PRIOR PRINTER'S NO. 27 PRINTER'S NO. 3608
No. 25 Session of 1989
INTRODUCED BY LLOYD, BATTISTO, D. R. WRIGHT, NOYE, HALUSKA,
GIGLIOTTI, VEON, HASAY, STABACK, KOSINSKI, G. SNYDER,
E. Z. TAYLOR, KUKOVICH, BELFANTI, TIGUE, CAWLEY, STUBAN,
ITKIN, COLAIZZO, BORTNER, PETRARCA, PRESTON, CAPPABIANCA AND
FARGO, JANUARY 18, 1989
AS REPORTED FROM COMMITTEE ON CONSUMER AFFAIRS, HOUSE OF
REPRESENTATIVES, AS AMENDED, MAY 30, 1990
AN ACT
1 Amending Title 66 (Public Utilities) of the Pennsylvania
2 Consolidated Statutes, providing for the commission to order
3 the acquisition of small water and sewer utilities.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Title 66 of the Pennsylvania Consolidated
7 Statutes is amended by adding a section to read:
8 § 529. Power of commission to order acquisition of small water
9 and sewer utilities.
10 (a) General rule.--The commission may order a capable public
11 utility to acquire a small water or sewer utility if the
12 commission, after notice and an opportunity to be heard,
13 determines:
14 (1) that the small water or sewer utility is in
15 violation of statutory or regulatory standards which affect
16 the safety, adequacy, efficiency or reasonableness of the
1 service provided by the small water or sewer utility;
2 (2) that the small water or sewer utility has failed to
3 comply, within a reasonable period of time, with any order of
4 the Department of Environmental Resources or the commission
5 concerning the safety, adequacy, efficiency or reasonableness
6 of service, including, but not limited to, the availability
7 of water, the potability of water, the palatability of water
8 or the provision of water at adequate volume and pressure;
9 (3) that the small water or sewer utility cannot
10 reasonably be expected to furnish and maintain adequate,
11 efficient, safe and reasonable service and facilities in the
12 future;
13 (4) that alternatives to acquisition have been
14 considered in accordance with subsection (b) and have been
15 determined by the commission to be impractical or not
16 economically feasible; and
17 (5) that the rates charged by the acquiring capable
18 public utility to its preacquisition customers will not
19 increase unreasonably because of the acquisition.
20 (b) Alternatives to acquisition.--Before the commission may
21 order the acquisition of a small water or sewer utility in
22 accordance with subsection (a), the commission shall discuss
23 with the small water or sewer utility, and shall give such
24 utility a reasonable opportunity to investigate, alternatives to
25 acquisition, including, but not limited to:
26 (1) The reorganization of the small water or sewer
27 utility under new management.
28 (2) The entering of a contract with another public
29 utility or a management or service company to operate the
30 small water or sewer utility.
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1 (3) The appointment of a receiver to assure the
2 provision of adequate, efficient, safe and reasonable service
3 and facilities to the public.
4 (4) The merger of the small water or sewer utility with
5 one or more other public utilities.
6 (5) The acquisition of the small water or sewer utility
7 by a municipality, a municipal authority or a cooperative.
8 (c) Factors to be considered.--In making a determination
9 pursuant to subsection (a), the commission shall consider:
10 (1) The financial, managerial and technical ability of
11 the small water or sewer utility.
12 (2) The financial, managerial and technical ability of
13 all proximate public utilities providing the same type of
14 service.
15 (3) The expenditures which may be necessary to make
16 improvements to the small water or sewer utility to assure
17 compliance with applicable statutory or regulatory standards
18 concerning the adequacy, efficiency, safety or reasonableness
19 of utility service.
20 (4) The expansion of the franchise area of the acquiring
21 capable public utility so as to include the service area of
22 the small water or sewer utility to be acquired.
23 (5) THE OPINION AND ADVICE, IF ANY, OF THE DEPARTMENT OF <--
24 ENVIRONMENTAL RESOURCES AS TO WHAT STEPS MAY BE NECESSARY TO
25 ASSURE COMPLIANCE WITH APPLICABLE STATUTORY OR REGULATORY
26 STANDARDS CONCERNING THE ADEQUACY, EFFICIENCY, SAFETY OR
27 REASONABLENESS OF UTILITY SERVICE.
28 (5) (6) Any other matters which may be relevant. <--
29 (d) Order of the commission.--Subsequent to the
30 determinations required by subsection (a), the commission shall
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1 issue an order for the acquisition of the small water or sewer
2 utility by a capable public utility. Such order shall provide
3 for the extension of the service area of the acquiring public
4 utility.
