DE 97-255
BIRCHVIEW BY THE SACO, INC.
Investigation into Quality of Service and Continued Utility
Status
Order Extending Receivership
O R D E R N O. 23,105
January 12, 1999
I. BACKGROUND
On August 3, 1998, the New Hampshire Public Utilities
Commission (Commission) placed Birchview by the Saco, Inc.
(Birchview or the utility), a water utility providing service to
approximately 110 customers in a limited area of the Town of
Bartlett, under the receivership of FX Lyons, Inc., the system's
operator, for thirty days pursuant to the provisions of RSA
374:47-a. Order No. 22,992 (August 3, 1998). This action was
taken without hearing based on a memorandum of Commission Staff
indicating that there was a "serious and imminent threat to the
health and welfare of customers of the utility . . . ." RSA
374:47-a.
On August 18, 1998, the Commission held a duly noticed
hearing to determine whether the utility should remain in
receivership. At that hearing the Commission heard testimony
from Francis Lyons, the principal of FX Lyons, Inc., and Douglas
Brogan, P.E., the Commission's Water Engineer. Mr. Brogan's and
Mr. Lyon's testimony generally revealed that the water system was
in poor condition and could fail at any time with the loss of the
one remaining pump. They also testified that: 1) FX Lyons, Inc.
and a number of others that had provided services to the utility
had not been paid by the utility; 2) the State of New Hampshire,
Department of Environmental Services (DES) would no longer accept
monthly water samples for bacteriological testing without first
being paid because the utility owed DES over a thousand dollars
for earlier testing it had provided; 3) the system was slowly
deteriorating and major capital investments would be required to
maintain a viable water supply and distribution system in the
near future; 4) the system was experiencing numerous leaks
because of its age and construction, and that the system had a
number of "significant deficiencies", as determined by DES, which
had never been addressed. Based on this testimony, the
Commission placed the utility under receivership for a period of
90 days to ensure that customers received safe and adequate
service that did not threaten their health or safety. Order No.
23,002 (August 31, 1998). The Commission also urged the
utility's customers to attempt to come to agreement concerning
the available options for future water service to their community
and directed Staff to conduct an informational meeting in the
town of Bartlett to advance that end.
The informational hearing was held on October 17, 1998
at the VFW Hall in Bartlett, New Hampshire. According to Staff,
presentations of available options and cost estimates for the
future of the water distribution system were made by Commission
Staff, representatives of DES, Birchview customers Karen and
George Weigold (Weigolds), the Lower Bartlett Water Precinct.
(Precinct). Staff also presented a brief cost overview of
different options prepared by the North Country Council (NCC).
On November 17, 1998, a hearing was held to review the
status of the receivership, customer progress towards a permanent
resolution to the water supply needs of the community and the
need to continue the existing receivership. Moreover, since the
November 17, 1998 hearing the Commission has received
correspondence from two customers concerning their positions with
regard to the future of this water utility. At the November 30,
1998 meeting the Commission orally extended the receivership
previously approved by the Commission for another 60 days,
scheduled a technical session for January 14, 1999, and a hearing
for January 20, 1999 to address the merits of the future of this
utility. Thus, receivership was continued until January 29,
1999, with this order to follow.
II. POSITIONS OF THE PARTIES
A. Commission Staff
Staff Engineer Brogan reiterated the position he set
forth at the August 18, 1998 hearing, testifying that the water
distribution system was in a state of significant deterioration
and that it would "conservatively" cost approximately $165,000 to
bring the system up to "bare bones" state and federal standards.
He further testified that this would not address all of the long-
term capital improvements that would be required immediately or
in the near future. Mr. Brogan also presented a similar analysis
prepared by NCC which supported these conclusions.
B. George Weigold
Mr. Weigold, a resident and customer of Birchview and a
self employed general contractor that has performed work on the
system, testified that the system could be repaired for a
fraction of the cost estimated by Mr. Brogan, Mr. Lyons and NCC.
Mr. Weigold requested that the receivership be continued for 60
days and requested that Commission Counsel provide him with an
opinion regarding the effect and enforceability of certain
provisions contained in some customers' deeds.
C. FX Lyons, Inc.
Mr. Lyons testified regarding the poor conditions of
the books and records of the utility which kept him from
verifying and consequently paying any of the back debts of the
utility. He further indicated a willingness to continue as
receiver.
D. Birchview Homeowners Association
By letter dated November 12, 1998, the Board of
Directors of the Homeowners Association informed the Commission
that it had voted 6-2 in favor of transfer of the water system to
the Precinct. The Board also expressed concern over the
inability of the Association and the customers in general to
reach consensus concerning the future of their water system. The
Board also requested that the Commission conduct an independent
poll of the customers to determine the overall preference of the
community.
Following the hearing, the Commission received
correspondence from T.M. Egbert and James E. Richard, customers
of the water system. Both Mr Egbert and Mr. Richard requested
that the Commission issue an order providing for the
interconnection of the Birchview system with the Precinct.
III. COMMISSION ANALYSIS
The issue for our consideration is whether the
receivership of this water utility under RSA 374:47-a should
continue, and if so, what conditions should be placed on the
receivership.
When the Commission placed this utility under its
receivership it specifically noted that receivership was not a
long-term solution to the utility's or the customers' problems.
Rather, the Commission noted that receivership was a temporary
measure taken to provide this utility and, more importantly, its
customers, an opportunity to come to a mutually acceptable
long-term resolution for the provision of water service to the
community. Order No. 23,002 (August 31, 1998).
The Commission went on to note that,
[i]n the event customers are unable to reach
a reasonable resolution concerning the future
of this water supply and distribution system,
we will determine what is in the public
interest for the future of this water utility
and implement that course of action. See
e.g., RSA 374:30.
Order No. 23,002 at 10.
It is apparent from the hearings in this matter and the
correspondence that we have received that the customers cannot
come to a mutually agreeable resolution concerning the future of
water service to their community. It is also apparent that
disagreement over the future of the water distribution system is
having a negative and divisive effect upon the community. Thus,
we shall conduct a hearing to determine what options are
available to provide water service to the community and which
option best serves the public interest.
In our oral deliberations we continued the receivership
for sixty (60) days and set the dates of January 14, 1999 and
January 20, 1999, respectively, for a technical session and a
hearing on the merits. Since those deliberations we have learned
that Mr. Lyons, the principal of the system operator, is
unavailable on those dates. Because his input into this decision
would be valuable, we will reschedule the technical session for
February 4, 1999 and a hearing on the merits at 10:00 am on
February 16, 1999. Any testimony that is proposed to be given at
the hearing should be prefiled with the Commission on or before
February 3, 1999. Consequently, the receivership shall continue
until we have issued a decision following the hearing.
Based upon the foregoing, it is hereby
ORDERED, that Birchview by the Saco, Inc. shall remain
under the receivership of FX Lyons, Inc. until an order issues
following the hearing set for February 16, 1999.
By order of the Public Utilities Commission of New
Hampshire this twelfth day of January, 1999.
Douglas L. Patch Susan S. Geiger Nancy Brockway
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary