DF 95-016
Pittsfield Aqueduct Company, Inc.
Petition for Authority to Borrow and for Authority for
a Step Increase in Rates
Order Denying Petition of the Town of Pittsfield for
Rehearing
O R D E R N O. 22,894
April 7, 1998
On December 31, 1997, the New Hampshire Public
Utilities Commission (Commission) issued Order No. 22,811 in this
docket (the Order) providing for an increase in the revenues and
rates of the Pittsfield Aqueduct Company, Inc. (PAC). This
increase in revenues, amounting to $217,952 or 101.6% over
current revenues, resulted primarily from PAC's construction of a
new water treatment plant in compliance with the federal Safe
Drinking Water Act (SDWA).
In the Order, the Commission approved the proposal of
PAC to allocate the revenue increase in a manner which provided
for an increase of approximately 155% to water customers and for
an approximate increase of 40% to fire protection rates. In its
Order, the Commission noted that a cost of service study
completed for PAC during the proceeding indicated that current
fire protection revenues were adequate to cover the costs of
providing such service. However, the Commission approved an
increase in such fire protection revenues because the level
proposed by PAC represented 30% of PAC's revenues, a standard
often used in the industry and other regulatory commissions. In
addition, the Commission pointed to testimony presented at the
hearing which indicated the Town was to receive a substantial
increase in property tax revenues as a result of the construction
of the treatment plant that caused the increase in rates.
On January 15, 1998, the Town of Pittsfield, an
intervening party to this docket, submitted a Motion for
Rehearing (the Motion) of the Order, indicating that it believed
the Commission erred in granting any increase in the fire
protection rates. The Town averred that the Commission did not
give proper weight to testimony which established that the
existing fire protection rates were equal to or in excess of the
cost of service for that rate classification. In addition, the
Town asserted its belief that such rate setting unfairly
subsidizes one rate class, i.e., General Metered Service
Customers, at the expense of another, namely the taxpayers of the
Town of Pittsfield, the vast majority of whom, they contend,
receive no benefit or service under the fire protection rates
charged to the Town of Pittsfield and included in their municipal
property tax.
The Town also questioned the Commission's reliance on
and the relevance of the standard adopted in Maine, of a 30%
allocation of a utilities' revenue to fire protection, and the
Town also questioned the appropriateness of pointing to property
tax revenue to be derived from the new treatment plant as further
justification for the Commission's decision. The Town asked that
the Commission rescind the Order as it relates to the increase in
fire protection rates; issue a new order providing for revenues
for the municipal fire protection classification of $76,898
annually; amend the allocations of revenues to the remaining rate
classifications as per the cost of service study; rescind its
action in accepting a standard establishing that fire protection
revenues for smaller water companies shall be 30% allocated to
municipal fire protection; and, rescind its action in linking
property tax revenue to be derived from new plant or improvements
with the rates to be charged to a municipality for fire
protection.
Having reviewed the Town's petition for rehearing in
this matter, we believe our decision as detailed in Order No.
22,811 is sound. We continue to believe that the benefits the
Town receives from property tax increases should be factored into
our analysis. Moreover, we believe that the use of a 30%
standard of a water utility's revenue to municipal fire
protection revenues is appropriate under these circumstances,
especially when considering the substantial increase in rates to
Pittsfield residents taking service from PAC without such an
allocation.
Based upon the foregoing, it is hereby
ORDERED, that the request for rehearing by the Town of
Pittsfield is DENIED.
By order of the Public Utilities Commission of New
Hampshire this seventh day of April, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary