PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON

Transcription

1 PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON At a session of the PUBLIC SERVICE COMMISSION OF WEST VIRGINIA in the City of Charleston on the 4th day of May, CASE NO PSD-PC GREENBRIER PUBLIC SERVICE DISTRICT NO. 1, a public utility, Ronceverte, Greenbrier County. Petition for consent and approval to acquire the Meadowbrook Estates Homeowners Association Package Plant and operate as a separate entity within the District and for approval of two loans. COMMISSION ORDER The Commission approves the takeover of a package plant, as well as receipt of grants and a $60,000 addition to a line of credit to be used in connection with the takeover. The Commission denies entry into a design loan for a separate, unrelated project and reminds the utility that its pleadings must be made by legal counsel. BACKGROUND On November 23, 201 1, Greenbrier Public Service District No. 1 requested, among other things, the Commission's prior consent and approval of the acquisition of the Meadowbrook Estates Homeowners Association package plant in Frankford, Greenbrier County, as well as permission to enter into a design loan and to borrow an additional $60,000 on an existing line of credit. Application at 1. Greenbrier No. 1 requested that separate rates be developed for the approximately 45 users of the Meadowbrook system. Id. at 3. On February 2, 2012, the Commission provided twenty days for Greenbrier No. 1 to file additional information and required Commission Staff to file a further recommendation. The Commission also bifurcated a rate request for separate processing in Case Number PSD-42A. Comm'n Order at 6-7. On February 24, 2012, Greenbrier No. 1 filed additional information and stated that no written agreement regarding the acquisition has been finalized with the West Virginia Department of Environmental Protection or Meadowbrook. Greenbrier No, 1 advised that

2 Meadowbrooks plant, lines and easements will be transferred to Greenbrier No. 1 for ownership and operation, DEP will impose no fines, penalties or costs for two years from the ownership transfer, Twenty thousand dollars from the Greenbrier County Commission is in escrow to defray system upgrade costs, The Greenbrier County Legislative Delegation has pledged about $25,000 for the project, The proposed design loan from the West Virginia Water Development Authority will be used primarily for a forthcoming certificate project to expand the Meadowbrook system into areas where septic tanks have failed, A portion of the proposed design loan may be used to design an upgrade to the existing Meadowbrook system, Repayment of the design loan would begin within two years if the final project is not approved, but Greenbrier County's karst region is a priority area for funding by the West Virginia Infrastructure and Jobs Development Council, The Meadowbrook system will be operated on a stand-alone basis because of its distance from other Greenbrier No. 1 facilities, The Meadowbrook Estates Homeowners Association has been rechartered and property owners have discussed the proposed package plant takeover, and Notice of the proposed transfer will be published and a meeting will be called to approve the transfer. Response at 1-2. Regarding the line of credit, Greenbrier No. 1 stated that First National Bank is increasing the loan principal by $60,000 and the additional finds could be drawn for emergency repairs and operation of the existing system, such as pump failures or line breaks. Greenbrier No. 1 will need to acquire easements for the proposed expansion. While most easements likely will be donated, Greenbrier No. 1 may need cash to buy some rights-of-way. Id. 2

