DR 98-104
Rolling Ridge Water Company
Petition to Increase Rates
Order Addressing Rate Increase and Future Operations
O R D E R N O. 23,140
February 8, 1999
APPEARANCES: Stephen C. Robinson, C.P.A. for Rolling
Ridge Water Company; Thomas Sweeny, pro se; and Eugene F.
Sullivan III, Esq. for the Staff of the New Hampshire Public
Utilities Commission.
I. PROCEDURAL HISTORY
On July 28, 1998, Rolling Ridge Water System (Rolling
Ridge) filed a petition for a proposed permanent rate increase
with supporting financial schedules which, if approved, would
result in an annual revenue increase of $7,693.00 or a 91.7%
increase in customers' annual rates. On August 31, 1998, the
Commission issued Order No. 23,004 suspending the proposed rate
increase for investigation pursuant to RSA 378:6.
Rolling Ridge is a public water utility operated as a
sole proprietorship by Robert A. DeMers, a Maine resident. The
water system provides service to thirty (30) customers in a
limited area of the Town of Bartlett.
II. POSITIONS OF THE PARTIES AND STAFF
A. Rolling Ridge
Mr. Stephen C. Robinson, CPA, appeared on behalf of
Rolling Ridge and testified that for the last 6 years the system
has operated at a loss in the total amount of $14,000. He stated
that the revenue increase is necessary to meet increased
operating expenses, to purchase a new pump and to remain
financially viable. The requested rate of return on equity is
10.4%; the system has no debt. Mr Robinson testified that Mr.
DeMers was ill and could not be present at the hearing because he
was in the hospital.
Mr. Robinson testified that the system is currently
being operated by Scott Hayes. Although Mr. DeMers pays Mr.
Hayes as work is performed, Mr. Robinson was unaware of any
written contract between Mr. DeMers and Mr. Hayes.
B. Intervenor Thomas Sweeny
Mr. Sweeney testified that he believed the Commission
should step in and appoint a receiver because the health and
safety of customers are at risk.
C. Staff
Douglas Brogan, of the Commission's Engineering
Department, testified that the system has many structural
deficiencies including an underground pump station that is only 5
feet from the road and is frequently flooded or covered with
snow. Mr. Brogan recommended that the pump station be relocated
and that there are other severe problems with the system that
need attention, including: poor water quality; inadequate
pressure storage; leaks in the distribution system which lead to
periodic outages; and poor construction generally. In summary,
according to Mr. Brogan, the system is in "serious condition" and
Mr. DeMers clearly does not want to continue to operate it.
At the request of a customer, the North Country Council
filed an application with the Department of Environmental
Services for state revolving loan funds to be used for three
possible scenarios: replacement of the system; consolidation of
the system with up to three small neighboring systems; and
interconnection with nearby Bartlett Village Fire Precinct. Mr.
Brogan recommended delaying any rate increase for at least a year
or making any increase conditional upon the award of state
revolving funds or grant money or the transfer of system
ownership.
Thomas Scully, of the Commission's Finance Department,
testified that after making certain adjustments to the proposal
filed by Rolling Ridge he could support a rate increase of
44.82%. The Finance Department, however, strongly opposes any
rate increase at this time primarily because Rolling Ridge has
not taken steps to address the high costs associated with system
leakage, and based on the testimony of Mr. Brogan, customers were
not receiving safe and adequate service.
III. COMMISSION ANALYSIS
The first issue for our consideration is whether to
grant the request to increase rates and whether this water
utility should be placed under our receivership.
We agree with Staff that it would be inappropriate to
grant this particular system a rate increase of 91.7% at this
time. Given Mr. DeMers' current and past failure to address
significant water problems, there is no guarantee that a revenue
increase would be used for system improvements. We believe that
the record supports a finding that Rolling Ridge is failing to
provide adequate and reasonable service to its customers and that
such failure is a serious and imminent threat to the health and
safety of its customers.
At this time, however, we will not appoint a receiver,
but will direct our Staff to take such temporary action as is
necessary to assure continued service. RSA 374:47-a. Such
action should include, but not be limited to: finding a party who
would be willing to act as a receiver; making sure that Mr. Hayes
is continuing to operate the system; and exploring the
willingness of another company to acquire the system. Staff
shall report its findings to the Commission on these issues
within 60 days of the date of this order.
In the event the water system is placed under the
supervision of a receiver or the Commission approves the transfer
of the system to another water utility we will grant the rate
relief suggested by Staff. Such action will ensure that any
revenues garnered through a rate increase are used to improve the
system and provide safe and adequate service to customers.
Moreover, the 44.82% rate increase will not preclude a receiver
or a new owner from petitioning the Commission for an additional
rate increase if circumstances so warrant.
Based upon the foregoing, it is hereby
ORDERED, that Robert A. DeMers', doing business as
Rolling Ridge Water System, request to increase rates is DENIED;
and it is
FURTHER ORDERED, that our Staff take the actions set
forth above and report back to us within sixty (60) days of this
order; and it is
FURTHER ORDERED, that the recommended increase in rates
of 44.82% will be effective upon the appointment of a receiver or
transfer of the system.
By order of the Public Utilities Commission of New
Hampshire this eighth day of February, 1999.
Douglas L. Patch Susan S. Geiger Nancy Brockway
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary