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PENNSYLVANIA PUBLIC UTILITY COMMISSION

Petition of the City of Titusville for a Declaratory Order that the Provision of Water Service to Isolated Customers in the Townships of Oil Creek and Cherrytree Does Not Constitute Provision of Public Utility Service Under 66 Pa.C.S. § 102

[44 Pa.B. 2829]
[Saturday, May 10, 2014]

Public Meeting held
April 23, 2014

Commissioners Present: Robert F. Powelson, Chairperson; John F. Coleman, Jr., Vice Chairperson; James H. Cawley; Pamela A. Witmer; Gladys M. Brown

Petition of the City of Titusville for a Declaratory Order that the Provision of Water Service to Isolated Customers in the Townships of Oil Creek and Cherrytree Does Not Constitute Provision of Public Utility Service Under
66 Pa.C.S. § 102; Doc. No. P-2013-2376600

Tentative Order

By the Commission:

 On July 29, 2013, the City of Titusville (the City or Titusville), filed the above-captioned petition (Petition) for a declaratory order. In accordance with 52 Pa. Code § 5.42, the City served a copy of its Petition on the Office of Consumer Advocate (OCA), the Office of Trial Staff (OTS),¹ the Office of Small Business Advocate (OSBA) and each of the 101 customers located outside of the City's corporate limits. Titusville also served a copy of the Petition on the Boards of Supervisors of the two townships in which the 101 affected customers reside, namely, Oil Creek and Cherrytree Townships. No answers were filed to Titusville's Petition.

 Section 331(f) of the Public Utility Code provides that the Commission ''may issue a declaratory order to terminate a controversy or remove uncertainty.'' 66 Pa.C.S. § 331(f). In its Petition, the City seeks a determination that its provision of water service to the 101 extraterritorial customers does not make the water service subject to the Commission's jurisdiction. The City asserts that the service it provides to these 101 customers is not service ''to or for the public'' within the meaning of Section 102 of the Public Utility Code. 66 Pa.C.S. § 102.

 In its Petition, the City states that it has a total of 2,454 customers. The City has approximately 5,600 residents concentrated in a 2.6 square mile area, and 2,353 customers within the City.² The City also states that it is primarily residential and is adjoined on the north, east and west sides by the Township of Oil Creek located in Crawford County, and on the south by the Township of Cherrytree located in Venango County.

 The City provides water service to nine customers in Cherrytree Township, which is overwhelmingly rural and agricultural, and 92 customers in Oil Creek Township, which is also overwhelmingly rural and agricultural. Of the nine customers in Cherrytree Township, all but one are residential customers and the remaining customer is a park owned by the Commonwealth of Pennsylvania. The customers within Oil Creek Township are primarily residential, but include a small number of businesses, the Township of Oil Creek's office building, and one church.

 According to the City's Petition, the 101 customers outside of the City's corporate limits are in close proximity to the City's boundaries and the City's water mains. The customers in Cherrytree Township, beginning in the 1940s, were allowed to connect to the City's water main for, as described by the City, ''unknown reasons'' other than their location to the City's water main. Petition at 2. The customers in Oil Creek Township who have connected to the City's water mains are generally located in the area of Route 8, which traverses the City, North Perry Street and West Spring Street. According to the City, these connections have existed prior to 1970 and it is similarly unknown why the connections were permitted other than location. The City points out that, prior to last year, the City's water system and assets were owned by the Titusville Municipal Authority (Authority); however, the Authority was dissolved in 2013.³

 Finally, the City has stated that the City does not, and never has held itself out as engaged in the business of supplying water to the public. As stated previously, the customers in Cherrytree and Oil Creek Townships were permitted to connect to the City's mains because the customers were in close proximity to the City's boundaries and existing City water mains. Moreover, the City avers that it has never built or extended a water line or water main in order to serve or obtain more customers in Cherrytree or Oil Creek Townships.

 Titusville has requested by this Petition a declaration that the City is not subject to the Commission's jurisdiction so that it may save the cost and time burdens of tariff and reporting requirements, while simultaneously ensuring that these nonresident customers continue to receive water service under terms that are acceptable to the Commission and the customers.⁴

 Based upon our consideration of these facts and circumstances, the Commission finds that it is appropriate to issue a Declaratory Order in response to the subject Petition.