5 (e) Acquisition price.--The price for the acquisition of the
6 small water or sewer utility shall be determined by agreement
7 between the small water or sewer utility and the acquiring
8 capable public utility, subject to a determination by the
9 commission that the price is reasonable. If the small water or
10 sewer utility and the acquiring capable public utility are
11 unable to agree on the acquisition price or the commission
12 disapproves the acquisition price on which the utilities have
13 agreed, the commission shall issue an order directing the
14 acquiring capable public utility to acquire the small water or
15 sewer utility by exercising the power of eminent domain pursuant
16 to the act of June 22, 1964 (Sp.Sess., P.L.84, No.6), known as
17 the Eminent Domain Code.
18 (f) Separate tariffs.--The commission may, in its discretion
19 and for a reasonable period of time after the date of
20 acquisition, allow the acquiring capable public utility to
21 charge and collect rates from the customers of the acquired
22 small water or sewer utility pursuant to a separate tariff.
23 (g) Appointment of receiver.--The commission may, in its
24 discretion, appoint a receiver to protect the interests of the
25 customers of the small water or sewer utility. Any such
26 appointment shall be by order of the commission, which order
27 shall specify the duties and responsibilities of the receiver.
28 (h) Notice.--The notice required by subsection (a) or any
29 other provision of this section shall be served upon the small
30 water or sewer utility affected, the Office of Consumer
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1 Advocate, the Office of Trial Staff, the Department of
2 Environmental Resources, all proximate public utilities
3 providing the same type of service as the small water or sewer
4 utility, all proximate municipalities and municipal authorities
5 providing the same type of service as the small water or sewer
6 utility, and the municipalities served by the small water or
7 sewer utility. The commission shall order the affected small
8 water or sewer utility to provide notice to its customers of the
9 initiation of proceedings under this section in the same manner
10 in which the utility is required to notify its customers of
11 proposed general rate increases.
12 (i) Burden of proof.--The Law Bureau shall have the burden
13 of establishing a prima facie case that the acquisition of the
14 small water or sewer utility would be in the public interest and
15 in compliance with the provisions of this section. Once the
16 commission determines that a prima facie case has been
17 established:
18 (1) the small water or sewer utility shall have the
19 burden of proving its ability to render adequate, efficient,
20 safe and reasonable service at just and reasonable rates; and
21 (2) a proximate public utility providing the same type
22 of service as the small water or sewer utility shall have the
23 opportunity and burden of proving its financial, managerial
24 or technical inability to acquire and operate the small water
25 or sewer utility.
26 (j) Plan for improvements.--Any capable public utility
27 ordered by the commission to acquire a small water or sewer
28 utility shall, prior to acquisition, submit to the commission
29 for approval a plan, including a timetable, for bringing the
30 small water or sewer utility into compliance with applicable
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1 statutory or regulatory standards. The capable public utility
2 shall also provide a copy of the plan to the Department of
3 Environmental Resources and such other State or local agency as
4 the commission may direct. The reasonably and prudently incurred
5 costs of each improvement shall be recoverable in rates only
6 after that improvement becomes used and useful in the public
7 service.
8 (k) Limitations on liability.--Upon approval by the
9 commission of a plan for improvements submitted pursuant to
10 subsection (j) and the acquisition of a small water or sewer
11 utility by a capable public utility, the acquiring capable
12 public utility shall not be subject to any enforcement actions
13 by State or local agencies which had notice of the plan and
14 shall not be liable for any damages beyond the aggregate amount
15 of $50,000, including a maximum amount of $5,000 per incident,
16 if the cause of those damages or the basis of such enforcement
17 action is proximately related to identified violations of
18 applicable statutes or regulations by the small water or sewer
19 utility. This subsection shall not apply:
20 (1) beyond the end of the timetable in the plan for
21 improvements;
22 (2) whenever the acquiring capable public utility is not
23 in compliance with the plan for improvements; or
24 (3) if, within 30 days of having received notice of the
25 proposed plan for improvements, the Department of
26 Environmental Resources submitted written objections to the
27 commission and those objections have not subsequently been
28 withdrawn.
29 (l) Definitions.--As used in this section, the following
30 words and phrases shall have the meanings given to them in this
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1 subsection:
2 "Capable public utility." A public utility which regularly
3 provides the same type of service as the small water utility or
4 the small sewer utility to 4,000 or more customer connections,
5 which is not an affiliated interest of the small water utility
6 or the small sewer utility, and which provides adequate,
7 efficient, safe and reasonable service.
8 "Small sewer utility." A public utility which regularly
9 provides sewer service to 1,000 1,200 or fewer customer <--
10 connections.
11 "Small water utility." A public utility which regularly
12 provides water service to 1,000 1,200 or fewer customer <--
13 connections.
14 Section 2. This act shall take effect in 60 days.
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