Jefferson County Vision, Inc. v. Public Service Commission of West Virginia and Jefferson Utilities

STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
Jefferson County Vision, Inc.,
Petitioner FILED
June 15, 2020
released at 3:00 p.m.
vs) No. 19-0774 EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
Public Service Commission of West Virginia
and Jefferson Utilities, et al.,
Respondents
MEMORANDUM DECISION
Jefferson County Vision, Inc., (“JCV”), 1 appeals the August 2, 2019, order of the
Public Service Commission of West Virginia (“Commission”) that dismissed its pending
complaint regarding the issuance of an emergency certificate of convenience and necessity
to Jefferson Utilities, Inc. (“JUI”), 2 to extend water service to an industrial park site known
as Jefferson Orchards in Ranson, West Virginia. The Commission has filed its requisite
Statement of Reasons for the Entry of its Order. 3
This Court has considered the parties’ briefs, oral arguments, and the appendix
record. Upon application of the standard of review and the pertinent authorities, this Court
finds no substantial question of law and no prejudicial error. For these reasons, a
memorandum decision affirming the final order of the Commission is appropriate under
Rule 21 of the Rules of Appellate Procedure.
1
According to JCV’s complaint, it is a nonprofit corporation formed “to promote,
among other things, responsible development within Jefferson County including proposed
utility infrastructure.”
2
JUI is a privately owned company that provides water treatment and potable water
delivery service in Jefferson County. As such, it is regulated as a public utility.
3
Christopher P. Stroech appeared on behalf of JCV, and John J. Meadows, Todd
Swanson, Peter J. Raupp, and Ryan D. Ewing represented JUI. Jessica M. Lane and Natalie
N. Terry responded for the Commission. Susan J. Riggs filed an amicus curiae brief on
behalf of Roxul, USA, Inc., in support of the Commission’s decision.
1
On July 12, 2018, the Commission approved an application filed by JUI for an
emergency certificate of convenience and necessity to extend water service to Jefferson
Orchards for use by a new manufacturing facility to be constructed in the industrial park.
Roxul USA, Inc., planned to build and operate the Rockwool stone wool manufacturing
facility in Jefferson Orchards and to receive water from JUI. The West Virginia
Infrastructure and Jobs Development Council (“WVIJDC”), a public economic
development authority that provides funding for public utility expansion and renovation
projects throughout the state, approved the water line extension project and designated it
as an “emergency project.” 4 The estimated cost of the project was $4,850,000 and was to
include the installation of approximately 18,050 linear feet of sixteen-inch water line, a
795,000-gallon water storage tank, a 1,200 gallon per minute triplex pressure booster
station, an altitude fault vault, and all other necessary appurtenances. The cost was to be
funded by a $4,520,000 loan from the WVIJDC to the Jefferson County Development
Authority (“JCDA”) and $330,000 provided by JUI from its cash flow. JUI indicated that
the project would have no impact on the rates of its existing customers. Following public
notice 5 and a favorable evaluation by the Commission staff, the Commission granted the
application for the certificate in a July 12, 2018, order subject to certain conditions.
Specifically, the order provided:
IT IS FURTHER ORDERED that if there are any
changes in the Project plans or scope, as well as the terms of
any financing other than grants or loans that impact the rates,
Jefferson Utilities, Inc., must seek Commission approval of
those changes.
IT IS FURTHER ORDERED if there are any changes
in the plans or scope, or terms of financing of the Project, or
changes in rates associated with the Project, Jefferson Utilities,
Inc., must petition to reopen for Commission approval of such
changes. Changes in project costs of financing do not require
separate approval if the changes do not affect rates and
See W.Va. Code § 31-15A-2(h) (1998) (defining “emergency project” as “a project
4
which the [WVIJDC] has determined: (1) Is essential to the immediate economic
development of an area of the state; and (2) will not likely be developed in that area if
construction of the project is not commenced immediately”).
