are about a million gallons per day; do you see that?

A. Uh-huh (yes).

Q. And so 1.67 percent of a million, would you agree that's about 16,700 gallons per day per year?

A. Okay.

Q. And how many EDUs would be 16,700 gallons per day? I get it to be 61, but you probably work with numbers?

A. Actually mine's wrong so let's hear yours. I divided by the wrong number.

JUDGE GEORGE: This is simple division.

ATTORNEY SHINGLETON: We have 16,700 gallons per day and what is the gallons you're using per an EDU, is that 180?

A. I was using 220.

ATTORNEY SHINGLETON: I think 180 EDU is the number used.

BY MR. BURKE: Q. So 180 into 17,000 would be about --- a little under 100, just in round numbers?

A. Yes.

Q. Taking that subject to checking, do you have an estimate of the finances if there are the engineer's assumption of around 100?

ATTORNEY SHINGLETON: I'm going to object to that question. That's not the engineer's assumption. Well, the engineer took the conservative growth of the entire county of 1.6 percent, not the growth rate of Charles Town/Ranson area.

MR. BURKE: Let me reframe my question.


BY MR. BURKE: Q. The engineer provides two future flow projections and at the engineer's lower flow projection, would you agree that subject to checking, that it's on the order of 100 EDUs per year?


A. I didn't mean to imply any more than that.

BY MR. BURKE: Q. I'm not asking you if you agree with the engineer's assumptions.

A. You're asking me to testify to something that I said before that I --- on the 225 that it was an assumption given to me by management.

Q. Let me ask you --- at the end of that line of questioning, you have not done an estimate of these finances for anything around 100 EDUs per year growth rate?

A. No, sir.

Q. Looking at the column of required developer subsidy in your Charlestown Exhibit 12, I noticed that as we go through the pages, the EDUs go up and the total developer subsidy goes down. Am I understanding that correctly?

A. Yes.

Q. So that if we have a figure with a low --- a 100 EDUs per year, the developer subsequently would be larger than this?

A. That's correct.

Q. All right. The total capital costs is two and a half million. And the interest is something in addition to that. And the letter of credit is for $700,000. Do you know why the letter of credit is set at that fraction of the total money at risk?

A. Yes. The letter of credit was based --- it was a risk assessment and it was based on an assessment of the potential amount of developer's subsidy over the term of the project's financing.

Q. So it was based on this distribution of pages where the largest number is, in fact, 678 more or less?

A. Yes.

Q. The 6582 replacement reserve, is that calculated just on income, two and a half percent of income, or is it based on the cost of the digester and the blowers?

A. You are going to have to refer me to the page.

Q. I'm sorry. We were on your latest Rule 42, page 22, Charles Town Exhibit 11. Under the Pro Forma adjustments you have a renewal and replacement reserve of 6582. How was that calculated?

A. That's a standard requirement in most bond covenants. If it's a --- most public bonds require two and a half percent of operating revenues be put into replacement reserve.

Q. So it's not related to the actual cost of replacing the equipment?

A. No, sir.

Q. Have you calculated the amount needed to set aside each year so that the equipment can be replaced at the end of its useful life?

A. No, sir.

Q. The Pro Forma estimates of operating revenues, so their latest one is here on statement A. And you have, as you said, a series of other statement A. Why have the operating revenues adjustments Pro Forma changed from one statement A to another? Page four of Charles Town Exhibit 11. It's the most recent.

A. You're going to have to be a little bit more clearer than that.

Q. All right. In this version and the August 17th version it was 263,300.

JUDGE GEORGE: I think he explained earlier in the hearing that it was because of the tariff change.

BY MR. BURKE: Q. But that's the going level adjustment? Now, I'm on the Pro Forma adjustment which, as I understand it, Pro Forma is what is expected out of this project and the customer revenues. I never heard anything that would explain why the customer revenue assumptions would have changed during the whole course of this project.

A. Just the equipment that as going to be done.

Q. So why did the customer revenue projections change as the last two versions the 263,000 and the May version was 483,000 and the January version was 237,000?

A. Well, the question that was asked of me was what were the changes in the last two versions and there --- I don't --- what would you like to know, the changes between May ---?

Q. Why there were three numbers. The last two are the same. But the other two were different numbers. Why would that be?

A. Apparently because of the new effluent line.

Q. Why would that affect the revenue?

JUDGE GEORGE: I didn't hear your answer. Primarily because of the ---.

A. An effluent line.

JUDGE GEORGE: An effluent line. Okay.

A. You don't have the --- this project is all driven by costs. The only reason for the revenues to be derived are the costs.

BY MR. BURKE: Q. So you're saying ---?

A. So if you have less costs, you're not going to have the revenues.

Q. The revenues come ---?

A. Ranson and the PSC aren't going to provide revenues for non-existent costs. If you take the effluent line out, there are less costs.

Q. So how did you calculate the revenues?

A. Based on the costs of the project.

Q. It was not based on estimates of revenue? It's not based on independent estimates of revenue?

JUDGE GEORGE: I think there is a disconnect, Mr. Kunkle. I think that --- I mean, it's an interesting answer that you're telling us or that you're projecting this revenue based upon the cost, but the revenue is that the money derived from new customers, the money derived from existing customers. I mean, I'm not sure the answer that you have given today made any sense to me.

A. There are no new customers at this point. There are no new EDUs at this point. What's driving this project to begin with is a guarantee by the developers or it wouldn't be built.

BY MR. BURKE: Q. You also have the expectation of new customers?

A. That's correct.

JUDGE GEORGE: Mr. Burke is asking you why you changed your expectation of new customers from the first two 242 to the last two 242 filings.

A. Because we had a --- in May we had a six million dollar project.

JUDGE GEORGE: We all realize that the cost of the project changed.

A. Right. We had $400,000 debt service costs which required, and I don't have the exhibit in front of me, but it required, say, $600,000 of revenues to support that.

BY MR. BURKE: Q. So you just decided to have more customers?

A. Well, no, it's developer subsidy that was going to have to pay for that.

Q. So now that you have less project to built ---?

A. There's less subsidy. There are no new customers at this point. They're coming, but they're not here now.


BY MR. BURKE: Q. So this revenue is from developers in your Pro Forma adjustment?

A. Initially.

Q. On schedule one, the next page, you list service to public authorities as a source. If it's developers, why is it listed as service to public authorities?

A. It has to flow through the other entities.

Q. So the developers' payments will go to PSD and Ranson?

A. PSD. It's the PSD's customer.

Q. I thought the Huntfield agreement was with Charles Town? Charles Town Exhibit Five. Could you provide him Charles Town Exhibit Five? Read in the first paragraph this is an agreement between Charles Town Utility Board and Huntfield. Is that the developer subsidy that you're referring to?

A. Yes.

Q. So would you want to revise the statement to show the income on a different line?

ATTORNEY SHINGLETON: What statement are you looking at, Paul?

MR. BURKE: Charles Town Exhibit 11, page five.


MR. BURKE: I don't need to pursue it at this moment unless the Judge wants to hear the answer.

JUDGE GEORGE: It's your question. If you want to go on, go on.

MR. BURKE: I think the lack of an answer, I think, speaks for itself.

JUDGE GEORGE: He's considering it. If you want to ---.

MR. BURKE: He's looking at the Huntfield agreement rather than the ---.

JUDGE GEORGE: I'll let you consider this as long as you need.

A. It could be that, you know, maybe --- I'd have to, I guess, confer with City's attorney on it, but it could that, you know, maybe it should be on a separate line.

BY MR. BURKE: Q. Let's turn to page six of the same exhibit. And you see purifications supplies and expenses near the bottom. Under the Pro Forma column and that's the only Pro Forma adjusted on that page. And that's $90,000. What are purifications supplies and expenses that you expect?

A. Primarily sludge digestion, power costs.

Q. Up higher on that page do you see the category on the left, pumping expenses? And there's no cost under Pro Forma adjustment. Am I reading that right?

A. Yes.

Q. And specifically am I reading the indentation on the left for power and fuel would be within the category of pumping expenses, but there is none?

ATTORNEY SHINGLETON: Your Honor, we'll make a distinction about this. The engineer testified that the adjustment to the operating expenses was less than $9,000. That was his testimony. Whether this $90,000 gets broken up in six lines items or in one, it's $90,000 a year. That's what the engineer testified to.

MR. BURKE: He also testified that he had not prepared any detailed description of ---.

ATTORNEY SHINGLETON: That's right. The total maintenance amount ---.

MR. BURKE: Of the maintenance that would be needed --- he had not prepared any and he hadn't seen any.

JUDGE GEORGE: Certainly the engineer would have provided that data to Mr. Kunkle. Mr. Kunkle wouldn't have come up with estimates on how many valves would need to be replaced on a particular pump.

MR. BURKE: Maybe that's all I should ask.

BY MR. BURKE: Q. Where did you get the Pro Forma adjustment figures for this page?

A. Well, the engineer supplied me with the operation and maintenance expenses. I do want to point out that he supplied a number that was a little bit lower and I added a little bit of a comfort margin --- a few thousand dollars.

Q. Thank you. Has anyone analyzed the ---- how this project would affect the financial situation of Ranson PSD? Have you seen any analysis of that?

A. No.

Q. And you're ---.

MR. BURKE: I have no other questions. Thank you.

A. You're welcome.


ATTORNEY PARDO: No questions, Your Honor.


ATTORNEY GLOVER: No questions, Your Honor.

JUDGE GEORGE: Mr. Robertson?



BY ATTORNEY ROBERTSON: Q. Mr. Kunkle, first of all, on your City's Exhibit Number 11, going to page 23, the last page I'm looking at project estimates and other details on that particular page. If you go down about four-fifths of the way, there is a statement that says, capital capacity costs fees are projected to be used to call bonds in the first 12 years. Did you make any calculation as to an amount?

A. Yes.

JUDGE GEORGE: That is in --- and perhaps I should ---. Yes. I don't know that --- I don't think it's been entered as an exhibit; has it, Ron?

