Tentative Order [41 Pa.B. 3655]
[Saturday, July 2, 2011]Public Meeting held
June 9, 2011Commissioners Present: Robert F. Powelson, Chairperson; John F. Coleman, Jr., Vice Chairperson; Tyrone J. Christy; Wayne E. Gardner; James H. Cawley
Hopkins & Reedy Water Company;
A-211425Tentative Order By the Commission:
Hopkins & Reedy Water Company (Hopkins & Reedy or the company) is a water utility certificated at A-211425. Upon our own motion and based on the facts described below, this Commission will cancel the operating authority issued to Hopkins & Reedy.
Background
Hopkins & Reedy, a private water utility, is located in Summit Station, Wayne Township, Schuylkill County, Pennsylvania and serves exclusively residents living in the Blue Mountain Heights trailer park. The trailer park itself sits on a mountainside and the water provided to the customers by Hopkins & Reedy comes from untreated well water. While the company currently goes by the name of Blue Mountain Heights Water Company that name change was never approved by the Commission and so for purposes of this Order we will refer to the company by the name on its certificate of public convenience, Hopkins & Reedy Water Company.
In September 2009, Law Bureau Prosecutory Staff (Prosecutory Staff or Staff) attempted to file a Formal Complaint at C-2009-2130647 against Hopkins & Reedy for failure to file its 2007 Annual Report, but the complaint came back as refused, return to sender. This failure to serve the complaint triggered an investigation by Staff to determine the reason for the refusal that eventually led into a more extensive review into the current operations of the company, including changes in ownership of the company that the Commission was previously unaware of and the possible transfer to yet another owner.
Prosecutory Staff learned the following additional facts from its investigation. On August 19, 1996, Messrs. William Hopkins and Melvin Reedy transferred the property (approximately 1.8 acres) upon which the wells used by the company rest to Ms. Ella Purcell, for $1.1 Ms. Purcell is a cousin to Mr. Hopkins' wife. This transfer was never submitted to the Commission for approval. Ms. Purcell later became Mrs. Ella Stamm through marriage.
Following the transfer, Mr. Reedy moved to New Jersey while Mr. Hopkins still lives in the trailer park. Since the transfer, neither gentleman has anything to do with the operations of the water system or the company. For her part, Mrs. Stamm advised Staff that she had little interest in running the day-to-day operations of the company either, so she turned over its daily operations to Mrs. Shirley Hopkins, Mr. Hopkins' wife. In June 2010, a young man by the name of Adam Spotts came forward and was interested in acquiring the company. At that point, Mrs. Stamm allowed Mr. Spotts to become the acting manager for the company managing its day-to-day operations, and he is currently listed in the Commission records as the person responsible at Hopkins & Reedy for assessment issues. Since becoming the active supervisor, Mr. Spotts has been very cooperative with Staff in responding to data requests and in seeking out the correct steps to submit an application of transfer.
Currently, Hopkins & Reedy has a total of seventeen connections served by two wells with two pumps and a third well as a back up without a pump. The number of connections has slowly decreased over the years as past customers installed their own well on their property or moved away. Moreover, most of the company's customers refuse to pay their water bill yet the company has not cut anyone off from service for failure to pay their water bill. Additionally, according to Mrs. Stamm and Mr. Spotts, Hopkins & Reedy has not had a new customer for many years and does not advertise for or otherwise solicit new customers. They further attested that the water system used by Hopkins & Reedy (two wells providing untreated water to the residents of the trailer park) is very primitive in nature with virtually no capacity for growth or expansion.
Since initially expressing interest in acquiring Hopkins & Reedy, Mr. Spotts has decided against taking ownership because of concerns that the Pennsylvania Department of Environmental Protection could require the company to invest in expensive purifying equipment to treat the well water, and the fact that most of the customers refuse to pay for their water. With the potential sale falling through, effective April 1, 2011, Hopkins & Reedy instead began to supply water to its existing customers at no charge with the understanding that any repairs or maintenance necessary to the system will be the responsibility of the individual homeowners affected. Similarly, according to Mrs. Stamm and Mr. Spotts, the monthly electric bills to run the wells must still be paid and will be divided equally among the customers using the water and any customer refusing to pay their share of the electric bill will be cut off from service. They also advise that if there is a future requirement to install new or upgraded equipment, the costs will be shared equally by all users of the system. Finally, Mr. Spotts has advised that he is actively seeking another water utility to take over the system from Hopkins & Reedy and has approached several water utilities to determine their interest in acquiring Hopkins & Reedy's customers.
