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March 23, 2010

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State Regulatory Relations

West Virginia American Water Asks PSC to Consider DSIC Program

West Virginia American Water has filed a petition with the state Public Service Commission (PSC) asking the agency to consider approval of a Distribution System Improvement Charge (DSIC) program to help the company proactively replace aging infrastructure. This filing comes in response to an order entered by the PSC in the company’s 2008 rate case. The order, issued in March 2009, recommended that the company discuss with PSC staff and the agency’s Consumer Advocate Division a new approach to funding infrastructure improvements. DSIC programs allow for rate adjustments, outside of general rate case proceedings, to cover the costs of infrastructure replacement.

West Virginia American Water believes implementation of a DSIC program would have a positive effect on service because a better maintained system would result not only in fewer service disruptions, but also better overall water pressure and flow.

The water industry standard for main replacement is a rate of 100 to 150 years. West Virginia American Water’s current rate structure allows for a main replacement rate of only every 600 years. The company believes failure to increase this rate could lead to service issues in the future. Water utilities in several other states, including Pennsylvania, Ohio, Delaware, California, Connecticut, Indiana, Illinois, Missouri and New York, have tackled similar issues through the implementation of DSIC programs. DSIC programs have been cited by the National Association of Regulatory Utility Commissioners as a “Best Practice,” and designated by the Council of State Governments as “Model Legislation.”

If a DSIC program is approved by the PSC, West Virginia American Water would agree to submit quarterly updates to the agency requesting DSIC surcharges for eligible infrastructure projects. All these surcharges would be subject to audit at intervals determined by the PSC and would also be subject to an annual reconciliation.

West Virginia American Water requests that such a program be established immediately upon PSC approval. The proposed DSIC program would initially add approximately 78 cents to the monthly bill of the average residential customer who uses 3,746 gallons of water per month. The company has proposed that any rate increases associated with a DSIC program be capped at 7 ½ percent of current revenue.

“West Virginia American Water strives to keep rates as low as possible, but we also owe it to our customers to maintain our water delivery system,” said West Virginia American Water President Wayne Morgan. “DSIC programs have the potential for so many benefits. Implementation of such a program in West Virginia would allow West Virginia American Water to better maintain its infrastructure, which is essential for us to continue offering the reliable service our customers deserve and expect.”

The PSC has scheduled hearing dates of August 10, 11 and 12, beginning at 9:30 a.m. each day in its hearing room in Charleston, W.V. Public comment will be taken at the beginning of the hearing process. Copies of the petition and proposed tariff will be published in newspapers across the state and will also be posted at West Virginia American Water offices. These documents are also available for public inspection at the PSC office.


United Water Idaho Granted Rate Increase

The Idaho Public Utilities Commission has authorized United Water Idaho to increase its annual rates for water service by 11.63 percent. In the Matter of the Application of United Water Idaho, Inc., Order No. 31016 (March 5, 2010). The increase is to be phased in over a two-year period, with $3.6 million, or 9.9 percent, in additional revenues to be recoverable effective March 1, 2010, and another $640,000, or 1.7 percent, in revenues effective Feb. 1, 2011. United Water agreed to implement a Budget Bill Plan that allows customers to make 12 equal monthly payments, to convene a workshop to discuss the UW Cares Program and related issues that affect low-income customers, and to wait to file a general rate case application until June 1, 2011.


NARUC Staff Subcommittee on Accounting and Finance Hosts Successful Spring 2010 Conference

The NARUC Staff Subcommittee on Accounting and Finance held their Spring 2010 Conference from March 15 to March 18 in Charleston, S.C.

The conference was well-attended and NAWC members were well-represented. Dave Smeltzer, CFO of Aqua America and chairman of the NAWC Finance Committee presented on the impacts of IFRS on the water industry.

James Kalinovich, vice president and treasurer of American Water, and Dennis Ciemniecki, president of regulated business at United Water, participated on a panel, “The Impacts of Return on Equity and ROE Risk Factors for Water Utilities” moderated by Cade Clark, NAWC. Presentations from the conference will be available soon.

New Jersey Senate Confirms BPU President

President Lee A. Solomon

The New Jersey Senate recently confirmed Governor Chris Christie’s nomination of State Superior Court Judge Lee Solomon as president of the state Board of Public Utilities.

President Solomon previously served as the Deputy U.S. Attorney for the Southern Vicinages, District of New Jersey. He was sworn in on June 4, 2002, by Chris Christie, then U.S. Attorney for New Jersey. Judge Solomon led the U.S. Attorney's Offices in Camden and Trenton, which handled approximately 905 cases per year.

