RE: Phone: (304) Fax: (304) September 16,20 I5

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1 201 Brooks Street, P.0. BOX 812 Charleston, West Virginia Phone: (304) Fax: (304) September 16,20 I5 Electronic Service Only Phillip J. Nuce Lisa Smith, Secretary CPA, Preston County PSD No. 2 PO Box 353 Arthurdale, WV Sheila Kae Williams, Esq. Counsel, City of Kingwood Garden Towers, Suite Tunnelton Street Steven L. Shaffer Counsel, Preston County PSD No. 2 Estep & Shaffer, L. C. 212 Main Street Floyd Laulk, Chairman Preston County PSD No. 2 PO Box 353 Arthurdale, WV RE: Case No PWD-19A Case No PWD-C City of Kingwood V. Ladies and Gentlemen: Case No PWD-19A The Staff Memorandum issued today was served via on the above-listed parties. Any responses must be submitted to the Executive Secretary s Office in writing within 10 days of this date, unless directed otherwise. You will not receive a copy of the Staff Memorandum by regular mail. Your failure to respond in writing to the utility s answer, Staffs recommendations, or other documents may result in a decision in your case based on your original filing and the other documents in the case file, without further hearing or notice. When you provide an address, you will automatically receive electronic docket notifications as documents are filed in this proceeding. The notifications allow recipients to view a document within an hour from the time the filing is processed.

2 Case No PWD-19A; et al September 16, 2015 Page 2 If you have not done so, you are encouraged to file the Electronic Mail Agreement, previously mailed to you, which allows the Commission to serve all orders issued in this matter via electronic docket notification. Please note - the Public Service Commission does not accept electronic filings. Sincerely, I F/tg Enc. - Memo Ingrid Ferrell, Director Executive Secretary Division cc: Kathy Metheny, Treasurer of the Board 444 Hill View Drive Robert Menear, Secretary of the Board 3333 Dinkenberger Road

3 INITIAL AND FINAL JOINT STAFF MEMORANDUM TO: FROM: INGRID FERRELL DATE: SEPTEMBER 16,2015 Executive Secretary LUCAS HEAD Staff Attorney by JOHN D. LITTLE Staff Attorney RE: CASE NO PWD-19A PRESTON COUNTY PUBLIC SERVICE DISTRICT NO. 2 and CASE NO PWD-19A PRESTON COUNTY PUBLIC SERVICE DISTRICT NO. 2 and CASE NO PWD-19A PRESTON COUNTY PUBLIC SERVICE DISTRICT NO. 2 On September 11,201 5, the City of Kingwood filed a request for the interpretation of a Commission Order to continue a surcharge for Preston County Public Service District No. 2 (Preston County PSD). The City of Kingwoods requests the Commission continue the surcharge until the arrearage is paid in full instead of how the surcharge is currently implemented. Pamela D. Latocha, Utilities Analyst I1 with the Commission s Utilities Division, sets forth her final findings and recommendations in the attached Memorandum. Ms. Latocha explains the procedural history leading to the City of Kingwood s request to continue the surcharge until the arrearage is paid in full. She notes that as of January 6, 2014, when Staff submitted its final report in Case No A4, Preston County PSD owed the City of Kingwood $92,239. If Preston County Public Service District paid the City of Kingwood the entire yearly amount collected from the surcharge, $50,000, the arrearage should have been satisfied in 22 months. The arrearage is now $123,918. Ms. Latocha notes that if Preston County PSD is permitted to continue the surcharge, it will take an additional 2 % years to pay the arrearage and the surcharge will

4 Case Nos PWD-l9A, PWD-l9A, and PWD-19A September 16,2015 Page 2 have been in effect for more than 6 years. Preston County PSD will have collected approximately $355,500 from its customers for the original $132,567 delinquency. Ms. Latocha points out that since Kingwood has entered into the Agreement with the District, the District has paid its current bill along with the arrearage to Kingwood each month. JDL/cm Attachment H:WLittle\-CASESUnitial & Final JSM.doc

5 PUBLIC SERVICE COMMISSION OF WEST VIRGINIA UTILITIES DIVISION INITIAL AND FINAL MEMORANDUM FROM: DATE: SUBJECT: Pamela D. Latocha, Utilities Analyst I1 Utilities Division September 16,2015 Case No PWD-19A Case No. ll-0604-pwd-19a Case No PWD-19A On September 11, 2015, the City of Kingwood (Kingwood) filed for an interpretation of the Commission in its Order to continue a surcharge on Preston County Public Service District No. 2 (District) customers until the arrearage is paid in full versus the manner in which the tariff is written. In Case No W-PWD-PC, the Commission approved an Operations and Management Agreement (Agreement) between Kingwood and the District where Kingwood would manage, repair and service the District, as well as sale water to it by a separate agreement approved in Case No W-PWD-PC. Since 2010, there has been a long term outstanding arrearage owed by the District to Kingwood. According to the Interim Order dated July 15,201 1, in Case No PWD-19A, the Commission stated that as of April 18, 201 1, the District owed Kingwood $168,383, of which $132,567 was past due. The Interim Order further required that the District set aside 7.6% from all revenue collections, including delayed payment penalties but excluding returned check charges, reconnection charges and tap fees, and pay that amount, in addition to its monthly current amounts owed for water service, to Kingwood. The surcharge would provide $50,000 annually to reduce the arrearage. In Case Nos PWD-19A and PWD-l9A, the Commission continued to approve the additional $50,000 a year in surcharge revenues to reduce the arrearage to Kingwood. In Case PWD-I9A, Staff concluded that the arrearage should be paid in full by September 2015, if the District paid the current bill and the arrearage to Kingwood each month. As of January 6, 2014, the due date of Staffs final report in Case No PSD-19A, the District owed Kingwood $92,239. This amount divided by $50,000 a year,

6 Utilities Division Initial and Final Memorandum CaseNo PWD-19A Case No PWD-19A Case No PWD-19A September 16,20 15 Page 2 would take the District approximately 22 months to repay Kingwood. The District paid off its only loan in May 2015, which had an annual payment of $22,764. Since May, that monthly payment of $1,897 should have been used to reduce the amount owed to Kingwood, reducing the number of months to approximately 20 months to pay off the arrearage. Twenty months from January 2014 is September The District has not complied with the Cominission Order. It has repeatedly not paid the current amount owed to Kingwood, thus increasing the arrearage. In April 201 1, the arrearage was $132,567 and according to the most recent report filed by the District, it still owes Kingwood, $123,918. In over four years since the surcharge started, the District has only reduced the arrearage $8,649; however, for more than four years it has been charging its customers an additional surcharge solely for the purpose of reducing the arrearage. If the District is permitted to continue the surcharge, it will take an additional 2 % years to eliminate the arrearage, utilizing only the Commission ordered surcharge. An additional 2 % years would total more than 6 years of the surcharge. The District will have collected approximately $335,500 from its customers for the original $132,567 delinquency. Staff wants to point out that since Kingwood has entered into the Agreement with the District, the District has paid its current bill along with the arrearage to Kingwood each month. PDWs