commonwealth of pennsylvania memogerard j keim 121 pine street po box 322 cornwall pa 17016 jerono e...

COMMONWEALTH OF PENNSYLVANIA

PUBLIC UTILITY COMMISSION MEMO

February 14, 2006

Subject: Application ofthe City of Lebanon for a Certificate of Public Convenience at Docket No. A-220010

To: James J. McNulty Secretary

From: Robert A. Rosenthal, Director J) h f ) . Bureau of Fixed Utility ServicesV-^

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The referenced application by the City of Lebanon for a Certificate of Public Convenience was filed on December 30, 2005. Prior to the filing of the application, a Complaint/Petition by Cleona Borough, et al, was filed on December 22, 2005 and docketed as C-20055689/P-00052195. On January 10, 2006, West Cornwall Township filed a similar submission which was docketed as C-20065773/P-00062198. In both cases, the parties who have filed the complaints/petitions allege the applicant, the City of Lebanon, is in violation of various provisions of the Public Utility Code and they are petitioning the Commission for a Declaratory Order.

The protest period, for this application, ends on February 13, 2006, and in light of the aforementioned, please assign this application to the Office of Administrative Law Judge for appropriate adjudication.

cc: Judith Koch Carlson, Water/wastewater, BFUS Ed Rodrock, Supervisor, Water/wastewater, BFUS Larry Lash, BFUS Festus Odubo, BFUS Ralph Wax, BFUS Doreen Trout, Secretary's Bureau

DOCUMEN OLDER

FEB 14 2006

1 I

FER 1 4 2006 'A PUBLIC UTILITY eOWWISSIOI-'

SECRETARY'S BUREAU

mo®® PENNSYLVANIA

PUC ^ 1 COTVIMONWEALTH OF PENNSYLVANIA

PENNSYLVANIA PUBLIC UTILITY COMMISSION Office of Administrative Law Judge

P.O. BOX 3265, HARRISBURG, PA 17105-3265 February 15, 2006

IN REPLY PLEASE REFER TO OUR FILE

In Re: A-220010 C-20055689, P-00052195 C-20065773, P-00062198

CURRENT RESIDENT 125 JUNIPER STREET CORNWALL PA 17016

Application of the City of Lebanon for approval of the right to begin to offer, render, furnish or supply water service to the

public in the Boroughs of Cleona and Jonestown and the Townships of Annville, North Cornwall, South Lebanon, North Lebanon, West

Lebanon, Swatara and Union, in Lebanon County, PA

N O T I C E

This is to inform you that an I n i t i a l Pre-Hearing Conference on the above-captioned case w i l l be held as follows:

Type:

Date:

Time:

Location

Presidi nq:

Initial Pre-Hearing Conference

Monday, March 13, 2006 D O C U M E N T

10:00 a.m. FOLDER Hearing Room 2 Plaza Level Commonwealth Keystone Building 400 North Street Harrisburg, PA 17120

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Administrative Law Judge Wayne L. Weismandel^ 1 n-PO Box 3265 i> 0

H a r r i s b u r g , PA 17105-3265 ^ Phone: 717.783.5452 Fax: 717.787.0481

#388914 rev 04/05

I f you are a person with a d i s a b i l i t y , and you wish to attend the pre-hearing, we may be able to make arrangements for your special needs. Please call the scheduling office at the Public U t i l i t y Commission at least (2) two business days prior to your hearing:

# Scheduling Office: 717.787.1399 # AT&T Relay Service number for persons who are deaf or

heari ng-i mpai red: 1.800.654.5988

#388914 rev 04/05

A-220010 Application o f ^ i e City of Lebanon v

V KENNETH ZIELONIS ESQUIRE STEVENS & LEE 17 NORTH SECOND STREET 16TH FLOOR HARRISBURG PA 17101

THOMAS J SNISCAK ESQUIRE HAWKE MCKEON SNISCAK & KENNARD LLP 100 NORTH 10TH STREET PO BOX 1778 HARRISBURG PA 17105

WILLIAM R LLOYD JR ESQUIRE OFFICE OF SMALL BUSINESS ADVOCATE 1102 COMMERCE BUILDING 300 NORTH SECOND STREET HARRISBURG PA 17101

IRWIN A POPOWSKY ESQUIRE OFFICE OF CONSUMER ADVOCATE 555 WALNUT STREET FORUM PLACE STH FLOOR HARRISBURG PA 17101

R SCOT FREEMAN SOLICITOR CITY OF LEBANON 315 SOUTH EIGHTH STREET LEBANON PA 17042

STEPHEN R NOVOSEL PO BOX 12 REXMONT PA 17085

DAVID S REINHART CPA 147 JULIAN LANE LEBANON PA 17042

JAMES L MESSNER 175 MAPLE LANE LEBANON PA 17042

CATHERINE L WEAVER 152 MAPLE LANE LEBANON PA 17042

ALAN M & MARY ALICE FERRINGTON 136 HILLSIDE STREET LEBANON PA 17042

CURRENT RESIDENT 117 PINE STREET LEBANON PA 17042-8894

CRAIG D & KAY L BOYER 125 PINE STREET LEBANON PA 17042

JAMES R ELLIOTT 2367 CORNWALL ROAD PO BOX 361 LEBANON PA 17042

RANDALL D REINOIR 134 JUNIPER STREET CORNWALL PA 17016

CARL F BRADY 106 PARK ST RURAL LEBANON PA 17042

JOE & CAROL A NICHOLS 75 NORWAY LANE LEBANON PA 17042

CURRENT RESIDENT 7 LYNCH DRIVE LEBANON PA 17042

PAUL C BENGANAR 276 TICE LANE LEBANON PA 17042

CURRENT RESIDENT 170 NORWAY LANE LEBANON PA 17042

STEVEN D SHAY 330 PAMELA LANE LEBANON PA 17042

CURRENT RESIDENT 136 IRON MASTER ROAD LEBANON PA 17042

V.

V.

THOMAS LAUDERMAN 203 SCHAEFFER ROAD LEBANON PA 17042-9773

KATHLEEN K KOHN 70 NORWAY LANE LEBANON PA 17042

CURRENT RESIDENT 171 TICE LANE LEBANON PA 17042

CHARLES R HOPSTETTER 106 STORE LANE LEBANON PA 17042-9713

DAVID V TOPPER 149 TICE LANE LEBANON PA 17042

GAYLE KOHL 218 KARINCH STREET LEBANON PA 17042

JOHN M ZIMMERMAN 924 HAUCK STREET LEBANON PA 17042-7228

ROBERT P BEARD 313 JUNIPER STREET PO BOX 76 CORNWALL PA 17016-0076

KAREN MITCHELL 111 HILLSIDE STREET LEBANON PA 17042

MARTIN R SARCSEK 214 KARINCH STREET LEBANON PA 17042

STEVEN D HASSINGER 145 NORWAY LANE LEBANON PA 17042

CHARLES GAINES 370 REXMONT ROAD REXMONT PA 17085

JOSEPH J DIFERRO 182 NORWAY LANE LEBANON PA 17042-9003

ROBERT E CONRAD BOX 71 REXMONT PA 17085

DARLENE M CONRAD 8 WATER STREET REXMONT PA 17085

VICKIE L PRICE 352 BOYD STREET PO BOX 17 CORNWALL PA

CHARLES PETRY 118 WALKER STREET CORNWALL PA 17016

C ANDREW DAN PO BOX 349 CORNWALL PA 17016

JOSEPH YACHLVICH PO BOX 94 12 WATER STREET REXMONT PA 17085

RALPH S FORENTINO SR 361 BOYD STREET BOX 186 CORNWALL PA 17016

ELEANOR HOWDYSHELL PO BOX 124 221 BURD COLEMAN ROAD CORNWALL PA 17016

v.

V.

DONALD & BEVERLY RYLAND 162 MAPLE LANE LEBANON PA 17042

RICHARD L RIGHT 142 HILLSIDE STREET LEBANON PA 17042

CURRENT RESIDENT 112 MAPLE LANE LEBANON PA 17042

CURRENT RESIDENT 102 SHORT STREET LEBANON PA 17042

BRUCE E LIGHT 319 REXMONT ROAD LEBANON PA 17042

FRANCIS A FIORENTINO PO BOX 273 CORNWALL PA 17016

L WASHINGTON 91 NORWAY LANE LEBANON PA 17042

WILLIAM D HENDRICK 161 NORWAY LANE LEBANON PA 17042

SUZANNE MILLER 313 PAMELA LANE LEBANON PA 17042-8946

JOANNE & JAMES S FOLTZ 171 SCHAEFFER ROAD LEBANON PA 17042

LISA ANN HAAS 121 NORTH CORNUKILL ROAD EAST LEBANON PA 17042

CURRENT RESIDENT 2387 CORNWALL ROAD LEBANON PA 17042

KENNETH H CARPENTER BOX 111 CORNWALL PA 17016


DAWN J WOLFE 125 JUNIPER STREET CORNWALL PA 17016

GERARD J KEIM 121 PINE STREET PO BOX 322 CORNWALL PA 17016

JERONO E GRACE PO BOX 310 CORNWALL PA 17016

HERMAN C SMITH 336 REXMONT ROAD BOX 42 REXMONT PA 17085

CURRENT RESIDENT 149.JULIA LANE REXMONT PA 17085

MICHAEL A & VICKI MOHL 305 SPRING STREET EAST LEBANON PA 17042

CAROL A KLEINFELTER 108 PARK STREET LEBANON PA 17042

TIMOTHY D SHEFFEY ESQUIRE REILLY WOLFSON SHEFFEY SCHRUM AND LUNDBERG LLP 1601 CORNWALL ROAD LEBANON PA 17042-7406

PAUL C BAMETZREIDER ESQUIRE REILLY WOLFSON SHEFFEY SCHRUM AND LUNDBERG LLP 1601 CORNWALL ROAD LEBANON PA 17042-7406

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STEVENS & LEE LAWYERS & CONSULTANTS

'i 7 North Second Sireet 16th Floor

Harrisburg, PA 17101 (717) 234-1090 Fax (717) 234-1099

www.stcvenslee.com

Al JW. UV /n\ •

Direct Dial: (717) 255-7355 Email: [email protected] Direct Fax: (610)371-7375

February 27, 2006 SE

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James J. McNulty Secretary PA. Public Utility Commission Keystone Building P.O. Box 3265 Harrisburg, PA. 17105-3265

Re: Application ofthe Citv of Lebanon. Docket No. A-220010

Dear Secretary McNulty:

Please find enclosed for filing on behalf oflhe City of Lebanon in the above matter an original and three copies of Objections to Interrogatories of City of Lebanon's. As indicated by the attached certificate of service, the presiding Administrative Law Judge and all parties of record have been served a copy hereof.

Should you have any questions or comments, please feel free to contact my office.

Sincerely,

STEVENS & LEE

Kenneth Zieloni

Philadelphia Scranton

Reading Wilkes-liarre

Valley Forge Princeton

Lehigh Valley Cherry Will

A PROFESSIONAL CORPORATION

l-Iarrishu if,

New York

Lancaster

Wi lmington

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BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION

APPLICATION OF THE CITY OF LEBANON FOR FURNISHING WATER SERVICE IN THE BOROUGHS OF CLEONA AND JONESTOWN AND THE TOWNSHIPS OF ANNVILLE, NORTH CORNWALL, SOUTH LEBANON, NORTH LEBANON. WEST LEBANON, SWATARA AND UNION, LEBANON COUNTY, PENNSYLVANIA

DOCKET NO. A-220010

%

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OBJECTIONS OF APPLICANT CITY OF LEBANON TO INTERROGATORIES

AND NOW COMES, the City of Lebanon ("City"), by and through its

attorneys, and files, pursuant to Section 5.342(c) of the Pennsylvania Public Utility

Commission's, ("Commission"), Rules of Practice and Procedure, 52 Pa. Code

Section 5.342(c), these Objections to Interrogatories, and in support thereof, avers the

following:

The specific Interrogatories to which the City objects are follows:

1. Protestants' No. 2

Provide copies of all reports or studies conducted by the City regarding the

proposed takeover.

OBJECTION:

1. Irrelevant

The Commission lacks jurisdiction over the take over and thus this matter is

irrelevant to the Commission's determination ofthe granting ofthe City's Application for a

Certificate of Public Convenience and Necessity.

•SLl 6!4202vl/09y«>99.0<)<W


Provide copies of all studies or reports by the City's consultants or

representatives regarding the proposed take-over

OBJECTION:

1. Irrelevant


irrelevant to the Commission's determination of the granting of the City's Application for a

Certificate of Public Convenience and Necessity..

2. Bad Faith and Unreasonable Annoyance

The Commission lacks jurisdiction over the take-over and therefore the

requested information is sought in bad faith and is simply meant to annoy the Applicant.

3. Protestants1 No. 7.

Provide copies of all reports or studies regarding the services provided, and

management fees paid, to the City by the Authority and claims by the City against the

Authority for the past five (5) years including any budgeted amounts or projections for 2006.

OBJECTION:

1. Irrelevant

Any studies related to past services and management fees paid, if any, and

contractual claims for the same are irrelevant to this Application proceeding.

4. Protestant No. 9

Identify the assets to be acquired by the City to provide sewer/wastewater

service.

OBJECTION:

SU 6l4202v]/099y99.()9 ,»9

1. Irrelevant

Wastewater serviced is irrelevant to this water certificate application

proceeding.

2. Bad Faith and Unreasonable Annoyance.

Because this matter concerns a water certificate, the requested information is

sought in bad faith and is simply meant to annoy the Applicant.

5. Protestant No. 10

Identify the following costs both incurred, and estimated to be incurred,

associated with the take-over:

a. Legal. b. Engineering. c. Accounting costs. d. Financial consulting costs. e. Additional interest costs associated with the assumption or refinancing of the Authority's debt.

OBJECTION:

1. Irrelevant



Certificate of Public Convenience and Necessity..




S U 614202v 1/099999.0W99

6. Protestants'No. 11.

Identify the financial consultant or consultants utilized by the City in

association with the take-over, and state when each was retained for this purpose.

OBJECTION:

1. Irrelevant








Identify the City's auditors and accountants and detail any business or

professional relationship or affiliation they have with the City's financial advisors or

consultants in this take-over matter.

1. Irrelevant


irrelevant to the Commission's determination ofthe granting of the City's Application for a





SLl 6142()2vl/09999y.099!)y


Provide all details and documents supporting the Mayor's public statements

that unless the take-over occurs the City may be bankrupt within two years.

OBJECTION:

1. Irrelevant


irrelevant to the Commission's determination of the granting ofthe City's Application for a





9. Protestants' No. 14(c),

Provide the same information for 14, 14(a), and 14(b) for sewer/wastewater.

OBJECTION:

1. Irrelevant

Wastewater serviced is irrelevant to this water certificate application

proceeding.

2. Bad Faith and Unreasonable Annoyance.


sought in bad faith and is simply meant to annoy the Applicant.

10. Protestants' No. 15.

Provide all reasons why the City believes it need not obtain approval under 66

Pa. C.S. §1102(a)(5) for acquiring assets to provide service beyond its municipal boundaries.

SLl 614202vl/09l)W).0!>999

OBJECTION:

1. Privileged

The requested information requests information that is a legal conclusion and

thus is privileged and confidential.


Because the information sought to be discovered through this Interrogatory is

known to be privileged and confidential, it is also sought in bad faith and is simply meant to

annoy the Applicant.


Provide copies of all documents and correspondence from the Mayor

regarding the take-over.

OBJECTION:

1. Irrelevant








Identify the date upon which the City intends to close its financing for the

take-over.

SL 1 614202 v 1 /OOWJ.O W J

a. Identify the type of financing and provide copies of all requests for

proposals to banks issued by the City in connection with the take-over.

13. Protestants'No. 21

Provide copies of all meeting minutes from City Council regarding the take

over.

OBJECTION:

1. Irrelevant








Provide a pro forma balance sheet and income statement for the City giving

effect to the take-over.

b. Provide the same for the sewer system operations.

15. Protestants' No. 27(b)

b. The location or route of the... wastewater collection treatment and disposal

facilities.

SLl 614202vl/WWJ.OMW


Provide the actual number of customers by class and related consumption or

gallons treated in the current calendar year and future number of connections anticipated for

the next ten years for water and sewer service.


Provide copies of the DEP certified operator's certificates for those who will

operate...wastewater facilities for the City.


If the City's water and wastewater operations will sustain operating losses

after the take-over, identify such losses for the next five years and explain in detail how those

losses will be subsidized and by whom?


Has the City prepared budgets for the water and sewer operations for 2006?

OBJECTION:

1. Irrelevant

Wastewater service is irrelevant to this water certificate application

proceeding.



sought in bad faith and is simply meant to annoy the Applicant..


Provide copies of the Authority's water and sewer budgets for 2006.

OBJECTION:

SI.I 614202v 1 /09fW99.09999

1. Irrelevant

The Authority's budgets are irrelevant to this proceeding. The Commission

has no jurisdiction over the Authority's budget.


Because the requested information is irrelevant, it is sought in bad faith and is

simply meant to annoy the Applicant.


Does the City believe it was underpaid by the Authority by approximately

$4,500,000 for management services rendered by the City to the Authority over the past ten

year time period?

22. Protestants'No 41.

Regarding the alleged underpayment of $4,500,000 identified by the City's

Mayor, does the City intend to recover said amount at the rate of approximately $450,000 a

year for the next ten (10) years?

a. Provide all copies of correspondence and reports between the Mayor, the City's consultants, and City Council regarding this subject.

b. How much of this has the City budgeted to recover in 2006?


Explain whether the City's financial statements identify a $4,500,000 claim or

assessment for services rendered to the water and sewer authority operations.


Did the 2005 allocation and management fee transfers from the water and

sewer funds to the City's general fund total approximately $1,300,000?

SU 614202v 1 /099999.09999


Has the City budgeted recovering approximately $2,060,000 in 2006 for

allocation and management fee transfers from the water and sewer funds?


Has the Authority proposed to pay the City general fund from the water and

sewer funds in 2006 a total of $892,880 of which $598,230 is allocated from the water fund

and $294,660 is from the sewer fund?

OBJECTION:

1. Irrelevant

The information requested concerning past transfers of funds by the Authority

or past underpayments by the Authority is irrelevant to the Commission's determination of

the granting of the City's Application for Certificates of Public Convenience and Necessity.



irrelevant it is also sought in bad faith and is simply meant to annoy the City.


Identify for 2006 the amount of allocation and management fee transfers from

the water and sewer fund the Authority has budgeted for 2006.

OBJECTION:

1. Irrelevant

The Commission lacks jurisdiction over the Authority and thus its 2006

budget is irrelevant to this proceeding.


10 SLl fil4202v 1 / 0WW.OW)




Has the Mayor by letter dated February 1, 2006 to the Chairman of the City of

Lebanon Authority opposed the hiring of an independent auditor to review the finances of the

City of Lebanon Authority?

a. Is Zeienofske Axelrod, LLC the present auditor for the City and City Authority?

b. Is Susquehanna Group Advisors, Inc., an affiliate of Zeienofske Axelrod, LLC?

c. Is Susquehanna Group Advisors, Inc., the financial consultants for the City relative to the 2006 budget?

d. Is Susquehanna Group Advisors, Inc., the financial consultants for the City relative to the take-over?

e. Is Susquehanna Group Advisors, Inc. the financial consultants who provided the Mayor with the basis for his $4,500,000 claim against the Authority?

OBJECTION:

1. Irrelevant

The information requested is irrelevant to this proceeding.


Because the infonnation sought to be discovered through this Interrogatory is



Are the bonds of the Authority presently lax exempt?

OBJECTION:

1. Irrelevant

11 S U f)M202vl/09W99.09999

The requested information is irrelevant to the Commission's determination of

the granting of the City's Application for a Certificate of Public Convenience and Necessity.


Because the infonnation sought to be discovered through this Interrogatory is


30. Protestants' No 51.

Are customers within the City billed the same rates as non-City water and

sewer customers?


Has the City undertaken any study or analysis for establishing different rates

within the City versus serviced provided to water and sewer customers outside of the City?


Is the City currenlly operating the water and/or sewer systems?


Identify all capital or equity contributed by the City to the water or sewer

systems in the last 60 years.


When, if ever, was the City the owner of the water and sewer systems?


Identify the owner and the operator ofthe water and sewer systems for the

past sixty (60) years.

OBJECTION:

1. Irrelevant

12 SU 614202v 1 m<m9.Q()999

Sewer issues are irrelevant to this water application proceeding.




3. Burdensome and unreasonable annoyance.

Because the some of the information covers a sixty (60) year time period, it

will be burdensome for the City to secure the information.

WHEREFORE, the City of Lebanon requests that the Pennsylvania Public

Utility Commission grant each and every Objection herein.

Respectfully submitted,

Kenneth Zieloni; STEVENS & LEE 17 North 2nd Street, 16th Floor Harrisburg, PA 17101 Telephone (717) 255-7355 Facsimile (610) 371-7375

Dated: February 27, 2006 Attorneys for the City of Lebanon

13 SLl 6]4202vl/09t)9W.()W99

BEFORE THE

D)!l Uv "ENNSYLVANIA PUBLIC UTILITY COMMISSION

APPLICATION OF THE CITY OP LEBANON FOR FURNISHING WATER SERVICE IN THE BOROUGHS OF CLEONA AND JONESTOWN AND THE TOWNSHIPS OF ANNVILLE, NORTH CORNWALL, SOUTH LEBANON, NORTH LEBANON. WEST LEBANON, SWATARA AND UNION, LEBANON COUNTY, PENNSYLVANIA

DOCKET NO. A-220010

CERTIFICATE OF SERVICE

1 hereby certify that on this 27th day of February, 2006 I have served a true

and correct copy ofthe Objections of Applicant, City of Lebanon to Interrogatories upon the

following persons by first class mail.

Honorable Wayne L. Weismandel Adminislrative Law Judge Pennsylvania Public Ulilily Commission Office of Administrative Law Judge P.O. Box 3265 . Harrisburg, PA 17105-3265

'fhomas J. Sniscak, Esquire Hawke, McKeon, Sniscak & Kennard, LLP 100 North Tenth Street Harrisburg, PA 17101

Timothy D. Sheffey Reilly, Wolfson. Sheffey, Schrum and Lundberg, LLP 1601 Cornwall Road Lebanon, PA 17042

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STEVENS & LEE LAWYERS & CONSULTANTS

17 North Second Street '16th Floor

Harrisburg, PA 17101 (717)234-1090 Fax (717)234-1099

www.steveiislee.com

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Direct Dial: (717)255-7355 Email: [email protected] Direct Fax: (610)371-7375

March 6, 2006

MAR - 8 2006 P 4 p ^ L i n u T l i l T Y C O ^ f a

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Hon. Wayne L. Weismandel Administrative Law Judge Office of Administrative Law Judge PA. Public Utility Commission Keystone Building P.O. Box 3265 Harrisburg, PA. 17105-3265

Re: Application ofthe Citv of Lebanon, Docket No. A-220010, ef al.