ATTORNEY SHINGLETON: No. Ron, what is your question?

ATTORNEY ROBERTSON: Well, I'm looking at that and then he has in his Charles Town Exhibit Number 12, on the last page, it's got a calculation of $3 million as to capital capacity cost fees of $3 million are projected.

BY ATTORNEY ROBERTSON: Q. How did you come up with that number?

A. Yes. The calculation is $1,765,000. For the first seven years of the project we assumed that $250,000 of capacity fees will be used to prepay the bonds. And then the eighth year $15,000 will be used to prepay the bonds. That reference to 12 years on page 23 should be corrected to eight years.

Q. So based on page 23 then also on page five of the City's Exhibit Number 12, both of them should state eight years?

A. It should state eight years.

Q. The other thing I do believe that you mentioned that it was looking at $250,000 per year. And in the statement you have $225,000 per year. Which figure should we be using?

A. It should be $250,000 per year.

Q. So let me ask you this. With using the eight years and the $250,000 a year, did you multiply those two together to get the $3 million that you have on page five of Exhibit 12?

A. Exhibit 12 ought to be by year --- page 23, that ought to be instead of $3 million, that ought to be $1,765,000. And it ought to be eight years at $250,000.

Q. You said that was like $1.7 million. But when you multiply the eight years times the $250,000, don't you actually get $2 million?

A. Well, it's seven years to the $250,000. It's one year at $15,000.

Q. I'm going to stay on page 23 of City's Exhibit Number 11. With the total project costs of $2.5 million, the engineer in his revised cost estimate with revised project with adding just a ten percent project contingency, when I look at --- and look at almost $500,000 roughly over the $2.5, is a 20 percent contingency. Can you explain the difference?

A. When we sized the bond, we took into consideration various factors that --- you know, the transaction costs to close the bonds and the project, of course, hasn't been bid yet. And the contingencies with it being not totally new construction and also the factor that, you know, there are no pre-payment penalties associated with the issue. And we did not want to be caught on the short end of the project. I believe if it comes to the point that if there is excess money at the end of the project, that it can be used just to apply to a pre-payment and move on down the road.

Q. So within that contingency, if the project costs comes in and you use contingencies and it comes in at just $2.3 million, then that will be the debt service that would be issued as opposed to the $2.5 million?

A. Correct.

Q. Okay. Have you seen earlier letters from Cruz and Associates from the original project balance also in the first revised project filing? And I'm going to call this the second revised project filing. Have you seen the earlier two letters from Cruz and Associates?

A. Yes, I believe that I have.

Q. And what I'm going to show you is a copy of Cruz and Associates brought to Jane Arnett. This one is dated January 21st of 2004. And with that one it was looking at just, I guess, the effluent line at approximately $3.2 million; is that correct?

A. That's correct.

Q. And with that one, looking at the second paragraph, it talks about an amortization schedule of 30 years. Is that true? Just in that second paragraph.

A. That's correct.

Q. Okay. That was for the original project. What I want to show you is now a copy within the revised filing, a letter dated May 13th to Jane Arnett. And that project cost is approximately up in the $6 million range. Is that correct? I think it's $6.2.

A. Yes.

Q. Okay. And in the second paragraph in that particular letter from Cruz and Associates, that is also looking at a 30-year term on the revenue bonds?

A. Correct.

Q. At this particular time does the City or you --- yourself or the City have what we would call from the Staff perspective a commitment letter looking at the issuance of the bonds at up to --- and I guess the maximum of $2.5 million with a 20-year term? Does the City have that?

A. No. I don't believe we have that at this point.

Q. Okay. So you do a lot of utility work and with that, that does put the Staff at a disadvantage to try to render a final recommendation without having what would be called ---?

ATTORNEY SHINGLETON: We'll provide it for you tomorrow morning. We have a debt service amortization schedule on the $2.5 million which I will provide for you.


ATTORNEY ROBERTSON: The other thing, moving on, can the City of Charles Town also present a letter of the, I believe, the $61,000 that they have on hand with the water department to show --- to make sure that everything will be funded for the sewer department?

ATTORNEY SHINGLETON: Sure. I want to be certain. You want a letter that says what we're ---?

ATTORNEY ROBERTSON: Well, we're basically looking at --- we have not found at any types of letters or things other than just the notation and the Pro Forma that the water department actually has the money in its account to fund a ---.

ATTORNEY SHINGLETON: What do you what, a letter or a financial statement backing it up?

ATTORNEY ROBERTSON: Basically, something from a financial statement or something that will show that the water department has those funds and it's available to transfer over to the sewer department to make the coverage factor.

JUDGE GEORGE: Can you offer or provide that by tomorrow morning, as well?


JUDGE GEORGE: You should FAX copies to the Commission. I know you may see Mr. Robertson tomorrow in person. You should also make sure he gets to the Commission's executive secretary.

BY ATTORNEY ROBERTSON: Q. Mr. Kunkle, looking at this, is it your understanding the revenue bonds that will be underwritten by Cruz and Associates, do you know if that is a fixed rate of interest or if it is a variable rate?

A. Well, it is a fixed rate. I'm not sure that each bond has a fixed interest rate. But the various coupons have varying rates to them. The average coupon rate is around 5.46 percent.

Q. And that is an average?

A. That is an average that the spectrum is from 2.5 percent to 5.5 percent.

Q. What I'm going to refer you to now is the City's Exhibit Number Five, the agreement with Huntfield. And with that, I'm looking at page two of this agreement, and talking about ---.


ATTORNEY ROBERTSON: I'm looking at the definitional paragraph, number one, and then looking at the monthly debt service payments of capital A.

BY ATTORNEY ROBERTSON: Q. With that, I know Mr. Shingleman (sic) talked about having an attachment from Cruz and Associates as to an amortization schedule as to monthly debt service payments. Is that something that was included on Exhibit A which is not --- would that be what should be included in the Exhibit A that is not attached to this agreement?

A. I'm sorry. If you could repeat that?

Q. Well, basically I'm looking at where it talks about the monthly debt service payments. Would you have this Exhibit A that is not attached? Would it be the debt service --- the amortization schedule of the payback of bonds?

A. I'm not sure that --- it might include that, but I think it would also include the payments that are going to be required by the City of Charles Town to be paid to the West Virginia Municipal Bond Commission monthly to make the semi-annual payments on the bond issue.

Q. Right.

A. It is probably in one of those documents.

Q. But it does talk in Exhibit A that it is a debt service?

A. Yes.

Q. Okay. But that would be the amortization schedule of payments from Cruz and Associates?

A. Right. It is probably in both of documents.

Q. Okay. Getting over into also page four of this agreement with Huntfield, in paragraph two do you know that the City has obtained the revised, irrevocable line of credit for $700,000 at this particular time?

A. I do not.

Q. You don't know or the City hasn't received one from Huntfield?

A. I don't know.

Q. Okay.

ATTORNEY SHINGLETON: Your Honor, if I might, a letter of credit would be issued when all the approvals are obtained. We have a letter in the file that says the bank will issue it when all the approvals are obtained.

JUDGE GEORGE: Very well.

ATTORNEY ROBERTSON: And that one is for the $1.7?


ATTORNEY ROBERTSON: But that's also another change because of ---?

ATTORNEY SHINGLETON: I know it's another --- if they issued for $1.7, they're going to issue it for $700,000 but I will get you a letter.

ATTORNEY ROBERTSON: I have no further questions, Your Honor.

JUDGE GEORGE: Any Redirect?

ATTORNEY SHINGLETON: I just want to clear up two things.


BY ATTORNEY SHINGLETON: Q. Go to your Exhibit 11, please. Go to the cash flow statement, page 22. I know there was a great deal of confusion. The $263,300, that was going to be your operating revenue. But your total debt service requirement in year one is going to be at what $201,000 or so?

A. $203,300.

Q. Now, go to Exhibit 12, your Exhibit 12. The first page the last column, required developer subsidy. You show a little less than $187,000 in developing subsidy in year one; is that true?

A. Correct.

Q. And that number is part of the income number on Exhibit 11?

A. Right. If I could, that $263,000 --- maybe I can simplify this. That $263,000 of revenues in the Exhibit is made up of just as Mr. Shingleton said, that that $187,000 developer subsidy plus --- okay, there is $90,000 of additional O&M because of this project that the three entities are going to have to absorb. So $60,000 of it isn't coming from a developer subsidy. So $30,000 is coming through this sewer service agreement from the PSD, $30,000 is coming through the sewer service agreement from Ranson. That is what makes up the $263,000. So that's what I mean by expenditure directive revenue project.

Q. Over time, over the years, as we go forward, that revenue number will stay relatively the same but it will be --- the money will come from different pots, so to speak?

A. Right. It will be replaced by the customer.

Q. As customer goes up, the debt service goes down, the annual debt service decreases. The developer subsidy decreases.

A. Right.

Q. But the annual revenue department, the way the bond is set up, will remain relatively the same. It's not exactly the same but it is close?

A. Correct.

ATTORNEY SHINGLETON: That's it. I don't have any further questions.


ATTORNEY KELSH: Just to clarify.


BY ATTORNEY KELSH: Q. With the $263,300 figure, does that include back fee collections?

A. No, sir.

ATTORNEY KELSH: That's all I have.



BY MR. BURKE: Q. And if you needed to depend on the developer subsidy more deeply, if there were fewer EDUs, then the money would run out at some point and then Pro Forma would happen?

A. Well, I think we listed that subject as the worst case scenario. But certainly our expectation is at this point 225 EDUs, new EDUs, per year. Now, if that development does not occur, then for the required developer subsidy would certainly increase. There is not a question about that.

Q. I just want to make sure I'm right. There is nothing in the record of this case to support the 225. And there's nothing written to support your verbal testimony about the worst case impact on the rate payers PSD and the City?

ATTORNEY ROBERTSON: Could you clarify your last question?