3 On February 29, 2012, Greenbrier No. 1 filed further information about its existing loans, explaining that it did not obtain the Commission's prior consent and approval before entering into a $500,000 loan with First National Bank. 2d Response at 1-2. Greenbrier No. 1 drew $475,279 on that loan, refinanced it in 2008 for $300,000, and refinanced it on November 3, 201 1, for the existing $224, debt plus a $60,000 line of credit for emergency repairs and to purchase rights-of-way for the proposed expansion. Greenbrier No. 1 stated that none of the additional $60,000 has yet been needed. Greenbrier No. 1 advised that the agreement with First National Bank was attached, but Greenbrier No. 1 provided a resolution relating to a loan with First Citizens Bank and Trust Company and two amortization schedules that do not identify the bank that provided the schedules. On March 5, 2012, Commission Staff filed its Final Joint Staff Memorandum, noting that this case involves two distinct and separate subjects: acquisition of Meadowbrook and a design loan on a long-planned sewer extension project. Staff recommended approval for the acquisition of Meadowbrook, but disapproval for the increased bank line of credit and the separate design loan. Utilities Division & Engineering Division Final Recommendations at 2, attached to Final Joint Staff Memorandum. Staff noted that an earlier extension project in 2005 had a $483,382 cost over-run, resulting in a final cost that was nearly twice the estimates presented to the Commission. Staff asserted that such cost escalation indicates serious problems with estimating, project management and perhaps, engineering, and these issues should be resolved before Greenbrier No. 1 moves ahead with another extension. Id. at 4. Staff further advised that Greenbrier No. 1 has been considering an extension to serve about 540 customers that was estimated in 2009 to cost $11,670,000.,. d I citing Greenbrier PSD No. 1, Case No PSD-CN (total for Phases A, B & C June 3, 2009 filing). Greenbrier No. 1 pursued this extension as a series of smaller projects and filed Phase A with the Infrastructure Council in When American Recovery and Reinvestment Act of 2009 (sometimes referred to as the federal stimulus program) funds were not received for Phase A, Greenbrier No. 1 reverted to planning a single large project. Id. at 5. Staff also stated that it was not clear which services are proposed to be paid using the design loan. Staff stated that the Infrastructure application for the large extension project has not been updated since June 2008, no funds have been committed to the project, and it would be fiscally irresponsible to continue to spend money on a project having no clear path forward. Staff suggested that Greenbrier No. 1 be provided 60 days to file an Infrastructure application for a new project to address only improvements to the Meadowbrook system or a revised plan for the single large extension project that includes Meadowbrook improvements. In the alternative, Staff suggested that Greenbrier No. 1 file a resolution abandoning the large extension project and ceasing expenditures related to it. Id. at 6. 3

4 Staff advised that the project engineer, Criss Haynes, P.E., has been receiving $1,500 per month since late 2010 and the amount outstanding for Phase A engineering work is less than $255,000. Greenbrier No. 1 is also paying $600 per month to attorney Steve Hunter, with $300 of it being applied to reduce the amount owed for Phase A legal services, but Staff does not know the remaining amount owed to Mr. Hunter. Id. at 5-6. Staff suggested that Greenbrier No. 1 may continue these payments for Phase A work, so long as the payments are not allocated to interest or additional charges. Because Greenbrier No. 1 is making payments to the project engineer and project attorney, Staff argued that it is not necessary to borrow an additional $60,000 from First National Bank. Staff recommended that Greenbrier No. 1 use its renewal and replacement reserves to fund ongoing system improvements and repair. Upon receipt of permanent financing for the large extension project, Greenbrier No. 1 should pay in full the remaining project-related balances owed to the engineer and attorney. Id. Staff also recommended that the Commission 1) authorize Greenbrier No. 1 to acquire the assets of the Meadowbrook sanitary sewer system, 2) require that a copy of all legal documents associated with the Meadowbrook acquisition be filed for Commission Staffs review and comment prior to their execution, 3) grant its prior consent and approval for Greenbrier No. 1 to accept grants from various sources including the Greenbrier County Commission, the State of West Virginia and the Meadowbrook Homeowners Association, 4) require Greenbrier No. 1 to notify the Commission in writing within ten days of receipt of any grant and state, at a minimum, the source, amount and any requirements or restrictions and 5) require Greenbrier No. 1 to place all grant funds into a separate bank account and use them solely to acquire, repair, maintain and initially operate the Meadowbrook system. Final Joint Staff Memorandum at 1-2. On March 8, 2012, the General Manager of Greenbrier No. 1 filed a motion asking to have additional time to respond to the final Staff recommendation. Motion at 1-2. DISCUSSION The Commission is pleased with the cooperative efforts by all participants in connection with the takeover of the Meadowbrook sanitary sewer system. A large portion of the Staff memoranda is focused upon the separate request for a design loan for an unrelated extension project, but there is support from Staff related to the Meadowbrook acquisition. Greenbrier No. 1 also included a request for a rate increase related to the design loan in its filing as well as a request that a separate rate be established for the Meadowbrook customers. The Commission removed the rate related requests from this proceeding and established Case Number PSD-42A to consider them. Approval for that acquisition and related financing should not be delayed because of concerns about a financing request for a separate project and a rate application 4