Dear Judge Weismandel:

Please find enclosed on behalf of the City of Lebanon in the above matter its Prehearing Memorandum. As indicated by the attached cerlificatc of service, all parties of record have heen served a copy hereof.

Should you have any questions or comments, please feel free to contact my office.

Sincerely,

STEVENS & LEE

Kenneth Zielonis >

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ex '•\\ Philadelphia Scranton

Reading Wilkes-Barre

Valley Forge Princeton

Lehigh Valley Cherry Hill

Harrisburg New York

Lancaster Wilmington

A PROFESSIONAL CORPORATION


Application of the City of Lebanon for a Certificate of Public Convenience

Petition of Cleona Borough, et. al. for Declaratory Order

Cleona Borough, et. al

v.

City of Lebanon

Petition of West Cornwall Township for Declaratory Order

West Cornwall Township

v.

City of Lebanon

DOCUMEN! FOLDER

Docket No. A-220010

Docket No. P-00052195

Docket No. C-20055689


Docket No. C-20065773

MAR 1 6 2006

MAR 6 % 2006

PA PUBLIC UTILITY Co^u^ooiON SECRETARY'S BUREAU

PREHEARING MEMORANDUM OF THE CITY OF LEBANON

AND NOW COMES, the City of Lebanon , ("Applicant" or "City"), by and through its

attorneys, and files, pursuant to the Prehearing Conference Order of Administrative Law Judge

: ^ Wayne L. Weismandel ("ALJ") dated February 15, 2006 in the above-captioned proceedings;

and, in support thereof, avers the following:

INTRODUCTION

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On or about December 22, 2005, Cleona Borough, Cleona Borough

Municipal Authority and North Lebanon Township filed a Formal Complaint with the

Commission against the Applicant and filed a Petition for Declaratory Order with the

Commission. The Formal Complaint and Petition for Declaratory Order were docketed by the

Commission at Docket Nos. C-20055689 and P-00052195, respectively. On December 30,

2005, the Applicant filed a Application for a Certificate of Public Convenience and Necessity to

serve the area currently served by the City of Lebanon Authority. This Application was

docketed by the Commission at Docket No. A-220010. On or about January 10, 2006, West

Cornwall Township filed a Formal Complaint with the Commission against the Applicant and

filed a Petition for Declaratory Order with the Commission. The Formal Complaint and Petition

for Declaratory Order were docketed by the Commission at Docket Nos. C-20065773 and P-

00062198, respectively.

On or about February 9, 2006, Cleona Borough, Cleona Borough Municipal

Authority, Fredericksburg Sewer & Water Authority, North Lebanon Township and West

Cornwall Township filed an both a Protest and an Formal Complaint against the Applicant's

Application for Certificate. In addition, Cleona Borough, Cleona Borough Municipal Authority

and North Lebanon Township filed a Reply to Request for Affirmative Relief. In addition it

appears that certain individuals residing outside of the proposed service territory filed purported

"Protests" to the Application. The Applicant was never served a copy of these purported

documents.

By Prehearing Conference Order dated February 15, 2006, the ALJ established a

Prehearing Conference for March 13, 2006 and further ordered the parties to file Prehearing

Memorandum. The Applicant submits this Prehearing Memorandum in accordance with that

directive.

II. SERVICE ON THE COMPANY

The Applicant will be represented by Kenneth Zielonis, Esquire in this

proceeding. Copies of all documents should be served on said counsel at the address listed at the

end of this Prehearing Memorandum.

III. POSITION ON OUTSTANDING PLEADINGS

The Applicant provides the following position on certain outstanding procedural

matters. First, the Applicant does not oppose the intervention of Swatara, Anneville and Union

Townships and the Borough of Jonestown. Second, the Applicant believes that because the

Formal Complaints are moot, the Motion for Consolidation filed by West Cornwall Township is

moot. Third, the Petitions for Declaratory Order are moot.

IV. SETTLEMENT

The Applicant is willing to discuss settlement with all ofthe active parties.

V. DISCOVERY

The Applicant believes that all discovery should close by April 1, 2006. This means no

further discovery can be propounded beyond this date.

VI. PROPOSED SCHEDULE

March 13,2006

April 14,2006

May 5, 2006

May 23-25, 2006

Prehearing Conference

All Parties' Written Direct Testimony due

All Parties' Written Rebuttal Testimony due

Hearings

IV. WITNESSES

The Applicant intends to present as its witnesses the following witnesses: Paul R.

Herbert, Gannett Fleming, Inc., P.O. Box 67100, Harrisburg, Pa. 17106 (Rates and financial

fitness); Jonathon Beers, City Engineer, City of Lebanon, 400 South 8th Street, Lebanon, Pa.

17604 (Facilities, technical fitness, public need, billing, system maintenance and background);

and Mark Morgan, Susquehanna Group Advisors, Inc., 4316 Derry Street, Harrisburg, Pa.,

17111 (Financial fitness.) The Applicant reserves the right to have these witnesses testify to

other matters and to call other witnesses as it deems necessary and will so inform the parties.

V. ISSUES

The issues to be resolved are the need for the City's service to the existing water

customers ofthe City of Lebanon Authority and the technical and financial fitness of the City to

provide such service. The City intends to prove all of the above elements.

VI. EVIDENCE

The Applicant will present evidence concerning background on the City, the City

of Lebanon Authority's current customers and their need for water service from the City, and the

City's technical and financial ability to provide water service to its customers and the public

interest all in support of the granting of the City's Certificate of Public Convenience.


Kenneth ZielonisrEsq-STEVENS & LEE 17 North Second Street 16th Floor Harrisburg, PA. 17101 T(717) 255-7355 F(610)371-7375

Dated: March 6, 2006 Attorneys for the City of Lebanon

220010 Application of the City of LcjQ on

HON. WAYNE L. WEISMANDEL ADMINISTRATIVE LAW JUDGE OFFICE OF ADMINISTRATIVE LAW JUDGE PA. PUBLIC UTILITY COMMISSION KEYSTONE BUILDING P.O. BOX 3265 HARRISBURG, PA. 17105-3265

THOMAS J SNISCAK ESQUIRE HAWKE MCKEON SNISCAK & KENNARD LLP 100 NORTH 10TH STREET PO BOX 1778 HARRISBURG PA 17105

R SCOT FEEMAN SOLICITOR IRWIN A POPOWSKY ESQUIRE OFFICE OF CONSUMER ADVOCATE CITY OF LEBANON 555 WALNUT STREET 315 SOUTH EIGHTH STREET FORUM PLACE 5TH FLOOR LEBANON PA 17042 HARRISBURGPA 17101

WILLIAM R LLOYD JR ESQUIRE OFFICE OF SMALL BUSINESS ADVOCATE 1102 COMMERCE BUILDING 300 NORTH SECOND STREET HARRISBURG PA 17101

STEPHEN R NOVOSEL PO BOX 12 REXMONT PA 17101

DAVID S REINHART CPA 147 JULIAN LANE LEBANON PA 17042

JAMES L MESSNER 175 MAPLE LANE LEBANON PA 17042

CATHERINE L WEAVER 152 MAPLE LANE LEBANON PA 17042

ALAN M & MARY ALICE FERRINGTON _36 HILLSIDE STREET LEBANON PA 17042

CURRENT RESIDENT 117 PINE STREET LEBANON PA 17042-8894

CRAIG D & KAY L BOYER 125 PINE STREET LEBANON PA 17042

JAMES R ELLIOTT 2367 CORNWALL ROAD PO BOX 361 LEBANON PA 17042

RANDALL D REINOIR 134 JUNIPER STREET CORNWALL PA 17016

CARL F BRADY 106 PARK ST RURAL LEBANON PA 17042

JOE & CAROL A NICHOLS 75 NORWAY LANE LEBANON PA 17042

CURRENT RESIDENT 7 LYNCH DRIVE LEBANON PA 17042

PAUL C BENGANAR 276 TICE LANE LEBANON PA 17042

CURRENT RESIDENT 170 NORWAY LANE LEBANON PA 17042

STEVEN D SHAY 330 PAMELA LANE LEBANON PA 17042

CURRENT RESIDENT 136 IRON MASTER ROAD LEBANON PA 17042

STACY L SIMMERS _15 PAMELA LANE LEBANON PA 17042

THOMAS LAUDERMAN 203 SCHAEFFER ROAD LEBANON PA 17042-9773

KATHLEEN K KOHN 70 NORWAY LANE LEBANON PA 17042

CURRENT RESIDENT 171 TICE LANE LEBANON PA 17042

CHARLES R HOPSTETTER 106 STORE LANE LEBANON PA 17042-9713

DAVID V TOPPER 149 TICE LANE LEBANON PA 17042

SU 6l5808v1/041208.00027

GAYLE KOHL 218 KARINCH STREET LEBANON PA 17042

MARTIN R SARCSEK 214 KARNICH STREET LEBANON PA 17042

JOSEPH J DIFERRO _82 NORWAY LANE LEBANON PA 17042-9003

VICKIE L PRICE _52 BOYD STREET PO BOX 17 CORNWALL PA

JOSEPH YACHLVICH PO BOX 94 _2 WATER STREET REXMONT PA 17085

ANN M KARINCH PO BOX 135 144 HILLSIDE STREET CORNWALL PA 17016

CURRENT RESIDENT J 2 MAPLE LANE LEBAON PA 17042

FRANCIS A FIORENTINO PO BOX 273 CORNWALL PA 17016

SUZANNE MILLER 13 PAMELA LANE

LEBANON PA 17042-8946

CURRENT RESIDENT 2387 CORNWALL ROAD LEBANON PA 17042

JOHN M ZIMMERMAN 924 HAUCK STREET LEBANON PA 17042-7228

STEVEN D HASSINGER 145 NORWAY LANE LEBANON PA 17042

ROBERT E CONRAD BOX 71 REXMONT PA 17085

CHARLES PETRY 118 WALKER STREET CORNWALL PA 17016

RALPH S FORENTINO SR 361 BOYD STREET BOX 186 CORNWALL PA 17016

ROBERT P BEARD 313 JUNIPER STREET PO BOX 76 CORNWALL PA 17016-0076

CHARLES GAINES 370 REXMONT ROAD REXMONT PA 17085

DARLENE M CONRAD 8 WATER STREET REXMONT PA 17085

C ANDREW DAN PO BOX 349 CORNWALL PA 17016

ELEANOR HOWDYSHELL PO BOX 124 221 BURD COLEMAN ROAD CORNWALL PA 17016

DONALD & BEVERLY RYLAND RICHARD L RIGHT 162 MAPLE LANE LEBANON PA 17024

CURRENT RESIDENT 102 SHORT STREET LEBANON PA 17042

L WASHINGTON 91 NORWAY LANE LEBANON PA 17042

JOANNE & JAMES S FOLTZ 171 SCHAEFFER ROAD LEBANON PA 17042

KENNETH H CARPENTER BOX 111 CORNWALL PA 17016

142 HILLSIDE STREET LEBANON PA 17042

BRUCE E LIGHT 319 REXMONT ROAD LEBANON PA 17042

WILLIAM D HENDRICK 161 NORWAY LANE LEBANON PA 17042

LISA ANN HAAS 121 NORTH CORNUKILL ROAD EAST LEBANON PA 17042


SU 615808vl/041208.00027

DAWN J WOLFE 125 JUNIPER STREET CORNWALL PA 17016

CURRENT RESIDENT _49 JULIA LANE REXMONT PA 17085

DEBORAH L BEMESDERFER _03 HILLSIDE ROAD LEBANON PA 17042

GERARD J KEIM 121 PINE STREET PO BOX 322 CORNWALL PA 17016

MICHAEL A & VICKI MOHL 305 SPRING STREET EAST LEBANON PA 17042

JERONO E GRACE PO BOX 310 CORNWALL PA 17016

CAROL A KLEINFELTER 108 PARK STREET LEBANON PA 17042

TIMOTHY D SHEFFEY ESQUIRE PAUL C BAMETZREIDER ESQUIRE REILLY WOLFSON SHEFFEY REILLY WOLFSON SHEFFEY SHRUM AND LUNDBERG LLP SCHRUM & LUNDBERG LLP 1601 CORNWALL ROAD 1601 CORNWALL ROAD LEBANON PA 17042-7406 LEBANON PA 17042-7406

SLl f)t580Kv]/041208.00027

awke D

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cKeon

niscak &

William T. Hawke Kevin J. McKeon Thomas J. Sniscak Norman James Kennard Lillian Smith Harris Scoll T. Wyland Todd S. Slewart

Craig R. Burgrafi" Steven D. Snyder Jancl L. Miller Steven K. Haas William E. Lehman Rikardo J. Hull Katherine E. Lovette

ennard LLP ATTORNEYS AT LAW

100 North Tenth Street, Harrisburg, PA 17101 Phone: 717.236.1300 Fax: 717.236.4841 www.hmsk-law.com

March 6, 2006

BY HAND DELIVER Y James J. McNulty, Secretary Pennsylvania Public Utility Commission Piling Room - Second Floor Commonwealth Keystone Building PO Box 3265 Harrisburg, PA 17105-3265

DOCUMENT

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Re: Application ofthe City of Lebanon For Furnishing Water Service in the Boroughs of Cleona and Jonestown and the Townships of Annville, North Cornwall, South Lebanon, North Lebanon, West Lebanon, Swatara and Union, Lebanon County, Pennsylvania; Docket No. A-220010;

Petition of Cleona Borough, Cornwall Borough Municipal Authority and North Lebanon Township for Declaratory Order; Docket No. P-00052195;

Cleona Borough, Cornwall Borough Municipal Authority and North Lebanon Township v. Cily of Lebanon; Docket No. C-20055689;

Petilion of West Cornwall Township for Declaratory Order; Docket No. P-00062198 and

West Cornwall Township v. City of Lebanon; Docket No. C-20065773


Enclosed for filing with the Commission are an original and three (3) copies of the Inilial Prehearing Conference Memorandum filed on behalf of Cleona Borough, Cornwall Borough, Lebanon County, Municipal Authority, North Lebanon Township, West Cornwall Township, and Fredericksburg Sewer & Water Authority ("Municipalities"). This filing has been served in accordance with the attached Certificate of Service.

MAILING ADDRESS: P.O. BOX 1778 HARRISBURG, PA 17105

James J. McNulty, Secretary Pennsylvania Public Utility Commission March 6, 2006 Page 2

If you have any procedural questions concerning this filing, please do not hesitate to contact me.

Very truly yours.

Thomas J. Sniscak

TJS/das Enclosures

cc: Hon. Wayne L. Weismandel (By Hand Delivery) Per Certificate of Service

BEFORE THE

D

PENNSYLVANIA PUBLIC UTILITY COMMISSION

Application ofthe Cily of Lebanon for a Certificate of Public Convenience authorizing il to commence water service to the public in portions of the Boroughs of Cleona and Jonestown and the Townships of South Annville, North Cornwall, South Lebanon, North Lebanon, West Lebanon, Union and Swatara, all in Lebanon County, Pennsylvania

Petition of Cleona Borough, Cornwall Borough Municipal Authority and North Lebanon Township for Declaratory Order

Cleona Borough, Cornwall Borough Municipal Auihority and North Lebanon Township

v.

Cily of Lebanon


A-220010

P-00052195

C-20055689

P-00062198

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v.

City of Lebanon

C-20065773

INITIAL PREHEARING CONFERENCE MEMORANDUM

Pursuant to the Prehearing Conference Order issued on February 15, 2006 in the above-

captioned matters, Cleona Borough, Cornwall Borough, Lebanon Couniy, Municipal Authority,

DOCUMENT 1 a m 1

1 i

MAR 3 0 2006

North Lebanon Township, West Cornwall Township, and Fredericksburg Sewer & Water Authority

(inclusively, "Municipalities")1 hereby file their Initial Prehearing Conference Memorandum.

a) Designation of person to be listed on the service list.

Thomas J. Sniscak Hawke McKeon Sniscak & Kennard LLP 100 N. IO'1' Street P.O. Box 1778 Harrisburg, PA 17105 Phone: 717-236-1300 Fax: 717-236-4841

lisniscakfaihmsk-law.com

The Municipalities also request that Katherine B. Lovette, who has also entered her

appearance on behalf of the Municipalities be added to the email list in this matter. Her email

address is [email protected].

b) Statement SUPPORTING granting of intervention at Docket No. A-220010.

The Municipalities support the granting ofthe interventions of Swatara Township, Annville

Township, Union Township, and Jonestown Borough in the City's application proceeding at Docket

No. A-220010. These municipalities seeking to intervene are included in the proposed service

territory of the City's application; therefore, they have a direct and substantial interest in the

outcome ofthe application proceeding, and their participation in this proceeding is in the public

interest.2

Indeed, the Commission's regulations recognize the interests of municipalities in these

matters. For instance, the Commission's Regulation at 52 Pa. Code § 3.501(d)(1) requires an

applicant for a certificate of public convenience to serve, by certified mail return receipt requested, a

copy oflhe filed application upon each city, borough, town, township, county and related planning

1 "Municipaliiies" as used herein shall include Boroughs, Townships or their Authorities. 2 52 Pa. Code § 5.72(a)(2) and (3).

2

office which is included, in whole or in part, in lhe proposed service area.3 Such interventions and

participations should be, and historically have been, granted by the Commission in considering what

is or is not in the public interest.

c) Statement SUPPORTING the Motion to Consolidate.

The Municipalities support the consolidation ofthe Complaint and Petition filed by Cleona

Borough, Cornwall Borough, Lebanon County, Municipal Authority and North Lebanon Township

at Docket Nos. C-20055689 and I3-00052195 wilh the related Complaint and Petition filed by West

Cornwall Township at Docket Nos. C-20065773 and P-00062198. The Complaints and Petitions

that are the subject ofthe Motion to Consolidate raise identical questions of law and fact related to

the Commission's jurisdiction over the City's take-back of its municipal authority and the City's

failure to seek and acquire all oflhe requisite approvals from the Commission related to the take-

back. The City apparently recognizes that the issues and factual disputes in these proceedings are

identical, as the Cily filed lhe exact same document-even forgetting to change the references to the

petitioning parlies in the two filings4 - as its Answer to the Petitions for Declaratory relief in both

Dockets.

The City's only argument against consolidation of these cases, set forth in its Answer to the

Motion to Consolidate filed on January 23, 2006, is lhal the Commission lacks jurisdiction over its

service to West Cornwall Township because, the City argues, this service is of a bulk and/or

contractual naiure. First, this argument is wrong because the Commission does have jurisdiction

over the City's proposed service to West Cornwall Township, and the City's other extraterritorial

large-volume and conlraciual customers. The large volume and/or contractual nature of service to

3 The Certificale of Service attached to the City's application shows the City did not serve its application upon any of the municipalities within the proposed service territory in violation oflhis regulation, including those municipalities now seeking to intervene in the proceeding. •' The City's Answer to West Cornwall Township's Petilion for Declaratory Order refers to "Joint Pelitioners," throughout. This is apparently because the City filed the same document as its Answer as it did to the Petition filed at Docket No. P-00052195 but forgot to change the reference lo the petitioning party.

extraterritorial customers arc not determining factors for the Commission's exercise of its

jurisdiction. The Municipalities arguments in support of Commission jurisdiction over large-volume

and contractual customers are fully set forth in paragraphs 12 through 20 of their replies to the

affirmative relief requested in both Docket Nos. P-00052195 and Docket No. P-00062198. The

Municipalities replies are hereby incorporated herein in their entirety and are attached hereto as

"Appendix A."

Second, the City's argument is an argument on the merits of why the Commission should or

should not granl West Cornwall Township's Petition, not a procedural argument staling a reason

why West Cornwall Township's Petition and Complaint should not be consolidated with the other

Petition and Complaint that arc the subject to the Motion to Consolidate that raise identical legal and

factual issues. The issue of whether Commission has jurisdiction over its provision of water and

wastewater service to large volume and/or contractual extraterritorial customers, including West

Cornwall Township, cannot be properly decided without discovery and presentation oflhe facts by

the parties at a hearing, and there is no question that this is a common issue involving common facts

that must be decided in all of the Dockets that are the subject of the Motion lo Consolidate.

Consol idation of these dockets is appropriate and necessary in order to avoid unnecessary costs and

delay thai would result from holding separate proceedings to decide lhe identical legal and factual

issues raised in Ihesc Complaints and Petitions.

d) Statement OPPOSING a finding that the Petitions for Declaratory Order are moot.

The Municipalities oppose a finding that the Petitions for Declaratory Order are moot. To

date, the City has not filed all ofthe applications for certificates of public convenience it is required

to file pursuanl to the Public Utility Code prior to its acquisition and operation oflhe water and

wastewater systems. Both Petitions for Declaratory Order ask the Commission to declare:

a) thai the Commission has jurisdiction over the City's acquisition of lhe Authority's facilities and provision of water and sewer service to extraterritorial customers;

b) thai the Cily must file conforming and complele applications for certificates of public convenience;

c) that the City may not collect charges from or change rates applicable to cxlralerritorial customers pending decisions on its application for public convenience and filing of tariffs before the Coinmission; and

d) lhat any charges for water or sewer service collected from customers outside the City's limits prior to the grant of a certificate of public convenience and the filing of tariffs wilh the Commission will be subject to refund.

(Emphasis added).

The City asserts in its answers to both Petitions that it is not required to obtain a certificate of

public convenience in order to acquire the facilities ofthe Authority, and this assertion is contrary lo

66 Pa.C.S. § 1102(a)(5). Additionally, the City's answers assert that the Commission docs nol have

jurisdiction over the City's large volume and/or conlraciual extraterritorial customers; however, the

Commission does have jurisdiction over these customers who, upon information and belief, are

served at meter points or with the City's facilities located outside the City's limits. The

Municipalities arguments on these points are fully set forth at paragraphs 1 through 20 of their

replies lo the affirmative relief requested in both Docket Nos. P-00052195 and. P-00062198, which

arc attached hereto and incorporated herein as "Appendix A."

Furthermore, it is clear from the City's answers to both Petitions and from the City's

application at Docket No. A-220010, that the City, not the Authority, is currently collecting

untariffed rates and charges from jurisdictional extraterritorial customers and has been doing so,

possibly "for decades," without Commission approval. Thus the Municipalities' requests for

declaratory relief regarding these charges remains an active issue.