ATTORNEY KELSH: I'm not sure it's fair to ask him what's in the record in this case. What's in the record in this case is --- there is going to be a transcript and it's going to be a ---.

BY ATTORNEY BURKE: Q. You have not provided any paper back-up of the worst case fee increase that might happen to Charles Town PSD customers?

A. To Charles Town, yes, I have.

Q. You had told Mr. Shingleton something like eight or ten percent. I don't see --- is that in one of these documents or is it just another document?

A. I gave verbal testimony.

Q. Yes. I mean, how you got to that and that sort of stuff. The back-up. How you got to the eight to ten percent.

A. No, I didn't provide any documentation.

Q. Okay. Thank you.




ATTORNEY GLOVER: Nothing, Your Honor.

JUDGE GEORGE: Mr. Robertson?

ATTORNEY ROBERTSON: I have a few other questions, Your Honor.


BY ATTORNEY ROBERTSON: Q. Looking at Charles Town Exhibit Number 12, looking at the area to which you look here with 225 new EDUs per year. That one with this has the required developer. Developer subsidy that date and year sometime in the year eight would not have any other subsidies going, is that the way that your calculations have provided that? That they have no other subsidies after the year eight because you have enough customers on board with all three utilities to pay the associated debt service?

A. That is correct. There is --- if I could expand, there is --- that's correct. After --- number one, after year eight there is enough customers that no developer subsidy will be required after that point. And also, number two, there is nothing but customer base after that point. And also because of the declining debt service schedule, that after that point, the $6.10 debt service for EDU calculation no longer holds that it will be less than that. So you can see in year eight that the actual EDU contribution is actually exactly the same as the scheduled P&I. It will actually decrease to match. It will be something less than $6.10.

Q. From both Charles Town/Ranson and Jefferson County PSD?

A. That is correct.

Q. Okay. One other question I have. With your scheduled P&I, looking at it from your one through eight, is there --- there has --- has there been an assumption, the reason for the reducing of the P&I is the collection of the capital improvement fees?

A. Yes. That is a major element of what you're seeing in that reduction. That is because of that $250,000 pre-payment being applied per year. That is why you're seeing those reductions in those years.

Q. Thank you, Mr. Kunkle.

JUDGE GEORGE: I need those exhibits, sir, and then you may step aside. Do you have additional witnesses?

ATTORNEY SHINGLETON: I'll call Jim Duszynski next. Your Honor, he stepped outside. He is a Huntfield representative with the consent of his attorney, I will call him.


BY ATTORNEY SHINGLETON: Q. Can you give us your name and address, please?

A. James Anthony Duszynski, 2755 Log Mill Road, Haymark, West Virginia.

Q. By whom are you employed?

A. Green Vest LC (phonetic).

Q. And what is your job title?

A. I'm the CEO.

Q. And is Green Vest LC involved in a project in Jefferson County known as Huntfield?

A. Yes, we are.

Q. Briefly describe what Huntfield is.

A. The project is a plant community approved and annexed to the City of Charles Town for 3,200 residential units and a minimum of 200,000 square feet of commercial space. There is also a high school on the property and ultimately another school, maybe an elementary or a middle school. So about a 1,000 acres.

Q. And you're right now a customer of the Jefferson County Public Service Sewer District or the Jefferson County PSD for short?

A. That's correct.

Q. And your annexed in the City of Charles Town?

A. That's correct.

Q. Entire property.

MR. BURKE: Objection. He has identified himself as the CEO for Green Vest and the relationship between Green Vest and Huntfield has not been made clear.


BY ATTORNEY SHINGLETON: Q. What is the relationship between Green Vest LC and Huntfield LC?

A. Huntfield LC is a single purpose entity with a single asset entity owned fully by the partners in Green Vest LC.

Q. You're familiar with the proposed improvements to the sewer plant in Charles Town?

A. Yes, I am.

Q. Probably more than you would like to be?

A. Yes, I am.

Q. Are you --- I'm going to hand you what's been already marked as Huntfield Exhibit Five --- excuse me, City Exhibit Five. Are you familiar with that document?

A. This is a revised debt service agreement. I'm not thoroughly familiar with this, but I do recognize it.

Q. It's been recently revised because of the reduced scope and cost of the project; is that true?

A. That is what I understand.

ATTORNEY SHINGLETON: I would like to have this marked as City --- next, Your Honor, which would be ---.

JUDGE GEORGE: Thirteen (13).


JUDGE GEORGE: Do you have another copy for me?


(City 13 marked for identification.)

BY ATTORNEY SHINGLETON: Q. Would you please examine that, Huntfield 13, for me --- or City 13? Can you ---? Is that your signature to that letter?

A. Yes, it is.

Q. Is that the still the true statement of the City or of the Huntfield LC regarding its willingness to guarantee that the debt service entered in this agreement, which was the previous exhibit you just looked at?

A. That's correct. This letter specifically references the effluent line which, of course, is no longer a matter. But everything else is accurate.

Q. And it just keeps coming up about demand. Do you have an estimate of what your demand is going to be in the next two or three years at the Huntfield LC?

A. We anticipate that if we can get up and running, and this year we have not been up and running, that we can sell and occupy roughly 250 units a year. It will probably take us several years to build to that level absorption of the project given the year basically that we lost with the lack of sewer.

Q. Do you know how many homes you presently have under contract to build and sell?

A. We have --- the first phase of the project is, I believe, 123 lots. And I think they were all sold, roughly half of them are occupied. The second phase of the project is another 77 lots. And I think out of that 77, about 20 of those are also sold. So we're somewhere in the 140, 150 range of homes sold with a little bit less than half of those occupied at this time.

Q. In addition to that, you have additional lots which have received final lot approval with the City of Charles Town Planning and Zoning Board?

A. I believe that's correct. I'm not sure of the exact status. But all together in the various levels of approval, we have some 850 lots approved. Some just as schematic levels which is a very preliminary level from the City's nomenclature process. And I'd say roughly about half of those are in further detail plans, construction plans and profiles for sewer water and storm drain and structure.

Q. Huntfield has also agreed to provide the land, I believe, to the Board of Education for the construction of its new high school?

A. We've already dedicated 57 acres to the Board of Education for that. We're currently meeting with them regarding the high school construction schedule.

Q. In addition to providing the land to the Board of Education, is there some agreement about providing the infrastructure to the school site?

A. That's correct. In addition to bringing utilities and roads to the periphery, or the lot line as we think of it when we sell the homes, we are also providing some grading and on-site improvements for the school board as well.

Q. It is my understanding the County has passed a bond call and passed a bond resolution to borrow some $15 or so million at the primary election this past spring; is that true?

A. That is correct.

Q. It is your understanding that the Board of Education now has in its possession or has commitment of all the money it needs to build its new high school?

A. That is my understanding.

Q. And I presume the new high school is going to get --- is going to need to get the sewer out of the Charles Town treatment plant? That's where the sewer lines are going to go?

A. They would appreciate that, I'm sure.

ATTORNEY SHINGLETON: I have no further questions of this witness.




BY ATTORNEY KELSH: Q. Mr. Duszynski, I want to clarify one thing for the record. You have City Exhibit 13 in front of you?

A. Yes, sir.

Q. I would like to refer you to the last sentence of the second paragraph. Can you read that?

A. Huntfield LC will post a letter of credit for the full amount of debt service for the bond and service the debt on a monthly basis.

Q. Now, earlier there was introduced into the record City Exhibit Five, which is Huntfield agreement with the City of Charles Town, and in that apparently Huntfield is going to post a letter of credit in the amount of $700,000; correct?

A. Exhibit Five was the debt service guarantee. I saw that in there, yes.

Q. So Huntfield's willingness to commit to this project for $700,000, not for the full $2.5 million?

A. That's correct. Originally we had received, again after discussions with our lender, a letter of commitment which was forwarded to the City of Charles Town. The original project scheduled for, I believe, up to $1.7 million. Again, we're changing the scope and some of the recent documentation. We have not gone back to the lender and told him that we will require less money, but generally that's not a problem.

Q. Some of the letters of protest that were filed in this case suggested that project be postponed for a year, during which time Charles Town will be required to comply with the PSD permit, no additional capacity would be available then until December of 2006. What effect did that development have on your business?

A. That would be devastating. That would put us out of business.

ATTORNEY KELSH: That's all the questions I have.


MR. BURKE: No questions.




ATTORNEY GLOVER: No questions, Your Honor.

JUDGE GEORGE: Mr. Robertson?

ATTORNEY ROBERTSON: I have one question.


BY ATTORNEY ROBERTSON: Q. Mr. Duszynski, looking at --- going down to the letter of credit for $700,000. Is it Huntfield or Green Vest's intention to also have that $700,000 actually still at an irrevocable line of credit?

A. I'm not sure if I understand your question. In terms of the letter of credit are --- drawn on site.

Q. In the agreement it talks about a irrevocable line of credit which was at $1.7 million. With that, I'm assuming the issue of the new letter of $700,000 will also be in a irrevocable line of credit?

A. Yes, under the same terms. Again, I'm not fully familiar with the revised agreement, but given that we're currently in two debt service agreements, one with the City and one with the PSD, I would assume that the terms are the same, which I believe they are an irrevocable letter of credit and the answer is yes.

Q. Will you be obtaining that particular new letter of $700,000 or will that be Mr. Shingleton's duty to provide that?

A. No. I'm providing that to the City.

Q. Okay.

A. To secure the bond issuance, as with previous agreements with both the PSD and the City, the condition of the bonds being issued with our posting of an irrevocable letter of credit and we're expected to do the same here.

Q. And with that as Mr. Shingleton said, can you provide that tomorrow?

ATTORNEY SHINGLETON: I don't promise. I already asked the bank. The banker is on vacation so as soon as he gets back to sign it, I'll get you the revised letter of credit for the reduced letter of commitment.

ATTORNEY ROBERTSON: You'll give us a letter of commitment. Between the two of us, we will get you the provision. It will read just like the other letter, except it will say $700,000.