Prior to his tenure at the U.S. Attorney's Office, President Solomon served five years as the Camden County Prosecutor and one year as Acting Prosecutor. In this position, he directed an office with a staff of more than 260, and the state's third largest caseload. During this time, President Lee served as vice chairman of the Juvenile Justice Committee, as well as the Inter-Agency Committee. Additionally, he served on the board of the National District Attorneys Association. In November of 1998, the New Jersey Attorney General appointed President Lee as the monitor of the Camden City Police Department. He then reorganized the 390-member force and continued to supervise it until leaving the post of Camden County Prosecutor.

Prior to his prosecutorial appointment, President Solomon served five years in the New Jersey General Assembly. As a legislator, President Solomon distinguished himself as one of the policy leaders in Trenton. He served on as vice chairman of the Assembly Judiciary Committee, vice chairman of the Law and Public Safety Committee, and chairman of the Subcommittee on Criminal Justice. In addition, he served as vice chairman of the Environmental Quality Committee and as a member of the Assembly Policy & Rules Committee.

While in the General Assembly, President Solomon sponsored legislation to protect victims' rights and prevent crime bias. He authored the anti-crime package, "Safe and Secure Communities Act," that put 2,000 more police officers on the streets of New Jersey.

President Solomon received his law degree from Widener University School of Law in 1978, where he served as an external articles editor and a member of the Delaware Journal of Corporate Law. He completed his undergraduate studies at Muhlenberg College in Allentown, Pa., where he received his B.S. in 1975 while majoring in English and natural sciences.


Connecticut PUC Gains New Commissioner

CT Commissioner Anna M. Ficeto

Attorney Anna M. Ficeto was nominated as Commissioner of the Connecticut Public Utility Control Authority by Governor Rell on Feb. 3, 2010, and confirmed by both houses of the General Assembly on Feb. 24, 2010.

Commissioner Ficeto worked for the law firm of Jackson, O’Keefe and Phelan for six years, concentrating in insurance defense litigation. In 1996, she began working for the Department of Consumer Protection and eventually became managing attorney for the agency. Attorney Ficeto dealt with a variety of consumer and regulatory issues, and was complaint counsel for the Connecticut Real Estate Commission. She became managing attorney for the Department of Public Works in October 2003 and helped guide the agency through its role with the Select Committee of Inquiry in 2004.

Commissioner Ficeto served a short stint as Deputy Commissioner of the Department of Administrative Services and began working as Deputy Chief of Staff to Governor Rell in March 2006. She was appointed Chief Legal Counsel in December 2006 and served in that capacity until her nomination to the Department of Public Utility Control. While at the Office of the Governor, Ficeto served as Special Counsel on Ethics and as chair of the Governor’s Residence Conservancy.

Commissioner Ficeto holds a Juris Doctorate from the University of Connecticut School of Law and a bachelor’s degree from Mount Holyoke College. She graduated from what is now Chase Collegiate in Waterbury, Conn. She was born in Brooklyn, N.Y., and now resides in Wolcott, where she is a Justice of the Peace.


Governor Daniels Appoints New Commissioner to the IURC

Governor Mitch Daniels recently announced the appointment of former state representative Carolene Mays of Indianapolis to the Indiana Utility Regulatory Commission. Commissioner Mays will fill the vacancy left by Commissioner Jeffrey Golc, whose term expired Dec. 31, 2009.

Commissioner Mays served in the Indiana House of Representatives from 2002–2008 and sat on the committees for Small Business and Economic Development, Ways and Means, and Public Health. She is currently the publisher and president of the Indianapolis Recorder Newspaper and the Indiana Minority Business Magazine, and serves on the board of directors for the Indianapolis Chamber of Commerce, the Marion County Capitol Improvement Board and Peyton Manning’s PeyBack Foundation, among others. Commissioner Mays received her undergraduate degree from Indiana State University.

“In both business and government, Carolene Mays has established a reputation for fairness and firmness, the qualities of a good regulator,” said Governor Daniels. “As a lawmaker she never let blind partisanship prevent her from supporting positive change for Indiana. It’s been my hope since she left the legislature that we could bring her many talents back to public life, and it’s good news to every Hoosier that it’s going to happen.”

Commissioner Mays’ appointment was effective March 8. Her term will expire Dec. 31, 2013.