Similarly, the one application the City has filed related to its take-back oflhc Authority's

facilities is grossly incomplete in violation oflhe requirements ofthe Commission's regulations and

does nol include all of the City's proposed jurisdictional cxlralerritorial cuslomers. The

Municipalities have set forth the procedural defects ofthe Application in detail in their Protest at

paragraphs 8, 9, and 10. which is attached hereto and incorporated herein as "Appendix B." The

Petitions for Declaratory relief also ask that the City file complete applications in compliance with

the Commission's filing regulations. The City did not, and the relief sought in the Petitions is not

moot on the basis ofthe filing of an incomplete, eleventh-hour application that does not seek all of

the approvals the Municipalities requested the Commission to declare necessary pursuant to the

Public Utility Code. It is clear that the issues raised by the Municipalities' Petitions are active, live

issues that have not yet been resolved and cannot be resolved without discovery and presentation of

facts al a hearing.5 The Municipalities arguments on these points are fully set forth al paragraphs 21

through 25 of iheir replies to the affirmative relief requested in both Docket Nos. P-00052195 and.

P-00062198, which are attached hereto and incorporated herein as "Appendix A."

e) Statement regarding the possibility of settlement of the cases subject to approval of the Pennsylvania Public Utility Commission

The Municipalities are willing to consider settlement, but the actions and inactions by the

City to date have impeded any such initiative. Por instance, despite the Municipalities having the

Petition and Original Complaint filed, served upon lhe City, and hand-dclivcred to its utility

attorneys on December 22,2005, the Cily did not, contrary to the requirements oflhc Commission's

regulations regarding obtaining certificates of public convenience lo provide water service, serve a

copy ofthe eleventh-hour December 30,2005 application upon the Petitioners/Complainants or upon

any ofthe municipaliiies where the City proposes to provide service. Similarly, when the Cily filed

its proposed Initial Tariff on January 3, 2006 it repeated its hidc-the-ball approach. This in and of

5 If after discovery, it becomes evident that the Municipalities' claims require amendment or that certain allegations or requests will not be pursued, the Municipalities will so notify the parlies and Presiding Officer.

itself gives the Municipalities great pause regarding the City's potential legal fitness and gives the

Municipalities little confidence in the Cily with regard to possible settlement negotiations.

The City's Mayor, as recently as February 23, 2006 in his state ofthe City address claimed

that the City may go "bankrupt" unless this deal goes through, bul the City has refused lo date to

address the concerns of the Municipalities and others that the monies the City expects to access as a

result of the deal may not actually be available under the Commission's rate-making policies.

Currently, the Authority is financially healthy and the Municipalities have grave concerns that

folding the importani functions for water and sewer inlo an admittedly financially teetering City is

not in the public interest, particularly in the absence of any proof, financial or otherwise, from the

City that it will be able lo do so without adverse rate, service or financial consequences. Indeed, the

Commission's regulations require year 1, 5 and 10 financial proformas. Here, the City skipped that

task, omitted any information regarding the City's own financial status and has produced to the

parties nothing that would allow any comfort in concluding that financial filncss, affirmative

benefits, and a transaction which is in the public inlerest is present here.

Similarly, the City is developing speedily a financing scheme, likely by private loans, to

replace the Authority's debt. The fall-out of this regarding the issue of whether the City will be able

to prove on-going financial fitness and affirmative benefits needs to be examined through discovery,

at a minimum.

Notwithstanding these concerns, if the City makes compete filings, proves it did complete

service of the same and notifications, abides by the process, provides sufficient infonnation,

responds to the Municipalities requests for information to test the City's representations,6 and

provides written assurances and perhaps accepts certain conditions to its application, the

Municipalities remain willing to consider seltlement in whole or in part.

6 The City has already filed objections to most of the Municipalities' first sei of interrogatories requesting this information.

7

f) Proposed plan and schedule of discovery

The Municipaliiies issued its first set of interrogatories or data requests on February 16,

2006. The City has objected to cerlain questions and the Municipalities will be submitting a motion

to dismiss objections and to compel responses. The Municipalities are considering deposing certain

City officials or consultants on the issues of legal, technical, and Financial fitness as well as on

whether the proposed acquisilion and service will provide affirmative benefits to the public. The

Municipalities believe that initial discovery7 can be concluded by May 1,2006 depending upon the

City's level of cooperation or non-cooperation.

g) Other proposed orders with respect to discovery

The Municipalities are unaware at this juncture of any proprietary issues that would require a

protective order. The Municipaliiies are in the process of drafting a motion to dismiss objections and

to compel responses to the first set of interrogatories issued on February 16, 2006 to which the City

filed objections.

h) Proposed schedule for the submission of written testimony, conducting an in-pcrson Hearing, and submission of Briefs

The Municipalities submit that before a hearing schedule is made in the matters raised in the

Complaints. Petition and the Application, the City should be first required to file for all required

approvals, to comply with the Commission's regulation at 52 Pa. Code §3.501 regarding supporting

informalion to be included in iis Application, and to prove it has effected notice as required by such

regulation. It is imperative that the Commission determine up-front which approvals are required by

the Cily; otherwise, going forward with a partial and incomplete proceeding will be a tremendous

waste of lime, money and resources by all involved.

7 Initial Discovery as referenced by the Municipalities means discovery prior to discovery regarding pre-filed testimony or exhibits.

In lhe allernalive, i f lhe above-docketed matters proceed, the Municipalities submit the

following schedule:

May 1, 2006: Close of Initial Discovery (Interrogatories/Depositions/ Data Requests)

June 1, 2006: City's Prc-Filcd Direct Testimony and Exhibits

June 1 to 29: Discovery re: Cily Pre-Eiled Testimony and Exhibits

July 20, 2006: Intervenor/Protcstant/Municipalitics Pre-Filed Responsive Testimony and Exhibits

August 2006: Public Input Session (2)

Sept 10, 2006: City's Pre-Filed Rebuttal

Sept 30, 2006: Intervenor/Protcstant/Municipalities Pre-Filed Surrcbuttal

October 9-13: Hearings (Oral Rejoinder*1 1 s t , Cross of City followed by Intervenors/Complainants)

October 31: Main Briefs

Nov. 15: Reply Briefs

Dec 31: ALJ Decision

i) Names, business addresses, and telephone numbers of witnesses the Municipalities expect to call and the subject matter of each witness' testimony.

Dennis M. Kalbarczyk Financial Fitness, Economic issues, Utility Rate Resources Accounting, Initial Tariff 910Piketown Road Harrisburg, PA 17112 (717) 469-7232

Gary D. Shambaugh Economic, Fitness and Financial Issues Weber Fick & Wilson Division 275 Grandview Avenue, Suile 100 Camp Hill , PA 17011 (717) 763-9890

The Municipalities may subpoena various City officials or consultants to testify "as on cross"

at the hearings. Similarly, the Municipalities may subpoena Authority employees regarding system

Outlines for Rejoinder to be provided to the other parties on October 5, 2006.

9

configuration and related issues. The Municipalities will identify these individuals well in advance

of hearings.

Elected officials ofthe Municipalities may testify on direct or at any public input sessions.

Should they testify on direct, they will do so by pre-filed testimony.

The Municipalities reserve the right to call witnesses to testify on surrebuttal or in rejoinder.

Identification of any such witnesses for surrebuttal will occur by pre-filed testimony. Any rejoinder

witness will be idenlified in an outline.

j) List of issues and sub-issues of this proceeding which the Municipalities intend to address and statement ofthe Municipalities' position9 on each ofthe issues and sub-issues listed.

1. ) Whether the City's actions in passing Ordinance 46 and in acquiring and beginning

to operate water and sewage treatment facilities to serve cuslomers outside the City's

limits prior to obtaining required certificates of public convenience is contrary to

law?

Municipalities' Position: The City's actions are contrary to law.

2. ) Whether fines and penalties should be issued for each day the City is in violation of

the requirements to first obtain approval in the form of certificates of public

convenience and lawful tariffs as a prerequisite to acquiring and/or operating

facilities serving extraterritorial customers and charging rates to those customers?

Municipalities' Position: Fines and penalties should be issued.

3. ) Whether the Commission has jurisdiction over the City's acquisition ofthe assets of

the Auihority to be used to provide extraterritorial service?

Municipalities' Position: The Commission has jurisdiction pursuant lo 66

Pa.C.S. § 1102(a)(5).

See n.5 supra.

10

a) Whether the City must file conforming and complete applications for a

certificate of public convenience lo acquire the faciliiies oflhe Authority to

be used to provide extraterritorial service?

Municipalities' Position: The City must file conforming and complete

applications prior to the acquisition of the assets.

b) Whether the City's transactions to date in attempting to acquire the facilities

of the Authority to be used to provide exterritorial service without

Commission approval are void as in violation of the Public Utility Code?

Municipalities' Position: The iransactions arc void as violative of the

Public Utility Code.

4. ) Whether the Commission has jurisdiction over the provision of water and wastewater

service to large volume and/or contractual customers outside the City's municipal

limits?

Municipalities' Position: The Cominission has jurisdiction over service to large

volume and/or contractual customers served outside the City's limits.

a) Whether the Cily is required to file an application for a certificate of public

convenience to provide service to its large volume and/or contractual water

and wastewater customers outside the City's limits?

Municipalities' Position: The City must file applications to serve

jurisdictional large volume and/or contractual water and wastewater

customers.

5. ) Whether the City's Application at Docket No. A-220010 should be rejected outright

for gross non-compliance with the requirements set forth at the Commission's

Regulation at 52 Pa. Code § 3.501?

11

Municipalities' Position: The Application should be rejected as incomplete and

procedurally facially deficient.

6. ) Whether the City's Application at Docket No. A-220010 should be denied because il

the City is not technically, legally, or financially fit to render the proposed service

and/or because the City's take-over ofthe Authority is not in the public interest of its

jurisdictional, extraterritorial customers?

Municipalities' Position: The Application should be denied because the City is

not technically, legally, or financially fit and the take-over is not in the public interest

of jurisdictional customers.

a) Whether the City has identified affirmative benefits which outweigh the

detriments for its proposed plan to acquire and operate the facilities oflhe

Authority to provide water service outside of its boundaries?

Municipalities' Position: The City has not identified affirmative benefits

for this acquisition.

7. ) Whether the City's Application should be denied because it is incomplete in lhal il

dose not include all of the jurisdictional extraterritorial customers the Cily intends to

serve?

Municipalities' Position: The Application should be denied as incomplete,

a) Whether the City appropriately delineated its service territory by melcs and

bounds and showing the precise limits of its proposed service area?

Municipalities' Position: The City did nol appropriately delineate its

service territory as required.

12

8.) Whether the City will not be financially fit because the rates il relics upon in its

financial projections as specified in its proposed initial tariff filed in support of its

Application arc unjust, unreasonable or discriminatory?

Municipalities' Position: The City is not financially fit because its rates set forth

in its initial tariff are unjust, unreasonable or discriminatory.

a) Whether the City must conduct a rate study and produce evidence that the

rales set forth in the proposed tariff are in conformity wilh Commission rate-

making principals?

Municipalities, Position: The City must conduct a rate study and produce

evidence lhat the rates set forth conform with Commission rate-making.

b) Whether the City can use rates collected from jurisdictional extraterritorial

cuslomers to subsidize the non-utility functions of the City's government by

extracting monies from the water and wastewater operations to balance the

City's overall budget.

Municipalities' Position: The City cannot use such rates to subsidized

non-utility functions ofthe City's government or to balance the City's overall

budget.

c) Whether the City lacks financial fitness related to its plan to make such

transfers?

Municipalities' Position: The City lacks financial fitness based on it plan

to make these transfers.

d) Whether the City has engaged in activities regarding the walcr and sewer

operations that are contrary to law and prudent management?

13

Municipalities' Position: The Cily may have engaged in aclivities thai

arc contrary to law and prudent management.

9.) Whether the City may collect charges from all or some of its extraterritorial

customers pending decisions on the complaints, petitions and its application for

public convenience and filing of tariffs before the Commission?

Municipalities' Position: The City may not collect charges from all or some of

its extraterritorial customers pending such decisions and filings,

a) Whether refunds of charges collected prior to and during these proceedings

from jurisdictional extralerritorial customers arc appropriate?

Municipalities' Position: Refunds of charges collected from

jurisdictional extraterritorial customers prior to and during these proceedings

should be refunded.

k) Statement describing the evidence the Municipalities propose to present at hearing, relating the evidence to each ofthe issues and sub-issues the Municipalities intend to address.

Because much, if not all ofthe information relating to lhe above-outlined issues is in the

possession ofthe City or within its control, the Municipalities at this time cannot now describe with

specificity exactly what evidence it will adduce in its testimony or exhibits. The Municipalities

issued its first set of interrogatories and data requests to the City on February 16, 2006. Once the

Municipalities receive complete responses to said discovery requests, conduct follow-up discovery

and/or depositions of City officials or consultants, and reviews the City's direct testimony and

exhibits, it will then address the above issues as the Municipalities find it to be necessary or

appropriate. Notably, the Municipalities will submit pre filed testimony and exhibits.

In the Application proceeding, the City bears the burden of proving affirmative benefits due

to this acquisition as well as an inadequacy of exiting service, a public need for the service proposed,

14

and its legal, technical and financial fitness. The Municipalities will file responsive testimony to the

profiled testimony and exhibits submitted by the City.

1). Request for Public Input Hearings

The Municipalities request that public input hearings be held at points within the areas

beyond the City's municipal limits where it provides jurisdictional water and sewer service. The

Municipalities will assist the Commission in providing a venue or venues for such public hearings.

The Municipalities suggest lhat such hearings should occur, for efficiency reasons, only after the

City's filings and submissions are complete and the public has an opportunity to see what the City

actually is and should be required to seek in terms of approvals from this Commission.

Thomas J. Sniscak Katherine B. Lovette Hawke McKeon Sniscak & Kennard LLP 100 North Tenth Street P. 0. Box 1778 Harrisburg, PA 17105-1778 (717)236-1300

Counsel for Municipalities

Dated: March 6, 2006

15

Hawke M c K e o n

Sniscak &

K

William T. Hawke Kevin J. McKeon Thomas J. Sniscak Norman James Kennard Lillian Smith Harris Scott T. Wyland Todd S. Stewart

Craig R. BurgrafT Steven D. Snyder Janet L. Miller Steven K. Haas William E. Lehman Rikardo J. Hull Katherine E. Lovette


100 North Tenth Street, Harrisburg, PA 17101 Phone: 717.236.1300 Fax: 717.236.4841 wwvy.fimsk-law.com

February 9, 2006

B Y HAND DELIVER Y James J. McNulty, Secretary Pennsylvania Public Utility Commission Filing Room - Second Floor Commonwealth Keystone Building PO Box 3265 Harrisburg, PA 17105-3265

l'T-1

o

Z'J f n •

!""'

Re: Cleona Borough, Cornwall Borough, Lebanon County, Municipal Authority, and North Lebanon Township, v. City of Lebanon; Docket No. P-00052195; Reply of Municipalities to the City of Lebanon's Request for Affirmative Relief Contained in its Answer to Petition for Declaratory Order

Dear Mr. McNulty:

Enclosed for filing with the Commission are the original and three (3) copies of the Reply of Cleona Borough, Cornwall Borough, Lebanon County, Municipal Authority, and North Lebanon Township to the City of Lebanon's Request for Affirmative Relief Contained in its Answer to Petition for Declaratory Order. A copy of this document has been served in accordance with the attached Certificate of Service.

If you have any procedural questions with regard to this filing, please direct them to me. Thank you for your attention to this matter.

Very truly yours,

Thomas J. Sniscak TJS Enclosures cc: Administrative Law Judge Wayne L. Weismandel

Per Certificale of Service

co r-, o rn

:>5: f

cn u 3c

CD

rn o rrj


Appendix A


CLEONA BOROUGH, CORNWALL BOROUGH, LEBANON COUNTY, MUNICIPAL AUTHORITY, and NORTH LEBANON TOWNSHIP,

Complainants/Petitioners

v.

CITY OF LEBANON Respondent


GO p-1 CO " J p' l —f

C" 'SO

r<'\', cr:

REPLY OF MUNICIPALITIES TO THE CITY OF LEBANON'S REQUEST FOR AFFIRMATIVE R E L I E F

CONTAINED IN ITS ANSWER TO PETITION FOR DECLARATORY ORDER

Pursuant to 52 Pa. Code § 5.62, Cleona Borough, Cornwall Borough, Lebanon County,

Municipal Authority, and North Lebanon Township, (inclusively, "Municipalities" or

"Petitioners") hereby file a Reply to the City of Lebanon's ("City" or "Respondent") requests for

affirmative relief contained in its Answer to Petition for Declaratory Relief. The City's requests

for affirmative relief were not properly set forth as a teNew Matter" as required by the

Commission's regulation at 52 Pa. Code § 5.62(b); instead, the requests for affirmative relief are

set forth in the "Wherefore" paragraph of the Answer and are based upon arguments appearing in

the Answer itself.1 Because the City's support for the requested affirmative relief is embedded

throughout the Answer, the Municipalities' Reply is organized as a response to the affirmative

' As set forth in the "Wherefore" paragraph, the City seeks the following affirmative relief: that the Commission (1) declare that it lacks jurisdiction over the City's acquisition of the City of Lebanon Authority's assets; (2) declare that it lacks jurisdiction over the City's provision of bulk water and wastewaier service lo outside municipal corporations and municipal authorities pursuant to bulk service agreements, and {':•) declare that the City is only required to receive a Certificate of Public Convenience before it may begin to provide extraterritorial service to retail customers.

relief issues as set forth in the "Wherefore" paragraph rather lhan as a response to every

numbered paragraph of the Answer. In support thereof, the Municipalities reply as follows:

I. THE COMMISSION HAS JURISDICTION OVER THE CITY'S ACQUISITION OF THE CITY OF LEBANON AUTHORITY'S ASSETS THAT PROVIDE SERVICE TO EXTRATERRITORIAL CUSTOMERS.

A. Tbe Commission has express statutory jurisdiction over a municipal corporation's acquisition of assets to provide extraterritorial service.

1. The City's first and third affirmative claims are that the Commission lacks

authority over the City's acquisition of the Authority's assets for providing service beyond the

City's limits and that the City is not required to obtain a certificate of public convenience prior to

acquiring the assets of the Authority.2 The City is wrong. The Commission clearly has

jurisdiction over the City's acquisition of facilities to be used to provide extraterritorial service

regardless of the kind of entity from which the City acquires the facilities. Section 1102(a)(5) of

the Public Utility Code requires a certificate of public convenience to be "first had and obtained"

in order for:

any municipal corporation to acquire, construct, or begin to operate, any plant, equipment, or other facilities for the rendering or ftimishing to the public of any public utility service beyond its corporate limits.

66 Pa.C.S. § 1102(aX5) (emphasis added). This language is clear and'express. The City may not

acquire any facilities intended for use to serve extraterritorial customers without Commission

approval.3

2 City Answer to Petition at 4 - 8, 10. 3 The express language of this section also addresses the City's concerns, presented at paragraph 18 of its Answer, that the Commission's exercise of its jurisdiction in this instance will improperly "inject" the Commission into a municipal corporation's "desire to execute its legislative power to reassert control over its assets." The language "for the rendering or furnishing to the public of any public utility service beyond [the municipality's] corporate limits" in seclion 1102(a)(5) makes clear that the Commission's jurisdiction over a municipality's acquisition of facilities belonging to its municipal authority attaches when those assets will he used by the municipality to furnish

2. Without citation to or acknowledgement of Section 1102(a)(5), the City

mischaracterizes the arguments of the Municipalities, suggesting in paragraph 10 of its Answer

that the Municipalities' only support for the position that the City is required to obtain a

certificate of public convenience prior to acquiring or operating the facilities ofthe Authority is

three cases that the City then attempts to distinguish. To the contrary, the Municipalities'

argument is squarely based on the solid footing of the above-quoted express statutory language

that unquestionably requires the City to obtain a certificate of public convenience prior to

acquiring any facilities to be used to provide extraterrorial service.

3. While the Municipalities' position on this issue can stand on the statutory

language alone, the cases cited by the Municipalities illustrate the consequences of a regulated

entity's failure to comply with Section 1102 and the Commission's powers where non

compliance occurs.

4. Specifically, the City argues at paragraph 11 of its Answer that Public

Service Water Co. v. Pa. Pub. Util. Comm'n, 645 A.2d 423 (Pa. Cmwlth. 1994) is inapposite

because in.that case, one public utility transferred facilities to another public utility without first

obtaining a certificate of public convenience as required by Section 1102. The City argues that

this case is distinguishable because Section 1102(a)(3) only requires a certificate of public

convenience when assets are transferred by a "public utility" to another entity and that the City is

a "municipal corporation," not a "public utility" pursuant to the definitional section ofthe Public

extralerritorial service. Thus, the two examples the City presents - a municipality acquiring assets to transfer to another authority and a municipality acquiring the assets in order to sell or lease to another public entity - are irrelevant.

Utility Code, 66 Pa.C.S. § 102.4 Even i f Section 1102(a)(3) only applies to a "public utility," 5 as

stated above and as cited in the Municipalities' Complaint and Petition, Section 1102(a)(5)

clearly applies to the City's acquisition of facilities to provide extraterritorial service. Public

Service Water Co. is relevant because it holds that when an entity is required to obtain a

certificate of public convenience prior to taking some action pursuant to Section 1102 (in that

case, a public utility transferring its assets lo another public utility under Section 1102(a)(3) and

in this case a municipal corporation acquiring facilities that wi l l be used to provide

extraterritorial service under Section 1102(a)(5)), and that entity fails to comply with Section

1102, the transaction is void and the Commission can order the parties to retum to the status quo

prior to the void transaction.

5. Similarly, the City's unpersuasive attempt to distinguish Middletown

Township v. Pa. Pub. Util. Comm'n, 482 A.2d 674 (Pa. Cmwlth. 1984) also fails because there

the Commonwealth Court found that a municipality seeking to acquire facilities pursuant to a

right set forth in another statute, the Corporation Act of 1874, was required to comply with the

requirements set forth in the Public Utility Code related to the acquisition despite the

municipality's arguments that the Corporations Act granted an absolute right to acquire the

facilities that limited the Commission's jurisdiction over the transaction. The court's analysis of

4 Interestingly, while the City claims to be a "municipal corporation" pursuant to 66 Pa.C.S. § 102 for purposes of its arguments here, the City denied being a "municipal corporation" pursuant to this section in the City's Answer to the Municipalities' related Complaint at Docket No. C-20055689. 66 Pa.C.S. § 102 defines "municipal corporation" as:

[a]ll cities, boroughs, towns, townships, or counties of this Commonwealth, and also any public corporation, authority, or body whatsoever created or organized under any law of this Commonwealth for the purpose of rendering any service similar to that of a public utility.

5 The Municipalities do not concede this point. Any argument lhat the City can avoid compliance with the Public Utility Code or the Commission's jurisdiction based on the City's claimed status as.a "municipal corporation" rather than a "public utility" under the definitional section of the Public Utility Code should be rejected. Borough of Media v. Pa. Pub. Util Comm'n, 419 A.2d 215 {Pa. Cmwlth. 1980), a j fd Per Curium, 456 A.2d 540 (Pa. 1983) (Commonwealth Court rejected argument that Borough did not have to comply with Section 1102(a)(2) of the Public Utility Code because lhat sub-section mentions only "public utility" and "municipal corporations" are not expressly mentioned, and because "municipal corporations" are nol included in the definition of "public utility" under section

Section 1102 is analogous to the current case regardless of what particular sub-section was at

issue. . .

