NOTICES
Tentative Order
[32 Pa.B. 5377] Public Meeting held
October 10, 2002Commissioners Present: Glen R. Thomas, Chairperson, statement follows; Robert K. Bloom, Vice Chairperson; Aaron Wilson, Jr.; Terrance J. Fitzpatrick, statement dissenting in part follows; Kim Pizzingrilli
Application of Tri-Valley Water Supply, Inc. for approval of the transfer of control of the utility from the present majority owners to their son; Doc. No. A-211890F5000
Tentative Order By the Commission:
On March 29, 2002, Tri-Valley Water Supply, Inc. (Tri-Valley) filed the previously-captioned application pursuant to Chapter 11 of the Pennsylvania Public Utility Code, 66 Pa.C.S. §§ 1101--1103. Tri-Valley filed along with this application, under Chapter 19 of the Code, 66 Pa.C.S. § 1901, a securities certificate separately docketed at S-00020899. Copies of the filings were served upon the Office of Consumer Advocate and the Office of Small Business Advocate. Notice was published in the Pennsylvania Bulletin and in two newspapers of general circulation, and the protest period ended June 3, 2002, with no protests or other comments having been received. On August 27, 2002, Tri-Valley filed an amendment to the joint filing. We have since bifurcated these filings for separate disposition inasmuch as the amended securities certificate has no direct relevance to the instant application.
Tri-Valley operates three water distribution systems in northeastern Pennsylvania. Operations in the Cypress Park Subdivision and in the Stone Ridge Manor Subdivision are in Carbon County. Those in the El-Do Lake Subdivision are in Monroe County. Each system is operated as a division of Tri-Valley, and each is physically separate. The service in the El-Do Lake division is governed by a separate tariff.
Via the instant application, Tri-Valley has proposed a transfer of control of the utility. The Company is currently owned by Anthony H. and Lucille P. Sander and their son, Gregory Sander. The parents together have a controlling equity and voting interest, owning 1,900 shares each out of 4,000 shares outstanding. Gregory Sander owns the remaining 200 shares. All three members of the Sander family currently participate in the management and operation of the utility, and the elder Sanders both wish now to retire from the utility and to sell all their stock in Tri-Valley. The Sanders and Tri-Valley had entered into an Agreement for Sale of Stock pursuant to which Tri-Valley would buy back the shares of Mr. and Mrs. Sander and hold the shares as treasury stock. A repurchase by the utility would leave Gregory Sander as owner of 100% of the new total of 200 shares outstanding, and he would thereby have absolute control of the utility.
In the amended application, Tri-Valley now seeks the approval of the Commission for transfer of control of Tri-Valley to Gregory Sander through his direct acquisition of the 1,900 shares of stock owned by Anthony H. Sander and the 1,900 shares of stock owned by Lucille P. Sander. Commission approval of the transaction is still required by section 1102(a)(3) of the Public Utility Code, 66 Pa.C.S. § 1102(a)(3), and 52 Pa. Code § 69.901. The acquisition of his parent's stock will, however, no longerbe financed by debt of the utility, and the amended securities certificate now deals only with the refinancing of existing debt.
The purchase price of the stock is to be $225,000, financed by a loan directly to Gregory Sander, the terms of which are not of regulatory significance to the Commission. Upon approval of the instant application, Gregory Sander will become owner of 100% of the 4,000 shares outstanding, and he will thereby have absolute control of the utility.
We turn now to another matter that has arisen during Commission analysis of the instant filings, but which is altogether separate from Tri-Valley's application and securities registration filing. In its annual reports filed for the calendar years 1998, 1999 and 2000, Tri-Valley seems to have reported financial data that, for most categories, is identical to the data reported in its 1997 report.
Utilities are also required to report their revenues from water sales to the Commission annually, to be employed in the allocation of assessments among Pennsylvania utilities. For these separate reports, Tri-Valley did show generally increasing operating revenues, but revenues that were lower than similar revenues reported in the annual reports.
Staff sent a request for additional data in connection with the instant filing in which it asked for a list of various classes of revenues for 1995 to 2000. Tri-Valley's responses to the request provided yet a different set of revenues. Additionally, the Company has not yet filed its annual report for the year 2001. We take these matters seriously, and fully expect Tri-Valley to provide the Commission with accurate information in a timely manner.
Having reviewed this filing of Tri-Valley, we have tentatively determined that Tri-Valley has shown that Gregory Sander possesses the requisite operational fitness to provide a seamless transition of ownership while allowing the elder Sanders to relinquish the responsibilities of management as they desire. The proposed transaction thus appears to meet the standard set by City of York v. Pennsylvania Public Utility Commission, 446 Pa. 136, 295 A.2d 825 (1972), that the change in control provide an affirmative public benefit; Therefore,
It Is Ordered That:
1. The application of Tri-Valley Water Supply, Inc. concerning the transfer of control resulting from the proposed sale of stock is hereby tentatively approved as in the public interest.
2. A copy of this Tentative Order be published in the Pennsylvania Bulletin giving the public 10 days from the date of publication to file written comment or request oral hearing.
3. Absent the filing of adverse public comment or request for oral hearing within 10 days from the date of publication pursuant to Ordering Paragraph No. 2, this Tentative Order shall become final without further order of the Commission.
4. Upon this Tentative Order becoming final pursuant to the provisions of Ordering Paragraph No. 3, the Secretary shall issue to Tri-Valley Water Supply, Inc. a certificate of public convenience consistent with ordering Paragraph No. 1.
5. Within 30 days of the entry date of this tentative order, Tri-Valley Water Supply, Inc. file amended annual reports for the years 1998, 1999 and 2000, as well as its 2001 Annual Report.
JAMES J. MCNULTY,
Secretary
[Pa.B. Doc. No. 02-1930. Filed for public inspection October 25, 2002, 9:00 a.m.]
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