A. All I need to do is ask. I usually don't run into objections when I ask for less money.

JUDGE GEORGE: So what I understand you're saying is it's not going to be tomorrow morning?

A. No, sir, because the gentleman that has to sign it --- I spoke to his office and I believe he's out this week. I spoke to him last Friday. So as soon as I can get it, I'll fax it to you.

JUDGE GEORGE: Anything further, Mr. Robertson?

ATTORNEY ROBERTSON: No other questions, Your Honor.

JUDGE GEORGE: Any Redirect, Mr. Shingleton?


JUDGE GEORGE: You may step aside. Thank you very much.

ATTORNEY SHINGLETON: Charles Town rests.

JUDGE GEORGE: Mr. Kelsh, do you have witnesses?

ATTORNEY KELSH: I have two witnesses, Your Honor. I will first call Harry Kable, chairman of the Public Service District, Marty Kable.


BY ATTORNEY KELSH: Q. Mr. Kable, you're the chairman of Jefferson County Public Service District?

A. Yes.

Q. Does the District support Charles Town's project which is the subject in this case?

A. Yes, we do.

Q. At this hearing there has been introduced into evidence, an amendment to the 1988 sewer service agreement between Charles Town and the District. Are you familiar with that document?

A. Yes.

Q. That document provides a series of ways of paying for the debt service for this project. One of the elements of that is to use a capital improvement fee. The District hopes to collect from its customers on --- get the approval of that fee. Are you aware of that aspect of the agreement?

A. Correct.

Q. In the event The Public Service Commission does not approve that capital fee, is it your status that the Board would still go forward with the amended attachment to the 1988 agreement?

A. Yes. I personally am in favor of moving --- I think we have support of the other two members with revising some financials. An issue to cover that, our commitment there.

Q. Do you have anything else you would like to add for the record today?

A. Not really. Except we --- I think our Board and organization is endorsing this whole move to provide additional capacity for all of those involved.

ATTORNEY KELSH: Thank you. That's all the questions I have at this time.


MR. BURKE: Yes. Could we provide the witness Charles Town Exhibit Seven?


BY MR. BURKE: Q. Could you turn to page 13?

A. Yes.

Q. Are some of these developments in the territory served by the PSD?

ATTORNEY KELSH: Your Honor, I'm going to be calling the general manger of The Public Service Distrct as our next witness. I think she's had more hands-on information on the specific developments.

MR. BURKE: Just a couple of very general questions. And she's already answered in another public meeting that she didn't know. So I'll probably put her on the record here to say the same thing, but I don't know if Mr. Kable knows.

BY MR. BURKE: Q. You recognize some of these as being within the District's ---?

A. Yes.

Q. And do you know how many of these plant units have final planning approval?

A. No. I don't know what phases some of these may be in.

Q. As far as you know, --- do you know, do some of them not have the final planning approval?

A. That I can't answer because I don't keep up on all that because Charles Town, Ranson and the County approve it.

MR. BURKE: No further questions. Thank you, Mr. Kable.


ATTORNEY PARDO: No questions, Your Honor.


ATTORNEY GLOVER: No questions, Your Honor.

JUDGE GEORGE: Mr. Robertson?



BY ATTORNEY ROBERTSON: Q. Mr. Kable, I'm going to make reference to City Exhibit Number Four. And as part of the District, as its chairman, you've had an opportunity to review this document?

A. Yes.

Q. Is it your understanding that this particular amendment to the 1988 sewer service agreement is a supplement to the original agreement?

A. Yes, as such.

Q. And this actually deals with just the additional 500,000 gallons of additional capacity; is that your understanding?

A. Correct.

Q. And the old 1988 sewer service agreement dealt with the 1.2 million gallons that is currently at Charles Town's plant?

A. Correct.

Q. What I'm going to have you do is looking at page two of this document, and looking under paragraph one, also reading the last sentence in paragraph one --- if you could read that.

A. Do you want me to read it out loud?

Q. You can just read it silently and then just ---.

A. Okay.

Q. And that is the Board's intention to share equally in the 500,000 gallons of additional capacity if this project is approved?

A. I think that that reads that way but then there can be a re-allocation from one entity to another.

Q. And as I also proposed to Ms. Arnett, if Ranson or the City of Charles Town has additional capacity but the PSD doesn't, and the other two will not allow that to happen, what is your recourse?

A. We would --- if they had need of it, then we would do something to pursue obtaining those additional unused EDUs.

JUDGE GEORGE: You can always file a complaint with The Public Service Commission; couldn't you?

BY ATTORNEY ROBERTSON: Q. Also, in your discussions you had with the Board members of the Jefferson County PSD, did you also talk about with this sharing in the equal --- the equal sharing of the increased capacity of looking at a first come, first serve basis with this additional 500,000 gallons?

A. Yes.

Q. And decided against that?

A. We have not moved forward with that, no.

Q. Okay.

ATTORNEY ROBERTSON: I have no further questions, Your Honor.

JUDGE GEORGE: Mr. Shingleton?


JUDGE GEORGE: Any Redirect?


JUDGE GEORGE: You may step aside. Thank you very much. I do need that exhibit. You may call your next witness.

ATTORNEY KELSH: I would like to call Sue Lawton.


BY ATTORNEY KELSH: Q. Ms. Lawton, where are you employed?

A. Jefferson County Public Service District.

Q. And what is your title there?

A. General manager.

Q. How many customers does the Jefferson County Public Service District have?

A. About 1,600.

Q. And do you know how many customers it's added in the recent years?

A. Well, we're now adding about 20 customers per month.

Q. Okay. Is there limited capacity available to the District to service prospective customers?

A. Yes.

Q. That is a more clear case we're talking about tomorrow; isn't it?

A. Yes.

Q. What role does the expansion of the Charles Town plant play in alleviating its capacity in the District?

A. It's absolutely necessary.

Q. I'm going to hand you a document.

ATTORNEY KELSH: I have this marked as District Exhibit Number One.

JUDGE GEORGE: Mark it as PSD One.

(PSD Exhibit One marked for identification.)

BY ATTORNEY KELSH: Q. And, Ms. Lawton, do you recognize this document?

A. Yes.

Q. Did you prepare this document?

A. Yes.

Q. When did you prepare this document?

A. Sometime in 2003 and then it gets updated occasionally.

Q. And what does the document show?

A. It shows the projects that the PSD is involved in in some manner.

Q. And these are --- you list a series of developments on the left-hand side of this document?

A. Yes.

Q. Are all these developments going to be --- have waste water treated at the Charles Town waste water treatment plant?

A. No, they're not.

Q. For example, in the first one we have there is Alex Robbe (phonetic) of the Bel-Air partnership. How is his waste water going to be treated?

A. From what I understand, he was --- he just had his own treatment plant approved by the County Commission and he will be taking care of that.

Q. Okay. I see that Mr. Robbe's development is in the Green chart. Why is it in Green?

A. Because his sewer is not going to be going through the Charles Town treatment plant.

Q. So all the developments that are in Green will not be going to the Charles Town for treatment?

A. Right. Actually the only ones that will are in white.

Q. Okay.

A. No. That is not true. The last three in purple will also be going there, but there are commercial and industrial that's why they're a different color.

Q. Okay. On the last page I see that at the bottom in yellow it says total EDUs used 9,946?

A. Yes.

Q. Are local EDUs all going to go to Charles Town for treatment?

A. Yes.

Q. So you backed Alex Robbe similar or other developments will not go to Charles Town for treatment?

A. Correct.

Q. And so you are aware of the possibility of an initial demand for service from the District of 9,946 EDUs?

A. Correct.

Q. And some of those may not be dealt with, is that fair to say?

A. Yes.

Q. You may receive initial requests that you do not know about today, is that also true?

A. Yes.

Q. Some of the engineers in this case suggested that this project should be deferred for a year. How would that affect the District's service to its prospective customers?

A. Extremely negative.

Q. Would you be able to fill your duties to serve?

A. No.

Q. The District also has looked into the possibility of constructing its own plant; has it not?

A. Yes.

Q. And that is still in a fairly early planning stage, would you agree with me on that?

A. Yes.

Q. And that plant will be constructed --- best case scenario that plant wouldn't be constructed for at least three years, is that fair to say?

A. Yes.

Q. So as in terms of providing services on a short-term basis, the District will need to provide Charles Town --- is proposing to come to fruition soon?

A. Yes, we are.

Q. Do you have anything else you would like to add today?

A. No.

ATTORNEY KELSH: That's all the questions for this witness at this time.




BY MR. BURKE: Q. On your exhibit there at the top it's entitled permit number. What does that refer to?

A. The State Health Department permit number.

Q. Do you know which, if any, of these projects in white or purple have planning commission approval?

A. No, I don't.

Q. Are you aware in particular of Daniel Forest (phonetic) asking for a grievance and for its review being involved in the Circuit Court decision called player?

A. No.

MR. BURKE: No further questions. Thank you.


ATTORNEY PARDO: No questions, Your Honor.


ATTORNEY GLOVER: No questions, Your Honor.

JUDGE GEORGE: Mr. Robertson?

ATTORNEY ROBERTSON: I have a few questions, Your Honor.


BY ATTORNEY ROBERTSON: Q. You've noted what the white developments are, the Green ones. Can you tell me what the orangish color dictates or what it's for?

A. We had contemplated purchasing the Willow Springs treatment plant and we're not going to anymore.

Q. And then also with the --- at the bottom it says Blackford Farms. It's in a yellow color. Could you explain the yellow color?

A. Blackford Farms was going to be our customer and they have recently been annexed to Ranson and they're now considering having their own treatment plant.

Q. Is that Ranson considering their own treatment plant or is this the developer itself?

A. The developer is considering providing sewer service.

Q. But basically it was in the yellow because that's been annexed in Ranson and so it would not affect the Public Service District?

A. Right. They were not counted in the number.

Q. All right. Thank you very much.

ATTORNEY ROBERTSON: No further questions.