6. Furthermore, the City's attempt to distinguish Borough of Media v. Pa.

Pub. Util Comm'n, 419 A.2d 215 (Pa. Cmwlth. 1980), af f d Per Curium, 456 A.2d 540 (Pa.

1983), lacks merit. The City admits, at paragraph 13 of its Answer, that there are two parts of the

transaction, but comes to the incorrect conclusion that in this case, unlike in Borough of Media,

the Commission has no jurisdiction over either part.6 The City could not have read this case

more incorrectly. In Borough of Media a municipality transferred its assets that served

extraterritorial customers to a municipal authority created pursuant to the Municipality

Authorities Act ("MAA"). Despite arguments that the MAA provided the exclusive procedure

for the entire transaction such that the Commission could not exercise jurisdiction, the

Commonwealth Court held that the Borough had to first obtain a certificate of public

convenience before transferring the assets because the Commission had jurisdiction over part of

the transaction, the abandonment of the facilities used to serve extraterritorial customers,

pursuant to the Public Utility Code.8 The City acknowledges that the Commission had

jurisdiction over the abandonment of facilities in Borough of Media pursuant to Section

1102(a)(2) of the Public Utility Code, but wishes to ignore that the Commission similarly has

102 ofthe Code). Based on Borough of Media, the City is arguably subject to every sub-section of 1102 that applies to a "public utility" or a "municipal corporation." 6 This faulty conclusion seems to be based on the City's characterization ofthe ofthe transaction in this case as merely a "transfer of assets from a municipal authority" which, the City asserts, is governed only by the Municipality Authorities Act with no room for the Commission's certificate of public convenience process. This argument is addressed in detail below. The City ignores that the transaction also results in an acquisition by the City of assets for use in rendering extralerritorial service. 7 53 Pa.C.S. § 5601, ei seq. 8 66 Pa.C.S. §§ M 02(a)(2) and 1501.

jurisdiction over the acquisition of facilities pursuant to Sub-section (a)(5) of Section 1102.9 The

City's self-serving reading of the statute and these cases is therefore plainly wrong.

B. Contrary to the City's first and third affirmative claims, nothing in the Municipality Authorities Act removes or supersedes the Commission's jurisdiction over the City's acquisition of facilities for exlraterritorial service.

7. The City admits that a certificate of public convenience is required before

it may begin to "render" extraterritorial service.10 Yet it attempts to escape Commission

jurisdiction over the acquisition portion of the transaction (the City's acquisition of facilities to

be used in providing extraterritorial service) by next arguing that the Commission's jurisdiction

is negated or superseded by the MAA. 1 1 This argument also fails because nothing in the MAA

negates or supersedes the Commission's jurisdiction over the acquisition of facilities and

rendering of extraterritorial service by the City or the requirement for obtaining a certificate of

convenience prior to the acquisition or the rendering of service under Section 1102(a)(5).

8. Section 5622t2 oflhe MAA, 53 Pa.C.S. § 5622, allows a municipality to

take back the assets of its municipal authority; but the MAA cannot be interpreted to allow this

transaction to take place in violation of other statutes, such as the Public Utility Code,

particularly where there is a way to construe the statutes to give purpose to both. 1 Pa.C.S. §

1922; Commonwealth Dep't of Transp. v. McFarren, 525 A.2d 1 185, 1188 (Pa. 1987)

9 The City applies the same flawed logic in its citation, in paragraphs 14 and 15 of its Answer, of Re: Borough of Red Lion, 56 Pa.P.U.C. 568 (1982), whereby the City admits the Borough in that case was required to obtain a certificate of public convenience in order to abandon facilities used to provide extraterritorial service prior to transferring those facilities to an authority pursuant to the MAA, Application of City of Erie, Docket No. A-221000, F200 (Order Entered Sept. 30, 1991), and Petition ofthe City of Lebanon, Docket No. P-810273 (Order Entered June 11, 1981), whereby in both cases the Commission exercised its jurisdiction over the abandonment of the municipalities' extjaterrilorial service prior lo the transfer of assets to an authority. 1 0 Answer at paragraph 13. 1 1 Answer at paragraphs 14-20. 5 2 The City mistakenly cites section 5621 in paragraph 16 of its Answer. Thai section is the severability provision of the MAA.

(interpretation of statute that results in conflict with another statute cannot be accepted). Because

Section 5622 of the MAA does not expressly preclude the Commission from exercising its

jurisdiction over a transaction between a municipality and an authority, any interpretation of

Section 5622 to so abrogate the Commission's jurisdiction pursuant to 66 Pa.C.S. § 1102(a)(5) is

improper.

9. There is clearly a way to interpret Section 5622 of the MAA to allow for

the coexistence of the MAA and the Commission's jurisdiction over the acquisition pursuant to

Section 1102 of the Public Utility Code. Section 5622 allows for a period of time to pass, during

which Commission Proceedings could conceivably be held, between a municipality's declaration

of its intent to acquire the facilities of its authority and the actual conveyance of the facilities.

The statute allows a municipality desiring to acquire the facilities of its municipality to:

by appropriate resolution or ordinance adopted by the proper authorities signify its desire to do so. and the authorities shall convey by appropriate instrument the project to the municipality upon assumption bv the municipality of all the obligations incurred bv the authorities with respect to that project.13

This language clearly contemplates some period of time to pass between when the municipality

adopts an ordinance declaring its desire to take back the authority and when the municipality

actually assumes the obligations of the authority, thus triggering the authority's conveyance of

the property to the municipality.14 Because the statute allows for a period of time to pass

between the declaration of intent to acquire facilities and the actual conveyance of facilities, this

1 3 53 Pa.C.S. § 5622(a) (emphasis added). 1 4 This interpretation makes logical sense, for, depending on the nature of the obligations the authority has assumed, it may not be possible for a municipality to take on those obligations all at one time or immediately following its decision to take back the authority. The City apparently has realized in hindsight that it may not be possible for the Authority to convey its assets within the 22-day time limit set forth in the City's take-back ordinance, as evidenced by the City's claim in its Answer to the Municipalities' Complaint lhat the assets have not yet been conveyed and by the City's fding, one day prior to the deadline set by the Ordinance, of an application for a certificate of public convenience to serve some of its extraterritorial customers (Docket No. A-220010). The City has not filed an application for a certificate of public convenience to acquire facilities to provide extraterritorial service.

period of time could be used by a municipality to apply for and obtain a certificate of satisfaction

from the Public Utility Commission.15 Thus, the Commission can exercise its jurisdiction over

the acquisition and rendering of extraterritorial service in harmony with the M A A .

10. Additionally, under the principals of statutory construction, the omission

of a "completeness provision" from Section 5622 ofthe M A A must be deemed intentional, thus

Section 5622 is not intended to be an exclusive procedure for a municipality's acquisition ofthe

facilities of its authority. Commonwealth v. Bigelow, 399 A.2d 392, 395 (Pa. 1979) (where a

section of a statute contains a given provision, the omission of such provision from a similar

section is significant to show that the legislature's intent was different). Unlike Section 5613 of

the M A A , ' 6 dealing with transfers of property f rom a municipality to an authority, Section 5622

has no completeness provision designating that no other proceedings shall be necessary to

effectuate a transfer f rom an authority to a municipality. Because these sections govern similar

transactions, the omission is deemed to be intentional. Consequently, the City's M A A

1 S

exclusivity argument must be rejected.

11. Furthermore, there is a clear basis for construing Section 5622 of the

M A A and Section 1102 of the Utility Code in pari materia, or as one statute. .1 Pa.C.S. § 1932;

1 3 See, e.g.. Township of Forks v. Forks Township Municipal Sewer Auth., 759 A.2d 47, 55 (Pa. Cmwlth 2000) (Commonwealth Court directed the trial court on remand to amend its mandamus order to allow for sufficient time for the authority to settle its financial obligations prior to transferring assets where the take-over resolutions adopted by the township did not allow sufficient time by requiring the authority to transfer all assets within approximately 6 weeks). This case did not involve any allegation of extralerritorial service or of possible Commission jurisdiction. 1 6 53 Pa.C.S. § 5613. 1 7 The Commonwealth Court has held, and the Supreme Court has affirmed, that even in the presence of the "completeness provision" in section 5613 ofthe MAA the Commission is not precluded from exerting its jurisdiction over part ofthe transaction. Borough of Media, 419 A.2d at 540. 1 8 The City points to language that was deleted from section 5513 ofthe MAA that once expressly required Commission approval before a transfer of property from a municipality to an authority. This language was deleted from the current version ofthe statute in 1947, well prior to the Borough of Media decision. Therefore, even if the language deleted from section 5513 were relevant to a transaction governed by section 5522, the removal of this language from section 5513 did not alter the Commonweahh Court's analysis and conclusion of the need for Commission's approval prior lo the transfer pursuant to the cunent language of section 551 3.

Marietta Borough v. East Donegal Township, 296 A.2d 785, 786 (Pa. 1972) (where Borough

Code and Second Class Township code both regulated the same transaction - namely the

annexation of land from a second class township by a borough - the two statutes were construed

together as one statute) (citing 1 Pa.C.S. § 1932). Here, as in Marietta Borough, two statutes

regulate the same transaction - namely the acquisition of the facilities of an authority by a

municipality. Thus, the statutes should be construed as one law. This construction allows for the

municipality to enact an ordinance declaring its intent to take back the facilities ofthe authority,

to then file an application before the Commission for a certificate of public convenience, and,

after the certificate is granted, to assume the obligations of the authority triggering the authority's

obligation pursuant to Section 5622 of the MAA to convey the facilities to the municipality.

I I . THE COMMISSION HAS JURISDICTION OVER THE CITY'S PROVISION OF SERVICE TO MULTIPLE MUNICIPAL CUSTOMERS OUTSIDE THE CITY'S CORPORATE LIMITS REGARDLESS OF THE LARGE-VOLUME NATURE OF SERVICE.

12. The City's second affirmative claim is that the Commission has no

jurisdiction over the City's service rendered to several municipalities or municipal authorities

through "bulk service agreements" The City, admittedly filing a partial (yet incomplete)

application for a certificate of public convenience, has held itself out as ready to serve the public

outside its borders; therefore, the City meets the test for Commission jurisdiction regardless of

whether some of that service is large volume or by contract.

13. The test for determining whether utility services are offered to the public

such that the Commission's jurisdiction attaches is whether (A) the person or entity holds itself

out, either expressly or impliedly, as being in the business of supplying a utility service to the

public as a class or to any portion of the public, as distinguished from holding itself out as

providing that service only to particular individuals; (B) the service at issue is incidental to the

non-utility service provided by lhe entity to the customer; or (C) the utility facility was designed

and constructed only to serve specific individuals so the service is not properly considered to be

for the public. Drexelbrook Associates v. Pa. Pub. Util Comm'n, 212 A.2d 237 (Pa. 1965)

(citing Borough of Ambridge. v. Pa. Pub. Service Comm'n., 165 A. 47 (Pa. Super. 3933). The

test is not whether the extraterritorial service is "bulk" service as the City argues at paragraphs 21

and 22 of its Answer.19

14. As discussed below, the City cites cases that are not only distinguishable

as to material facts, but those decisions have been superseded by a subsequent decision by the

Commonwealth Court that held that even where service is provided only on a large volume basis

to a few customers who may in turn resell, the service is jurisdictional i f the ultimate nature of

the service is public. Waltman v. Pa. Pub-Util Comm'n, 596 A.2d 1221 (Pa. Cmwlth. 1991).

Thus, the large volume nature of the service is not the determining factor, as the City erroneously

suggests. Moreover, the admitted facts show the City has many extraterritorial customers whose

purchases are from small to large volume.

15. The only support the City cites for its sweeping position that "bulk service

arrangements" are non-jurisdictional are Lehigh Valley Cooperative Farmers v. City of

Allentown, 54 Pa.P.U.C. 495 (1980) and Petition of Borough of Springdale, 63 Pa.P.U.C. 3

(1986). These are Commission decisions lhat, with all due respect, hold no precedential value

whereas Waltman is a Commonwealth Court opinion lhat post-dales Lehigh Valley and Borough

1 9 While bulk service has been a factor that the Cominission has considered in making a jurisdictional determination, it is not a stand-alone basis for abrogating the Commission's jurisdiction. See Lehigh Valley Cooperative Farmers v. City of Allentown, 54 Pa. P.U.C. 495 (1980) (Commission evaluated nature of extraterritorial service and determined it was not held out io the public because it was either brought about by limiied special circumstances or was service to another municipality, bul was not offered to the public at large).

10

of Springdale and is binding on lhe Commission.20 Additionally, even i f Lehigh Valley and

Borough of Springdale were not superseded by Waltman, the facts here are in stark contrast to

the facts in those cases.

16. In Lehigh Valley, the only extraterritorial customers were the large-volume

municipalities served from meter points within the city, one industrial customer, and a small

number of residential customers, and the non-municipal customers were only served due to

unique circumstances. In Borough of Springdale, the only extraterritorial customer was one

municipality served from a meter point within the borough.

17. Here, in contrast, the City serves the large volume water municipal

customers from City mains located outside its borders and metered at points outside the City

limits. 2 1 Thus, at the outset, Lehigh Valley and Borough of Springdale do not apply since the

points of delivery there were within the utility-municipality's limits. Moreover, the nature ofthe

exlraterritorial service the City intends to render is admittedly public. In its application for a

certificate of public convenience, the City states that it intends to provide service directly to

approximately 9,718 customers outside the City's municipal limits. Application ofthe City of

Lebanon, at paragraph 7, Docket No. A-220010 (filed Dec. 30, 2005).

18. That the City here does not have a direct relationship with the ultimate

end-users in some municipalities does not mean that the large volume service customers,

2 0 The rule of stare decisis does not apply to administrative agency decisions. Dee-Dee Cab, Inc. v. Pa. Pub. Util. Comm 'n, 817 A.2d 593, 598 (Pa. Cmwlth 2003). 2 1 Regarding the City's large volume water customers, Cornwall Borough is served within Cornwall Borough at a meter pit located off of Cornwall Road, 353 feet south of the Cornwall Borough/North Cornwall Township municipal line. Bethel Township (Fredericksburg) is served within Bethel Township at a meter pit located off of Airport Road, 172 feet east ofthe Swatara Township/Bethel Township municipal line. West Lebanon Township is served within West Lebanon Township at a meter pit located at the intersection of Guilford and 22nd streets, 25 feet east ofthe 22nd Street center line. The Indiantown Gap Military Reserve is served within Union Township at two meter pits. One is located on Fisher Avenue, 56 feet east of Quartermaster Road. The other is located on Calvary Road, 368 feet west of BordnersviMe Road. Pennsylvania American is served within Cleona Borough at a meter pit located along Route 422, 38 feet east ofthe Annville Township, Cleona Borough line.

11

including municipal cuslomers, are not protected by Commission regulation of rates and services.

Such a result would clearly violate Waltman and would ignore that many regulated water and

other utilities serve Commission-protected large volume customers who may, in turn, resell.22

19. Furthermore, accepting the City's argument that "bulk service" is non

jurisdictional would create a giant loophole to the Commission's jurisdiction that any public

utility could use to escape jurisdiction by entering large volume service arrangements with

groups of customers or with municipalities in derogation of the Public Utility Code's provisions

which are intended to protect all customers whether large or small.

20. Nor can the City avoid the Commission's jurisdiction by claiming that the

large volume service is provided pursuant to contracts or agreements. Duquesne Light Co.

v. Pa. Pub. Util. Comm'n, 507 A.2d 1274 (Pa. Cmwlth 1986) (a utility cannot deprive the

Commission of jurisdiction by entering into a contracl with a third party). As with the City's

argument regarding "bulk service," the Commission cannot allow regulated entities to end-

run the Public Utility Code by entering into agreements for service, and at a minimum these

contracts and the tenns thereof should be subject to tariff requirements or be made a part

thereof.

2 3 Indeed, there is nothing uncommon about providing service on a large-volume basis or for resale, and the Commission dearly regulates rates for such service. See City of Lancaster, Supplement No. 35 to Tariff Water-Pa. P.U.C. No. 6, IS* Revised Page No. 4 and 17th Revised Page No. 5 (Effective September 8, 2001) (customer charges differ depending on the size of the meter up to the large-volume size of twelve inches and includes a separate schedule of charges for sales to "public utilities and municipal corporations for. resale purposes" with different charges for meter sizes ranging from1 four to ten inches); Tariff of the Borough of Hanover, Supplement No. 13 to Water-Pa. P.U.C. No. 3, Sixth Revised Page No. 4 (Effective January 1, 1995) (schedule of rates includes different rates for different meter sizes up to a large-volume size of eight inches). 2 3 This argument is subtly suggested by the City in paragraph 22 where the City refers to "bulk service arrangements" and in throughout the City's Answer to the Municipalities' related Complaint at Docket No. C-20055689 where the City refers to service to the Municipalities as "pursuant to private contractual agreements."

12

I I I . THE MATTER IS NOT MOOT BECAUSE THE CITY HAS NEITHER SOUGHT NOR OBTAINED ALL REQUISITE COMMISSION APPROVALS AND IS ILLEGALLY OWNING OR OPERATING A SYSTEM TO PROVIDE SERVICE BEYOND ITS BOUNDARIES.

21. As set forth above, the Public Utility Code requires tbe City to obtain a

certificate of public convenience prior to acquiring facilities for the provision of extraterritorial

service and prior to owning and operating said facilities to provide service beyond its corporate

limits. 66 Pa.C.S. § 1102.

22. The City argues, at paragraphs A and 5 of its Answer, that the

Municipalities' Petition for Declaratory Order is moot because the City alleges it has not yet

taken ownership of the Authorities assets; however, the express language ofthe City's take-over

ordinance, adopted December 9, 2005, stated:

[t]o effectuate the City's right to own, operate, and maintain the [Authority's] Systems for its residents, the City Council hereby commands and orders the Authority through its Board, to convey the System and all property of the Auihority to this City pursuant to Section 5622 of the Authorities Act written instruments(s) in form and substance acceptable to the City on or before December 31, 2005 (the "Deadline").

City of Lebanon Ordinance 46 of 2004-2005, at Section 2 (December 9, 2005). Thus the City's

revisionist argument must fail, particularly when the City cannot dispute that it is controlling the

Authority's expenditures, system management, and operations.

23. Specifically, the City, in its application for a certificate of public

convenience in relation to its take-back of the Authority's assets, represents that it currently both

operates and manages the Authority's system, including controlling the Authority's books.

Application ofthe City of Lebanon, at paragraph 10, Docket No. A-220010 (filed Dec. 30, 2005).

Thus, for Commission jurisdictional purposes, there is currently- no "bona fide" authority

13

operating. See East Hempfeld Township v. Lancaster, et a l , 273 A.2d 333 (Pa. 1971) (where

the authority exercised no control over the City's operation of its system pursuant to a lease-back

agreement. Commission jurisdiction attached).24 Thus, the City by its actions is admittedly

furnishing service in derogation of the Public Utility Code, and the Commission should so

declare and grant the relief Petitioners request.

24. In sum, because the City is cunently operating the Authority's system and

because the City has not sought all of the requisite Commission approvals, there is a live

controversy regarding whether the City is required to obtain a certificate of public convenience

prior to acquisition of the assets of the Authority and regarding whether the City is currently

providing uncertificated service; therefore, the Municipalities Petition for Declaratory Order is

ripe for decision. The City cannot avoid regulation by the Commission by interposing the

Authority when the City has passed an ordinance, effective December 31, 2005, assuming control

from the Authority and by attempting by Resolution (Resolution 98 of the 2004-2005 Session

attached as Appendix "A" hereto) to immediately stop the Authority from making disbursements

or capital projects, said Resolution leading to a court order25 (attached as Appendix "B" hereto)

wherein the City now controls the Authority's expenditures, i f not actions, because the City must

co-sign for disbursements. The City is already owning and operating within the meaning ofthe

2 4 The City's Application claims that it has essentially been operating the Authority's facilities "for decades" and has clearly done so without a certificate of public convenience from the Commission. The City has arguably been providing extraterritorial service in violation of the Public Utility Code "for decades." East Hempfield Township, 273 A.2d at 335 (where Authority was merely a financing device and City was in control of the Authority's operation, the Public Utility Code was enforced against the City); see also. Re Metropolitan Lancaster Authority, 91 Pa.P.U.C. 542 (1998) (City of Lancaster acquired a certificate of public convenience in order to operate, through a lease-back agreement, the Authority's system that provided service beyond the City's municipal limits). 250rder eniered December 7, 2005 by the Honorable Judge John C. Tywalk. Court of Common Please of Lebanon County, Docket No. 2005-01758.

14

Public Utility Code2 6 and could have, but did not, allow time for obtaining necessary

Commission approvals before it "jumped the gun."

25. In accordance with the relief requested in the Municipalities' Petition, the

Commission should declare that the City must receive Commission approval prior to acquisition

of the Authority's facilities and operating and providing service for said system pursuant to the

Public Utility Code, direct it to make all required filings and make them in compliance with the

Commission's filing requirements,28 and otherwise grant the Municipalities Petition for

Declaratory order.

26 In other words, there is no longer a bona-fide or independent Authority for purposes of being insulated from Commission jurisdiction under an East Hempfield analysis. 2 7 Going forward in this proceeding, any suggestion by the City that its actions were not taken in an attempt to immediately control and operate the water and sewer systems are soundly contradicted by the City's actions and its statements in its Application at paragraph 10 and by Resolution 98 of the 2004-2005 Session which sought to bar the Auihority from taking any actions or making any expenditure without the City's permission. 2 8 Tbe City's Application and proposed tariff filed in support of its lariff both fall woefully short of compliance with the Commission's regulalions as will be shown in a Protest and Complaint against the proposed tariff the Municipalities intend to file in this matter.

15

WHEREFORE, Cleona Borough, Cornwall Borough, Lebanon County, Municipal

Authority, and North Lebanon Township respectfully request that the City's requests for

affirmative relief be denied in its entirety and that the Municipalities Petition for Declaratory

relief be granted.


Thomas J. Sniscak Todd S. Stewart Katherine E. Lovette Hawke McKeon Sniscak & Kennard LLP Harrisburg Energy Center 100 North Tenth Street POBox 1778 Harrisburg, PA 17105-1778 717-236-1300

DATED: February 9, 2006

Counsel for Cleona Borough, Cornwall Borough, Lebanon County, Municipal Authority, and North Lebanon Township

16

FILE O F THE COUNCIL OF THE CITY OF LEBANON, PA.

