PUBLIC SERVICE COMMISSION. Entered: October 31,2003 RECOMMENDED DECISION PROCEDURE

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1 ..., PUBLIC SERVICE COMMISSION y; ' *.:a t OF STATE VIRGINIA I, AT <- * --.- OB03 t3m ; >,-,i A Entered: October 31, IlOIALJ wpd (-JR[[qr''. CASE NO W-MA CITY OF LOGAN, a municipal corporation, Logan County. c r p fl Pd 1'3 '1 I 5 1 ij j Investigation and suspension of increase in water rates and charges as a result - of a petition filed in accordance with e 9- J RECOMMENDED DECISION PROCEDURE On June 24,2003, the City of Logan (Logan), a municipal corporation, Logan, Logan County, adopted an ordinance increasing its rates and charges to provide water service to its customers inside and outside its corporate boundaries, to become effective August 8,2003. Logan published a notice of these rates, and, pursuant thereto, on or about July 7, 2003, the Logan County Public Service District (District), a resale customer of Logan, filed a petition with the Public Service Commission, protesting Logan's June 24,2003 rate ordinance, indicating that the rates contained in the ordinance discriminate against customers located outside of Logan's city limits and against resale customers. Pursuant to the protest and pursuant to West Virginia Code (Code) $24-2-4b7 on July 21,2003, the Commission invoked its jurisdiction over the municipal appeal by entering the Commission Order Suspending Rates and Refesng to Administrative Law Judge (Order). By said July 21,2003 Order, the Commission made Logan a Respondent to this proceeding and, pending investigation, hearing and decision in this matter, the Commission suspended the aforesaid rate ordinance and deferred using the rates and charges stated in the rate ordinance until 12:Ol a.m., December 6, 2003, unless otherwise ordered by the Commission, to enable the Commission to examine and investigate the supporting data filed with the rate ordinance and to provide time for Commission Staff to make reports concerning the matters involved in this proceeding. Also, the Order referred this matter to the Division of Administrative Law Judges for decision on or before November 6, 2003, effectively 29 days prior to the end of the statutory suspension period, since December 6,2003, is a Saturday. Finally, the Order directed Commission Staff to file its report on or before September 22, PUBLIC E COMMISSION OF VIRGINIA

2 On September 15, 2003, Melissa K. Marland, Chief Administrative Law Judge, issued a Procedural Order appointing the undersigned Deputy Chief Administrative Law Judge (ALJ), Ronnie Z. MXhn, to review the grievances raised by the petitioners in this proceeding, to conduct a hearing and to issue a recommended decision on the matters involved in this proceeding. Responding to all of the above, on September 15, 2003, the ALJ issued a Procedural Order establishing a procedural schedule to process and resolve this matter, including a Monday, September 29,2003 hearing date. On Tuesday, September 16, 2003, Logan s counsel telephoned the ALJ to indicate that the September 15,2003 Procedural Order contained two typographical errors that needed correction, one in the procedural schedule (changing the word Friday to Monday in the second sentence of the second numbered paragraph in the procedural schedule) and one in the attached Notice of Hearing (changing the starting time of the hearing from 1O:OO a.m., to 9:30 a.m.). Responding to all of the above, on September 16,2003, the ALJ issued a Corrective Order correcting the September 15,2003 Order. On September 22,2003, the District submitted its prepared direct testimony and requested that the Commission formally grant it Intervenor status. Responding to all of the above, on September 23, 2003, the ALJ issued an Order Grmhg Intervenor Status, thereby granting the request for Intervenor status filed with the Commission on September 22,2003, by the Logan County Public Service District. On September 29,2003, the ALJ convened the hearing as scheduled. Logan appeared at the hearing by counsel, H. Wyatt Hanna, Esquire; Commission Staff appeared by counsel, Staff Attorney Christopher Howard, Esquire; and the District appeared by Mark Kauffelt, Esquire. Logan presented the testimony of two witnesses and presented six exhibits. Commission Staff presented the testimony of three witnesses and presented five exhibits. The District presented the testimony of one witness and presented one exhibit. At the hearing, the parties waived their rights under West Virginia Code (b) to submit proposed orders, findings of fact, conclusions of law, briefs and replies, and submitted the matter for decision based upon the evidence adduced at the hearing. EVIDENCE The ALJ received Logan s first exhibit into evidence, without objection, which is a publication aidavit demonstrating that, as directed, Logan published the Notice of Hearing on September 18 and 25,2003, in The Logan Banner, a newspaper published and generally circulated in Logan County, West Virginia. (Logan Exhibit No. 1). PUBLIC S OF COMMISSION 2