NARUC Adds New Leadership

Chairman Douglas R. M. Nazarian

National Association of Regulatory Utility Commissioners President David Coen of Vermont appointed Commissioner Douglas R. M. Nazarian of Maryland to serve on the association’s Executive Committee.

The NARUC Executive Committee consists of the association’s chief officers — President, First Vice President, Second Vice President and Treasurer — and additional members to ensure that each NARUC region is represented.

Commissioner Nazarian, who chairs the Maryland Public Service Commission, will fill the slot on the Executive Committee reserved for the Mid-Atlantic Conference of Regulatory Utility Commissioners held by former NARUC President Frederick Butler of New Jersey, who left regulation last month. Chairman Nazarian already serves on the NARUC board, having been appointed in May 2009.

“On behalf of NARUC, I want to thank Chairman Nazarian for stepping up to serve the Association and the nation’s ratepayers at this critical time,” President Coen said. “He brings a strong enthusiasm and I look forward to his participation on NARUC’s leadership team. I also want to applaud Past-President Butler for his years of service to NARUC. His inclusive leadership of this Association and tireless dedication to the public interest has benefited consumers across the country. He will be missed.”

“I am grateful for the opportunity to serve, and I thank President Coen for his trust and confidence in me,” Chairman Nazarian said. “I look forward to working closely with him and the other members of the Executive Committee, especially to support President Coen’s renewed emphasis on the consumers we serve.”

Chairman Nazarian was appointed to lead the Maryland PSC in August 2008. He also serves as the 2009 President of the Organization of PJM States Inc. He joined the commission in 2007, as General Counsel, from the law firm of Hogan & Hartson LLP, where he was a litigation partner with a diverse national practice that included complex business-oriented litigation, government investigations and representations of public entities. Chairman Nazarian also was the partner in charge of Hogan & Hartson’s Baltimore pro bono practice, and in 2007 received a Pro Bono Service Award from the Maryland Pro Bono Resource Center.

He earned a B.A., cum laude, from Yale College in 1988; a J.D. with honors from the Duke University School of Law in 1991; and clerked for The Hon. James B. Loken of the United States Court of Appeals for the Eighth Circuit.


Commissioner Erin O’Connell-Diaz of Illinois appointed to NARUC Board of Directors

Commissioner Erin O’Connell-Diaz

Commissioner Erin O’Connell-Diaz of Illinois was recently appointed as a member of the NARUC board of directors.

Commissioner O'Connell-Diaz received her undergraduate degree in history and government with honors from St. Mary's College of Notre Dame, South Bend, Ind. She graduated from Loyola University School of Law in Chicago with a Juris Doctorate.

She was then appointed by the Illinois Attorney General to serve as an Assistant Attorney General in the General Law Division. In that capacity she represented more than 150 state agencies in matters ranging from complex construction contract litigation to prisoner civil rights cases.

In 1991, she was appointed as an administrative law judge for the Illinois Commerce Commission. In that role, Commissioner O'Connell-Diaz handled a full spectrum of dockets involving all aspects of utility regulation including electric, gas and water utility rate cases; consumer complaint cases; telecommunication arbitration; and certification cases. In 2001, she was appointed assistant director of the Administrative Law Division. Additionally, she has served as chair of the Chicago Bar Association's Public Utility Law Division.

In April 2003, she was appointed to the Illinois Commerce Commission and reappointed to a second term in 2008. She currently serves as the chairman of the ICC’s Water and Transportation Committees. Commissioner O’Connell-Diaz serves as co-vice chair of the Committee on Electricity for the National Association of Regulatory Commissioners, as well as a member of its committees on Critical Infrastructure, Water and International Relations.


Commissioner Terry Jarrett of Missouri appointed to Committee on Critical Infrastructure

Commissioner Terry Jarrett

Commissioner Terry Jarrett of Missouri has been appointed as co-vice chair of the Committee on Critical Infrastructure.

Commissioner Jarrett was appointed by Governor Matt Blunt to the Missouri Public Service Commission for a six-year term on Sept. 11, 2007. Commissioner Jarrett received unanimous Senate confirmation on Jan. 17, 2008.

Commissioner Jarrett serves as chairman of the Missouri Universal Service Board, which was established on March 31, 2002, to help low-income and disabled Missourians receive additional discounts for basic local telephone service. He additionally serves, by gubernatorial appointment, on the Committee on 911 Service Oversight. This committee has a variety of responsibilities, including aiding in and collecting information relating to use of a universal emergency telephone number, reviewing existing and proposed legislation, and providing recommendations for model systems in preparing a model 911 service plan.