Discussion
The Public Utility Code (''Code''), 66 Pa.C.S. § 102 (relating to definitions), provides in relevant part:
''Public Utility''
(1) Any person or corporations now or hereafter owning or operating in this Commonwealth equipment or facilities for:
* * * * * (ii) Diverting, developing, pumping, impounding, distributing, or
Furnishing water to or for the public for compensation. 66 Pa.C.S. § 102. Given that Hopkins & Reedy, effective April 1, 2011, is no longer charging for its water services, the company does not meet the definition of a public utility because it is not ''furnishing water to or for the public for compensation.'' Id. (emphasis added).
Even if the company was charging customers for its water, however, we believe that there are other grounds to support the conclusion that Hopkins & Reedy is not a public utility. First, the water system currently in operation was constructed to serve exclusively the residents living within the trailer park's limits. The facts reveal that the company draws all its water supply from two ground wells, a primitive water system with limited flow capacity and virtually no ability for growth or expansion. Any such growth or expansion would require significant capital expenditures to make the infrastructure improvements necessary to serve members of the public living outside of the trailer park. See Pilot Travel Centers LLC v. Pa. Pub. Util. Comm'n, 933 A.2d 123 (Pa. Cmwlth. 2007) (court found that a sewage treatment facility was not a ''public utility'' as it never solicited the public to connect to the sewage facility and because of its ''limited flow capacity,'' it was not really available to all members of the public but rather its services were provided to a defined, privileged and limited group); Re Hazelton Assoc. Fluidized Energy, Inc., 62 Pa.P.U.C. 619 (1986) (holding that company was not a ''public utility'' because it would not be physically able to serve any significant, additional load of users without a major overhaul and upgrading of its system's capacity).
This conclusion is further supported by the fact that during its entire existence, Hopkins & Reedy has only served park residents and has never served any persons living outside of the trailer park. The untreated water that Hopkins & Reedy provides from its two wells is not available to the public at large but rather is confined to a defined, privileged, limited group of Blue Mountain Heights trailer park residents. See Drexelbrook Assoc. v. Pa. Pub. Util. Comm'n, 212 A.2d 237, 240 (Pa. 1965) (Court held that proposed utility service to only the tenants of a large apartment complex did not qualify as a ''public utility'' because ''those to be serviced consist[ed] only of a special class of persons—those to be selected as tenants—and not a class open to the indefinite public'' so that the tenants ''constitute[d] a defined, privileged and limited group and the proposed service to them would be private in nature''); Pilot Travel, 933 A.2d at 128-29. Finally, even within the trailer park itself, Hopkins & Reedy has not acquired nor has it solicited new customers in many years. See Pilot Travel, 933 A.2d 128 (in finding that sewage treatment facility was not a public utility, court relied in part on fact that the plant had never solicited the public to connect to it).
These findings are also consistent with our recently promulgated guidelines for determining public utility status at 52 Pa. Code § 69.1401(c)(2) & (3). These guidelines provide that an entity is not a public utility if the facility is designed and constructed only to serve a specific group of persons or entities and others cannot be feasibly served without a significant upgrade in the facilities or when the service is provided to a defined, privileged and limited group.
Finally, Hopkins & Reedy is no longer holding itself out as offering to provide water service ''to or for the public.'' 66 Pa.C.S. § 102 (relating to definitions). A critical factor as to whether an entity is providing public utility service is whether or not a supplier ''holds himself out, expressly or impliedly, as engaged in the business of supplying his product or service to the public, as a class, or to any limited portion of it, as contradistinguished from holding himself out as serving or ready to serve only particular individuals.'' Waltman v. Pa. Pub. Util. Comm'n, 596 A.2d 1221, 1223 (Pa. Cmwlth. 1991) (emphasis in original), citing Drexelbrook v. Pa. Pub. Util. Comm'n, 212 A.2d 237, 239 (Pa. 1965). At this point, the facts indicate that Hopkins & Reedy is in a state of business decline, is no longer offering to serve additional customers and, more specifically, has limited water service to existing customers on a cost sharing basis. Accordingly, the lack of holding itself out as offering to provide water ''to or for the public'' also indicates that Hopkins & Reedy no longer qualifies as a public utility under Pennsylvania law. Based on these facts, we find that Hopkins & Reedy, in its present operations, is not acting as a public utility; Therefore,
It Is Ordered That:
1. The provision of water service by Hopkins & Reedy Water Company to the seventeen households in the Blue Mountain Heights' trailer park is deemed to be non-jurisdictional because it is not service ''to or for the public for compensation'' within the meaning of section 102 of the Public Utility Code, 66 Pa.C.S. § 102.
2. A copy of this Order shall be served upon the Office of Consumer Advocate, the Office of Small Business Advocate, the Office of Trial Staff, Hopkins & Reedy Water Company and upon each of Hopkins & Reedy Water Company's seventeen household customers.