3 The first witness who testified was Willard Adkins, Logan s General Manager, who has been employed by Logan for 28 years. He identified his prepared direct testimony, which the ALJ received into evidence as Logan Exhibit No. 2. (Tr., pp ; Logan Exhibit No. 2). Mr. Adkins has served as General Manager for the past seven years. Logan s existing treatment plant, which is approximately 75 years old, can produce about 2,800,000 gallons of potable water per day. Currently, Logan s water treatment plant, which is operating 12 hours per day, produces about 1,200,000 gallons daily to serve about 2,245 customers. Logan employs three certified water plant operators. (Logan Exhibit No. 2, p. 1). Mr. Adkins clarified that two of Logan s customers, West Logan Water Company (West Logan) and Logan County Public Service District, are resale customers. Neither of these resale customers are purchasing as much water as they used to purchase. He explained that West Logan purchases a portion of its water to resell to the District, and the District purchases some of its water directly from Logan. In November 2002, when the District began operating its Mill Creek treatment facility, the amount of water purchased from Logan by both the District and West Logan decreased dramatically. (Logan Exhibit No. 2, p. 2). Mr. Adkins testified that the Logan s most recent general rate increase was about 1 1 years ago. During this 1 1-year period, Logan s operation and maintenance (O&M) costs have risen. Logan has not been able to increase its employees salaries and wages at a reasonable rate during this period. Also, Logan has employed the engineering firm of Dunn Engineers, Inc., to provide consulting engineering services to modi@ its treatment plant in order to comply with State and Federal laws. (Logan Exhibit No. 2, pp. 2-3). Next, Logan called Wayne Hypes of Dunn Engineers, Inc., to testiq. He identified his prepared direct and rebuttal testimony, which the ALJ received into evidence as Logan Exhibit Nos. 3 and 4. Mr. Hypes, a registered professional engineer, is the President of Dunn Engineers, Inc. He has performed work for about 25 potable water distribution projects over the years. His fm has worked for Logan since He has prepared cost estimates for Logan s planned treatment facility improvements. He believes that, in order to meet all State and Federal regulatory requirements, Logan will have to spend about $3,050,000 to improve its treatment facility. He opined that Logan s proposed rates were needed to meet Logan s O&M expenses and to make the needed improvements to its treatment facility. He attached a cost breakdown to support his cost estimate, which is dated January (Tr., pp ; Logan Exhibit No. 3, pp. 1-2, attachment; Logan Exhibit No. 4). Mr. Hypes specified the problems that need to be addressed at Logan s treatment facility. He explained that the existing presettling basin is located directly above the finished water clearwell. The State Health Department requires that these two basins be separated and not have a common wall between them. He proposed constructing a 600,000-gallon presettling basin located east of the existing facility to eliminate the common wall. The filter and chemical operation needs to be automated. Monitoring for turbidity, flow and chlorine needs to be separated to satisfy regulations. He outlined several other proposed elements for the treatment facility project. He opined that the proposed improvements would increase O&M by about $10,000 annually. He opined that it is in the public s interest for Logan to make the proposed improvements. (Logan Exhibit No. 4, pp. 1-2). COMMISSION 3