5
West Virginia Code § 24-2-11 (2017) sets forth the requirements for a certificate
of public convenience and necessity and provides for notice of any application for a
certificate to be made by publication. The statute further allows for a formal hearing to be
waived in the absence of substantial protest. Because no protests or petitions to intervene
were filed in response to the publication providing notice of JUI’s application, no public
hearing was held.
2
Jefferson Utilities, Inc., submits an affidavit from a certified
public accountant attesting to the lack of rate impact. 6
(Footnote added).
Six months after the Commission approved the application and granted the
certificate, David Tabb, a JUI customer and non-party to the certificate case, filed a motion
seeking to have the Commission review the project and issue a stop work order. Mr. Tabb
asserted that JUI had violated the July 12, 2018, certificate order by not seeking the
Commission’s approval of changes to the project. In that regard, Mr. Tabb noted that
funding for the project was no longer being provided by JCDA through a WVIJDC loan;
that the construction bids received for the project exceeded the initial cost estimate by at
least fourteen percent; and that Roxul/Rockwool had agreed to provide substitute funding
and had executed agreements with JUI to replace those between JUI and JCDA. Thereafter,
the Commission staff recommended that the Commission reopen the certificate case based
on its concern that the project revisions would have an impact on customer rates. The
Commission staff also sought to join Roxul/Rockwool as a necessary party.
Roxul/Rockwool opposed the Commission staff’s petition to join it as a party,
maintaining that it had simply “stepped into the shoes” of JCDA and because JCDA was
not a party to the certificate case, there was no reason for it to be made a party. JUI also
filed a response in which it acknowledged that the project costs had increased from
$4,850,000 to $5,605,229 based on the construction bids received and that
Roxul/Rockwool had replaced JCDA as the funding source. However, JUI maintained that
the scope of the project remained the same and the financing changes would not impact
customer rates because JUI’s share of the costs remained at $330,000 as approved by the
Commission in the July 12, 2018, order granting the certificate.
On February 22, 2019, the Commission issued a procedural order reiterating the
conditions set forth in the July 12, 2018, order that would require JUI to request further
approval from the Commission for project changes. The Commission held its ruling on
whether to reopen the certificate case in abeyance pending submission of an affidavit from
JUI’s certified public accountant regarding any rate impact as a result of the project
changes. JUI was also required to file with the Commission a detailed revenue requirement
calculation and cash flow statement as well as sample journal entries demonstrating the
recording of the transfer of the project to Roxul.
6
These conditions are consistent with West Virginia Code § 24-2-11(j) (2017),
which provides: “A public utility, including a public service district, which has received a
certificate of public convenience and necessity after July 8, 2005, from the commission
and has been approved by the Infrastructure and Jobs Development Council is not required
to, and cannot be compelled to, reopen the proceeding if the cost of the project changes but
the change does not affect the rates established for the project.”
3
The requisite information was filed by JUI with the Commission on March 14, 2019.
Approximately ten days before, on March 4, 2019, which was almost nine months after the
period to intervene in the certificate case expired, the petitioner herein, JCV, and another
JUI customer, Leigh Smith, filed a joint petition to intervene in the closed certificate case.
That same day, they also filed a petition for reconsideration of the Commission’s February
22, 2019, order, arguing that JUI was required to seek approval of the substitute funding
from Roxul/Rockwool. They also argued that the change in the funding source would
impact customer rates. JUI filed responses objecting to these petitions.
By order issued March 26, 2019, the Commission denied the Commission staff’s
petition to reopen the certificate case and JCV and Ms. Smith’s petition for reconsideration
of the February 22, 2019, order. The Commission found that the scope and plans for the
project had not changed and the cost increase and funding revisions were not going to
impact customer rates. As such, the Commission concluded that its approval of the project
changes was not required.
On April 5, 2019, JCV and Ms. Smith filed a petition for reconsideration of the
March 26, 2019, order. They claimed a denial of due process because they were not
allowed to pursue and dispute factual issues regarding the project. Following a response
from JUI, the Commission denied the petition for reconsideration by order entered May 3,
2019.