Commissioner Jarrett is a member of the NARUC Gas Committee and the NARUC/FERC Demand Response Collaborative. Commissioner Jarrett is also a member of the NARUC Subcommittee on Clean Coal and Carbon Sequestration.

He is also a member of the New Mexico State University Center for Public Utilities Advisory Council. The Advisory Council assists the Center for Public Utilities in providing educational and research services to the energy, water and telecommunications industries, and regulatory commissions.

Prior to his appointment to the PSC, Commissioner Jarrett was the presiding commissioner of the Administrative Hearing Commission. He formerly served as general counsel to Matt Blunt in both the Office of the Governor and the Office of the Secretary of State.

Jarrett has practiced law as a private attorney and served as a judicial law clerk to the Honorable Duane Benton at the Supreme Court of Missouri. He currently serves as a Judge Advocate in the Missouri Army National Guard at the rank of Captain.

Commissioner Jarrett received a B.S. from Central Missouri State University (now the University of Central Missouri) and a J.D. from the University of Missouri-Columbia School of Law. While in law school, he was editor-in-chief of the Missouri Law Review. In 2005, Jarrett was honored with the “Most Recent Distinguished Graduate” award by the University of Missouri-Columbia School of Law.

Jarrett is a member of the Cole County Bar as well as the Missouri Bar, where he is active on several committees, including serving as the chair of the Military Law Committee. He routinely lectures on administrative law, military law and other regulatory issues.


Commissioner John W. Betkoski III appointed as the Vice Chair to NARUC Committee on Consumer Affairs

Vice Chairman John W. "Jack" Betkoski III

Commissioner John W. Betkoski III of Connecticut has been appointed as the vice chair of the NARUC Committee on Consumer Affairs.

Betkoski was appointed Commissioner of the Connecticut Department of Public Utility Control on July 1, 1997, and was reappointed by Governor M. Jodi Rell to a fourth term, which expires June 30, 2013. As commissioner, he specializes in water utility issues and is lead commissioner on the department’s annual Connecticut Energy Efficiency Fund programs. Commissioner Betkoski is vice chairman of the Connecticut Water Planning Council. He was a member of the EPA National Drinking Water Advisory Council, having served on its Water Security Working Group, and was formerly a member of the AWWA Research Foundation’s Public Council on Drinking Water Research. He is on the National Association Regulatory Utility Commissioners (NARUC) board of directors, formerly serving as chairman of the Committee on Water and presently serving as chairman of the Subcommittee on Education and Research.

Commissioner Betkoski is the chairman of the Board of Directors for Griffin Hospital in Derby, and serves on the boards of directors for the National Multiple Sclerosis Society, Connecticut Chapter; Waterbury Youth Services; and VARCA Inc. of Derby, a private nonprofit agency that provides work opportunities to individuals with special needs. He also is a member of the Advisory Board of The Salvation Army of Waterbury. He served in the Connecticut Legislature as state representative for the 105th District (Ansonia, Beacon Falls and Seymour) from 1987–1997, and was chairman of the House Commerce Committee (from 1993–1997). His experience in the legislature and in working with issues affecting the underprivileged through various human service agencies, gives him a unique perspective on the needs of all segments of Connecticut's population.

Commissioner Betkoski was the Waterbury Salvation Army’s director of Human Services from 1989–1997 and held various administrative positions in human services agencies from 1974–1989. He served on Beacon Falls’ Board of Selectmen from 1981–1987 and Board of Finance from 1979–1981.

Commissioner Betkoski received his B.A. from Sacred Heart University and his M.S. and Sixth Year Diploma in advanced studies in administration and supervision from Southern Connecticut State University.


Indianapolis to Transfer Water And Wastewater Systems to Public Trust

On March 10, 2010, the City of Indianapolis executed a memorandum of understanding to transfer the city’s water and wastewater systems to Citizens Energy Group (Citizens), a public charitable trust that currently owns gas, steam and chilled-water operations. The transaction requires the approval of the Indianapolis City-County Council, the Board of Water Works, the Board of Public Works and the Indiana Utility Regulatory Commission. According to a press release issued by Citizens, it is anticipated that Veolia Water and United Water, which currently operate the water and wastewater systems in partnership with the city, will continue to play significant roles in the future. The agreement culminates more than seven months of deliberation following the city’s issuance, last July, of a Request for Expression of Interest asking qualified firms to provide ideas and proposed solutions to the infrastructure challenges facing the city.