RESOLUTlOKl 98 SESSIONS 2004-2005

INTRODUCE^ BY Mr Richard A. Wertz. Nlovennber 17, 2Q05

A RESOLUTION

L I M m N G THE PIROJECTS \VHJCH MAY BE UNPERTAKEN AND CONTRACTS Wl-jlCH M'jAY BE ENTERED INTO BY THE CITY OF LEBANON. AUTHOR! ITY

j WHEREAS, the City Council of the City of Lebanon (Uw "City Council") has

heretofore oiganJ^ed the City of Lebanon Authority (the "Autl-iority") on or obout November 26, 1945, under provisions of the Act of Assembly epproved May 2, 1945, P.L. 382, as omended and supplemented, known as the "Municipality Authorities" 53 Pa. C-S- §5601, fit f iS. (the "Authorities Act"); and

WHEREAS, pursuant to operative ordinances of the City of Lebanon ("the City") and egreement between the City and the Authority, the Authority has engaged in Bctivities to construct and finance the City's water and sewer systems including, but not limited to, the wpter works, water supply works, water trtetment system, water transmission, water distribution system, sanitary sewage collection, sanitary sewage transmission, sanitary sewage treatment and sanitary sewfige disposal system facilities (the collectjvely "System" or "Systems"); and

WHEREAS^ the City Council has concluded that, in order to avoid duplication of effort and in order to consolidate certain activities currently being undertaken by both the City and the Authorfty, it is ne'eessary and appropriate for ihe Cily lo own and operate the Systems and to have &I1 such Activities conducted exclusively by the City through its governing body andistaff; and

WHEREAS,; pursuant to the Authorities Act, a municipality organizing such an authority is authorized, by resolution, from time to time, to specify the project or projects to be undertaken by the seid authority, and no other projects shall be undertaken by the said euthority other than those so specified; mid

WHEREAS,, the City Council has determined to prohibit the Authority from engaging in any future project orprojects or to contract with vendors and other providers of professional services, including but not limited to, agents, representatives, attorneys, financial advisors, aDcbitects and engineers.

Appendix A

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lebanon, Lebanon County, Pennsylvania, ns follows;

SECTION 1. From the dote of this Resolution, the Authority shall not undcrtalte, take official action upon or prosecute or expend any funds related to any project or piojeots (olher than those which have been undertaken by the Authority to date hereof and other than those which may be .ftirther directed by the City Council), including, but not limited to, the; incurrence by the Authority of any obligation or indebtedness for any purpose, or the expansion, encumbrance, transfer or other disposition of any portion of the Systems or any property of the Authority.

SECTION 2. The Authority shaU not engage ot contract with any vendors or service providers, including but not limited to consultants, attorneys, financial advisors, engineers, accountjmts end architects without the prior written approval of the Mayor of the City.

SECTION 3. The Auihority shall not engage in any conduct or expend any funds, directly or indirectly, for any purpose other lhan accomplishing the directives and objectives of the City as set forth in this Resolution.

SECTION 4. AJI resolutions or parts thereof insofar as the same are inconsistent herewith, are repealed hereby.

SECTION 3. This Resolution shall become effective on the date hereof.

IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY,. PENNSYLVANIA

CIVIL ACTION LAW

CITY OF LEBANON AUTHORITY 25 4

CITY OF LEBANON

No. 2005-01758-r,

Preliininary Injunction:' -

O R D E R

AND NOW, to wit, December 5, 2005, after consideration of

the coraipents of counsel, the Motion for Injunctive Relief filed on behalf of

the City of Lebanon Authority is granted in part.

It is hereby Ordered as follows:

1. The title on the current bank accounts which contain water

and sewer revenues shall be changed to reflect the City of

Lebanon Authority as the owner of those accounts. Those

accounts shall require two authorized signatures for any

disbursement, one each from the City of Lebanon and City

of Lebanon Authority.

2. The provisions of our December 2, 2005 Order restricting

certain expenditures by the City of Lebanon Authority is

modified in that paynieht by the Authority for past and

Appendix B

continued representation by the following parties is

approved:

a. Samuel G. Weiss, Jr.. Esquire

b. Mette, Evans & Woodside

c. Eckert Seaman

d. Gannett-Fleming Engineering

e. Utility Rate Resources

f. An account selected by the Authority.

These parties may be retained to provide advice to the

Authority, including advice with regard to the proposed

takeover by the City of Lebanon of assets owned by the

City of Lebanon.

3. Tbe two actions currently filed under Action Nos. 2005-

01758 and 2005-01748 are hereby consolidated for all future

actions. Any future filings shall be made under the single

Action No, 2005-01748.

-2-

cc:

4. All olhers aspects ofour Order of December 2, 2005 shall

continue in full force and effect.

Samuel G. Weiss, Jr., Esquire Daniel Sullivan, Esquire R. Scot Feeman, Esquire Mark Bradshaw, Esquire «'at this order h-^- u .

entered ir, Ufc cZ^'"^

1mm

-3-

VERIFICATION

I, JttAHtS b £i*t4< , hereby state that the facts set forth in the

forgoing document and its attachments are true and correct to the best of my knowledge,

information and belief, and that I expect to be able to prove the same at a hearing in this matter.

This verification is made subject to the penalties of 18 Pa.C.S. § 4904 relating to unsworn

falsification to authorities.

(3 ^Lr-^ fr^^LU Name: Richard D. Fields

Cleona Vice President of Borough Council

1A0 West Walnut Street

Cleona PA 17042

Title and Business Address

Dated: February 9, 2006

VERIFICATION

I , Kathleen G. Schaeffer , hereby state that the facts set forth in the





Chairperson

Cornwall Borough Municipal Authority

PO Box 667

Cornwall, PA 17016 Title and Business Address

Dated: February-9. 2006

VERIFICATION

I, Kenneth C. Artz , hereby state that the facts set forth in the





Name: Kenneth C. Art

North Lebanon Township -Treasurer

725 K i m m e r l i n g R Road

Lebanon PA 17046




I hereby certify that I have this day served a true and correct copy of the foregoing document upon the persons named and by First Class mail or by hand delivery:

Service by First Class Mail:

Mayor and City Council Members c/o Cheryl Gibson, City Clerk City of Lebanon Municipal Building' 400 South 8 , h Street Lebanon, PA 17042

Samuel G. Weiss, Jr., Esquire Solicitor, City of Lebanon Authority Weiss, Weiss & Weiss 802 Walnut Street Lebanon, PA 17042

R. Scot Feeman, Esquire Siegrist, Koller, Brightbill, Long & Feeman 315 South Eighth Street Lebanon, PA 17042

Service by First Class Mail and Hand Defivery

Kenneth Zielonis, Esquire Stevens & Lee 17 North Second Street, 16Ih Floor Harrisburg, PA 17101

Irwin A. Popowsky, Esquire Office of Consumer Advocate 555 Walnut Street Forum Place, 5th Floor Harrisburg, PA 17101-1921

William R. Lloyd, Jr., Esquire Office of Small Business Advocate Commerce Building, Suite 1102 300 North Second Street Harrisburg, PA 17101

Cheryl W. Davis, Esquire Office of Special Assistants Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street, 3 r d Floor East Harrisburg, PA 17120

Bodhan R. Pankiw, Chief Counsel Pennsylvania Public Utility Commission Law Bureau Commonwealth Keystone Building 400 North Street, 3 r d Floor West P.O. Box 3265 Harrisburg, PA 17105-3265

Thomas J. Sniscak


Hawke . S/L cKeon

Sniscak &

ICennard LLP ATTORNEYS AT LAW


Craig R. Burgraff Steven D. Snyder Janet L. Miller Steven K. Haas William E. Lehman Rikardo J. Hull Katherine E. Lovette

100 North Tenth Street, Harrisburg, PA J7303 Phone; 717.236.1300 Fax: 717.236.4841 www.hmsk-law.com

February 23,2006

B Y HAND DELIVER Y James J. McNulty, Secretary Pennsylvania Public Utility Commission Filing Room - Second Floor Commonwealth Keystone Building PO Box 3265 Harrisburg, PA 17105-3265

to m o zo

cr.

ro

cn

Re; West Cornwall Township, v. City of Lebanon; Docket No. P-00062189; Reply of West Cornwall Township to the City of Lebanon's Request for Affirmative Relief Contained in its Answer to Petition for Declaratory Order

Dear Mr. McNulty:

Enclosed for filing with the Commission are the original and three (3) copies of the Reply of West Cornwall Township to the City of Lebanon's Request for Affirmative Relief Contained in its Answer to Petition for Declaratory Order. A copy of this document has been served in accordance with the attached Certificate of Service.

If you have any procedural questions with regard to this filing, please direct them to me. Thank you for your attention to this matter.

Very truly yours,

Thomas J. Sniscak

TJS/kel Enclosures cc: Administrative Law Judge Wayne L. Weismandel

Per Certificate of Service



WEST CORNWALL TOWNSHIP, Petitioner

v.

CITY OF LEBANON, Respondent


to m o •so

CJO

CO

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REPLY OF WEST CORNWALL TOWNSHIP TO THE CITY OF LEBANON'S REQUEST FOR AFFIRMATIVE R E L I E F

CONTAINED IN ITS ANSWER TO PETITION FOR DECLARATORY ORDER

Pursuant to 52 Pa. Code § 5.62, West Cornwall Township ("Township" or "Petitioner")

hereby files its Reply to the City of Lebanon's ("City" or "Respondent") requests for affirmative

relief contained in its Answer to Petition for Declaratory Relief. The City's requests for

affirmative relief were not properly set forth as a "New Matter" as required by the Commission's

regulation at 52 Pa. Code § 5.62(b); instead, the requests for affirmative relief are set forth in the

"Wherefore" paragraph of the Answer and are based upon arguments appearing in the Answer

itself.1 Because the City's support for the requested affirmative relief is embedded throughout

the Answer, the Township's Reply is organized as a response to the affirmative relief issues as

set forth in the "Wherefore" paragraph rather than as a response to every numbered paragraph of

the Answer, In support thereof, the Township replies as follows:

1 As set forth in the "Wherefore" paragraph, the City seeks the following affirmative relief: that the Commission (1) declare that it lacks jurisdiction over the City's acquisition of the City of Lebanon Authority's assets; (2) declare that it lacks jurisdiction over the City's provision of bulk water and wastewater service to outside municipal corporations and municipal authorities pursuant to bulk service agreements, and (3) declare that the City is only required to receive a Certificate of Public Convenience before it may begin to provide extraterritorial service to retail customers.

I . THE COMMISSION HAS JURISDICTION OVER THE CITY'S ACQUISITION OF THE CITY OF LEBANON AUTHORITY'S ASSETS THAT PROVIDE SERVICE TO EXTRATERRITORIAL CUSTOMERS.

A. The Commission has express statutory jurisdiction over a municipal corporation's acquisition of assets to provide extraterritorial service.

1. The City's first and third affirmative claims are that the Commission lacks

authority over the City's acquisition of the Authority's assets for providing service beyond the

City's limits and that the City is not required to obtain a certificate of public convenience prior to

acquiring the assets of the Authority.2 The City is wrong. The Commission clearly has

jurisdiction over the City's acquisition of facilities to be used to provide extraterritorial service

regardless of the kind of entity from which the City acquires the facilities. Section 1102(a)(5) of

the Public Utility Code requires a certificate of public convenience to be "first had and obtained"

in order for;

any municipal corporation to acquire, construct, or begin to operate, any plant, equipment, or other facilities for the rendering or furnishing to the public of any public utility service beyond its corporate limits.

66 Pa.C.S. § 1102(a)(5) (emphasis added). This language is clear and express. The City may not

acquire any facilities intended for use to serve extraterritorial customers without Commission

approval.3

2 City Answer to Petition at 4 - 8, 10. 3 The express language of this section also addresses the City's concerns, presented at paragraph 18 of its Answer, that the Commission's exercise of its jurisdiction in this instance will improperly "inject" the Commission into a municipal corporation's "desire to execute its legislative power to reassert control over its assets." The language "for the rendering or furnishing to the public of any public utility service beyond [the municipality's] corporate limits" in section 1102(a)(5) makes clear that the Commission's jurisdiction over a municipality's acquisition of facilities belonging to its municipal authority attaches when those assets will be used bv the municipality to furnish extraterritorial service. Thus, the two examples the City presents - a municipality acquiring assets to transfer to another authority and a municipality acquiring the assets in order to sell or lease to another public entity - are irrelevant.

2. Without citation to, or acknowledgement of Section 1102(a)(5), the City

mischaracterizes the arguments of the Township,4 suggesting in paragraph 10 of its Answer that

the Township's only support for the position that the City is required to obtain a certificate of

public convenience prior to acquiring or operating the facilities of the Authority is three cases

that the City then attempts to distinguish. To the contrary, the Township's argument is squarely

based on the solid footing of the above-quoted express statutory language that unquestionably

requires the City to obtain a certificate pf public convenience prior to acquiring any facilities to

be used to provide extraterrorial service.

3. While the Township's position on this issue can stand on the statutory language

alone, the cases cited by the Township illustrate the consequences of a regulated entity's failure

to comply with Section 1102 and the Commission's powers where non-compliance occurs.

4. Specifically, the City argues at paragraph 11 of its Answer that Public Service

Water Co. v. Pa. Pub. Util. Comm'n, 645 A.2d 423 (Pa. Cmwlth. 1994) is inapposite because in

that case, one public utility transferred facilities to another public utility without first obtaining a

certificate of public convenience as required by Section 1102. The City argues that this case is

distinguishable because Section 1102(a)(3) only requires a certificate of public convenience

when assets are transferred by a "public utility" to another entity and that the City is a "municipal

corporation," not a "public utility" pursuant to the definitional section of the Public Utility Code,

4 The City refers to the Township in paragraph 10 and throughout this pleading as "Joint Petitioners." This is probably because this pleading is an exact duplicate of the City's answer to the related petition for declaratory relief filed by several municipalities or "joint petitioners" at Docket No. P-20052195, and the City apparently forgot to change the references to those "joint petitioners" in this document before it was filed in this docket.

66 Pa.C.S. § 102.5 Even i f Section 1102(a)(3) only applies to a."public utility," 6 as stated above

and as cited in the Township's Complaint and Petition, Section 1102(a)(5) clearly applies to the

City's acquisition of facilities to provide extraterritorial service. Public Service Water Co. is

relevant because it holds that when an entity is required to obtain a certificate of public

convenience prior to taking some action pursuant to Section 1102 (in that case, a public utility

transferring its assets to another public utility under Section 1102(a)(3) and in this case a

municipal corporation acquiring facilities that will be used to provide extraterritorial service

under Section 1102(a)(5)), and that entity fails to comply with Section 1102, the transaction is

void and the Commission can order the parties to return to the status quo prior to the void

transaction.

5. Similarly, the City's unpersuasive attempt to distinguish Middletown Township v.

Pa. Pub. Util. Comm'n, 482 A.2d 674 (Pa. Cmwlth. 1984) also fails because there the

Commonwealth Court found that a municipality seeking to acquire facilities pursuant to a right

set forth in another statute, the Corporation Act of 1874, was required to comply with the

requirements set forth in the Public Utility Code related to the acquisition despite the

municipality's arguments that the Corporations Act granted an absolute right to acquire the

5 Interestingly, while the City claims to be a "municipal corporation" pursuant to 66 Pa.C.S. § 102 for purposes of its arguments here, the City denied being a "municipal corporation" pursuant to this section in the City's Answer to the related Complaint at Docket No. C-20055689. 66 Pa.C.S. § 102 defines "municipal corporation" as:

[a]ll cities, boroughs, towns, townships, or counties of this Commonwealth, and also any public corporation, auihority, or body whatsoever crealed or organized under any law of this Commonwealth for the purpose of rendering any service similar to that of a public utility.

6 The Township does not concede this point. Any argument that the City can avoid compliance with the Public Utility Code or the Commission's jurisdiction based on the City's claimed status as a "municipal corporation" rather than a "public utility" under the definitional section of the Public Utility Code should be rejected. Borough of Media v. Pa. Pub. Util. Comm'n, 419 A.2d 215 (Pa. Cmwlth. 1980), affd Per Curium, 456 A.2d 540 (Pa. 1983) (Commonwealth Court rejected argument that Borough did not have to comply with Section 1102(a)(2) of the Public Utility Code because that sub-section mentions only "public utility" and "municipal corporations" are not expressly mentioned, and because "municipal corporations" are not included in the definition of "public utility" under section 102 of the Code). Based on Borough of Media, the City is arguably subject to every sub-section of 1102 that applies to a "public utility" or a "municipal corporation."

facilities that limited the Commission's jurisdiction over the transaction. The court's analysis of

Section 1102 is analogous to the current case regardless of what particular sub-section, was at

issue.

6. Furlhermores the City's attempt to distinguish Borough of Media v. Pa. Pub. Util.

Comm'n, 419 A.2d 215 (Pa. Cmwlth. 1980), a f fd Per Curium, 456 A;2d 540 (Pa. 1983), lacks

merit. The City admits, at paragraph 13 of its Answer, that there are two parts ofthe transaction,

but comes to the incorrect conclusion that in this case, unlike in Borough of Media, the

Commission has no jurisdiction over either part.7 The City could not have read this case more

incorrectly. In Borough of Media a municipality transferred its assets that served extraterritorial

customers to a municipal authority created pursuant to the Municipality Authorities Act

("MAA"). 8 Despite arguments that the MAA provided the exclusive procedure for the entire

transaction such that the Commission could not exercise jurisdiction, the Commonwealth Court

held that the Borough had to first obtain a certificate of public convenience before transferring

the assets because the Commission had jurisdiction over part of the transaction, the abandonment

ofthe facilities used to serve extraterritorial customers, pursuant to the Public Utility Code.9 The

City acknowledges that the Commission had jurisdiction over the abandonment of facilities in

Borough of Media pursuant to Section 1102(a)(2) of the Public Utility Code, but wishes to ignore

that the Commission similarly has jurisdiction over the acquisition of facilities pursuant to Sub-

7 This faulty conclusion seems to be based on the City's characterization of the of the transaction in this case as merely a "transfer of assets from a municipal authority" which, the City asserts, is governed only by the Municipality Authorities Act with no room for the Commission's certificate of public convenience process. This argument is addressed in detail below. The City ignores that the transaction also results in an acquisition by the City of assets for use in rendering extraterritorial service. 8 53 Pa.C.S. § 5601, e/seg. 966 Pa.C.S.§§ 1102(a)(2)and 1501.

section (a)(5) of Section 1 ] 02.10 The City's self-serving reading of the statute and these cases is

therefore plainly wrong.

B. Contrary to the City's first and third affirmative claims, nothing in the Municipality Authorities Act removes or supersedes the Commission's jurisdiction over the City's acquisition of facilities for extraterritorial service.

7. The City admits that a certificate of public convenience is required before it may

begin to "render" extraterritorial service." Yet it attempts to escape Commission jurisdiction

over the acquisition portion of the transaction (the City's acquisition of facilities to be used in

providing extraterritorial service) by next arguing that the Commission's jurisdiction is negated

or superseded by the MAA. 1 2 This argument also fails because nothing in the MAA negates or

supersedes the Commission's jurisdiction over' the acquisition of facilities and rendering of

extraterritorial service by the City or the requirement for obtaining a certificate of convenience

prior to the acquisition or the rendering of service under Section 1102(a)(5).

8. • Section 562213 ofthe MAA, 53 Pa.C.S. § 5622, allows a municipality to take back

the assets of its municipal authority; but the MAA cannot be interpreted to allow this transaction

to take place in violation of other statutes, such as the Public Utility Code, particularly where

there is a way to construe the statutes to give purpose to both. 1 Pa.C.S. § 1922;

Commonwealth Dep't of Transp. v. McFarren, 525 A.2d 1185, 1188 (Pa. 1987)

I Q The City applies the same flawed logic in its citation, in paragraphs 14 and 15 of its Answer, of Re: Borough of Red Lion, 56 Pa.P.U.C. 568 (1982), whereby the City admits the Borough in that case was required to obtain a certificate of public convenience in order to abandon facilities used to provide extraterritorial service prior to transferring those facilities to an authority pursuant to the MAA, Application of City of Erie, Docket No. A-221000, F200 (Order Entered Sept. 30, 1991), and Petition ofthe City of Lebanon, Docket No. P-810273 (Order Entered June 11, 1981), whereby in both cases the Commission exercised its jurisdiction'over the abandonment of the municipalities' extraterritorial service prior to the transfer of assets to an authority. " Answer at paragraph 13. 1 3 Answer at paragraphs 14-20, 1 3 The City mistakenly cites section 5621 in paragraph 16 of its Answer. That section is the severability provision of the MAA.

(interpretation of statute that results in conflict with another statute cannot be accepted). Because

Section 5622 of the MAA does not expressly preclude the Commission from exercising its

jurisdiction over a transaction between a municipality and an authority, any interpretation of

Section 5622 to so abrogate the Commission's jurisdiction pursuant to 66 Pa.C.S. § -l-l02(a)(5) is

improper.

9. There is clearly a way to interpret Section 5622 of the MAA to allow for the

coexistence of the MAA and the Commission's jurisdiction over the acquisition pursuant to

Section 1102 of the Public Utility Code. Section 5622 allows for a period of time to pass, during

which Commission Proceedings could conceivably be held, between a municipality's declaration

of its intent to acquire the facilities of its authority and the actual conveyance of the facilities.

The statute allows a municipality desiring to acquire the facilities of its municipality to:

by appropriate resolution or ordinance adopted by the proper authorities signify its desire to do so. and the authorities shall convey by appropriate instrument the project to the municipality upon assumption bv the municipality of all the obligations incurred bv the authorities with respect to that project.'4

This language clearly contemplates some period of time to pass between when the municipality

adopts an ordinance declaring its desire to take back the authority and when the municipality

actually assumes the obligations of the authority, thus triggering the authority's conveyance of

the property to the municipality.15 Because the statute allows for a period of time to pass

between the declaration of intent to acquire facilities and the actual conveyance of facilities, this

14 53 Pa.C.S. § 5622(a) (emphasis added). 1 5 This interpretation makes logical sense, for, depending on the nature of the obligations the authority has assumed, it may not be possible for a municipality to take on those obligations all at one time or immediately following its decision to take back the authority. The City apparently has realized in hindsight that it may not be possible for the Authority to convey its assets within the 22-day time limit set forth in the City's take-back ordinance, as evidenced by the City's claim in its Answer to the Township's Complaint lhat the assets have not yet been conveyed and by the City's filing, one day prior to the deadline set by the Ordinance, of an application for a certificate of public

period of time could be used by a municipality to apply for and obtain a certificate of satisfaction

from the Public Utility Commission.16 Thus, the Commission can exercise its jurisdiction over

the acquisition and rendering of extraterritorial service in harmony with the M A A .

10. Additionally, under the principals of statutory construction, the omission o f a

"completeness provision" from Section 5622 of the M A A must be deemed intentional, thus

Section 5622 is not intended to be an exclusive procedure for a municipality's acquisition of the

facilities of its authority. Commonwealth v. Bigelow, 399 A.2d 392, 395 (Pa, 1979) (where a

section of a statute contains a given provision, the omission of such provision from a similar

section is significant to show that the legislature's intent was different). Unlike Section 5613 of

the M A A , 1 7 dealing with transfers of property f rom a municipality to an authority, Section 5622

has no completeness provision designating that no other proceedings shall be necessary to

effectuate a transfer f rom an authority to a municipality. Because these sections govern similar

transactions, the omission is deemed to be intentional. Consequently, the City's M A A

exclusivity argument must be rejected.19

convenience to serve some of its extraterritorial customers (Docket No. A-220010). The City has not filed an application for a certificate of public convenience to acquire facilities to provide extraterritorial service. " See, e.g., Township of Forks v. Forks Township Municipal Sewer Auth., 759 A.2d 47, 55 (Pa. Cmwlth 2000) (Commonwealth Court directed the trial court on remand to amend its mandamus order to allow for sufficient time for the authority to settle its financial obligations prior to transferring assets where the take-over resolutions adopted by the township did not allow sufficient time by requiring the authority to transfer all assets within approximately 6 weeks). This case did not involve any allegation of extraterritorial service or of possible Commission jurisdiction. 1 7 53 Pa.C.S. §5613. 1 8 The Commonwealth Court has held, and the Supreme Court has affirmed, that even in the presence of the "completeness provision" in section 5613 ofthe MAA the Commission is not precluded from exerting its jurisdiction over part of the transaction. Borough ofMedia, 419 A.2d at 540. 1 9 The City points to language that was deleted from section 5513 of the MAA that once expressly required Commission approval before a transfer of property from a municipality to an authority. This language was deleted from the current version of the statute in 1947, well prior to the Borough of Media decision. Therefore, even if the language deleted from section 5513 were relevant to a transaction governed by section 5522, the removal of this language from section 5513 did not alter the Commonwealth Court's analysis and conclusion of the need for Commission's approval prior to the transfer pursuant to the current language of section 5513.

11. Furthermore, there is a clear basis for construing Section 5622 of the MAA and

Section 1102 of the Utility Code in pari materia, or as one statute. 1 Pa.C.S. § 1932; Marietta

Borough v. East Donegal Township, 296 A.2d 785, 786 (Pa. 1972) (where Borough Code and

Second Class Township code both regulated the same transaction - namely the annexation of

land from a second class township by a borough - the two statutes were construed together as

one statute) (citing ,1 Pa.C.S. § 1932). Here, as in Marietta Borough, two statutes regulate the

same transaction - namely the acquisition of the facilities of an authority by a municipality.

Thus, the statutes should be construed as one law. This construction allows for the municipality

to enact an ordinance declaring its intent to take back the facilities of the authority, to then file an

application before the Commission for a certificate of public convenience, and, after the

certificate is granted, to assume the obligations of the authority triggering the authority's

obligation pursuant to Section 5622 ofthe MAA to convey the facilities to the municipality.

II. THE COMMISSION HAS JURISDICTION OVER THE CITY'S PROVISION OF SERVICE TO MULTIPLE MUNICIPAL CUSTOMERS OUTSIDE THE CITY'S CORPORATE LIMITS REGARDLESS OF THE LARGE-VOLUME NATURE OF SERVICE.

12. The City's second affirmative claim is that the Commission has no jurisdiction

over the City's service rendered to several municipalities or municipal authorities through "bulk

service agreements" The City, admittedly filing a partial (yet incomplete) application for a

certificate of public convenience, has held itself out as ready to serve the public outside its

borders; therefore, the City meets the test for Commission jurisdiction regardless of whether

some of that service is large volume or by contract.

13. The lest for determining whether utility services are offered to the public such that

the Commission's jurisdiction attaches is whether (A) the person or entity holds itself out, either

expressly or impliedly, as being in the business of supplying a utility service to the public as a

class or to any portion of the public, as distinguished from holding itself out as providing that

service only to particular individuals; (B) the service at issue is incidental to the non-utility

service provided by the entity to the customer; or (C) the utility facility was designed and

constructed only to serve specific individuals so the service is not properly considered to be for

the public. Drexelbrook Associates v. Pa. Pub. Util. Comm'n, 212 A.2d 237 (Pa. 1965) (citing

Borough of Ambridge. v. Pa. Pub. Service Comm 'n., 165 A. 47 (Pa. Super. 1933). The test is not

whether the extraterritorial service is "bulk" service as the City argues at paragraphs 21 and 22 of

its Answer.20

14. As discussed below, the City cites cases that are not only distinguishable as to

material facts, but those decisions have been superseded by a subsequent decision by the

Commonwealth Court that held that even where service is provided only on a large volume basis

to a few customers who may in turn resell, the service is jurisdictional i f the ultimate nature of

the service is public. Waltman v. Pa. Pub. Util. Comm'n, 596 A.2d 1221 (Pa. Cmwlth. 1991).

Thus, the large volume nature of the service is not the determining factor, as the City erroneously

suggests. Moreover, the admitted facts show the City has many extraterritorial customers whose

purchases are from small to large volume.

2 0 While bulk service has been a factor that the Commission has considered in making a jurisdictional determination, it is not a stand-alone basis for abrogating the Commission's jurisdiction. See Lehigh Valley Cooperative Farmers v. City of Allentown, 54 Pa. P.U.C. 495 (1980) (Commission evaluated nature of extraterritorial service and determined it was not held out to the public because it was either brought about by limited special circumstances or was service to another municipality, but was not offered to the public at large).

10

15. The only support the City cites for its sweeping position that "bulk service

arrangements" are non-jurisdictional are Lehigh Valley Cooperative Farmers v. City of

Allentown, 54 Pa.P.U.C. 495 (1980) and Petition of Borough of Springdale, 63 Pa.P.U.C. 3

(1986). These are Commission decisions that, with all due respect, hold no precedential value

whereas Waltman is a Commonwealth Court opinion that post-dates Lehigh Valley and Borough

of Springdale and is binding on the Commission.21 Additionally, even i f Lehigh Valley and

Borough of Springdale were not superseded by Waltman, the facts here are in stark contrast to

the facts in those cases.

16. In Lehigh Valley, the only extraterritorial customers were the large-volume

municipalities served from meter points within the city, one industrial customer, and a small

number of residential customers, and the non-municipal customers were only served due to

unique circumstances. In Borough of Springdale, the only extraterritorial customer was one

municipality served from a meter point within the borough.

17. Here, in contrast, the City serves the large volume water municipal customers

from City mains located outside its borders and metered at points outside the City limits. Thus,

at the outset, Lehigh Valley and Borough of Springdale do not apply since the points of delivery

2 1 The rule of stare decisis does not apply to administrative agency decisions. Dee-Dee Cab, Inc. v. Pa. Pub. Util. Comm'n, 817 A.2d 593, 598 (Pa. Cmwlth 2003). 2 2 Regarding lhe City's large volume water customers, Cornwall Borough is served within Cornwall Borough at a meter pit located off of Cornwall Road, 353 feet south of the Cornwall Borough/North Cornwall Township municipal line. Bethel Township (Fredericksburg) is served within Bethel Township at a meter pit located off of Airport Road, 172 feet east of the Swatara Township/Bethel Township municipal line. West Lebanon Township is served within West Lebanon Township at a meter pit located at the intersection of Guilford and 22nd streets, 25 feet east of the 22nd Street center line. The Indiantown Gap Military Reserve is served within Union Township at two meter pits. One is located on Fisher Avenue, 56 feet east of Quartermaster Road. The other is located on Calvary Road, 368 feet west of Bordnersville Road. Pennsylvania American is served within Cleona Borough at a meter pit located along Route 422, 38 feet cast of the Annville Township, Cleona Borough line.

11

there were within the utility-municipality's limits. Moreover, the nature of the extraterritorial

service the City intends to render is admittedly public. In its application for a certificate of public

convenience, the City states lhat it intends to provide service directly to approximately 9,718

customers outside the City's municipal limits. Application of the City of Lebanon, at paragraph

1, Docket No. A-220010 (filed Dec. 30, 2005).

18. That the City here does not have a direct relationship with the ultimate end-users

in some municipalities does not mean that the large volume service customers, including

municipal customers, are not protected by Commission regulation of rates and services. Such a

result would clearly violate Waltman and would ignore that many regulated water and other

utilities serve Commission-protected large volume customers who may, in turn, resell.

19. Furthermore, accepting the City's argument that "bulk service" is non

jurisdictional would create a giant loophole to the Commission's jurisdiction that any public

utility could use to escape jurisdiction by entering large volume service arrangements with

groups of customers or with municipalities in derogation of the Public Utility Code's provisions

which are intended to protect all customers whether large or small.

20. Nor can the City avoid the Commission's jurisdiction by claiming that the large

volume service is provided pursuant to contracts or agreements.24 Duquesne Light Co. v. Pa.

2 3 Indeed, there is nothing uncommon about providing service on a large-volume basis or for resale, and the Commission clearly regulates rates for such service. See City of Lancaster, Supplement No. 35 to Tariff Water-Pa. P.U.C. No. 6, 18'h Revised Page No. 4 and l?* Revised Page No. 5 (Effective September 8, 2001) (customer charges differ depending on the size of the meter up to the large-volume size of twelve inches and includes a separate schedule of charges for sales to "public utilities and municipal corporations for resale purposes" with different charges for meter sizes ranging from four to ten inches); Tariff of the Borough of Hanover, Supplement No. 13 to Water-Pa. P.U.C. No. 3, Sixth Revised Page No. 4 (Effective January 1, 1995) (schedule of rates includes different rates for different meter sizes up to a large-volume size of eight inches). 2 4 This argument is subtly suggested by the City in paragraph 3 where the City where the City refers to "bulk water and wastewater contract service", in paragraph 22 where the City refers to "bulk service arrangements" and in the City's Answer to the Township's related Complaint at Docket No, C-20065773 where the City refers to service to the Municipalities as "pursuant to contracts."

12

Pub. Util Comm 'n, 507 A.2d 1274 (Pa. Cmwlth 1986) (a utility cannot deprive the Commission

of jurisdiction by entering into a contract with a third party). As with the City's argument

regarding "bulk service," the Commission cannot allow regulated entities to end-run the Public

Utility Code by entering into agreements for service, and at a minimum these contracts and the

terms thereof should be subject to tariff requirements or be made a part thereof.

HI . THE MATTER IS NOT MOOT BECAUSE THE CITY HAS NEITHER SOUGHT NOR OBTAINED ALL REQUISITE COMMISSION APPROVALS AND IS ILLEGALLY OWNING OR OPERATING A SYSTEM TO PROVIDE SERVICE BEYOND ITS BOUNDARIES.

21. As set forth above, the Public Utility Code requires the City to obtain a certificate

of public convenience prior to acquiring facilities for the provision of extraterritorial service and

prior to owning and operating said facilities to provide service beyond its corporate limits. 66

Pa.C.S. § 1102.

22. The City argues, at paragraphs 4 and 5 of its Answer, that the Township's Petition

for Declaratory Order is moot because the City alleges it has not yet taken ownership of the

Authorities assets; however, the express language of the City's take-over ordinance, adopted

December 9, 2005, stated:

[t]o effectuate the City's right to own, operate, and maintain the [Authority's] Systems for its residents, the City Council hereby commands and orders the Authority through its Board, to convey the System and all property of the Authority to this City pursuant to Section 5622 of the Authorities Act written instruments(s) in form and substance acceptable to the City on or before December 31, 2005 (the "Deadline").

City of Lebanon Ordinance 46 of 2004-2005, at Section 2 (December 9, 2005). Thus the City's

revisionist argument must fail, particularly when the City cannot dispute that it is controlling the

Authority's expenditures, system management, and operations.

13

23. Specifically, the City, in its application for a certificate of public convenience in

relation to its take-back of the Authority's assets, represents that it currently both operates and

manages the Authority's system, including controlling the Authority's books. Application of the

City of Lebanon, at paragraph 10, Docket No. A-220010 (filed Dec. 30, 2005). Thus, for

Commission jurisdictional purposes, there is currently no "bona fide" authority operating. See

East Hempfield Township v. Lancaster, et a i , 273 A.2d 333 (Pa. 1971) (where the authority

exercised no control over the City's operation of its system pursuant to a lease-back agreement,

Commission jurisdiction attached).25 Thus, the City by its actions is admittedly furnishing

service in derogation ofthe Public Utility Code, and the Commission should so declare and grant

the relief Petitioners request.

24. In sum, because the City is currently operating the Authority's system and because

the City has not sought all of the requisite Commission approvals, there is a live controversy

regarding whether the City is required to obtain a certificate of public convenience prior to

acquisition of the assets of the Authority and regarding whether the City is currently providing

uncertificated service; therefore, the Township's Petition for Declaratory Order is ripe for

decision. The City cannot avoid regulation by the Commission by interposing the Authority

when the City has passed an ordinance, effective December 31, 2005, assuming control from the

Authority and by attempting by Resolution (Resolution 98 ofthe 2004-2005 Session attached as

Appendix "A" hereto) to immediately stop the Authority from making disbursements or capital

2 3 The City's Application claims that it has essentially been operating the Authority's facilities "for decades" and has clearly done so without a certificate of public convenience from the Commission. The City has arguably been providing extraterritorial service in violation ofthe Public Utility Code "for decades." East Hempfield Township, 273 A.2d at 335 (where Authority was merely a financing device and City was in control of the Authority's operation, the Public Utility Code was enforced against the City); see also, Re Metropolitan Lancaster Authority, 91 Pa.P.U.C. 542 (1998) (City of Lancaster acquired a certificate of public convenience in order to operate, through a lease-back agreement, the Authority's system that provided service beyond the City's municipal limits).

14

projects, said Resolution leading to a court order26 (attached as Appendix " B " hereto) wherein

the City now controls the Authority's expenditures, i f not actions, because the City must co-sign

for disbursements. The City is already owning and operating within the meaning of the Public

Utility Code 2 7 and could have, but did not, allow time for obtaining necessary Commission

approvals before it "jumped the gun."

25. In accordance with the relief requested in the Township's Petition, the

Commission should declare that the City must receive Commission approval prior to acquisition

of the Authority's facilities and operating and providing service for said system pursuant to the

Public Utility Code, direct it to make all required filings and make them in compliance with the

Commission's filing requirements,29 and otherwise grant the Township's Petition for Declaratory

order.

:6Order entered December 7, 2005 by the Honorable Judge John C. Tywalk, Court of Common Please of Lebanon County, Docket No. 2005-01758. 3 7 In other words, there is no longer a bona-fide or independent Authority for purposes of being insulated from Commission jurisdiction under an East Hempfield analysis. 2 8 Going forward in this proceeding, any suggestion by the City that its actions were not taken in an attempt to immediately control and operate the water and sewer systems are soundly contradicted by the City's actions and its statements in its Application at paragraph 10 and by Resolution 98 ofthe 2004-2005 Session which sought to bar the Authority from taking any actions or making any expenditure without the City's permission. 2 9 The City's Application and proposed tariff filed in support of its application both fall woefully short of compliance with the Commission's regulations as is alleged in detail by the Protest and Formal Complaint against the Application and initial tariff the Township and other municipalities filed on February 9, 2005 in Docket No. A-220010.

15

WHEREFORE, West Cornwall Township respectfully requests that the City's requests

for affirmative relief be denied in its entirety and that the Township's Petition for Declaratory

relief be granted.

Respectfully submitted.

Thomas J. Sniscak Todd S. Stewart Katherine E. Lovette Hawke McKeon Sniscak 8c Kennard LLP Harrisburg Energy Center 100 North Tenth Street PO Box 1778 Harrisburg, PA 17105-1778 717-236-1300 .

Counsel for West Cornwall Township

DATED: February 23, 2006

16

FILE OF THE COUNCIL OF THE CITY OF LEBANON, PA.

RESOLUTION! 98 SESSIONS 2004-2005

INTRODUCE^ BY Mr. Richard A. VVertz. November 17. 2005

A RESOLUTION

LIMITING THE PkOJECTS WHICH MAY B E' UND ERTAKEN AND CONTRACTS WHICH MjAY BE ENTERED INTO BY THE CITY OF LEBANON. AUTHORI ITY

I WHEREAS, the City Council of the City bf Lebanon (the. "City Council") has

hcrerofore organhcd the City df Lebanon Authority (the "Authority") on or about November 26, 1945, under provisions of the Act of Assembly approved May 2, 1945, P.L. 382, as omendcd and supplemented, known as the "Municipality Authorities" 53 Pa. C.S. §5601, & £Sfl. (the "Authorities Act"); and

WHEREAS, pursuant to operative ordinances of the City of Lebanon ("the City") and agreement between the City and the Authority, the Authority has engaged in Ectlvities to constnjet and finance the City's water and sewer systems including, but not limited to, the wptcr works, water supply works, water treatment system, water transmission, water distribution system, sanitary sewage collection, sanitary sewage transmission, sanitqsy sewage treatment and sanitary sewage disposal system facilities (the collectively "System" or "Systems"); and

WHEREAS^ the City Council has concluded that, in order to avoid duplication of effort and in order to consolidate certain activities currently being'undertaken by both'the City and tlic Authority, it is necessary and appropriate for the City to own and operate the Systems and to have jdl such activities conducted exclusively, by the City through its governing body and:staff; and .

^ WHEREASpursuant to the Authorities Act, a municipality organizing juch an authority is authorized, by resolution, fiom time to time, to specify "the project or projects to be undertaken by the said authority, and no other projects shall be undertaken by the said euthority other than those so specified; aiid

• , • WHEREAS'the City Council has detemuncd to prohibit the Authority from

engaging in any future project orprojects or to contract with vendors and other providers of professional scrvjees, including but not limited to, agents, representatives, attorneys, financial advisors, architects and engineers. Appendix A

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City o f Lebanon, Lebanon County, Pennsylvania, as foJIoAVs;

SECTION 1. From the dete of this Resolution, the Authority shall not undertalce, take official action upon or prosecute or expend any funds related to any project or projects (other thftn those which have been undertaken by the Authority to date hereof and other than those which may be.farther directed by the City Council), including, but not limited To, the; incurrence by die Authority of any obligation or indebtedness for any purpose, or the expansion, encumbrnncc, transfer or other disposition of any portion of the Systems or any property of the Authority.

SECTION 2. The Authority shall not engage or contract with any vendors or service providers, including but not limited to consultants, attorneys, financial advisors, engineers, accountants and architects without die prior written approval o f the Mayor of the City.

SECTION 3.' The Authority shall not engage in any conduct or expend any funds> directly or indirectly, for any puipose other than accomplishing the directives and objectives of the City as set forth in this Resolution.

SECTION 4. Al l resolutions or parts thereof insofar as the same are inconsistent herewith, are repealed hereby.

SECTION 3. This Resolution shall become effective on the date hereof.


CJVJL ACTION LAW

CITY OF LEBANON AUTHORITY

v

CITY OF LEBANON

No. 2 0 0 5 - 0 1 7 5 8 ' A ••

Preliminary Injunction ^

O R D E R

. AND NOW? to \vit5 December 5, 2005, after consideration of

the cominents of counsel, the Motion for Injunctive Relief filed on behalf bf

the City of Lebanon Authority is granted in part.'

Tt is hereby Ordered as. follows:

1. The title on the current bank accounts which contain water





of Lebanon Authority.

2.. The provisions of our December 2, 2005 Order restricting

certain expenditures by the City of Lebanon Authority is

•. modified in-that payment by the-Authority for past and

Appendix B

continued representation by the following parties'is

approved:

a. Sarnuel G.- Weiss, Jr,: Esquire


c. Eckert Seaman



f. An account selected by the Authority,

These parties may be retained to provide advice to the

Authority, including advice with regard to tbe.proposed


City of Lebanon.

3. The two actions currently filed under Action Nos, 2005-

01758 and 2005-01748 are hereby consolidated for all future

actions. Any iuture filings shall be made under the single

Action No. 2005-01748.

-2-

cc:

4. AU others aspects ofour Order of December 2, 2005 shall

continue jn full force and effect.

Samuel G. Weiss, Jr., Esquire Daniel Sullivan, Esquire R. Scot Feeman, Esquire Mark Bradshaw, Esquire

entered in ttticc^- n

Imm

-3-

VERIFICATION

I , Russell L. Gihhie , hereby state that the facts set forth in the


infonnation and belief, and that I expect to be able to prove the same at a hearing in this matter.



Name: Russell L. Glbble

West Cornwall Township Supervisors Vice Chairman

73 S. Zinns M i l l Road

Lebanon PA 17042




I hereby certify that I have this day served a true and correct copy of the foregoing document upon the persons named and by First Class mail or by hand delivery:

Service by First Class Mail:

Mayor and City Council Members c/o Cheryl Gibson, City Clerk City of Lebanon Municipal Building. 400 South 8 , h Street Lebanon, PA 17042

R. Scot Feeman, Esquire Siegrist, Koller, Brightbill, Long & Feeman 315 South Eighth Street Lebanon, PA 17042

Samuel G. Weiss, Jr., Esquire Solicitor, City of Lebanon Authority Weiss, Weiss & Weiss 802 Walnut Street Lebanon, PA 17042

Service by First Class Mail and Hand Delivery

Kenneth Zielonis, Esquire Stevens & Lee 17 North Second Street, 16,h Floor Harrisburg, PA 17101



Cheryl W. Davis, Esquire Office of Special Assistants Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street, 3 r d Floor East Harrisburg, PA 17120

Bodhan R. Pankiw, Chief Counsel Pennsylvania Public Utility Commission Law Bureau Commonwealth Keystone Building 400 North Street, 3 r d Floor West P.O. Box 3265 Harrisburg, PA 17105-3265

Thomas J. Sniscak Dated: February 23, 2006

Hawke M c K e o n

Sniscak &

K


Craig R. Burgraff Steven D. Snyder Janet L. Miller Steven K. Haas William E. Lehman Rikardo J. Hull Katherine E. Lovette


100 North Tenth Street, Harrisburg, PA 17101 Phone: 717.236.1300 Fax: 717.236.4841 www.hmsk-law.com

February 9, 2006

BY HAND DELIVERY James J. McNulty, Secretary Pennsylvania Public Utility Commission Filing Room - Second Floor Commonwealth Keystone Building POBox 3265 Hairisburg, PA 17105-3265

m o TO rn

CO •--

ZD

rn

ci:

Re: Application of the City of Lebanon For Furnishing Water Service in the Boroughs of Cleona and Jonestown and the Townships of Annville, North Cornwall, South Lebanon, North Lebanon, West Lebanon, Swatara and Union, Lebanon County, Pennsylvania; Docket No. A-220010; PROTEST

Dear Mr. McNulty:

Enclosed for filing with the Commission are the original and three (3) copies of the Protest of Cleona Borough, Cornwall Borough, Lebanon County, Municipal Authority, Fredericksburg Sewer & Water Authority, North Lebanon Township and West Cornwall Township in the above-captioned docket. A copy of this document has been served in accordance with the attached Certificate of Service.