3. The Secretary shall certify this Order and deposit it with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin with a 30-day comment period.
4. Absent the filing of adverse public comment relating to the Commission's intent to cancel the Hopkins & Reedy Water Company certificate of public convenience within 30 days after publication in the Pennsylvania Bulletin, this Tentative Order shall become final without further action by the Commission.
5. Upon this order becoming final, the Commission's Secretary's Bureau shall cancel the operating authority of Hopkins & Reedy Water Company at A-211425 and mark this file as closed and shall remove Hopkins & Reedy Water Company from all active utility lists maintained by the Commission's Bureau of Fixed Utility Services and the Assessment Section of the Bureau of Administrative Services.
By the Commission
ROSEMARY CHIAVETTA,
SecretaryEXHIBIT A BEFORE THE
PENNSYLVANIA PUBLIC UTILITY COMMISSIONIn re: Hopkins & Reedy Water Co. : A-211425 : JOINT AFFIDAVIT OF
ADAM SPOTTS AND ELLA STAMMI, Adam Spots, and I, Ella Stamm, being duly sworn, depose and say:
1. Ella Stamm is the current owner of Hopkins & Reedy Water Company (Hopkins & Reedy), also known as Blue Mountain Heights Water Company, and Adam Spotts is the current acting manager of Hopkins & Reedy.
2. Hopkins & Reedy, a private water utility, is located in Summit Station, Wayne Township, Schuylkill County, Pennsylvania and serves exclusively residents living in the Blue Mountain Heights trailer park. The trailer park itself sits on a mountainside and the water provided to the customers by Hopkins & Reedy comes from untreated well water.
3. On August 19, 1996, the then current owners of Hopkins & Reedy, transferred the property (approximately 1.8 acres) upon which the wells used by the company to Ms. Ella Purcell, for $1. Ms. Purcell is a cousin to Mr. Hopkins' wife, Shirley Hopkins. Ms. Purcell later became Ms. Ella Stamm through marriage.
4. Following the transfer, Mr. Reedy moved to New Jersey while Mr. Hopkins still lives in the trailer park. Since the transfer, neither gentleman has anything to do with the operations of the water system or the company.
5. Ms. Stamm had little interest in running the day-to-day operations of the company so she turned over its daily operations to Shirley Hopkins. In June 2010, Adams Spotts inquired about acquiring Hopkins & Reedy and shortly thereafter Ms. Stamm allowed Mr. Spotts to become the acting manager for Hopkins and Reedy managing its day-to-day operations while Mr. Spotts worked with Commission Staff on the steps necessary to acquire the company. Since taking over as acting manager, Mr. Spotts is listed in the Commission records as the person responsible at Hopkins and Reedy for assessment issues.
6. Currently, Hopkins and Reedy has a total of 17 connections served by two wells with two pumps and a third well as a back up without a pump. The number of connections has slowly decreased over the years as past customers installed their own well on their property or moved away. Moreover, most of the company's customers refuse to pay their water bill yet the company has not cut anyone off from service for failure to pay their water bill.
7. Hopkins & Reedy has not had a new customer for many years and does not advertise for or otherwise solicit new customers. In addition, the Hopkins & Reedy water system consisting of two wells providing untreated water to the residents of the trailer park is very primitive in nature with virtually no capacity for growth or expansion.
8. Since initially expressing interest in acquiring Hopkins & Reedy, Mr. Spotts has had second thoughts about taking ownership because of concerns that the Pennsylvania Department of Environmental Protection could require the company to invest in expensive purifying equipment to treat the well water, and the fact that most of the customers refuse to pay for their water.
9. Effective April 1, 2011, Hopkins & Reedy began to supply water to its existing customers at no charge with the understanding that any repairs or maintenance necessary to the system will be the responsibility of the individual homeowners affected.
10. Going forward from April 1, 2011, the monthly electric bills to run the wells will be divided equally among the customers using the water and any customer refusing to pay their share of the electric bill will be cut off from service. If there is a future requirement to install new or upgraded equipment, the costs will be shared equally by all users of the system.
11. Mr. Spotts is actively seeking another water utility to take over the system from Hopkins & Reedy and has approached several water utilities to determine their interest in acquiring Hopkins & Reedy's customers. These efforts are ongoing.
We swear the foregoing is true and correct to the best of our knowledge, information and belief.
[Pa.B. Doc. No. 11-1117. Filed for public inspection July 1, 2011, 9:00 a.m.] _______
1 The facts provided in this Background Section of the Order are supported by the Joint Affidavit of Adam Spotts and Ella Stamm, dated April 18, 2011, follows as Exhibit A to this Order.
