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BEFORE THE PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON

CASE NO. 04-0095-S-CN

CITY OF CHARLES TOWN SEWER DEPARTMENT

Application for a Certificate of Convenience and Necessity to construct improvements to its existing wastewater treatment system.

INITIAL BRIEF

The Jefferson County Public Service District ("District") fully supports the City of Charles Town's ("City") application for a certificate of convenience and necessity. At hearing, it was amply demonstrated that the City's project is needed, and in a hurry. The District urges the Commission to grant a certificate of convenience and necessity to the City for this project.

The primary purpose of the District's Initial Brief is to address the post-hearing Final Joint Staff Memorandum filed on September 3, 2004. In that Memorandum, the Staff of the Commission recommends approval of the certificate application contingent upon receipt of an NPDES permit modification for the plant. The District concurs with this recommendation. Staff further recommends that the Commission approve the First Revised Amendment to the 1988 Sewer Service Agreement for a limited period of up to one year or until the sewer resale rate is implemented by the City of Charles Town, whichever comes first. The District objects to this recommendation as being unworkable. Upon the Commission granting a certificate for this project to the City, the City will seek to issue bonds for this project. The underwriter of those bonds would not be willing to issue such bonds if there is the possibility that the First Revised Amendment to the 1988 Sewer Service Agreement may expire without an alternative arrangement being in place. For that reason, the District recommends that the Commission simply approve the First Revised Amendment to the 1988 Sewer Service Agreement.

In the September 3, 2004 Final Memorandum from Randy Lengyel and Jim Weimer, Staff recommends that the City of Charles Town establish a resale rate for sewer service within 120 days or else the Staff of the Commission will petition for a general investigation into the City of Charles Town. The District believes it would be more prudent for the City of Charles Town and the Staff of the Commission to refrain from taking any action related to the First Revised Amendment to the 1988 Sewer Service Agreement until after the project financing has closed. While such a case is open, it is unlikely that bonds could be issued. The District would further note that a petition initiating a general investigation on account of a municipal utility's failure to adopt an ordinance may be legally vulnerable, since the Commission only has limited jurisdiction over municipal utilities pursuant to W.Va. Code 24-2-4b. The Commission's jurisdiction in regard to inter-utility agreements, such as the 1988 Agreement and the First Revised Amendment to that Agreement, is extremely broad. The District has no objection to the Staff of the Commission filing a petition to initiate a general investigation to review the First Revised Amendment to the 1988 Sewer Service Agreement, as well as the 1988 Sewer Service Agreement itself. In fact, subject to the inclusion of other generally acceptable terms, the District would prefer to receive service from Charles Town pursuant to a simple bulk rate arrangement. However, it is urgent that this project go forward without delay. The District would ask that the Staff refrain from filing such a petition until after the financing related to this project has closed.

In the post-hearing Final Joint Staff Memorandum, the Staff of the Commission calculates the rate impact upon each of the three utilities should no additional customers emerge in Jefferson County. Staff's calculations do not take into account the effect drawing down Huntfield's $700,000 letter of credit would have upon the three utilities. Should no customers emerge, those three utilities would draw upon Huntfield's letter of credit for the first three plus years to pay for the debt service in full. Thereafter, the three utilities would need to shoulder the burden of the debt service, as indicated by Staff. It is highly unlikely that the areas which are served by the Charles Town wastewater treatment plant will experience no growth in customers. In any event, should that occur, Staff's calculations show that the rate impact would not be too great. Under any fair risk/benefit analysis, this project should go forward.

For the foregoing reasons, the Jefferson County Public Service District prays that the Public Service Commission grant a certificate of convenience and necessity to the City of Charles Town contingent upon the City obtaining an NPDES permit, and approve the First Revised Amendment to the 1988 Sewer Service Agreement.

Respectfully submitted,

JEFFERSON COUNTY PUBLIC SERVICE DISTRICT

By Counsel

James V. Kelsh

[WV State Bar No. 6617]

BB&T Square - Suite 1230

300 Summers Street

Post Office Box 3713

Charleston, West Virginia 25337

(304) 343-1654

(jefferso\charles.twn\04-0095\initial.brf)

CERTIFICATE OF SERVICE

I, James V. Kelsh, counsel for Jefferson County Public Service District, do hereby certify that a copy of the foregoing Initial Brief has been served upon the following parties of record this 10th day of September, 2004 in the manner indicated:

VIA FIRST CLASS U.S. MAIL,

AND E-MAIL:

Hoy Shingleton, Esquire

115 Aikens Center-Suite 24

Martinsburg, West Virginia 25401

E-mail: shinglet@adelphia.net

David C. Glover, Esquire

Waters Warner & Harris, PLLC

Post Office Box 1716

Clarksburg, West Virginia 26302-1716

E-mail: davidcglover@aol.com

Georgianna Pardo, Esquire

44084 Riverside Parkway, Suite 300

Leesburg, Virginia 21076-5102

E-mail: gpardo@reedsmith.com

Paul Burke

Post Office Box 1320

Shepherdstown, West Virginia 25443

E-mail: docs @numbersinstitute.com

numbersinstitute@juno.com

VIA HAND DELIVERY AND E-MAIL:

Honorable Keith George

Administrative Law Judge

Public Service Commission

201 Brooks Street

Charleston, West Virginia 25323

E-mail: kgeorge@psc.state.wv.us

Ron Robertson, Esquire

Legal Division

Public Service Commission

201 Brooks Street

Charleston, West Virginia 25301

E-mail: rrobertson@psc.state.wv.us __________________________________

JAMES V. KELSH



September 10, 2004

Ms. Sandra Squire

Executive Secretary

Public Service Commission

of West Virginia

Post Office Box 812

Charleston, West Virginia 25323

RE: CASE NO. 04-0095-S-CN

CITY OF CHARLES TOWN SEWER DEPARTMENT

Dear Ms. Squire:

Enclosed herein for filing on behalf of Jefferson County Public Service District please find the original and twelve (12) copies of its Initial Brief in the above-referenced proceeding.

A copy of the Initial Brief has been served upon all parties of record as evidenced by the attached Certificate of Service.

Sincerely,

James V. Kelsh

(WV State Bar No. 6617)

JVK/nal

Enclosures

cc: Honorable Keith George

Ron Robertson, Esq.

Hoy Shingleton, Esq.

Georgianna Pardo, Esq.

David Glover, Esq.

Paul Burke

Sue Lawton

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