I f you have any procedural questions with regard to this filing, please direct them to me. Thank you for your attention to this matter.

Very truly yours,

Thomas J. Sniscak TJS/kel Enclosures cc: Hon. Wayne L. Weismandel

Per Certificate of Service


Appendix B

BEFORE THE PENNSYLVANIA PUBLIC UTILITV COMMISSION

ADMINISTRATIVE LAW JUDGE WAYNE L. WEISMANDEL

RE: APPLICATION OF THE CITY OF LEBANON FOR FURNISHING WATER SERVICE IN THE BOROUGHS OF CLEONA AND JONESTOWN AND THE TOWNSHIPS OF ANNVILLE, NORTH CORNWALL, SOUTH LEBANON NORTH LEBANON, WEST LEBANON, SWATARA AND UNION, LEBANON COUNTY, PENNSYLVANIA

•DocketNo. A-220010^

PROTEST OF MUNICIPALITIES AGAINST APPLICATION OF CITY OF LEBANON

cr.

Pursuant to the Commission's regulation at 52 Pa. Code §§ 3.502 and 5.52, Cleona

Borough, Cornwall Borough, Lebanon County, Municipal Authority, North Lebanon Township,

West Cornwall Township, and Fredericksburg Sewer & Water Authority (inclusively,

"Municipalities" or "Protestants")1 hereby file a protest against the Application of the City of

Lebanon ("City" or "Applicant") to fumish water service in portions of the Boroughs of Cleona

and Jonestown and the Townships of South Annville, North Cornwall, South Lebanon, North

Lebanon, West Lebanon, Union and Swatara, all in Lebanon County, Pennsylvania.

("Application") In support thereof, the Municipalities aver as follows:

"Municipalities" as used herein shall include Boroughs, Townships or their Authorities.

Introduction

1. The Applicant is the City of Lebanon, Lebanon County, Pennsylvania, a city of

the Third Class operating under the Home Rule Charter and Optional Plans Law.2 The Docket

Number of the City's application is A-220010. The City's address is:

City of Lebanon 400 South 8 , h Street Lebanon, PA 17042

2. The names and business addresses and telephone numbers for the Protestants are

as follows:

Cleona Borough 140 West Walnut Street Cleona, PA 17042 (717)272-7167

Cornwall Borough, Lebanon County Municipal Authority 36 Burd Coleman Road Cornwall, PA 17016 (717)274-5441

Fredericksburg Sewer & Water Authority 2529 Route 22, P.O. Box 161 Fredericksburg, PA 17026 (717) 865-7542

North Lebanon Township 725 Kimmerlings Road Lebanon, PA 17046 (717)273-7132'

West Cornwall Township 73 S. Zinns Mill Road Lebanon, PA 17042 (717) 272-9841

2 53 P.S. § 41101, et seq.; see THE PENNSYLVANIA M A N U A L , Vol. 116 at 6-5 (City of Lebanon has adopted a home rule charter).

3. The names, business address, telephone and facsimile numbers of the Protestants'

special counsel, to whom correspondence, notices, orders, pleadings, documents, or filings

regarding this complaint proceeding, are:

Thomas J. Sniscak Todd S. Stewart Katherine E. Lovette Hawke McKeon Sniscak & Kennard LLP 100 N. 10,h Street P.O.Box 1778 Harrisburg, PA 17105 Phone: 717-236-1300

Fax: 717-236-4841

4. Protestants are municipalities that currently receive water service from the City "of

Lebanon Authority ("Authority"). Protestants and/or their residents will become the City's

extraterritorial customers pursuant to the City's take-back of the Authority's assets.3 Protestants

therefore have sufficient interest in the City's Application and standing to protest said

Application.

5. Pursuant to 66 Pa.C.S. § 332(a), the City bears the burden of proof as to all issues

relating to its application. Tlie City must therefore prove all necessary elements required by the

Public Utility Code and the Commission by substantial evidence or its application must be

denied.

6. The Commission's regulation at 52 Pa. Code § 3.501 sets forth in detail the

documents and information that must be included in an application for a certificate of public

convenience to provide water service. Applications that fail to include the documents and

3 The City's take-back ordinance, which is attached to the City's Application as "Appendix A," set a deadline of December 31, 2005 for the City to acquire the Authority's assets and begin to furnish service; however, the City claims it has not yet "taken-back" the assets. Though, as stated in the Municipalities' Reply to the City's requests for affirmative relief (Docket No. P-00052195), the Municipalities believe the City is already rendering jurisdictional service because it controls operation, management, and expenditures (it obtained a court order that the Authority may not spend monies without its co-signing) for service to extraterritorial customers. The court order is attached hereto and incorporated herein as "Appendix A."

information set forth by this regulation are subject to rejection by the Commission. 52 Pa. Code

§ 3.501(b).

7. The Public Utility Code4 requires an applicant for a certificate of public

convenience, to establish that the proposed service is "necessary or proper for the service,

accommodation, convenience or safety of the public." 66 Pa.C.S. § 1103. The Commission and

the courts have interpreted this statute to require an applicant to demonstrate: (a) public need or

demand for the proposed service; (b) inadequacy of existing service; and (c) that the applicant is

technically, financially and legally fit to provide the service. Chester Water Auth. v. Pa. Pub.

Util. Comm868 A.2d 384, 386 (Pa. 2005).

Grounds For Protest

8. At the outset, the City's Application is substantially deficient and in violation of

the Commission's regulation at 52 Pa; Code § 3.501 and should be rejected on that basis. The

Application fails to include the following documents or information required by section 3.501:

• a copy ofthe business plan required by the Department of Environmental Protection ("DEP") relating to public water system construction permits;

• the original cost, by year and major plant category, of used and useful plant in service and related accrued depreciation calculations;

• a breakdown of the sources of funds used to finance the construction ofthe facilities;

• a map of the service area that meets the requirements of 52 Pa. Code § 3.501 (a)(2Xi)-(v);5

4 66 Pa.C.S. § ]Q\,etseq. 5 The Application purports to include a map of the proposed service territory attached to the Application as "Appendix D"; however, Appendix D only contains a single sheet of paper with the statement "To be provided at a later date." This is not acceptable.

• a statement of the actual number of customers by class and related consumption or gallons treated in tbe current calendar year and future number of connections anticipated for the next 10. years;6

• a demonstration of the City's ability to provide adequate water supply, treatment, storage and distribution to meet present and future customer demands;

• an initial tariff which reflects rates and terms of service that conform to the Commission's regulations and the Public Utilitv Code;7

• proof of compliance with applicable design, construction and operation standards of the DEP or of the County Health Department, or both, including copies of permits, valid certified operator's .certificates, and a 5-year compliance history with.DEP with an explanation of each violation;8

• a copy of documents showing compliance with requirements of the Susquehanna River Basin Commission or the Delaware River Basin Commission if applicable; and

• a verification that the water sources and customers are metered in accordance with the Commission's regulation at 52 Pa. Code § 65.7, or, if unmetered service is currently provided, a metering plan on forms provided by the Commission.

9. Furthermore, the Application facially is procedurally deficient because it fails to

comply with the service and filing requirements set forth in 52 Pa. Code § 3.501(b) and (d). The

affidavit of service attached to the Application does not show that the parties served were served

by registered or certified mail, retum receipt requested, and the affidavit of service shows that

the City failed to serve the following parties as required:

• each city, borough, town, township, county and related planning office which is included, in whole or in part, in the proposed service area; and

6 The Application lists the number of current customers by class but fails to provide the other required customer-related information. 7 The City filed a proposed tariff on January 3,2006 in support of its Application; however, the proposed tariff is not in conformity with the Commission's regulations and the Public Utility Code, in part because the rates set forth in the proposed tariff are not supported by a rate study or a historic test year as required. The Municipalities are filing a Formal Complaint against the proposed tariffs fully setting forth the Municipalities arguments that the proposed tariff is inadequate. 8 The Application avers that there are valid DEP permits but provides no documentary evidence of such and states that the Authority had not been cited by the DEP but does not slate the period of time for which this statement is made.

• any water, wastewater utility, municipal corporation or authority which provides water service to the public and whose .service area abuts the service area proposed in the application.

10. The Application is also facially deficient because it fails to include large volume

customers served at points outside the City's limits, including municipal customers, as customers

to which lhe Application and proposed tariff will apply. Service provided to these customers is

within the Commission's jurisdiction and should be included in the Application and proposed

tariff.

13. The City's Application does not establish technical fitness to provide the

proposed service. The City has provided no evidence to support its statements regarding the

Authority's facilities and system. The City's statement regarding its Department of Public

Works including the "City Engineer" and "various City employees" is wholly inadequate to

show that the city is technically fit to provide the proposed service.

12. The City may not possess requisite financial fitness to provide the proposed

service. The only support the City offers for its claim of financial fitness are the 2004 financial

statements of the Authority. The Authority is not the Applicant. Even i f one year's worth of

financial statements were sufficient to show financial fitness, which they are not, the City's

burden is to demonstrate its own financial fitness at this point in time and on a pro forma basis,

and the City has utterly failed to do so in its application. Furthermore, based on statements made

by the City's Mayor publicly and to the media, the City's sole impetus for the take-back of the

Authority is to balance the City's budget. According to a Lebanon Daily Times article, the

City's Mayor stated that i f the City did not take over the Authority, the City would immediately

fall into debt and would likely be bankrupt within two years. PUC asked to intervene in

takeover, John Latimer, LEBANON DAILY NEWS (January 31, 2006), available at

www.ldnews.com/news/ci 3374337. Perhaps seeking to avoid inspection of the City's

apparenlJy unstable financial situalion, tbe City's Application seeks to put forth the Authority's

2004 financial statements as proof that the City is financially fit to provide the proposed service.

The City has provided none of its own financial statements, nor has the City, in the media, in its

Application, or otherwise, provided any proof that its take-over of the Authority will solve the

City's financial woes. The City is currently financially unstable and is unfit to provide the

proposed service. Simply put, the City's proposal here is not in the interest of water and sewer

customers but rather is for its non-public utility political and financial concerns. While the

Protestants are not unsympathetic with the City's financial plight, the City should not be

permitted to derail the financial and operational soundness of the water and'sewer operation for

its purely political desire to extract more and more money from the water and sewer system9 and

its ratepayers. In short, reaching into the Authority's coffers is not the solution to the City's

situation and there are no upsides—only downsides—to all ratepayers.

13. The City is not legally fit to provide the proposed service. The City's statement

that it will comply with all relevant laws and regulations is inadequate to show legal fitness and

is contradicted by its actions. Indeed, the City's failure to date to make all required filings with

this Commission and to file sufficient information and notice belie its claims that it will comply

with legal requirements.10 The City has already acted in open violation of the Public Utility

Code and the Commission's regulations in several respects. First, the City is currently directly

or indirectly operating the Authority without required certificates of public convenience and

collecting rates from extraterritorial customers that are not set forth in an approved tariff.

9 To make its budget balance on paper, the City has budgeted for 2006 a whopping $2,061,757 in transfers from the water and sewer funds. Because many of these charges may not be permitted into rates by this Commission, the Mayor's scheme has a distinct possibility of failure. 1 0 Despite the City's knowledge ofthe Complaint and Petition for Declaratory Order with respect to the City's take-back ofthe Authority filed by some of the municipalities it intends to serve, the City did not serve a copy of its eleventh-hour application and intended tariff upon any of the municipalities it proposes to serve. This typifies the City's repeated anempts to railroad this ill-conceived plan through with a disregard, at best, for the law, and at worst, with an utter lack of intermunicipal and political relations.

Second, the City has not filed an application for a certificate of public convenience to acquire the

facilities of the Authority that will be used to serve extraterritorial customers as required by

66 Pa.C.S. § 1102(a)(5). Third, the City has not included large volume customers, including

municipal customers, in its Application even though service to these customers is jurisdictional.

WHEREFORE, for all of the reasons set forth above, the Municipalities respectfully

request that the Application of the City of Lebanon to furnish water service in portions of the

Boroughs of Cleona and Jonestown and the Townships of South Annville, North Cornwall,

South Lebanon, North Lebanon, West Lebanon, Union and Swatara, all in Lebanon County,

Pennsylvania be rejected and/or denied in its entirety, that the City be directed to make all

necessary filings, provide all required supporting information, provide notice as required in the

Commission's regulations, and grant such other relief and conditions as appropriate.


Thomas J. Sniscak • Todd S.Stewart Katherine E. Lovette Hawke McKeon Sniscak & Kennard LLP Harrisburg Energy Center 100 North Tenth Street .' POBox 1778 Harrisburg, PA 17105-1778 717-236-1300

DATED: February 9, 2006 Counsel for Cleona Borough, Cornwall Borough, Lebanon County, Municipal Autbority, Fredericksburg Sewer & Water Authority, North Lebanon Township, and West Cornwall Township


CJVJL ACTION LAW

CITY OF LEBANON AUTHORITY * ^

CITY OF LEBANON

No. 2 0 0 5 - 0 1 7 5 8 - r i — % -a

Preliminary Injunction' - \A . • as. &

tjrs

O R D E R

. AND NOW, to wit, December 5, 2005, after consideration of

the coraments of counsel, the Motion for Injunctive Relief filed oh behalf of

the City of Lebanon Authority is granted in pah." • '

Jt is hereby Ordered as follows:

] . The title on the current bank accounts which contain water





of Lebanon Autbority.

2. The provisions ofour December 2, 2005 Order restricting

•certainexpenditures by the "City of Lebanon Authority is

• modified in • th at; payineht" by t he-Authority for past and

Appendix A

continued representation by tbe following parties'is

approved:

a. Samuel G. Weiss, Jr.. Esquire


c. Eckert Seaman



f. An account selected by tbe Authority.

These.parties may be retained to provide advice to the

Authority, including advice with regard to the proposed


City of Lebanon.

3. The two actions currently filed under Action Nos. 2005-

01758 and 2005-01.748 are hereby consolidated for all future

actions. Any future filings shall be made under the single

Action No; 2005-01748.

-2-

4. A3] others aspects ofour Order of December 2,2005 shall

: continue jn full force and effect.

cc: Samuel G. Weiss, Jr., Esquire . Daniel Sullivan, Esquire R. Scot Feeman, Esquire Mark Bradshaw, Esquire

Imm

-3-

VERIFICATION

I, Ri chard D. F i e l d s hereby state that the facts set forth in the


information and belief, and that I expect to be able to prove the same at a hearing in this matter.'



Name : R ichard D. F i e l d s

Vice P res iden t o f Cleona Borough C o u n c i l

1A0 West Walnut S t r e e t

Cleona PA 17042


Dated: February 9 2006

VERIFICATION

I , Kathleen G. Schaeffer , hereby state that the facts set forth in the





Chairperson

Cornwall Borough Municipal Authority

PO Box 667

Cornwall, PA 17016 Title and Business Address

Dated: Februarv 9. 2006

VERIFICATION

I , James A. Heisey, hereby state that the facts set forth in the forgoing document and its

attachments are true and correct to the best of miy knowledge, infonnation and belief, and that I

expect to be able to prove the same at a hearing in this matter. This verification is made subject

to the penalties of 18 Pa.C.S. § 4904 relating to unsworn falsification to authorities.

Fredericksburg Sewer & Water Authority 2529 Route 22, P.O. Box 161 Fredericksburg, PA 17026 (717) 865-7542


VERIFICATION

I , Kenneth C. Artz hereby state that the facts set forth in the


infonnation and belief, and that I expect to be able to prove the same at a hearing in this matter.



North Lebanon T6wnship

Treasurer

725 Kimmerlings Road '

Lebanon PA 17046


Dated: February 9f 2006

VERIFICATION

I, _, hereby state that the facts set forth in the





Name: Russell L. Glbble

West Cornwall Township Supervisors Vice Chairman

73 S. Zinns M i l l Road

Lebanon PA 17042



co m o i-n

\

£ x-rn ro -p. CD CZ-

^3 m o rn rn O


I hereby certify that I have this day served a true and correct copy of the foregoing document upon the persons named by First Class mail:

Kenneth Zielonis, Esquire Stevens & Lee 17 North Second Street 16,h Floor Harrisburg, PA 17101

Irwin A. Popowsky, Esquire Office of Consumer Advocate 555 Walnut Street Forum Place, 5th Floor Hamsburg, PA 17101-1921

Larry E. Stohler, Chairman Lebanon County Board of Commissioners Room 207, Municipal Building 400 South 8th Street Lebanon, PA 17042

William R. Lloyd, Jr., Esquire Office of Small Business Advocate . Commerce Building, Suite 1102 300 North Second Street Harrisburg, PA 17101

Earl H. Meyer, Executive Director Lebanon County Planning Commission Room 206, Municipal Building 400 South 8 th Street " Lebanon, PA 17042

PA Department of Environmental Protection South Central Regional Office 909 Elmerton Avenue Harrisburg, PA 17110

Thomas J. Sniscak



I hereby certify that I have this day served a true and correci copy ofthe foregoing document upon the persons named by the manner described:

Service By First Class Mail:

Kenneth Zielonis, Esquire Stevens & Lee 17 North Second Street 16,il Floor Harrisburg, PA 17101



Timothy D. Sheffey Paul C. Bametzreider Reilly, Wolfson, Sheffey, Schrum & Lundberg LLP 1601 Cornwall Road Lebanon. PA 17042-7406

R. Scot Feeman, Solicitor City of Lebanon 315 South Eighth Sireet Lebanon, PA 17042

David S. Reinharl, CPA 147 Julia Lane Lebanon, PA 17042

Alan M. & Mary Alice Femngton 136 Hillside Street Lebanon. PA 17042

James R. Elliott 2367 Cornwall Road

P.O. Box 361 Lebanon, PA 7042

Joe & Carol A. Nichols 75 Norway Lane Lebanon, PA 17042

Current Resident 170 Norway Lane Lebanon, PA 17042

Stacy L. Simmers 315 Pamela Lane Lebanon, PA 17042

Current Resident 171 Tice Lane Lebanon, PA 17042

Gayle Kohl 218 Karinch Street Lebanon, PA 17042

James L. Messner 175 Maple Lane Lebanon, PA 17042

Current Resident 117 Pine Street Lebanon, PA 17042-8894

Randall D. Rcinoir 134 Juniper Street Cornwall, PA 17016

I f ™ 1

i

m o rn —t

— . T V

CO cr.

i-n

cr.

ZO \

33

m o rn

•

Current Resident 7 Lynch Drive Lebanon, PA 17042

Steven D. Shay 330 Pamela Lane Lebanon. PA 17042

Kathleen K. Kohn 70 Norway Lane Lebanon, PA 17042

David V. Topper 149 Tice Lane Lebanon. PA 17042

Thomas Lauderman 203 Schaeffer Road Lebanon, PA 17042-9773

Charles R. Hopstctter 106 Store Lane Lebanon, PA 17042-9713

John M. Zimmerman 924 Hauck Street Lebanon, PA 17042-7228

Stephen R. Novoscl P.O. Box 12 Rcxmont, PA 17085

Catherine L. Weaver 152 Maple Lane Lebanon, PA 17042

Craig D. & Kay L. Boyer 125 Pine Street Lebanon, PA 17042

Carl F. Brady 106 Park St. Rural Lebanon, PA 17042

Robert P. Beard 313 Juniper Street P. O. Box 76 Cornwall, PA 17016-0076

Martin R. Sarcsck 214 Karinch Street Lebanon, PA 17042

Joseph D. Diffcro 182 Norway Lane Lebanon, PA 17042-9003

Vickie L. Price 852 Boyd Street P.O. Box 17 Cornwall, PA 17016

Joseph Vachlvich P.O. Box 94 12 Water Street Rcxmom. PA 17085

Ann M. Karinch P.O. Box 135 144 Hillside Street Cornwall. PA 17016

Paul C. Bcnganar 276 Tice Lane Lebanon. PA 17042

Current Resident 1 12 Maple Lane Lebanon. PA 17042

Current Resident 136 Iron Master Road Lebanon, PA 17042

Francis A. Fiorentino P.O. Box 273 Cornwall, PA 17016

Suzanne Miller 313 Pamela Lane Lebanon, PA 17042-8946

Current Resident 2387 Cornwall Road Lebanon, PA 17042

Dawn J. Wo lie 125 Juniper Street Cornwall. PA 17016

Steven D. Hassingcr 145 Norway Lane Lebanon, PA 17042

Robert B. Conrad Box 71 Rexmont. PA 17085

Charles Petry 118 Walker Street Cornwall, PA 17016

Ralph S. Forenlino Sr. 361 Boyd Street Box 186 Cornwall, PA 17016

Donald & Beverly Ryland 162 Maple Lane Lebanon. PA 17024

Current Resident 102 Short Street Lebanon, PA 17042

L. Washington 91 Norway Lane Lebanon, PA 17042

Joanne & James S. Follz 171 Schaeffer Road Lebanon, PA 17042

Kenneth H. Carpenter Box 111 Cornwall, PA 17016

Gerard J. Keim 121 Pine Street P.O. Box 322 Cornwall, PA 17016

Charles Gaines 370 Rexmont Road Rexmont, PA 17085

Darlene M. Conrad 8 Water Street Rexmont, PA 17085

C. Andrew Dan P.O. Box 349 Cornwall, PA 17016

Eleanor Howdyshell P.O. Box 124 221 Burd Coleman Road Cornwall, PA 17016

Richard L. Right 142 Hillside Street Lebanon, PA 17042

Bruce E. Light 319 Rexmont Road Lebanon, PA 17042

William D. Hcndrick 161 Norway Lane Lebanon, PA 17042

Lisa Ann Haas 121 North Cornukill Road Lebanon, PA 17042

Current Resident 125 Juniper Street Cornwall, PA 17016

Jerono E. Grace P.O. Box 310

ast

Cornwall, PA 17016

Current Resident 149 Julia Lane Rexmont, PA 17085

Deborah L. Bcmcsderfer 103 Hillside Road Lebanon. PA 17042

Dated: March 6, 2006

Michael A. & Vicki Mohl 305 Spring Street East Lebanon, PA 17042

Carol A. Kleinfelter 108 Park Street Lebanon, PA 17042

Thomas J. Sniscak

IRWIN A. POPOWSKY Consumer Advocate

COMMONWEALTH OF PENNSYLVANIA

OFFICE OF CONSUMER ADVOCATE 555 Walnut Street, 5th Floor. Forum Place

Harrisburg, Pennsylvania 17101-1923 (717) 783-5048

800-684-6560 (in PA only) FAX (717) 783-7152

[email protected]

March 8,2006

Hon. Wayne L. Weismandel Administralive Law Judge PA Public Utility Commission Commonwealth Keystone Building 400 North Street P. 0. Box 3265 Harrisburg, PA 17105-3265

via Electronic Mail & Hand Delivery

Application of the City of Lebanon for a Certificate of Public Convenience authorizing it to commence water service to the public in portions ofthe Boroughs of Cleona and Jonestown and the Townships of South Annville, North Cornwall, South Lebanon, Union and Swatara^ all in Lebanon County, Pennsylvania Docket No. A-220010

Petition of Cleona Borough, Cornwall Borough Municipal Authority and North Lebanon Township for Declaratory Order Docket No. P-00052195

Cleona Borough, Cornwall Borough Municipal Authority and North Lebanon Township v. City of Lebanon Docket No. C-20055689

Petition of West Cornwall Township for Declaratory Order Docket No. P-00062198

West Cornwall Township v. City of Lebanon Docket No. C-20065773

DOCUMENT FOLDER

Dear Judge Weismandel:

Enclosed please Find the Prehearing Memorandum of the Office ^Consumer Advocate in the above-captioned proceedings. ' P

Hon. Wayne L. Weismandel March 8, 2006 Page 2

Copies have been served upon all part.es Utached Certificate of Service.