4 Mr. Hypes explained that the proposed water treatment facility improvement project will be a part of a separate certificate proceeding. He estimated that the final design would be completed in However, he opined that the cost estimate will not change appreciably, since, when he made it in 1999, he anticipated a fairly long lag before the project was built. He believes that the 1997 figures are still good estimates. He reviewed the 1999 construction cost estimate and found no reason to modi@ it. Once the project construction begins, it will take about nine months to a year to complete. He clarified that the cost estimate is for constructing the project only. He has not yet made a final estimate for the total project cost. Other costs would include legal costs, engineering costs and other miscellaneous items not included in the construction costs. He estimated that the project would be completed by early His engineering fm has been paid for most of the engineering costs, but some additional engineering costs will be incurred. He specified that $125,000 in engineering design costs have not been paid, plus the engineering costs for supervising the construction of the project will be paid out of the total project costs. He stated that scaled-down plans and specifications would be presented in the certificate case. (Tr., pp ). The final witness who testified on behalf of Logan was Jefiey C. Vallet, Logan s accountant. He identified his prepared direct testimony, to which was attached Logan s Rule 42 Exhibit and rate ordinance, which the ALJ collectively received into evidence as Logan Exhibit No. 5. Mr. Vallet has worked for Logan for about 19 years. Prior to Logan enacting its ordinance, he prepared a Rule 42 Exhibit to justig the proposed rate increase. The chief justification for the ordinance is the fact that Logan has incurred an 18% decrease in resale sales. Also, Logan s O&M expenses have increased since its last rate ordinance 1 1 years ago. Logan needs to increase its employee compensation. (Tr., pp ; Logan Exhibit No. 5, pp. 1-2). Mr. Vallet explained that, due to the District bringing a new water treatment facility online, Logan s resale revenues have decreased sharply. He stated that Logan s rate ordinance would increase its residential rates by 22.77%; its commercial rates by 22.77%; and its sale for resale rates by 36.67%. The fact that resale revenues have decreased so dramatically since the District started operating its new treatment plant justifies increasing Logan s resale rate by a greater percentage than the commercial and residential rates. He performed a customer class cost of service study to determine the amount of increase for each customer class. The resale rate in the ordinance is $0.97 per 1,000 gallons. Logan s ordinance also contains a different rate structure for those customers who cause Logan to incur additional costs for pumping. He used a test year ending June 30,2000, since Logan directed his accounting firm to prepare the Rule 42 Exhibit in November Logan decided not to update the test year since it would need to reevaluate its costs again once the proposed project in completed. Although the rate ordinance reflects revenue requirements based on a test year ending on June 30,2000, Logan did adjust the rate design to account for the drop in resale revenues. He opined that Commission Staffs investigation and customer class cost of service study might be a better indicator of Logan s rates and rate design, since it was based on a later test year. (Logan Exhibit No. 5, pp. 2-3). Mr. Vallet identified his prepared rebuttal testimony, which the ALJ received into evidence as Logan Exhibit No. 6. He attached a revised Rule 42 Exhibit for the fiscal year ending on June 30, Mr. Vallet indicated that, after reviewing Commission Staffs reports, he agrees with most of PUBLIC S OF COMMISSION 4

5 the recommendations. However, he disagreed with Commission Staffs failure to include the additional O&M expenses and the additional debt service that will be required by Logan s proposed treatment plant project. He opined that, if these costs are not included in Logan s rates, Logan would suffer a cash flow deficit of $194,460 annually. He opined that the revenue requirements should be adjusted to the levels that would be generated by Logan s proposed tariff, as set forth in the Rule 42 Exhibit attached to Mr. Vallet s prepared rebuttal testimony. Logan s proposed tariff attached to Mr. Vallet s rebuttal testimony follows the same rate design as Commission Staffs proposed rate design, but incorporates a revised revenue requirement that would generate the revenue necessary to cover the additional O&M expenses and debt service required by the proposed project. (Tr., pp ; Logan Exhibit No. 6). Mr. Vallet explained that Logan has lost a significant number of residential customers since he prepared his original Rule 42 Exhibit in The 2000 Rule 42 Exhibit contains many estimates that are now known. He acknowledged that Logan s current bonds, issued in 1964, would be paid off in However, he believes that any rates the Commission approves now must include revenues to make those payments. He estimated that, once those bonds are paid, about $19,360 would be freed up for other uses. (Tr., pp ). Mr. Vallet explained that non-recurring items should not be included in revenue requirements. Known and measurable expenses occurring outside the test year that will be recurring should be included in going-level revenue requirements. He opined that the cost of the proposed project, i.e., the additional O&M expenses that will be incurred as a result of the project and the additional debt service, are known and measurable expenses that should be included in the going-level revenue requirements for this rate case. He based his recommendations on the premise that the project will require $3,000,000 in borrowed funds. (Tr., pp ). Mr. Vallet clarified that, although the annual payment on Logan s current bonds is about $8 1,000, the actual amount that would be freed up once that debt is retired is about $19,000. He also clarified that, as Logan s accountant, he accepts the Staff-recommended revenues, except for the amount not included for the treatment plant project. He also concurs with the Staff-recommended rate design. (Tr., pp ). The first witness who testified on behalf of Commission Staff was Utilities Analyst Dixie Kellmeyer. She prepared the Staff Rule 42 Exhibit, which the ALJ received into evidence as Staff Exhibit No. 1. Logan s current rates do not cover its O&M expenses. The rates contained in Logan s June 24,2003 rate ordinance do not cover Logan s O&M expenses. The chief difference between Logan s original Rule 42 Exhibit upon which its ordinance was based and the Staff Rule 42 Exhibit is a function of the different test years. Staffs Rule 42 Exhibit is based on a test year ending June 30,2003. Also, Staff did not include any funding for the additional O&M and debt service resulting from the proposed water treatment plant project, since that project has not yet been approved. Logan has not yet filed a certificate application for the proposed project. (Tr., pp ; Staff Exhibit No. 1)- PUBLIC E COMMISSION OF VIRGINIA