5 that Greenbrier No. 1 included with its filing for the Meadowbrook acquisition that will be considered in a separate proceeding. Upon consideration, and to facilitate a prompt transition, the Commission will approve Greenbrier No. 1's 1) acquisition of the Meadowbrook system, 2) receipt of grants from the Greenbrier County Commission, the State of West Virginia or any other source for the acquisition or initial operation of Meadowbrook system, and 3) receipt of up to $60,000 on the line of credit for the acquisition or initial operation of the Meadowbrook system. To date, Greenbrier No. 1 has provided sufficient details only about the $20,000 grant from the Greenbrier County Commission. Upon receipt of any other grants for the takeover or initial operation of the Meadowbrook system, Greenbrier No. 1 should make a closed entry filing in this proceeding that states the amount, source and any restrictions on such grants. Commission approval must be sought in a separate proceeding for the receipt of grants to be used for any other purpose. The Commission also wishes to make clear that it provides consent and approval for up to $60,000 in draws on the line of credit only relating to the acquisition or initial operation of the Meadowbrook system. In this proceeding, the Commission does not approve of any borrowing for any other purpose. The Commission will not require Greenbrier No. 1 to establish a separate account relating to the grant funds or draws on the line of credit. The Commission instead will require Greenbrier No. 1, in its accounting system, to track the receipt of these grant funds and draws as well as the expenditures Greenbrier No. 1 makes for the Meadowbrook system in such a manner to be able to demonstrate to the Commission in future filings how the grant funds and draws were dedicated to the Meadowbrook system acquisition or initial operations. Based upon the information provided to date, the Commission will not provide its prior consent and approval for Greenbrier No. 1 to enter into the design loan for an unrelated extension project. We agree with Commission Staff that information relating to any large expansion project must be updated before the Commission can consider a request to enter into a design loan. As discussed above, a rate request made by Greenbrier No. 1 is under consideration in a separate proceeding. When Greenbrier No. 1 begins operating the Meadowbrook system, therefore, Meadowbrook customers will pay existing Greenbrier No. 1 rates. Greenbrier No. 1 shall promptly file, as a closed entry in this proceeding, a copy of any agreements with DEP or the Meadowbrook Estates Homeowners Association relating to the takeover or operations of the Meadowbrook system. Greenbrier No. 1 should file those documents for Commission review before Greenbrier No. 1 executes them. Finally, the Commission notes that this utility has filed several pleadings via its General Manager, which is contrary to Procedural Rule 4.1.d: 5