Very truly yours

of record this date as evidenced by the

Darryl A. Lawrence Assistant Consumer Advocate

Enclosure Cc; AU parties of record 87880.doc: l/DAUsmn


Application of the Cily of Lebanon for a Certificate of Public Convenience authorizing it to commence water service to the public in portions of the Boroughs of Cleona and Jonestown, the Townships of South Annville, North Cornwall, South Lebanon, North Lebanon, West Lebanon, Union and Swatara, all in Lebanon County, Pennsylvania


Cleona Borough, Cornwall Borough Municipal Authority and North Lebanon Township

v.

City of Lebanon



v.

City of Lebanon

A-220010

P-00052195

C-20055689

P-00062198

C-20065773

PREHEARING MEMORANDUM OF THE

OFFICE OF CONSUMER ADVOCATE

Pursuant to Section 333 oflhe Public Utility Code, 66 Pa. C.S. §333, and in response to

the prehearing conference scheduled for March 13, 2006, in the above-captioned matter the

Office of Consumer Advocate (OCA) provides the following information:

DOCUMENT FOLDER

OCKETE NOV 0 7 2005

I. HISTORY OF THE PROCEEDING

On December 22, 2005, Cleona Borough, Cornwall Borough Municipal Authority and

North Lebanon Township filed a Complaint and Request for a Declaratory Order as to the City of

Lebanon's (City) planned takeover of the City of Lebanon Authority (Authority), which provides

water and wastewater service to customers beyond the City's municipal boundaries. On

December 30, 2005, the City filed an Application with the Public Utility Commission (PUC or

Commission) for a Certificate of Public Convenience to provide water service to customers

beyond the City's municipal boundaries. On January 10, 2005, West Cornwall Township filed a

Complaint, Request for a Declaratory Order and a Motion to Consolidate the proceedings,

involving all of the aforementioned actions. Numerous parties have filed Protests to the City's

Application, including many private citizens, and a contingent of Townships and Boroughs

(Municipalities).

On February 14, 2006, the Commission assigned the case to Administrative Law Judge

(ALJ) Wayne L. Weismandel. ALJ Weismandel scheduled a Prehearing Conference for March

13, 2006. On March 8, 2006, the OCA filed its Notice of Intervention.

II. ISSUES

The OCA's primary concern in this matter is whether the City, if its Application is

granted, has the requisite level of technical, financial and administrative expertise to provide safe

and reasonable utility service, at just and reasonable rates, to customers beyond the City's

municipal boundaries. To that end, the OCA will engage in formal and informal discovery with

the Cily.

Until the OCA has conducted extensive discovery, it cannol say with certainty what

further issues may arise in this proceeding. However, the OCA will specifically answer the

questions posed by A U Weismandel in Ordering Paragraph 4 of the Prehearing Conference

Order, as follows:

a. The OCA respectfully submits that removing the Protestors as parties to these

proceedings, who fail to make an in-person appearance at the Initial Prehearing Conference, is

not reasonable in a matter such as this. As stated previously, numerous private citizens have

filed Formal Protests to the City's Application. These private citizens should not be unduly

burdened, through lost wages, child-care expense, travel expenses, etc., by having to appear at a

Prehearing Conference where the main focus will be issues relating to procedural matters. The

OCA understands and agrees with the tenets of Ordering Paragraph 6; however, the OCA

respectfully submits that the requirements imposed by Ordering Paragraph 2 are loo harsh for a

matter that has drawn such significant public attention and involvement.

b. The OCA supports granting the Motion to Intervene of Swatara, Union and

Annville Townships, and Jonestown Borough.

c. The OCA supports granting the Motion to Consolidate of West Cornwall •

Township, as a means to conserve scarce judicial resources and to ensure that all common issues

of fact and law are raised and examined in the same proceeding.

d. The OCA opposes a finding that the Petitions for Declaratory Order are moot.

The OCA submits lhal a fact-based inquiry is needed to arrive at such a decision, and such facts

are nol properly before the ALJ at this time.

e. The OCA is willing to engage in Alternative Dispute Resolution as to this mailer,

including informal negotiations or Commission-sponsored mediation. The OCA submits lhat

earnest settlement talks have the potential to diffuse some of the issues surrounding these

proceedings thai could otherwise lead to protracted and expensive litigation.

f. In order to effectively investigate and adequately develop a record in this matter,

the OCA requests a modification ofthe Commission's procedural rules on a going-forward basis,

as set forth below:

1. Answers to written interrogatories shall be served in-hand within ten (10)

calendar days of service.

2. Objections to interrogatories shall be communicated orally within three (3)

calendar days of service of the interrogatories; unresolved objections shall

be served to the ALJ in writing within five (5) days of service of the

interrogatories.

3. Motions to dismiss objections and/or direct the answering of

interrogatories shall be filed within three (3) calendar days of service of

the written objections.

4. Answers to motions to dismiss objections and/or answering of

interrogatories shall be filed within three (3) calendar days of service of

such motions.

5. Ruling over such motions shall be issued, if possible, within seven (7)

calendar days ofthe filing ofthe motion.

6. Responses to requests for document production, entry for inspection, or

other purposes must be served in-hand wilhin ten (10) calendar days.

7. Requests for admissions will be deemed admitted unless answered wilhin

ten (10) calendar days or objected to within five (5) calendar days of

service.

8. Answers to on-the-record data requests shall be served in-hand within

seven (7) calendar days of the requests.

g. 1. The OCA proposes that any discovery served after 12 noon on a Friday

will be deemed to have been served on the following Monday for purposes

of tracking due dates.

2. The OCA proposes that the due dates be "in-hand" and that electronic or

fax service on the due date will satisfy the "in-hand" requirement, where

such service is immediately followed by a hard copy sent by first-class

mail.

h. The OCA is willing to work with the other parties to develop a mutually

acceptable procedural schedule for litigation purposes, in the event such a schedule becomes

necessary.

i. See OCA Section III.

j . See OCA Section II.

k. See OCA Section III.

I I I . WITNESSES

The OCA intends lo present the direct, rebuttal and surrebuttal testimony, as may be

necessary, of the following witness in this proceeding. The witness will present testimony in

written fonn and will attach various exhibits, documents, and explanatory informalion, which

will assist in the presentation of the OCA's case. In order to expedite the resolution of this

proceeding, the OCA requests that copies of all interrogatories, testimony, and answers to

interrogatories be mailed directly to the expert witness, as well as mailing a copy to counsel for

the OCA.

Accounting and General Tariff Issues:

Marilyn J. Kraus Senior Regulatory Analyst Office of Consumer Advocate 555 Walnut Street, Forum Place 5 lh Floor Harrisburg, PA 17101-1923 717-783-5048 717-783-7152 (fax) [email protected]

The OCA specifically reserves the right to call additional witnesses and expand the scope

of its witnesses' testimony, as necessary. As soon as the OCA has determined whether an

additional witness or witnesses will be necessary for any portion of its case, the OCA will notify

all parties of record.

IV. SERVICE ON THE OCA

Senior Assistant Consumer Advocate Christine M. Hoover and Assistant Consumer

Advocate Darryl Lawrence will represent the OCA in this case. Two copies of all documents

should be served on the OCA as follows:

Darryl Lawrence Assistant Consumer Advocate Christine M. Hoover Senior Assistant Consumer Advocate Office of Consumer Advocate 555 Walnut Street 5th Floor, Forum Place Harrisburg, PA 17101-1923 Telephone: (717) 783-5048 Facsimile: (717) 783-7152 Email: [email protected]

[email protected];

V. PUBLIC INPUT HEARINGS

The OCA is in favor of scheduling public input hearings for this matter, as the issues

involved have generated a significant amount of press coverage and local interest.


Darryl Lawrence Assistant Consumer Advocate Christine M. Hoover Senior Assistant Consumer Advocate

For: Irwin A. Popowsky Consumer Advocate

Office of Consumer Advocate 555 Walnut Street 5th Floor, Forum Place Harrisburg, PA 17101-1923 (717) 783-5048

DATED: March 8, 2006

87860.doc


Application of the City of Lebanon for a Certificate of Public Convenience authorizing it to commence water service to the public in portions ofthe Boroughs of Cleona and Jonestown and the Townships of South Annville, North Cornwall, South Lebanon, Union and Swatara, all in Lebanon County, Pennsylvania Docket No. A-220010





I hereby certify that I have this day served a true copy of the foregoing document.

Office of Consumer Advocate's Prehearing Memorandum, upon parties of record in this proceeding

in accordance with the requirements of 52 Pa. Code § 1.54 (relating to service by a participant), in

the manner and upon the persons listed below:

Dated this 8th day of March, 2006.

SERVICE BY ELECTRONIC MAIL & FIRST CLASS MAIL, POSTAGE PREPAID

Kenneth Zielonis, Esq. Thomas .1. Sniscak

Stevens & Lee Hawke McKeon Sniscak & Kennard LLP 17* North Second Sireet 100 North 10'1' Street 16* Floor P. 0. Box 1778 Harrisburg, PA 17101 Hamsburg, PA 17105

SERVICE BY FIRST CLASS MAIL. POSTAGE PREPAID

City of Lebanon City Hall 400 South 9I,, Street Lebanon, PA 17042

West Cornwall Township 73 S. Zinns Mill Road Lebanon, PA 17042

William R. Lloyd, Jr., Esq. Office of Small Business Advocate Suite 1102, Commerce Building 300 North Second Street Harrisburg, PA 17101

Timothy D. Sheffey, Esq. Reilly Wolfson Sheffey Schrum & Lundberg 1601 Cornwall Road Lebanon, PA 17042

Paul C. Bametzreider, Esq. Reilly Wolfson Sheffey Schrum & Lundberg 160! Cornwall Road Lebanon, PA 17042

DavidS. Reinharl, CPA * 147 Julian Lane Lebanon, PA 17042

Alan M. & Mary Alice Ferrington 136 Hillside Street Lebanon, PA 17042

James R. Elliott 2367 Cornwall Road P. O. Box 361 Lebanon, PA 17042






R. Scot Feeman, Solicitor City of Lebanon 315 South Eighth Street Lebanon, PA 17042



Randall D. Deinoir 134 Juniper Streel Cornwall, PA 17016


Steven D. Shay 330 Pamela Lane Lebanon, PA 17042

Thomas Lauderman 203 Schaeffer Road Lebanon, PA 17042

Charles R. Hopstetter 106 Store Lane Lebanon, PA 17042-9713

John M. Zimmerman 924 Hauck Street Lebanon, PA 17042

Stephen R. Novosel P. O. Box 12 Rexmont, PA 17085





Martin R. Sarcsek 214 Karinch Street Lebanon, PA 17042

Joseph J. Diferro 182 Norway Lane Lebanon, PA 17042


Joseph Yachlvich P. O. Box 94 12 Water Street Rexmont, PA 17085

Ann M. Karinch P. O. Box 135 144 Hillside Street Cornwall, PA 17016

Paul C. Benganar 276 Tice Lane Lebanon, PA 17042

Current Resident 112 Maple Lane Lebanon, PA 17042


Francis A. Fiorentino P. O. Box 273 Cornwall, PA 17016



David V. Topper 149 Tice Lane Lebanon, PA 17042

Current Resident 2387 Cornwall Road Lebanon, PA 17042

Dawn J. Wolfe 125 Juniper Street Cornwall, PA 17016

Steven D. Hassinger 145 Norway Lane Lebanon, PA 17042

Robert E. Conrad Box 71 Rexmont, PA 17085


Ralph S. Forentino Sr. 361 Boyd Street Box 186 Cornwall, PA 17016

Donal & Beverly Ryland 162 Maple Lane Lebanon, PA 17042



Joanne & James S. Foltz 171 Schaeffer Road Lebanon, PA 17042


Gerard J. Keim 121 Pine Street P. O. f3ox 322 Cornwall, PA 17016



C. Andrew Dan P. O. Box 349 Cornwall, PA 17016

Eleanor Howdyshell P. O. Box 124 221 Burd Coleman Road Cornwall, PA 17016



William D. Hendrick 161 Norway Lane Lebanon, PA 17042

Lisa Ann Haas 121 North Cornukill Road East Lebanon, PA 17042


Jerono E. Grace P. O. Box 310 Cornwall, PA 17016

Current Resident 49 Julia Lane Rexmont, PA 17085

4 Deborah L. Bemesdcrfer Michael A. & Vicki Mohl 103 Hillside Road 305 Spring Street East Lebanon, PA 17042 Lebanon, PA 17042

Carol A. Kleinfelter 108 Park Street Lebanon, PA 17042

Christine Maloni Hoover Senior Assistant Consumer Advocate


Counsel for Office of Consumer Advocate 555 Walnut Street 5th Floor, Forum Place Harrisburg, PA 17101-1923 (717) 783-5048 87870.doc;l/CMH/smn

COMIVIONWEALTH OF PENNSYLVANIA

IRWIN A. POPOWSKY Consumer Advocate

OFFICE OF CONSUMER ADVOCATE 555 Walnut Street, 5th Floor, Forum Place

Harrisburg, Pennsylvania 17101-1923 (717) 783-5048

800-684-6560 (in PA only) FAX (717) 783-7152

[email protected]

March 8,2006

.lames J. McNulty, Secretary PA Public Utility Commission Commonwealth Keystone Bldg. 400 North Street Harrisburg, PA 17120

DOCUMENT FOLDER

Application of the City of Lebanon for a Certificate of Puhlic Convenience authorizing it to commence water service to the public in portions ofthe Boroughs of Cleona and Jonestown and the Townships of South Annville, North Cornwall, South Lebanon, Union and Swatara, all in Lebanon County, Pennsylvania Docket No. A-220010






Enclosed please find for filing an original and three (3) copies ofthe Office of Consumer Advocate's Notice of Intervention and Public Statement in each oflhc above-captioned proceedings.

70 m o m <

a

James McNulty, Secretary March 8, 2006 Page 2

Copies have been served upon all parties of record as shown on the attached Certificate of Service.

Sincerely,



Enclosures cc: Hon. Wayne L. Weismandel, ALJ (via Hand Delivery)

All parties of record 87866.doc; l/CMH/smn


Application ofthe City of Lebanon for a Certificate of Public Convenience authorizing It to commence water service to the public in Portions ofthe Boroughs of Cleona and Jonestown, the Townships of South Annville, North Cornwall, Soulh Lebanon, North Lebanon, West Lebanon, Union and Swatara, All in Lebanon County, Pennsylvania


Cleona Borough, Cornwall Borough Municipal Auihority and North Lebanon Township

v.

City of Lebanon



v.

City of Lebanon

A-220010

DOCUMENT FOLDER

P-00052195

C-20055689

P-00062198

C-20065773 rn o

-<->, O C T

cr ZD

2 I

CO

- C -NOTICE OF INTERVENTION

CT CO

o rn —. m c?

Pursuant to 52 Pa. Code Sections 5.71-74, the Office of Consumer Advocate hereby

gives Notice of Intervention in the above-captioned proceedings. A copy of all correspondence and

notices, documents, orders or other communications willi respeel lo the above-captioned proceedings

should be addressed to the following:

Christine Maloni Hoover Senior Assistant Consumer Advocate Darryl Lawrence Assistant Consumer Advocate Office of Attorney General Office of Consumer Advocate 555 Walnut Sireet 5th Floor, Forum Place Harrisburg, PA 17101-1923


Darryl Lawrence Assistant Consumer Advocate

DATED: March 8, 2006

PUBLIC STATEMENT OF THE OFFICE OF CONSUMER ADVOCATE

PURSUANT TO 71 P.S. SECTION 309-4(e)

Act 161 ofthe Pennsylvania General Assembly, 71 P.S. § 309-2, as enacted July 9,

1976, authorizes the Consumer Advocate to represent the interests of consumers before the

Pennsylvania Public Utility Commission (PUC or Commission). In accordance with Act 161, and

for the following reasons, the Consumer Advocate determined to intervene and participate in the

Application, Complaint and Petition proceedings before the PUC involving the City of Lebanon

(City), Boroughs of Cleona and Jonestown, the Townships of South Annville, North Cornwall, West

Cornwall, South Lebanon, North Lebanon, West Lebanon, Union, Swatara and the Cornwall

Borough Municipal Authority (Municipalities).

On December 9,2005, the City adopted Ordinance No. 46. The Ordinance directs the

City of Lebanon Authority (Authority) to turn over all assets ofthe Authority and control thereof to

the City on December 31, 2005. On December 30, 2005, the City filed an Application for a

Certificate of Public Convenience, which if granted, would allow the City to render water service to

the residents ofthe Municipalities, utility customers who live outside the City, an activity that falls

within the jurisdiction ofthe PUC.

The objective of the Consumer Advocate in filing a Notice of Intervention in this

proceeding is to protect the interests of those utility customers, and to ensure that those cuslomers

receive adequate, efficient, safe and reasonable service pursuant to the Public Utility Code, 66

Pa.C.S. § 1501, at just and reasonable rates.

87847.doc _

# #


Application of the City of Lebanon for a Certificate of Public Convenience authorizing it to commence water service to the public in portions of the Boroughs of Cleona and Jonestown and the Townships of South Annville, North Cornwall, South Lebanon, Union and Swatara, all in Lebanon County, Pennsylvania Docket No. A-220010





I hereby certify that I have this day served a true copy ofthe foregoing document,

Office of Consumer Advocate's Notice of Intervention and Public Statement, upon parties of record

in this proceeding in accordance with the requirements of 52 Pa. Code§ 1.54 (relating to service by a

participant), in the manner and upon the persons listed below:

Dated this 8lh day of March, 2006.

SERVICE BY ELECTRONIC MAIL & FIRST CLASS MAIL, POSTAGE PREPAID

Kenneth Zielonis, Esq. Thomas J. Sniscak

Stevens & Lee Hawke McKeon Sniscak & Kennard LLP 17"1 North Second Streel 100 North 10,h Streel }6xh Floor P. O. Box 1778 ^ Harrisburg, PA 17101 Harrisburg, PA 17105

SERVICE BY FIRST CLASS MAIL, POSTAGE PREPAID

City of Lebanon City Hall 400 South 9 ,h Street Lebanon, PA 17042

West Cornwall Township 73 S. Zinns Mill Road Lebanon, PA 17042

William R. Lloyd, Jr., Esq. Office of Small Business Advocate Suite 1102, Commerce Building 300 North Second Street Harrisburg, PA 17101

Timothy D. Sheffey, Esq. Reilly Wolfson Sheffey Schrum & Lundberg 1601 Cornwall Road Lebanon, PA 17042

Paul C. Bametzreider, Esq. Reilly Wolfson Sheffey Schrum & Lundberg 1601 Cornwall Road Lebanon, PA 17042

David S. Reinharl, CPA 147 Julian Lane Lebanon, PA 17042

Alan M. & Mary Alice Ferrington 136 Hillside Street Lebanon, PA 17042

James R. Elliott 2367 Cornwall Road P. O. Box 361 Lebanon, PA 17042






R. Scol Feeman, Solicitor City of Lebanon 315 South Eighth Street Lebanon, PA 17042



Randall D. Deinoir 134 Juniper Street Cornwall, PA 17016


Steven D. Shay 330 Pamela Lane Lebanon, PA 17042

Thomas Lauderman 203 Schaeffer Road Lebanon, PA 17042

Charles R. Hopstetter 106 Store Lane Lebanon, PA 17042-9713

John M. Zimmerman 924 Hauck Street Lebanon, PA 17042

Stephen R. Novosel P. O. Box 12 Rexmont, PA 17085




Paul C. Benganar 276 Tice Lane Lebanon, PA 17042



David V. Topper 149 Tice Lane Lebanon, PA 17042


Martin R. Sarcsek 214 Karinch Street Lebanon, PA 17042

Joseph J. Diferro 182 Norway Lane Lebanon, PA 17042


Joseph Yachlvich P. O. Box 94 12 Water Street Rexmont, PA 17085

Ann M. Karinch P. O. Box 135 144 Hillside Street Cornwall, PA 17016

Current Resident 112 Maple Lane Lebanon, PA 17042

Francis A. Fiorentino P. O. Box 273 Cornwall, PA 17016


Cunent Resident 2387 Cornwall Road Lebanon, PA 17042

Dawn J. Wolfe 125 Juniper Street Cornwall, PA 17016

Steven D. Hassinger 145 Norway Lane Lebanon, PA 17042



Robert E. Conrad Box 71 Rexmont, PA 17085

C. Andrew Dan P. O. Box 349 Cornwall, PA 17016


Ralph S. Forentino Sr. 361 Boyd Streel Box 186 Cornwall, PA 17016

Eleanor Howdyshell P. O. Box 124 221 Burd Coleman Road Cornwall, PA 17016


Donal & Beverly Ryland 162 Maple Lane Lebanon, PA 17042




William D. Hendrick 161 Norway Lane Lebanon, PA 17042

Lisa Ann Haas 121 North Cornukill Road East Lebanon, PA 17042

Joanne & James S. Follz 171 Schaeffer Road Lebanon, PA 17042



Jerono E. Grace P. O. Box 310 Cornwall, PA 17016

Gerard J. Keim 121 Pine Streel P. O. Box 322 Cornwall, PA 17016

Curreni Resident 49 Julia Lane Rexmont, PA 17085

Deborah L. Bemesderfer Michael A. & Vicki Mohl 103 Hillside Road 305 Spring Street East Lebanon, PA 17042 Lebanon, PA 17042

Carol A. Kleinfelter 108 Park Streel Lebanon, PA 17042



Counsel for Office of Consumer Advocate 555 Walnut Street 5th Floor, Forum Place Harrisburg, PA 17101-1923 (717) 783-5048 87870.doc;l/CMM/snin

commonwealth of pennsylvania memogerard j keim 121 pine street po box 322 cornwall pa 17016 jerono e...

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