While JCV and Ms. Smith were attempting to intervene in the certificate case, they
also sought to reopen the certificate case by filing a completely separate complaint with
the Commission on January 22, 2019, which is now the subject of this appeal. In that
complaint, they alleged that JUI was in violation of the Commission’s July 12, 2018, order
for failing to reopen the certificate case and secure the Commission’s approval of the
changes to the scope, costs, and financing of the project. JCV and Ms. Smith indicated that
they filed their complaint based on a local newspaper article that reported the financing
changes and the increased costs, and noted that construction had begun. JCV and Ms.
Smith asserted that the project changes were likely to increase the rates of other JUI
customers and sought interim relief in the form of a stop work order. They also sought to
have the Commission reopen the certificate case and issue a procedural order allowing for
discovery and a hearing regarding the project.
By order entered on August 22, 2019, the Commission dismissed the complaint on
the grounds that JCV and Ms. Smith were seeking the same relief that they sought in the
closed certificate case. The Commission stated that although JCV and Ms. Smith were not
parties to the certificate case, the Commission had decided all of issues raised in their
complaint in the February 22, 2019, March 26, 2019, and May 3, 2019, orders entered in
the certificate case. Accordingly, the Commission dismissed the complaint. This appeal
followed.
4
Our standard of review for final orders entered by the Commission is well
established:
In reviewing a Public Service Commission order, we
will first determine whether the Commission’s order, viewed
in light of the relevant facts and of the Commission’s broad
regulatory duties, abused or exceeded its authority. We will
examine the manner in which the Commission has employed
the methods of regulation which it has itself selected, and must
decide whether each of the order’s essential elements is
supported by substantial evidence. Finally, we will determine
whether the order may reasonably be expected to maintain
financial integrity, attract necessary capital, and fairly
compensate investors for the risks they have assumed, and yet
provide appropriate protection to the relevant public interests,
both existing and foreseeable. The court’s responsibility is not
to supplant the Commission’s balance of these interests with
one more nearly to its liking, but instead to assure itself that the
Commission has given reasoned consideration to each of the
pertinent factors.
Syl. Pt. 2, Monongahela Power Co. v. Pub. Serv. Comm’n of W.Va., 166 W. Va. 423, 276
S.E.2d 179 (1981). To be more concise,
“[t]he detailed standard for our review of an order of the
Public Service Commission contained in Syllabus Point 2 of
Monongahela Power Co. v. Public Service Commission, 166
W. Va. 423, 276 S.E.2d 179 (1981), may be summarized as
follows: (1) whether the Commission exceeded its statutory
jurisdiction and powers; (2) whether there is adequate evidence
to support the Commission’s findings; and, (3) whether the
substantive result of the Commission’s order is proper.
Syl. Pt. 1, Central W.Va. Refuse, Inc. v. Pub. Serv. Comm’n of W.Va., 190 W. Va. 416,
438 S.E.2d 596 (1993).
JCV argues that the Commission committed procedural and legal error by
dismissing its complaint as a “collateral proceeding.” JCV maintains that it had the right
to seek relief from the order issued in the certificate case by filing a separate complaint
pursuant to 150 C.S.R. § 6.2.1 which provides:
5
Any person or entity may complain to the Commission
by petition substantially in the form of Form No. 1 attached to
these Rules of anything done or omitted to be done by the
public utility in violation of any of the provisions of the Public
Service Commission laws of West Virginia[.]
See also W.Va. Code § 24-4-6 (1923). JCV also relies upon syllabus point eight of
Affiliated Const. Trades Foundation v. Public Serv. Comm’n of W.Va., 211 W. Va. 325, 565
S.E.2d 778 (2002), which holds:
Any person or entity having a good faith reason to file
a complaint against a public utility under West Virginia Code
§ 24-4-6 (1923) (Repl.Vol.2001) has standing to do so,
notwithstanding the fact that such person or entity was not a
party to prior proceedings for a certificate of convenience and
necessity or other proceedings to which the complaint relates.