6 A party... that is a corporation.. may file preliminary filings by either a duly authorized person or an attorney at law. A party... that is a corporation... making filings that are not preliminary filings must do so by an attorney at law. Professionals other than attorneys... may not file pleadings with the Commission but may file responses to data requests, unless the party is represented by an attorney, in which case all filings shall be made by the attorney. We remind Greenbrier No. 1 to make future pleadings in this, and all other proceedings, consistent with the requirements of Procedural Rule 4.1.d. FINDINGS OF FACT 1. On November 23, 201 1, Greenbrier No. 1 requested the Commission's prior consent and approval of the acquisition of Meadowbrook Homeowners Association Package Plant and authority to operate that plant as a separate entity, as well as permission to enter into a design loan, to receive grants and to borrow an additional $60,000 on an existing line of credit. Application at On February 24 and 29, 2012, Greenbrier No. 1 filed additional information. 3. On March 5, 2012, Commission Staff recommended that the Commission deny Greenbrier No. 1's request to enter into the design loan and to draw up to an additional $60,000 from First National Bank. Utilities Division & Engineering Division Final Recommendations at 1-6, attached to Final Joint Staff Memorandum. 4. Staff also recommended that the Commission 1) authorize Greenbrier No. 1 to acquire the assets of the Meadowbrook sanitary sewer system, 2) require that a copy of all legal documents associated with the Meadowbrook acquisition be filed for Commission Staffs review and comment prior to their execution, 3) grant its prior consent and approval for Greenbrier No. 1 to accept grants from various sources including the Greenbrier County Commission, the State of West Virginia and the Meadowbrook Homeowners Association, 4) require Greenbrier No. 1 to notify the Commission in writing within ten days of receipt of any grant and state, at a minimum, the source, amount and any requirements or restrictions and 5) require Greenbrier No. 1 to place all grant funds into a separate bank account and use them solely to acquire, repair, maintain and initially operate the Meadowbrook system. Final Joint Staff Memorandum at

7 CONCLUSIONS OF LAW 1. It is in the public interest to approve Greenbrier No. 1's 1) acquisition of the Meadowbrook system, 2) receipt of grants from the Greenbrier County Commission, the State of West Virginia or any other source for the acquisition or initial operation of Meadowbrook system, and 3) receipt of up to $60,000 on the line of credit for the acquisition or initial operation of the Meadowbrook system. 2. In its accounting system, Greenbrier No. 1 should track the receipt of these grant funds and draws as well as the expenditures Greenbrier No. 1 makes for the Meadowbrook system in such a manner to be able to demonstrate to the Commission in future filings how the grant funds and draws were dedicated to the Meadowbrook system acquisition or initial operations. 3. Information relating to any large expansion project must be updated before the Commission can consider a request to enter into a design loan. 4. When Greenbrier No. 1 begins operating the Meadowbrook system, Meadowbrook customers will pay existing Greenbrier No. 1 rates. 5. Greenbrier No. 1 should make future pleadings in this, and all other proceedings, consistent with the requirements of Procedural Rule 4.1.d. ORDER IT IS THEREFORE ORDERED that the Commission grants its prior consent and approval for Greenbrier No. 1's 1) acquisition of the Meadowbrook system, 2) receipt of grants from the Greenbrier County Commission, the State of West Virginia or any other source for the acquisition or initial operation of Meadowbrook system, and 3) receipt of up to $60,000 on the line of credit for the acquisition or initial operation of the Meadowbrook system. IT IS FURTHER ORDERED that upon receipt of any grants for the takeover or initial operation of the Meadowbrook system, except for the $20,000 now in escrow from the Greenbrier County Commission, Greenbrier No. 1 shall make a closed entry filing in this proceeding that states the amount, source and any restrictions on such grants. IT IS FURTHER ORDERED that, in its accounting system, Greenbrier No. 1 shall track the receipt of grant funds and draws as well as the expenditures Greenbrier No. 1 makes for the Meadowbrook system in such a manner to be able to demonstrate to the Commission in future filings how the grant funds and draws were dedicated to the Meadowbrook system acquisition or initial operations. 7

8 IT IS FURTHER ORDERED that Greenbrier No. 1 shall promptly file, as a closed entry in this proceeding, a copy of any agreements with DEP or the Meadowbrook Estates Homeowners Association relating to the takeover or operations of the Meadowbrook system. Greenbrier No. 1 shall file those documents for Commission review before Greenbrier No. 1 executes them. IT IS FURTHER ORDERED that upon entry of this Order this case shall be removed from the Commission's docket of open cases. IT IS FURTHER ORDERED that the Executive Secretary of the Commission serve a copy of this Order by electronic service on all parties of record who have filed an e-service agreement, and by United States First Class Mail on all parties of record who have not filed an e-service agreement, and on Commission Staff by hand delivery. c I rur c 'PS. tala: CLW/sk cb.doc 8