6 d Ms. Kellmeyer explained that she did not prepare the Staff-recommended revenue requirements. Those were prepared by Thomas Wagoner. The Staff Rule 42 Exhibit includes all adjustments made by Staff at per books, going-level and pro forma. Chiefly, the pro forma adjustments were to exclude the amounts that Logan included to support the proposed project. Also, per books and going-level adjustments were made to reflect the later test year spending and the expenses outside the test year that are known and measurable. (Tr., p. 40; Staff Exhibit NO. 1). The next witness who testified on behalf of Commission Staff was James Spurlock of the Engineering Division. He prepared Commission Staffs Class Cost of Service Study Allocation Factors, dated September 22,2003, which the ALJ received into evidence as Staff Exhibit No. 2, and a revised version of that document, dated September 26,2003, which the ALJ received into evidence as Staff Exhibit No. 3. He stated that Staff Exhibit No. 3 corrects certain errors contained in Staff Exhibit No. 2. Also, Staff Exhibit No. 3 reflects the reduced amount of water sold to West Logan. (Tr., pp ; Staff Exhibit Nos. 2 and 3). The final witness who testified on behalf of Commission Staff was Thomas Wagoner of the Utilities Division. He prepared the Staff-recommended revenue requirements and designed the Staffrecommended rates based upon the customer class cost of service study which he prepared. The ALJ received the original document which Mr. Wagoner prepared, titled Revenue Requirements Class Cost of Service Study, into evidence as Staff Exhibit No. 4. Based upon Mr. Spurlock s revised allocation factors, Mr. Wagoner also prepared a Revised Revenue Requirements Class Cost of Service Study, which the ALJ received into evidence as Staff Exhibit No. 5. (Tr., p. 45; StaffExhlbit Nos. 4 and 5). Mr. Wagoner stated that Staffs revised revenue requirements for Logan would generate additional revenues of approximately $170,500 above going-level, or an increase in revenues of 25.9%. He stated that this level of revenues would cover Logan s $779,164 cash operating requirements, its $19,360 debt service requirements and other additional costs as recommended by Commission Staffs Engineering Division. The Staff-recommended rates would generate a $20.20 bill for a residential customer who does not require a booster pump using 4,500 gallons of water, or a 33.77% increase from $ The bill for a residential customer using 4,500 gallons who uses a booster pump would decrease by $1.18, or 5.52%, under the Staff-recommended rates, since the separate rate for customers using a booster pump has b2n eliminated. Under the Staff-recommended rates, the revenue generated from resale customers would increase by $30,783, or 23.83%. The resale rate would increase to $ per 1,000 gallons, with no difference between booster and non-booster resale customers. The revised leak adjustment rate is $ per 1,000 gallons. (Staff Exhibit No. 5). Mr. Wagoner testified that Logan s last rate case was Case No W-MA. Logan s current rates are not sufficient to cover its O&M expenses. He explained that Staff prepared corrected exhibits to reflect reduced consumption by Logan s resale customers. The Staffrecommended rates would generate about 5.5% more revenues than the rates contained in the ordinance. The chief difference in rate design is that the Staff-recommended rate design no longer differentiates between booster and non-booster customers. He opined that separate rates for PUBLIC s E COMMISSION OF VIRGINIA 6