JUDGE GEORGE: Mr. Shingleton?

ATTORNEY SHINGLETON: No questions, Your Honor.

JUDGE GEORGE: Any Redirect?

ATTORNEY KELSH: No Redirect, Your Honor. I would move Exhibit Number One into evidence.

JUDGE GEORGE: Any objection to the admission into evidence of PSD Exhibit Number One?



JUDGE GEORGE: It's admitted into evidence. You may step aside. Do you have additional witnesses?

ATTORNEY KELSH: No additional witnesses.

JUDGE GEORGE: Mr. Burke, do you have witnesses?

MR. BURKE: I would like to deal with my exhibits if that's appropriate at this time.

JUDGE GEORGE: You can make a motion to move your exhibits into evidence.

MR. BURKE: I move to move Burke's Exhibits One and Two into evidence.

JUDGE GEORGE: Any objection to the admission into evidence of Burke Exhibits One and Two?

ATTORNEY KELSH: I have some questions, if I may?


ATTORNEY KELSH: On Burke Exhibit Number One who put the document together?

MR. BURKE: The first page, I did. The others generally have title pages.

JUDGE GEORGE: Where did they come from, though? I know they have title pages.

MR. BURKE: Well, the second page titled section C is from the current permit of the Charles Town treatment plant.

JUDGE GEORGE: And you've looked at that permit and made that copy?

MR. BURKE: Yes, I did.


MR. BURKE: The next is a letter from Charles Town that was ---. Then I have a title page dated October '97 and a couple of pages from that document. And another title page dated January 2004 but handwritten as 2/13/04 and a couple of pages from that document.

ATTORNEY KELSH: The cover page of this document that you've prepared yourself after reviewing the source records, is that fair to say?

MR. BURKE: That's right.

ATTORNEY KELSH: I have no objection to this document at this time subject to the verification of page one, that I would like to reserve the option to review.

JUDGE GEORGE: I need to either admit it or not admit it. If it gets admitted into evidence and you can show at briefing or at some other time that some of it is erroneous, that would certainly weaken its credibility.

ATTORNEY KELSH: I will not object to its admission. And if I review it and do find that it is somehow faulty, I will make an appropriate motion to strike at that time.

JUDGE GEORGE: Very well. Any other objections to Burke One and Two?


JUDGE GEORGE: They're admitted into evidence. Do you rest, Mr. Burke, or do you have a witness?

MR. BURKE: I would like to introduce Burke Three and Burke Four. Let's do them both at once.

JUDGE GEORGE: I think maybe you better become a witness to explain these documents.

MR. BURKE: I will be happy to do that.

JUDGE GEORGE: Go ahead and circulate the documents.

JUDGE GEORGE: Do you want to explain to us what documents Three and Four are, Mr. Burke?

A. Burke Three is the single sheet that we all have.


A. This takes --- the left-hand two columns come directly from page 13 of the May 2004 addendum which was submitted by Charles Town. So those are not my numbers. The right-hand two columns I prepared based on my review of minutes of the planning commission and my knowledge of court cases. Starting from the bottom, Huntfield's intervention stated that they had 300 more lots and that's the source of that number. I have a question mark. I don't know how many have preliminary improvement. Suzanne testified today that was 850. The main purpose of this is the final column to show how few units have final approval.

JUDGE GEORGE: How did you determine what units had final approval and what did not?

A. I filed four requests at Ranson in particular and they said they have no file on Shenandoah Springs. The Flowing Springs, I didn't find records in their minutes and I'm not sure if I asked for filing --- I'm not sure if I requested specific --- on question marks ---.

JUDGE GEORGE: You don't have to go through each one.

A. I went through minutes and files, the Ranson documents. For Bel-Air it's handled by the County Planning Commission. And I'm not absolutely sure --- I'm taking their 400 as a group working number, but I have not seen them get any final plot approval. They're still on the agenda tonight for a portion. The three Daniel Forest's that have a single start, Daniel's Forest, Forest View and Aspen Greens went through the planning process to a degree, but the circuit court has overturned and remanded back to the zoning board as part of their approval process.

JUDGE GEORGE: So it has not been permanently denied by the circuit court?

A. Service has been remanded. So it strictly does not have formal approval.

JUDGE GEORGE: And the one that you have marked as denied by Planning Commission, is that a final denial that's unappealable?

A. That has been appealed to the circuit court.

JUDGE GEORGE: Okay. Any objection to the admission into evidence of Burke Exhibit Number Three?

ATTORNEY KELSH: Well, I'm going to Cross Examine him on this document.

JUDGE GEORGE: Okay. Can you tell me what Burke Four is?

A. Burke Four is a collection of information on the public costs in the context of the second Supreme Court decision of the convenience of the general public. The first exhibit is a cover page of a document. I have the entire document with me if anybody needs to see that. And then there is page 19 of that document. This was prepared for the Metropolitan Planning Organization which is a highway planning group. And the second page it shows ---.

JUDGE GEORGE: It's your governmental ---?

A. In Jefferson County.

JUDGE GEORGE: Intergovernmental highway planning group of various state jurisdictions in the local area?

A. Yes.

JUDGE GEORGE: And what does ---?

A. You can see on the cover of it their planning area which includes the three counties, Jefferson, Berkeley, and Washington County, Maryland.

JUDGE GEORGE: And what do you think 19 is showing?

A. It is showing on the Jefferson County line the highway existing plus committed project cost of $205 million for highway money.


A. The next five pages are an entire report from Farmland Commission Center on the cost to the public versus the tax revenues to the public of different kinds of land use. And the key summary finding is on the second page, a bar graph showing that for every dollar of taxes paid by different types of land use, there are various amounts of revenues needed from our government.


A. And then the legal notice is from last year's Spirit of Jefferson showing state --- among many other things, state funding for Jefferson County public schools of just under $30 million. There's $27 million on the first page and $2 million on the second page.


A. That's the one year operating money. The next page after that shows that the enrollment in that same year was 7,274. And the purpose of those three pages together is to show approximately $4,000 of state operating money per student in that year.


A. The next year is the current enrollment. It's there for completeness but it does not have a cost figure associated with it. Then the last pages are to show the total housing units in the county. First from 1990, showing near the bottom of the page 14,606. And near the end of the last page in 2000, 17,623. So a change of about 3,000 customers.

JUDGE GEORGE: Do you want to offer any other testimony now that you're a witness? You don't have to.

MR. BURKE: I hear you. After this are you going to ask if there's objections?

JUDGE GEORGE: Well, they're going to Cross Examine you.

MR. BURKE: I have received an e-mail from someone who is in the Reserves on duty so he couldn't be here. I don't know him. And he asked me to, you can distribute if you'd like, and so I want to know if that would be appropriate to introduce as another exhibit?

JUDGE GEORGE: I'm not sure what relevance it has, if any. Maybe it could have come in on public comment.

MR. BURKE: It could have but he didn't get it in by the deadline of the 18th.

JUDGE GEORGE: I'm not interested in it.

MR. BURKE: I rest.

JUDGE GEORGE: Okay. Ms. Pardo, Cross Examination.

ATTORNEY PARDO: I don't think we have any Cross Examination for Mr. Burke. However, we do object to both of these exhibits.

JUDGE GEORGE: Okay. We'll deal with objections in a minute. Mr. Glover, Cross Examination?

ATTORNEY GLOVER: I'm in the same boat as Ms. Pardo, I don't have any Cross Examination but I'm going to object to the submission of exhibits.

JUDGE GEORGE: Mr. Robertson?

ATTORNEY ROBERTSON: I have one question for the witness in his Exhibit Number Four.


BY ATTORNEY ROBERTSON: Q. And I'm just trying to find what you explained to us that you --- you had in 1990 general population it has --- at the end it says total housing units and it's 14,606.

JUDGE GEORGE: That's occupied; right?

A. No. There is also that ---.

BY ATTORNEY ROBERTSON: Q. Right. But those are total housing units. Looking at the 2000 ---?

A. The very last page. About 15 lines from the bottom in the second to last column, you see the 17,623.

Q. I was just trying to locate that because there was a percentage on the second --- on the census.

A. Yes, the census used a different format for '90 and 2000.

ATTORNEY ROBERTSON: That's all the questions I have at this time.

JUDGE GEORGE: Mr. Shingleton?



ATTORNEY KELSH: Yes, Your Honor.


BY ATTORNEY KELSH: Q. Mr. Burke, I would like to refer to your Exhibit Number Three. First, would you agree with me according to this document there are 516 homes in the final approval for Jefferson County? Indicated in the top right-hand column?

A. Yes.

Q. And looking at the Bel-Air approval there are 2,846 that obtained preliminary approval?

A. Yes.

Q. And, in fact, this project is designed to add about 2,900; is it not?

A. By testimony today.

Q. Would you agree for example, the Industrial Park. You indicate that it was your --- the figures you provided here are that the preliminary or final appeal had occurred on the Industrial Park?

A. I do know that some has. I didn't know the numbers.

Q. Okay. Because there are, in fact, occupied structures out there; are there not?

A. Well, what this exhibit was --- the document was presented in the Intervenor's report as a projection of usage. So I'm not counting occupied structures in any of this. And I think that was the intent of the document on page 13 of that addendum.

JUDGE GEORGE: Can I interpret the question marks to mean that you simply don't know on those?

A. That's right.

BY ATTORNEY KELSH: Q. So to get back to your question on Burkhart Dan ---?

A. On war leave. I believe they do have a few lots remaining that have been planted and are ready for customers. And I understand they're seeking --- they're thinking about getting planting for others and thinking about alternatives for their own treatment if they don't get from us.

BY ATTORNEY KELSH: Q. In fact, Exhibit Number One shows 103 in use being needed by the Industrial Park.

A. Which there was testimony --- that exhibit also does not count how many have final plot. And actually I think it's an important number.

