Bill Giving More Control To PSC Aims to Address Failing Water Systems
In an effort to address water issues plaguing rural West Virginia, the state Public Service Commission is supporting a bill that would give the group more statutory authority to assist and order the acquisition of failing water and wastewater utilities throughout the state.
House Bill 4953 addresses a “tsunami” of issues that Amy Swann with the West Virginia Rural Water Association says local utilities have been facing for years. Those issues include aging infrastructure, a shrinking consumer base and a lack of federal grant opportunities, which all make funding repairs and maintenance difficult.
“Many of our [water] systems on the municipal side of things are more than 100 years old,” Swann said. She estimated many privately owned systems are more than 40 or 60 years old.
The debate comes as one northern West Virginia community, Paden City, is grappling with the effects of years-long chemical contamination.
“They’re reaching the end of their useful lives, in terms of the infrastructure in the ground,” Swann added of the water and wastewater systems.
Public Service Commission Chairwoman Charlotte Lane said Monday during a House Judiciary Committee hearing that many small water systems cannot provide good water and their infrastructure is failing. Delegates in that committee passed the bill on to the House Finance Committee Monday with a favorable recommendation.
Lane also attended a Senate Judiciary Committee meeting Tuesday evening, during which senators agreed to pass Senate Bill 739, which consists of the same language as the House version, on to the full Senate for consideration, with a favorable recommendation.
According to self-reported numbers the PSC published in 2018, there were 269 publicly owned water utilities, 18 privately owned water utilities and 29 water authorities and associations in West Virginia.
Regarding wastewater systems, the same report said there were 265 publicly owned sewer utilities for wastewater and 36 privately owned utilities in 2018.
The state Bureau for Public Health and the state Department of Environmental Protection are responsible for tracking which utilities are violating state and federal regulations.
Several state-issued boiled water advisories remain in effect daily in areas where a local utility is out of compliance. A study last fall found 378 of roughly 448 active utilities between 2016 and 2019 had at one point violated the federal Safe Drinking Water Act of 1974. The organizations that conducted the study reported more than 912,000 West Virginians at one point in those three years drank unsafe water.
When a utility is struggling in an area or a utility is unable to provide clean water, the commission’s options are limited. Currently, if the Public Service Commission has received several complaints from an area with a failing utility, Chairwoman Lane said the commission will address a local circuit court about ordering another utility to take over.
“The problem is, a lot of other utilities don't want to take on a failing system,” she said. “This [bill] would allow us to make another utility take on that failing system.”
House Bill 4953 and the Senate version of the bill would allow the Public Service Commission to create a list every year of distressed and failing utilities.
The bill defines a distressed utility as one that continually violates state regulations, hasn’t complied within a reasonable timeline to a notice of that violation and is unable to fulfill its financial obligations.
A failing utility, according to the bill, is a distressed utility that the public service commission has decided to replace with another more capable utility.
Once a utility is deemed either failing or distressed, the bills require the Public Service Commission to hold a public hearing to discuss possible improvements, or the possibility of an acquisition.
Following that hearing, the commission will either provide assistance or identify and appoint a capable utility to take over. Both the failed and the newly appointed utility will then discuss what price the new utility will pay to take over the failed utility’s service area.
Costs and Opportunities
The bill mentions a few “cost recovery mechanisms” to help the utilities that take over a failed utility’s area, to make up for what they spend on acquiring the systems, improving and maintaining them.
A nonprofit organization could be eligible for a grant from a Distressed Utility Account created by the bill, which will hold $5 million from an infrastructure fund currently under the Water Development Authority’s jurisdiction.
A for-profit organization could qualify for below-market loans from the state.
In the long run, Lane said she believes the bill will benefit the utilities who engage in a take over, as improved water and wastewater systems will attract more consumers.
“Eventually, the more customers that utilities have, the better they are,” Lane said. “It means that they have more revenue, and the more revenue that they have, then the more money that can put back into their systems to provide better service.”
According to Swann, director of the West Virginia Rural Water Association, the bill would allow the Public Service Commission to take a more active role in assisting or improving water systems that only continue to age as time continues to pass and no improvements are made.
“They feel like they’ve been abandoned,” Swann said of consumers in rural areas with inadequate access to clean water and reliable wastewater systems. “That’s never been true, but I can see how they would have that perception.”
House Bill 4953 was referred to the House Finance Committee for consideration before it reaches the full House for a vote. Senate Bill 739 will proceed to the full Senate for consideration.
Lane said Tuesday the Public Service Commission also is following Senate Bill 551 that the House Government and Organization Committee referred to the House Finance Committee. This bill would allow for incentives to small, publicly owned municipal utilities looking to merge with or hand their systems over to a larger utility. National utility organization American Water has publicly supported this legislation.
Emily Allen is a Report for America corps member.