7 customers who require a booster pump is discriminatory. The other differences in rate design are a result of Staffs customer class cost of service study. (Tr., pp ). When cross-examined on whether the rates approved in Case No W-MA were later disallowed, Mr. Wagoner indicated that the tariff on file with the Commission reflects the rates approved in the 1999 case. He opined that Logan should file a revised tariff if those rates were subsequently revised or disallowed. (Tr., pp ). Mr. Wagoner clarified that Logan s bonds should be retired in October He concurred that the debt service coverage of $19,360 should be included in the instant rate case. No debt service was included for the proposed treatment plant project, since Logan has not yet filed a certificate application. (Tr., pp ). The final witness who testified, William Baisden, the District s Assistant Manager, testified on behalf of the District. He identified his prepared direct testimony, which the ALJ received into evidence as District Exhibit No. 1. (Tr., pp ; District Ehbit No. 1). Mr. Baisden, a certified public accountant, has worked for the District for over 10 years. He supervises all of the frnancial activities of the District. The District s Rum Creek system serves about 325 customers and purchased about 26,801,900 gallons of water from Logan during the year ending on June 30,2003; the District s Mud Fork system purchased about 7,222,000 gallons to serve about 145 customers; and its Stollings/McConnell system purchased about 48,452,900 gallons to serve about 730 customers. West Logan also is a resale customer of Logan. He opined that Logan s proposed rates would increase the District s costs by about $15,000 annually. He opinedthat Logan s proposed rates are discriminatory, since those rates would increase Logan s resale rate by % while increasing residential and commercial rates by only 22.77%. He also opposed Logan s rates because they include debt service and O&M expenses for the proposed water treatment plant project. Finally, he opined that Logan s current debt service would decrease by $81,000 in 2004, which should be sufficient to offset any operating deficit Logan now experiences. (District Exhibit No. 1, pp. 1-4). DISCUSSION The ALJ holds that it is premature to include in rates O&M expenses and debt service requirements for Logan s proposed water treatment plant project at this time. Logan can pass another ordinance to cover those requirements once it has filed its certificate application. The ALJ holds that the $19,360 figure allowed by Staff is a correct statement of Logan s current debt service requirement, not the $81,000 figure proposed by the District. Since Logan s current rates will not cover its O&M expenses, and since Logan has concurred with the Staff-recommended revenue requirements, except for the exclusion of expenses associated with the proposed project, it is reasonable to approve the Staff-recommended revenue requirements as contained in StafTExhibit No. 5. COMMISSION 7

8 Since Commission Staff has performed a customer class cost of service study to support its rate design, which will eliminate any claims of discrimination by the District; since the Staffrecommended rates will generate revenues sufficient to cover its O&M expenses, its debt service requirements and other expenses recommended by StafT, it is reasonable to approve the Staffrecommended rates and rate design. FINDINGS OF FACT 1. On June 24, 2003, the City of Logan adopted an ordinance increasing its rates and charges to provide water service to its customers inside and outside its corporate boundaries, to become effective August 8,2003. Logan published a notice of these rates, and, pursuant thereto, on or about July 7, 2003, the Logan County Public Service District, a resale customer of Logan, filed a petition with the Commission, protesting Logan s June 24,2003 rate ordinance, indicating that the rates contained in the ordinance discriminate against customers located outside Logan s city limits and against resale customers. Pursuant to the protest and pursuant to Code b, the Commission invoked its jurisdiction over the municipal appeal, made Logan a Respondent to this proceeding and, pending investigation, hearing and decision in this matter, suspended the aforesaid rate ordinance and deferred using the rates and charges stated in the rate ordinance until 12:Ol a.m., December 6,2003, unless otherwise ordered by the Commission. (See, on July 21,2003 Order). 2. Logan published the Notice of Hearing on September 18 and 25,2003, in The Logan Banner, a newspaper published and generally circulated in Logan County, West Virginia. (See, Logan Exhibit No. 1). 3, Logan s two resale customers, West Logan Water Company and Logan County Public Service District, are not purchasing as much water as they used to purchase, as a result of the District placing its Mill Creek treatment facility in service in November (See, Testimony of Willard Adkins, Logan Exhibit No. 2, p. 2). 4. Although Logan is proposing improvements to its water treatment facility, it has not yet filed a certificate application. (See, Testimony of Willard Adkins, Logan Exhibit No. 2, pp. 1-3; Wayne Hypes, Tr., pp ; Logan Exhibit No. 3, pp. 1-2, attachment; Logan Exhibit No. 4; Jeffrey Vallet, Tr., pp ; Logan Exhibit No. 5, pp. 1-3; Dixie Kellmeyer, Tr., pp ; Staff Exhibit No. 1). 5. Logan s current rates do not cover its existing level of O&M expenses. (See, Testimony of Dixie Kellmeyer, Tr., pp ; Thomas Wagoner, Tr., pp ; Staff Exhibit No. 1). 6. The Staff-recommended revenue requirements and the Staff-recommended rates, which are based upon the Staff Rule 42 Exhibit, the Staffs engineering allocation factors and the Staff-recommended rate design, which itself is based upon a customer class cost of service study, would generate additional revenues of approximately $170,500 above going-level, or an increase in revenues of 25.9%. This level of revenues would cover Logan s $779,164 cash operating requirements, its $19,360 debt service requirements and other additional costs as recommended by PUBLIC OF E COMMISSION VIRGINIA 8 - A