Q. You don't show any houses as preliminary file approval; correct?

A. I'm not showing zero. I'm showing ---. I don't know.

Q. But nonetheless signed a development which is under construction; correct?

A. I have heard that they are not settling because of the plot issue.

Q. They have a 568 EDU, would you agree with me that's a pretty sizeable development?

A. Yes.

Q. It's augmented the two figures you have in the right-hand column; could it not?

A. If some substantial number of them have approval, yes.

Q. And then going down County Green, you agree --- again, you show two question marks there. Would you be surprised if that development was under construction?

A. No.

Q. And the requirement for preliminary approval were final for that to be under construction?

A. It requires preliminary final approval for at least some phases.

Q. All right.

ATTORNEY KELSH: Your Honor, I think this document has no reliability whatsoever.

JUDGE GEORGE: Okay. We'll deal with objections in a minute. Are you finished with Cross Examination?

ATTORNEY KELSH: That completes my Cross Examination.

JUDGE GEORGE: We're going to have numerous objections. I've been warned. Okay.

ATTORNEY GLOVER: Can I ask him a couple questions?



BY ATTORNEY GLOVER: Q. Mr. Burke, are you a customer of any of the three utilities in the room?

A. I am not.

Q. Do you have property in Jefferson County?

A. I do.

Q. Where is it located?

A. Momber's Crossroads. M-O-M-B-E-R-S.

Q. Is that near Shephardstown?

A. It's about half-way between Harpers Ferry and Shephardstown.

Q. Do you receive sewer service from the public utility?

A. No.

Q. Thank you.

JUDGE GEORGE: I'm ready to take objections to Burke Exhibit Three. We'll do it separately. First, Burke Exhibit Three. Mr. Shingleton, do you have objections to Three?

ATTORNEY SHINGLETON: Yes, Your Honor. I do not think especially on Cross Examination by Mr. Kelsh has shown this document is inaccurate --- made by an attempt by Mr. Burke to represent what he thought was fact work. They're submitting an inaccuracy. I think it would be wholly improper to admit it into evidence.

JUDGE GEORGE: Okay. Any other objections, Mr. Shingleton?

ATTORNEY SHINGLETON: No. Mr. Kelsh, your objections to Three?

ATTORNEY KELSH: With regard to the stated objections to this document. Just that one.

JUDGE GEORGE: Okay. Ms. Pardo?

ATTORNEY PARDO: One objection on the basis that this document's reliability for reasons stated by Mr. Shingleton.

JUDGE GEORGE: Mr. Glover, anything different?

ATTORNEY GLOVER: Your Honor, as far as Burke Exhibit Number Three, Ranson objects to it as being both inaccurate and then Burke Exhibit Number Four, I can't see any relevancy whatsoever to ---.

JUDGE GEORGE: We'll deal with Four in just a moment. But your objection to Three would be on the same grounds as everyone else's, that it's not reliable or accurate?


JUDGE GEORGE: Staff, any objection to Three?

ATTORNEY ROBERTSON: Also Staff would join in with the objections because of some of the inconsistencies just provided by Mr. Kelsh with his Cross Examination of Mr. Burke's document identified as Number Three.

JUDGE GEORGE: Very well. Do you have a response, Mr. Burke, for Three?

MR. BURKE: There was no evidence in any of the Cross Examination of inaccuracies. It is granted that this is incomplete. Nevertheless, it fills a glaring gap in the record of some information on homes with planning approvals. The other entities have provided their own lists without that information. And I let that become evidence. And I think this provides some information. And I repeat, there was no evidence of inaccuracies.

JUDGE GEORGE: I think all the objections go to the weight, not to the admissibility so I will admit Burke Number Three. Objections to Burke Number Four. Mr. Shingleton?

ATTORNEY SHINGLETON: It's irrelevant, Your Honor. I'm familiar with the group that has done this, the Tri-State study of highways but I don't think it's relevant to this proceeding.


ATTORNEY KELSH: Your Honor, I would also object, it's hearsay. This is a document prepared by someone else who is not here today to testify as to their truthfulness and how they prepared it.


ATTORNEY PARDO: I'm going to object to Exhibit Number Four on the basis of relevance. The school may know the road data and such other bits of information are more relevant to county planning proceedings and not a Public Service Commission certificate case as necessary here.


ATTORNEY GLOVER: Your Honor, I object to Burke Exhibit Number Four on grounds of relevancy and also that the creator or the author of the exhibit is not here to undergo Cross Examination.

JUDGE GEORGE: Mr. Robertson?

ATTORNEY ROBERTSON: Also, Your Honor, Staff would also object to the content of this document, Burke Number Four, under --- looking at the jurisdiction with the dollars spent on highways that the Commission has no jurisdiction under the regulation of highway construction. Also, with looking at the school board information. Also the Commission does not have jurisdiction. Looking at the County school board. And also anything that property and possibly zoning that could also come under the zoning and planning commission of Jefferson County. Which none of those particular actions that the Commission has jurisdiction in the regulation of sewer in this case, at the sewer utility of Charles Town.

JUDGE GEORGE: Response, Mr. Burke?

MR. BURKE: The Sexton verus South Jackson County Public Service District's Supreme Court case 90-075-ESE-CM said that the issuance of a certificate of public opinions is a necessity is the general public convenience. And they went on to say as distinguished from that --- from a number of individuals or a community. And all of this information deals with the state costs that are most general public convenience. It's not been a tradition issue.

JUDGE GEORGE: How does the fact that it costs money to build roads impact this case?

MR. BURKE: Compared to the number of homes added in the ten years, it comes to $60,000 per house for road construction. It doesn't need ---.

JUDGE GEORGE: Do you think the County would build roads if we didn't have new homes?

MR. BURKE: These were extension roads, that's right.

JUDGE GEORGE: And the same question about schools. How does the fact that we, as a civilized society, we spend money on schools have anything to do with this case?

MR. BURKE: The cost for our existing students is not relevant to this case. The cost per student will also need to be paid for students from the new houses. And, therefore, will be a public state cost of those houses. And again, compared to the tax that might come from those families.

JUDGE GEORGE: I will not admit Burke Exhibit Number Four. I find it to be both irrelevant and to be subject to serious hearsay concerns. So it has been identified for the record. Purposes of identification, but it is not admitted into evidence. Anything further that you need to do, Mr. Burke, before we proceed?

MR. BURKE: No. Thank you, Your Honor.

JUDGE GEORGE: Ms. Pardo, do you have additional witnesses?


JUDGE GEORGE: Mr. Glover, do you have witnesses?

ATTORNEY GLOVER: I would call one witness today.


BY ATTORNEY GLOVER: Q. Can you state your full name for the record, please?

A. Paul David Mills.

Q. Where are you employed?

A. City of Ranson.

Q. In what capacity?

A. City Manager.

Q. In your capacity as City Manager have you become familiar with the project that has brought us here today involving Charles Town?

A. I have.

Q. Let me ask you this. How many sewer customers does the City of Ranson have?

A. 1,265.

Q. On the application subject hearing filed by the City of Charles Town, does Ranson support the project?

A. We do.

ATTORNEY GLOVER: Your Honor, if I could have a five-page document collectively marked as Ranson Exhibit Number One for identification?

JUDGE GEORGE: We will mark it as Ranson Exhibit One.

(Ranson Exhibit One marked for identification.)

BY ATTORNEY GLOVER: Q. Mr. Mills, I want to focus your attention on the very first page of the exhibit identified as property by Ranson for January of 2003 through August of 2004. Am I correct on that?

A. Yes, sir.

Q. Why did Ranson undertake and annex these manifestations?

A. A number of years ago the City Council decided that some level of growth was inevitable for Jefferson County and that the areas around the City were --- conversations with some of the projects that they were about to be developed. They felt like they annexed them into the City. But then they started the process of developing the infrastructure and the planning for more of a tax base and such. And they decided that in light of that, they would create a boundary and station within that boundary. And subsequent to that, began to do planning for the area within that boundary and finally operating it if taxation didn't come within the boundary and then execute the annexation. So to date they have executed --- they've annexed 22 separate actions by the City Council totaling 3,351 acres from our original 550 acres.

Q. They've done quite a bit, I guess?

A. Yes, quite a bit.

MR. BURKE: I didn't hear the question.

JUDGE GEORGE: He said you've done quite a bit. And he said, yes, quite a bit.

BY ATTORNEY GLOVER: Q. Let's turn to page two of that project. Why don't you tell me about that.

A. This is a document that we began shortly after the annexations to start identifying belt men projects as they would come into the city. It was kind of a reference point for us --- the process, how many houses they intended to build, square footage of commercial. And this would guide us for any of the other planning that we had to do; water, sewer, roads, schools, parks, and I could go on. The first column, the docket shows a control number that we assigned that's originally presented to the city. Underneath that it shows the current project, where it's at, it's currently online with the sewer. Under that it shows the number being used. The first couple columns show the number being used remaining in the developments. Some of these developments were existing when we started this spread sheet. Then under that, consultation of the city engineer and with the various developments, we identified what order and year this development was expected to send flow to the treatment facility. Again, how many years it would take that development to build out and that was based on conversations with the developer, as well as what we felt was a reasonable assumption. Sometimes the developer will say three years and we'll say three years depending ---. It's a little high. It's a standard ability of what we could maintain. Further over in the last column it shows the --- mid-way over it shows the number of units in each development. And in the last column it shows the status. And that is the planning commission status as well as the number of units that have been completed, getting notes on the project, whether the funding has been provided. And also you see where their plans have been approved. There will be a note saying final plan is pending. The final plan is issued when homes are ready to be sold. For homes to be sold, there has to be a proof of sewer availability in that time. So there is a number of issues. There's bonding. There's sewer, water, fees paid, things like that. Once the planning commission has granted the site improvement plan, plan approval, that authorizes the builder to begin laying out their road, preparing for their lots, finishing off their final sewer and water plans, things like that. Then they file a final plan for the number of lots that they want to be awarded. And that amount is going to be verified --- the availability of sewer. After that, the individual building permits are issued and available for each individual lot.

