State Consumer Advocate continues to advocate against free service for Shenandoah area fire companies
SHENANDOAH – Once again, the state’s Office of Consumer Advocate — the state agency that’s supposed to represent the consumers of Pennsylvania in matters involving their utility service — is advocating against Aqua temporarily providing free water service to Shenandoah fire companies, as MABS has for decades.
That came in the latest filings in the regulatory approval process for the pending sale of the Municipal Authority of the Borough of Shenandoah (MABS) to Aqua Pennsylvania, one of the largest private water companies in the nation, for $12 Million.
The sale needs approval from the Pennsylvania Public Utilities Commission first, and has been wading through bureaucratic red tape for over a year, and multiple state agencies and protestants have had the opportunity to weigh in.
As part of that approval process, Aqua requested permission to continue to provide free water service to the fire companies of the Shenandoah Fire Department and West Mahanoy Township Fire Department in MABS’ service territory until Aqua’s next rate case, when former MABS customers’ rates would be brought in line with Aqua’s existing rates.
MABS has provided free service to those fire companies, Shenandoah Ambulance, and borough-owned properties for decades.
Although Aqua’s request to provide free water is not permanent, the Office of Consumer Advocate (OCA) has provided testimony against the request to provide free water to the fire departments, which have had a busy year so far.
In previous filings, OCA claimed that if free service is permitted, “it would have a cumulative impact on existing customers,” and says “existing customers and the other acquired customers will not benefit from the Fire Companies contributing revenues through the [Distribution System Improvement Charge] during that period.”
They claimed that Aqua’s plan to bill fire companies at the next rate case will “mitigate harm to Aqua’s other ratepayers.”
Locally, the Hazleton City Authority and the Mahanoy Township Authority both told the Sentinel that they charge fire companies in their service territories for water service. The Schuylkill County Municipal Authority said they only charge each fire company in their service area the minimum charge of $19.65 per month.
Administrative Law Judge Jeffrey A. Watson filed his recommended decision on May 18, recommending approval of the sale and stipulating that the free service provision be denied, claiming such service is “unreasonably preferential.”
On May 30, both Aqua and Shenandoah filed exceptions challenging that denial.
William C. Rhodes, counsel for Shenandoah, said in the borough’s filing that the companies would only receive free service for “a relatively short period of time.”
“Shenandoah asserts that continuing the long-standing practice of offering free water to the enumerated fire companies just until such time as meters can be installed and Aqua’s next rate case is approved does not constitute an ‘unreasonable preference or advantage,’” Rhodes wrote.
Rhodes said the companies “serve an essential public benefit to the residents of the Borough and customers of MABS.”
“They provide life-saving service to the general public; therefore, supplying them with the tools they require to provide this service is not unreasonable,” Rhodes wrote. “The fire companies rely on this practice and understood it would be preserved (at least in the short term) following the sale of the System to Aqua until such time as the Borough and the fire companies could agree on alternate arrangements.”
Both Shenandoah and Aqua contend that the denial is a violation of PUC regulations requiring a utility to adopt a tariff equal to the rates of the utility it is acquiring.
Courtney L. Schultz, counsel for Aqua, said in their filing that “the Commission has previously required and approved the exact same continuation of free service proposed here in a prior proceeding.”
She cited the purchase of the Cheltenham Township Sewer Authority in southeastern Pennsylvania, in which the PUC required Aqua to continue to provide free service to entities previously provided such service by the township.
All of those entities provided free service by Cheltenham were fire companies.
The OCA filed replies Wednesday, saying they disagree “with certain statements of facts and assertions of law in Aqua’s and Shenandoah’s Exceptions.”
They claim that MABS did not have a rate of $0 for fire companies, stating there was no rate and that the companies were not billed at all.
“As such, the fire companies are effectively ‘new’ customers now that Aqua has acquired the system and service territory,” Harrison Breitman, assistant consumer advocate, wrote in the filing. “Similar to any other entity that becomes a customer post-closing, Aqua’s rates for service should apply.”
The OCA claims that the denial of free service would “mitigate harm to Aqua’s other ratepayers,” which outnumber Shenandoah MABS customers by a factor of 100 to 1.
The Public Utilities Commission has final say on the sale and is expected to make a decision later this summer.
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