9 Commission Staffs Engineering Division. The Staff-recommended rates would generate a $20.20 bill for a residential customer who does not require a booster pump using 4,500 gallons of water, or a 33.77% increase from $ The bill for a residential customer using 4,500 gallons who uses a booster pump would decrease by $1.18, or 5.52%, under the Staff-recommended rates, due to Staff eliminating the separate rate for customers using a booster pump. Under the Staff-recommended rates, the revenue generated from resale customers would increase by $30,783, or 23.83%. The resale rate would increase to $1.373 per 1,000 gallons, with no difference between booster and non-booster resale customers. The revised leak adjustment rate is $ per 1,000 gallons. (See, Testimony of Thomas Wagoner, Tr., pp ; Staff Exhibit No. 5). 7. The Staff-recommended rates, based on a test year ending June 30,2003, instead of the 2000 test year that Logan used to prepare its ordinance, would generate 5.5% more revenues than the rates contained in the ordinance. (See, Testimony of Thomas Wagoner, Tr., pp ). 8. Logan's bonds will be retired in October Logan's current debt service of $19,360 for those bonds was included in the Staff-recommended revenue requirements. No debt service was included for the proposed treatment plant project, since Logan has not yet filed a certificate application. (Tr., pp ). CONCLUSIONS OF LAW 1. For all of the reasons set forth in Finding of Fact Nos. 2 through 8, it is reasonable to conclude that the rate ordinance passed by Logan on June 24,2003, is unreasonable and should be set aside. 2. For the same reasons, it is also reasonable to approve the revised Staff-recommended revenue requirements, the revised Staff-recommended rate design and the revised Staff-recommended rates, as set forth in Staff Exhibit No. 5. ORDER IT IS, THEREFORE, ORDERED that the rate ordinance passed by the City of Logan on June 24,2003, be, and hereby is, set aside and rendered void and of no effect. IT IS FURTHER ORDERED that the revised Staff-recommended revenue requirements, attached as Appendix A, and the revised Staff-recommended rate design and the revised Staffrecommended rates, attached as Appendix B, be, and hereby are, approved for use by the City of Logan for all water service rendered after 12:Ol a.m., December 6,2003. IT IS FURTHER ORDERED that, within thirty (30) days of this Recommended Decision becoming final, the City of Logan shall file with the Commission an original and at least five (5) copies of a proper tariff setting forth the rates hereby approved. PUBLIC SE COMMISSION IRGlNlA ~ ~ A U L E S T O N 9

10 The Executive Secretary hereby is ordered to serve a copy of this Recommended Decision upon the Commission by hand delivery, and upon all parties of record by United States Certified Mail, return receipt requested. Leave hereby is granted to the parties to file written exceptions supported by a brief with the Executive Secretary of the Commission within fifteen (15) days of the date this Recommended Decision is mailed. If exceptions are filed, the parties filing exceptions shall certifl to the Executive Secretary that all parties of record have been served said exceptions. If no exceptions are so filed this Recommended Decision shall become the order of the Commission, without further action or order, five (5) days following the expiration of the aforesaid fifteen (15) day time period, unless it is ordered stayed or postponed by the Commission. Any party may request waiver of the right to file exceptions to an Administrative Law Judge s recommended decision by filing an appropriate petition in writing with the Executive Secretary. No such waiver will be effective until approved by order of the Commission, nor shall any such waiver operate to make any Admtnistrative Law Judge s recommended decision the order of the Commission sooner than five (5) days after approval of such waiver by the Commission. Ronnie Z. MXann Deputy Chief Administrative Law Judge RZM:s ad.wpd PUBLIC E COMMISSION OF VIRGINIA 10

11 Appendix A Page 1 of 1 CITY OF LOGAN WATER BOARD CASE NO W-MA APPROVED REVENUE REQUIREMENTS Cash Available: Operating Revenues Sales Revenue Other Operating Revenues Other Income Total Cash Available Cash Requirements: Operation & Maintenance Expenses Taxes Other Than Income Taxes Cash Requirements Before Debt Service Cash Available for Debt Service Debt Service Requirements: Interest Principal Other Subtotal 827,642 15, ,362 36, ,280 16,080 19,360 Other Debt Reserve Requirement Total Debt Service Requirements Remaining Cash Coverage Ratio 1 PUBLIC SE COMMISSION OF W IRGlNlA

12 Appendix B Page 1 of 3. CITY OF LOGAN WATER BOARD CASE NO W-MA APPROVED RATES SCHEDULE NO. 1 APPLICABILITY Applicable within the entire territory served. AVAIL ABILITY Available for general, domestic and commercial service. RATES (Customers with metered water supply) First 2,000 gallons used per month $4.85 Next 3,000 gallons used per month $4.20 Next 25,000 gallons used per month $3.55 Next 70,000 gallons used per month $2.45 Next 100,000 gallons used per month $2.00 All Over 200,000 gallons used per month $0.93 MINIMUM CHARGE No bill will be rendered for less than $9.70 per month, which is the equivalent of 2,000 gallons of water. Eauivalent Gallons 5/8-inch meter $ ,000 3/4-inch meter $ ,300 1-inch meter $ , /4-inch meter $ , /2-inch meter $ ,900 2-inch meter $ ,400 3-inch meter $ ,500 4-inch meter $ ,700 6-inch meter $ ,500 8-inch meter $ ,000 DELAYED PAYMENT PENALTY The above tariff is net. On all accounts not paid in full when due, ten percent (10%) will be added to the net current amount unpaid. This delayed payment penalty is not interest and is only to be collected only once for each bill where it is appropriate.

13 Appendix B Page 2 of 3 SCHEDULE NO. 2 RESALE All water for resale to West Logan Water Company and Logan Public Service District will be billed in accordance to the approved rate of $1.373 per 1,000 gallons used per month. APPLICABILITY Applicable in the City of Logan. AVAILABILITY OF SERVICE Available for public fire protection. SCHEDULE NO. 3 The City of Logan shall pay a public fire service charge of $14, per annum, payable in twelve (12) equal monthly payments. This charge covers all water system facilities existing on June 30, 2003, which are used in whole or in part for public fire protection. SCHEDULE NO. 4 APPLICABILITY Applicable outside the corporate limits of the' City of Logan. AVAILABILITY OF SERVICE Available for public fxe protection. RATE Monthly charge of $14.27 per month. SCHEDULE NO. 5 APPLICABILITY Applicable within the entire territory served. AVAILABILITY OF SERVICE Available for private fire protection. PUBLIC s E COMMISSION OF VIRGINIA

14 Appendix B Page 3 of 3 RATE Two-inch pipe, per opening, not more than 50 feet of hose to each Sprinkler system service connection of 4 inches or greater, 1,000 heads or less $ 3.02 per month $ per year Each additional sprinkler head $ 0.27peryear LEAK ADJUSTMENT $ per 1,000 gallons, to be used when the bill reflects unusual consumption which can be attributed to eligible leakage on customer s side of the meter. This rate shall be applied to all such unusual consumption above the customer s historical average usage. RECONNECTION $ To be charged whenever the supply of water is turned off for violation of rules, nonpayment of bills or fraudulent use of water. TAP FEE A tap fee of $200 will be charged to all customers who apply for service outside of a certificate proceeding before the Commission for each tap to the system. rr PUBLIC s E COMMlSSlON OF VIRGINIA