Upon review of the Commission’s final order, it is clear that JCV’s complaint was
not dismissed as an impermissible collateral proceeding or for lack of standing. Rather,
the Commission dismissed the complaint because JCV did not present any new facts or
substantive issues that were not adequately addressed in the certificate case. In other
words, the Commission considered the merits of all the arguments made by JCV in the
orders entered on February 22, 2019, March 26, 2019, and May 3, 2019, in the certificate
case and found no basis to reopen the matter. Specifically, the Commission found no
change in the project plans or scope based upon the information contained in the filings
made in the certificate case in response to the motion to reopen the proceeding. 7 Likewise,
In its March 26, 2019, order, the Commission rejected the contention that the scope
7
and project plans had changed, stating:
The JCV and Ms. Smith’s petition for reconsideration
asserted that the scope of the Project has been changed to
reflect approximately 1,600 feet less of sixteen-inch pipe from
the preliminary design filed in the application and the final bid
cost. March 4, 2019 Petitioner for Reconsideration at 3. They
also claimed that the Project has changed because the amount
of water to be sold to ROXUL has decreased from the original
projections. Id. The assertions made by JCV and Ms. Smith
are not correct. A reduction of the length of the water line
installed by approximately 1,600 feet, for a Project of this size,
between the final design and bids to the preliminary design is
not significant and does not change the scope of the Project.
Furthermore, there is no difference in the annual revenue to be
6
the Commission found the changes in the project’s costs and financing did not require
reopening of the certificate case for Commission approval because JUI submitted an
affidavit from its certified public accountant attesting to a lack of rate impact. 8 Thus, JCV’s
complaint was only dismissed after the Commission determined there were insufficient
grounds to reopen the certificate case.
JCV also argued that it was denied due process because the Commission did not
permit discovery or hold a hearing before dismissing its complaint. However, the record
shows that extensive discovery occurred in the certificate case. Moreover, JCV did in fact
serve additional discovery on JUI after it filed its January 22, 2019, complaint. With respect
to a hearing, the Commission was not required to hold a hearing in the certificate case
because no protest was filed in response to the notice publication. 9 Absent any new facts
generated by JUI from ROXUL as filed in the application and
as shown in the March 14, 2019 JUI response to the Procedural
Order. The requests to reopen based on changes to the Project
scope and Project-related revenue are unfounded.
With respect to the changes to financing and costs, the Commission made the
8
following findings in the March 26, 2019 order:
JUI is in compliance with the Final Order and has
supplied an affidavit signed by its certified public accountant
attesting that there will be no rate impact related to the
increased Project cost and change in source of Project
financing. Response to Procedural Order at Ex. A. JUI also
provided its projected revenue requirement calculation,
projected cash flow analysis and sample journal entries, all
indicating that the revised Project will not result in any
additional rate base or impact current rates. The sample journal
entries record the transfer of approximately $5.275 million of
utility plant from ROXUL to JUI with an equal amount
charged to Contributions-in-aid-of-Construction (CIAC). JUI
did not propose an amortization of the CIAC and the
Commission will not recognize an amortization of the CIAC in
a future rate proceeding of JUI. Reopening this case for
Commission approval of the changes to Project costs and
source of funding is not warranted because the changes do not
affect JUI rates.
9
See note 5, supra.
7
or substantive issues warranting a reopening of the certificate case, there was no
requirement that the Commission hold a hearing before dismissing JCV’s complaint.
Simply stated, the Commission has not exceeded its statutory jurisdiction and
powers, and there is adequate evidence to support the Commission’s findings. Based upon
our careful review of the record in this matter, we find that substantive result of the
Commission’s final order is proper. Accordingly, the Commission’s August 2, 2019, order
is affirmed. 10
Affirmed.
ISSUED: June 15, 2020
CONCURRED IN BY:
Chief Justice Tim Armstead
Justice Margaret L. Workman
Justice Elizabeth D. Walker
Justice Evan H. Jenkins
Justice John A. Hutchison
10
In its Statement of Reasons for Entry of its Order, the Commission argued that
this matter is “technically moot” because the water line extension portion of the project
was completed in October 2019. However, the record showed that the water tank and
booster station had yet to be installed.
8