Q. But where we stood --- as this allowed us to figure out how many developments were under way. This was all from once we were notified, you get a sketch of applied. And we started this project in November of '02, I think is when we first started tracking this. At that time, we identified the amount of EDUs that we would need. And they are only looking at treatment sources, whether we build our own plant, whether there were alternative methods out there, anything that we could possibly do. We determined that the Charles Town waste water treatment plant was our most viable option. Not only for the efficiency. The cost was less per EDU. It's more effective to get to that plant. At that time we went to our City Council --- Staff went to City Council to present a new resolution and said, we identified this project. The Public Service Commission requires that we respond to these requests for service in our new annex areas and that we then notify the current ADA sewer service agreement, that we notified the City of Charles Town of our expectant sewer needs. And we did that. We said via resolution. We said we expect the need --- I think it was --- I can't testify as to what

--- it was 500,000 or 600,000 gallons over what we projected in a ten to 20-year time.

At that time, we began working on the Charles Town and knew that the sewer line project was the project on the table that had been debated for a number of years. Under our original agreement, we had 330,000 gallons. We had enough to serve our current customer base. Didn't see a need to increase it at that time. At the time that we did feel that we did need more for the sewer line project, as well as the four basins, our resolution said that we would fund both of those via developer, guarantees, and all the rest of Charles Town in the process.

After that, a month or two later, it became apparent that the other two utilities would also like to share in this new capacity and projects, the one we're here today for. And that an equal distribution of the shares of that facility should be --- those new upgrades should be split amongst the three parties so that you could then take your share of the plant and forecast it against your expected development, track it quarterly, annually to see if development occurred at the rate that you thought it would. Begin to plan an issue and commitment letters to the different developments so that they can go and get the bank financing and continue their developments. Timing and everything --- that we're required to provide them the service.

So we didn't have a problem with that. Once we were notified, then we would --- the plan was to use thirds. We began planning for that third and how we would elevate that third amongst the developments we knew about in Ranson. That was difficult because it's again it's --- there is a great deal of projects and limitations. So you want to make sure that you're aware of it. You want to make sure that you're beginning plan expands to the time of day they needed it. So currently the day we have --- through my exhibits, we have 20 --- or 18 developments total in the city that we're currently managing. There are various stages of development that we would have been notified about or they have already completed their site improvement plans and are now beginning their phase the development of the final planning which totals 3,325 residential units and five commercial developments. The last page in my exhibit is our nine-year analysis to sewer capacity at the waste water treatment plant.

And we made some assumptions in that. We assumed that there would be an allocation of the remaining 150,000 gallons, 50,000 to each entity. Total improvements were made at the plant. We assumed that we would get a third share of the new improvements in the plant, with the flow line fourth based and fifth based, whatever that was. We always said at the next improvement, plan on a third of that capacity. And then at some point in the future, there may be a leveling of the playing field in the current ADA agreement that all of us would have 400,000 gallons. It was noted earlier in testimony that Ranson has less shares of 330,000 gallons. I think that was intended because we were the smallest entity at the time of the ADA agreement and now we're the largest city in Jefferson County. So we --- I think it does --- there will come a point where it does need to level off.

We asked our engineering firm to then track that into the amount of gallons we would need based on the phase in schedule and the number of houses. Basically our numbers show at the bottom that we are short under the third for a number of years. But that all of the developments that we've listed in one year, we do eventually catch up and we do have an excess capacity, albeit, only 23 EDUs in your fiscal year 12/13.

JUDGE GEORGE: In what way are you the largest municipality in Jefferson County?

A. Population.

JUDGE GEORGE: In population?

A. And in land acreage.

JUDGE: And in acreage?

A. Yes. So bottom line is, this was our planning tool that we used to go back to City Council and advise them of what steps they would need to take to provide service.

BY ATTORNEY GLOVER: Q. Mr. Mills, the last page asks something about --- talks about the deficits of running into the latter part of nine years. Is that based upon receiving one-third capacity of the upgrades?

A. That's right. We're willing to --- we understand that the other two utilities have as much invested need as we do. So we're trying to plan around that. I mean, we want to be very clear about where our short-falls were and how they would be made up. But this is what we know of today. There is supposed to be even more developments occurring that we're not aware of at this point.

Q. Today, have you heard about any new developments?

A. My secretary said I had a sketch plat dropped off to me today for 800 units in an area not contemplated by our infrastructure project, we're talking about today. So it would be a brand new project. We will then have to assess.

Q. That's back at the office waiting on you?

A. Yes.

Q. Is it imperative that Ranson received --- somehow to get a portion of the capacity upgrades in this project?

A. To answer your question, yes, we need to. And I would clarify that by saying if Ranson were not a partner with Charles Town and the District in its waste water, and we had our own plant, we don't, but if we did, then we would be in the same chair that Charles Town is in today and ask the PSC for upgrades to their plant to plan for their new growth and development. And our own accountants doing a real --- our own City Council and our rate making to keep up with the projections that we're faced with. But because we're part of the three party agreement, we have to have some share, otherwise we can't plan for when the next upgrade --- or what we're going to do to provide the service to our customers. Without that, our hands are tied and so are our City Council. They can't effectively plan without it.

Q. I may have forgotten to ask you this. Did you prepare all five pages of this Exhibit One?

A. Yes, I did. And I updated it yesterday.

Q. Do you have anything else you want to tell us?

A. No.


JUDGE GEORGE: Mr. Robertson?

ATTORNEY ROBERTSON: Staff has no questions, Your Honor.

JUDGE GEORGE: Mr. Shingleton?





BY ATTORNEY KELSH: Q. Mr. Mills, your Exhibit Number One shows that Ranson has received fillers for 3,784 EDUs; is that fair to say? It would be the last page.

A. No. It's 3,225, I should point out is total customers for the District.

Q. Okay.

A. The first couple pages from our planning documents, they're in Ranson.

Q. So the number is?

A. The number is off of our last sheet. 3,784 is the number of EDUs that requested service from Ranson at this point.

Q. And earlier, Exhibit One was admitted into evidence to show for 9,946 EDUs. Do you recall Ms. Lawton here testifying?

A. Definitely.

Q. And that means a total of 13,730 EDUs out there looking for a sewer provider?

A. Absolutely.

Q. This property is going to add about 3,000?

A. Yes.

Q. Would you agree with me that this project absolutely has to go forward in order for these three---?

MR. BURKE: Objection. He's leading the witness.

JUDGE GEORGE: He's Cross Examining. He can lead.

A. Absolutely.




BY MR. BURKE: Q. On your exhibit, Mr. Mills, on the second page which is marked one of three. The second to last development is called Green Hill town homes on Seven and George (phonetic)?

A. Yes.

Q. And on the far right column it says final plot issued?

A. That's correct.

Q. Do you recall the May 3rd planning commission, Ranson planning commission meeting to approve an updated site plan subject to sewer and water availability?

A. That's correct.

Q. And how has sewer and water availability been resolved?

A. For the --- this is a new fill development located on Seven and George, existing sewer lines, no main line extension. They provided a Health Department permit which allows us --- it allows us to issue their final plat. Their sewer availabilities have been determined by individual building permits. But as far as reporting the plat, they have the availability of sewer and once they provided their health department permit and their sewer provider, has satisfied all the regulations, the plat was released.

Q. So their plat was released and the building permits are under this sharing, initially?

A. That's correct.

Q. Do you recall that in the April 5th Ranson planning commission meeting, the utility market place, there was a vote to approve delegation of final plat?

A. That's correct.

Q. Why is the wording different? That was the delegation of final plat whereas the Green Hill wasn't updated like the planning?

A. I don't understand the question.

Q. The ---.

JUDGE GEORGE: Just so I understand the relevance to this proceeding, why are we delving into the internal planning commission functions at the City of Ranson in this hearing?

MR. BURKE: To see what they have approved.

JUDGE GEORGE: Go ahead briefly.

BY MR. BURKE: Q. Is there a difference between the May 3rd planning commission wording of updated site plans approved and the April 5th wording on the final plat approved?

A. I would have to see the documents. It could be a clerical error.

MR. BURKE: No further questions.

JUDGE GEORGE: Ms. Pardo, any questions?

ATTORNEY PARDO: Very briefly.


BY ATTORNEY PARDO: Q. Until the PSC should build additional waste water treatment facilities somewhere in your county, all of your sewer customers go to the Charles Town waste water treatment plant; is that correct?

A. Yes. Correct.

Q. Are the 3,225 residential units that you mentioned in your document in addition to or inclusive of your 1,225 existing?

A. In addition to. They add --- the total EDUs is about 3,700 is what we have been notified by at this time, which will take our total customer count of --- just short of about --- just short of 4,800.

ATTORNEY PARDO: That's all I have.

JUDGE GEORGE: Any Redirect, Mr. Glover?

ATTORNEY GLOVER: No Redirect, Your Honor.

JUDGE GEORGE: You may step aside. Do you have any additional witnesses?

ATTORNEY GLOVER: No, Your Honor. I move Ranson Exhibit Number One into evidence at this time.

JUDGE GEORGE: Any objection to the admission into evidence of Ranson Exhibit One?


MR. BURKE: None.

JUDGE GEORGE: It's admitted into evidence. We're going to take a five minute break.


JUDGE GEORGE: Mr. Robertson, do you want to redo your motion that you made earlier or do you want to proceed with calling witnesses?

ATTORNEY ROBERTSON: Yes, Your Honor. I would like to renew my motion. But after consulting with the City and Mr. Shingleton and also consulting with both Mr. Weimer and Mr. Lingle, the technical staff, we could possibly, if we got everything --- submitted the documents that we need, the completed documents from Charles Town by this Friday, we could look at that, review it and make our analysis and provide a final recommendation concerning the Charles Town certificate case by Friday, September 3rd. I know earlier in the motion I was looking at September 10th. But I did check with the technical staff's schedules and we can move it up to September 3rd.

JUDGE GEORGE: I have a serious concern, Mr. Robertson. And that is that if you're going to provide the substantive evidence after the date of this hearing, then I think due process demands that your witnesses be subject to Cross Examination. And if they're subject to Cross Examination, that means I have to have another hearing which is, to say the least, inconvenient.

ATTORNEY ROBERTSON: Well, at this particular time, Your Honor, with the lack of documents, the lack of financial commitments to fund this project, and all of the other agreements, some of them still being incomplete, the only other alternative Staff has at this time is to recommend final recommendation of dismissing the project.

JUDGE GEORGE: Understood. Any response, Mr. Shingleton?

ATTORNEY SHINGLETON: Your Honor, I reluctantly agreed to an extension. However, I would point out that the basic --- the financing of this has to change. There has been no financial impact on this project since January the 26th when it was filed with the Commission. And now the project scope is obviously changing, the money is changing, the financing scheme. Those documents were provided late. They weren't provided until May or June. But the amendment to the '88 sewer agreement and the guarantee agreement, the substance of it, has not changed; the procedure, how it's going to work. The Rule 42 exhibit changed, but the bottom line to the rate payers hasn't changed. From an engineering standpoint, it's definitely changing. I understand that.

JUDGE GEORGE: Most of those changes weren't, though, in the last few days?

ATTORNEY SHINGLETON: That's right. I mean, the engineering changes really --- since May has been the least of the effort. And so, in an effort to work with the Staff, I want to work with them on one hand, but I'm --- I don't want to keep continuing this case on the other hand. In my opinion, I did not know how the hearing was going to turn out today with regard to comments from the public and questions about discharging into Evitts Run, which I thought potentially had been a major question mark and some folks might ---. Charles Town --- and really I don't think became much of an issue. So I don't want to have an extension of the due date. There is a process to go through, we have to go through, with DEP to get a modification --- to make a modification of our discharge purpose. There is a hearing process that is available to the public and the Protestants and the concerned citizens there. I presume those folks will avail themselves and their rights there. But I just don't want to keep pushing this thing back. I don't know how --- I might oppose to the Staff's position, but I wouldn't want --- as a result of doing that, I don't want to have to push the case back another month or two.

JUDGE GEORGE: Mr. Kelsh, any response?

ATTORNEY KELSH: Yes. I guess I --- I don't fully agree with Staff's position that further time and further information is needed. The application there is, included there, January 21, 2004 letter from Cruz and Associates committing $3.2 million bond offering to support this project. Through that time, $2.5 million to commit that letter. It stands to reason if you're willing to commit $3.2 million, you got $2.5. The engineering information, with respect to the HR1 Charles Town plant is available to Staff as early as June this year. Rule 42, filed on August 17th, includes debt service project of $2.5 million. I think over the last week that has been available to Staff and Staff has had an opportunity to run those numbers and see if they work. For all those reasons and because of the urgency of getting this project going and ending it, the District opposes any extension.

JUDGE GEORGE: Mr. Burke, do you have a response?

MR. BURKE: I think it's always advisable to have staff input and I acknowledge your concern about due process. Otherwise, I have no comments.


ATTORNEY PARDO: I would certainly oppose any further extension of the project as it has been --- issues off. I further concur with the comments of Mr. Kelsh regarding the financing documentation.


ATTORNEY GLOVER: Ranson concurs with Mr. Shingleton. I certainly --- I don't want the case extended --- that makes the whole day worthless. I don't want that to happen so we move forward to include it. That's what Ranson is all for.

JUDGE GEORGE: I do believe there's an internal public service commission policy that essentially says that Staff can issue its report any time it wants to regardless of procedural scheduling or hearings or due process concerns or anything else. But for that policy, I would say that you need to make your recommendation today because I do think that the changes --- although I'm very sympathetic with you of the fact that --- as of even last night you were given a change in certain accounting information. But all those changes have been relatively minor ones, changes that in large part are --- it would shock me if you didn't get commitment letters from lending institutions that committed to greater numbers to now give us lower numbers. Relatively minor changes, but given that internal commission guideline that basically gives you some kind of super party status, the only thing I can do if you're not willing to submit a substantive recommendation today, which I think you should, but if you're not willing to do that, the only thing I can do is if you issue that, if anyone demands that we have another hearing, I see no choice but to have another hearing. If I have to do that, I'll do that in Charleston, West Virginia as opposed to Charles Town. But is there any way that you could ---?

ATTORNEY ROBERTSON: Do you want a formal recommendation for right now from Staff? Staff would recommend dismissal of this project for an inadequate filing.

JUDGE GEORGE: If you want to make that recommendation now, you can call your witnesses. Or do you want to ---?

ATTORNEY ROBERTSON: Basically I'm making this from the stand. I talked with Mr. Shingleton about something to get all of the documents, both documents from Crews and Associates are different dollar amounts, but they're both at 30-year terms. Mr. Kunkle today has said it's a 20-year term. We need Crews and Associate looking at the appropriate debt service. We have different debt service calculations. We need to look at --- from the City's Exhibit Number 12, looking at the 6/10 per EDU calculation, that's changed, looking at how Mr. Kunkle derived that from his form, we got that today as an exhibit. You know, I feel like Staff did not put on a case at this time. And the only recommendation that we have at this time would be to recommend dismissal of that project for inadequate filing or substantively, as Mr. Shingleton and I talked, that Charles Town can get all of these particular documents to us by Friday, that we will file a final recommendation no later than September 3rd. The other thing is we have documents that are still inadequate. With some of the changes with the City's Exhibit Number Four, the City's Exhibit Number Five, with Huntfield it has blanks-field ---.

JUDGE GEORGE: It's going to have blanks in it until we're ready to issue the bonds.

ATTORNEY ROBERTSON: You can put that as to not to exceed $2.5 million in that agreement because ---.

JUDGE GEORGE: I can do that. I wish you would have asked me to have done that three weeks ago or a month ago. That document has been in Charles Town since May.

ATTORNEY ROBERTSON: It's not the Staff to present the direct case of the City of Charles Town.

JUDGE GEORGE: Very well. So you're not going to call witnesses today; is that correct?


JUDGE GEORGE: Are you going to file a further final joint Staff memorandum on or before September 3rd?

ATTORNEY ROBERTSON: That's our plans if we have all of the supporting information from Charles Town. I talked with the technical staff and we are agreed to go ahead and file something by September 3rd, on a week from Friday.

JUDGE GEORGE: My proposal is this, and I'll get responses from the parties, but my proposal is that if Staff is going to file something further, that it be filed by September 3rd. Can you agree to that?

ATTORNEY ROBERTSON: Yes, Friday, September 3rd. I've asked the technical staff and also asked Mr. Shingleton about the documents we need.

JUDGE GEORGE: And that falls on a Friday?

ATTORNEY ROBERTSON: As far as I know, yes, Your Honor.

JUDGE GEORGE: Okay. Is there any way you can fax that recommendation to all the parties?

ATTORNEY ROBERTSON: With that, I should be able to once we have it filed with the executive secretary.

JUDGE GEORGE: Does Mr. Burke have access to some kind of fax equipment?

MR. BURKE: Yes, Your Honor.

JUDGE GEORGE: So you could fax that on Friday to the parties?

ATTORNEY ROBERTSON: Yes. Once it is filed downstairs with the executive secretary's office. Give everybody a stamped copy.

JUDGE GEORGE: Any party that's going to demand a second hearing to cross examine the Staff witnesses, needs to do so by 2:00 on September the 6th.

ATTORNEY KELSH: That's Monday.

JUDGE GEORGE: That is a Monday. Let's make it the 7th. 2:00 on the 7th. If I receive a request for a hearing from the parties on the 7th, I will set that hearing without conferring with the parties as to availability. It will be set in Charles Town. It will be set quickly and we'll deal with it at that point.

If I don't receive a request for an additional hearing, then I would like initial briefs filed, assuming parties want to file initial briefs, by September the 10th and I would like reply briefs filed by September the 17th.

If I get a request for an additional hearing, then that briefing schedule will be modified and we will set that briefing schedule after our additional hearing. That hearing will be held very quickly. Is there any response to this proposal from the various parties?

ATTORNEY SHINGLETON: We can live with that, Your Honor.

JUDGE GEORGE: Anyone else want to address that?

ATTORNEY ROBERTSON: Looking at your request for an additional hearing. If someone does request that by September 7th, which is on a Tuesday by 2:00, what are your anticipations of setting that hearing date? Because I have already a previous commitment with another PSC on the 8th of September.

JUDGE GEORGE: I won't set it for the 8th. And I don't have my hearing calendar before me so I can't commit to a day. But it will be as soon as I can possibly fit it on my calendar.

ATTORNEY KELSH: I have a case the entire week of September 7.

JUDGE GEORGE: Okay. And you're unfortunate enough to be part of that?

ATTORNEY KELSH: I am unfortunate enough to be a part of that.

JUDGE GEORGE: Very well.

MR. BURKE: Your Honor, could we ask if the parties could distribute their briefs by e-mail because it may be voluminous to do by fax.

JUDGE GEORGE: Would it be all right with the parties, you can confer after we go off the record and exchange e-mail addresses, would it be all right to serve each other via e-mail?

ATTORNEY KELSH: That would be all right.


JUDGE GEORGE: Anything else we need to do today? If not, --- yes, we do. We do have exhibits that have not been entered.

ATTORNEY SHINGLETON: Your Honor, I am going to move the introduction of Charles Town Exhibits, I think we've got 13, I believe, however many there are.

JUDGE GEORGE: There's 13 Charles Town Exhibits that have not been admitted. All the other exhibits have been admitted or denied admission as far as I can tell.

ATTORNEY SHINGLETON: I move their admission.

JUDGE GEORGE: Any objection to Exhibits One through 13 for Charles Town? Make your objections specific to exhibit number.



JUDGE GEORGE: They're admitted into evidence.

JUDGE GEORGE: Anything else we need to do today? Hearing is adjourned. Thank you very much.