 Initially, it should be emphasized that the City has passed an ordinance, dated June 18, 2013, that provides that the City will apply the same rules, regulations, and rates to the customers outside as those within City limits.⁵ Additionally, attached to the Petition is an affidavit of the Mayor of Titusville stating that the City will not repeal or modify the aforementioned ordinance without providing advance notice to the Commission. These commitments were made to ensure that the 101 extraterritorial customers will not be subject to potential discrimination without the opportunity for Commission oversight.

 In the Commission's judgment, the circumstances here are similar to those presented to the Commission in the matters of Lehigh Valley Cooperative Farmers v. City of Allentown, 54 Pa. P.U.C. 495 (1980); Petition of New Albany Borough, Docket No. P-00991775, 200 Pa. PUC Lexis 34 (2000); Petition of Laceyville Borough, Docket No. P-2008-2064117 (2008) and Petition of Cochranton Borough, Docket No. P-2008-2035741 (2009), wherein the Commission concluded that service to a number of isolated individuals outside of the municipal boundaries under special circumstances did not constitute public utility service subject to the Commission's jurisdiction.

 In Lehigh Valley, New Albany Borough, Laceyville Borough and Cochranton Borough, the Commission reiterated that the test to determine whether a party is rendering service to the public is set forth in Borough of Ambridge v. Pa. Public Service Commission, 165 A. 47 (Pa. Super. 1933). In Ambridge, the Commission noted,

We find the distinction between public and private rendition of such service put definitely on the readiness to serve all members of the public to the extent of capacity: The test is, therefore whether or not such person 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. The public or private character of the enterprise does not depend, however, upon the number of persons by whom it is used, but upon whether or not it is open to the use and service of all members of the public who may require it, to the extent of its capacity; and the fact that only a limited number of persons may have occasion to use it does not make it a private undertaking if the public generally has a right to such use.

 See also, Petition of Chicora Borough, P-00981355 (May 22, 1998).

 More recently, the Commission applied the same rationale in Joint Application of Seven Fields Development Corporation, A-220007 and A-210062F2000 (October 1, 1999). In that case, the Commission granted an application filed by a jurisdictional utility seeking to transfer its assets used in the operation of its water system to the Borough of Seven Fields. The Commission noted that the borough would be providing water service to three customers that were located outside of the borough's limits. Moreover, the Commission took note of the fact that the borough committed to continue providing water service solely to these three customers at the same terms of service as are or will be offered to customers within the boundaries of the borough. Also, as in the instant case, the Borough of Seven Fields presented an affidavit to the effect that it did not intend to offer service to the general public outside of its boundaries in the future. In the Seven Fields case, the Commission concluded that the limited nature of water service to such a defined group of customers should not realistically be subject to its jurisdiction. (Order at p.4).

 In Pilot Travel Center, LLC v. Pa. Public Utility Commission, 933 A.2d 123 (Pa. Cmwlth. 2007), appeal denied, 938 A.2d 1054 (Pa. 2007), the Commonwealth Court, in affirming the Commission's view on this issue, concluded:

The test for determining whether utility services are being offered ''for the public'' is whether or not such person 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 distinguished from holding himself out as serving or ready to serve particular individuals. The private or public character of a business does not depend upon the number of persons who actually use the service; rather, the proper characterization rests upon whether or not the service is available to all members of the public who may require it.

933 A.2d at 128.

 In applying the standards enunciated in Ambridge, Lehigh Valley, Seven Fields, Laceyville Borough, Cochranton and Pilot Travel Center to the facts of the case sub judice, we find that the limited extraterritorial service provided by the City is not subject to Commission jurisdiction. The extraterritorial service being provided by Titusville is provided to a limited number of customers and is not available to the general public. Moreover, the City clearly states that it will continue to provide service solely to the 101 customers that it is presently serving outside of its boundaries and that it is not soliciting additional customers nor will it provide service to any additional extraterritorial customers in the future. Indeed, Titusville, by way of this Petition, has assured the Commission that it has no intention of ever offering water service to any other customers that are located outside of the City corporate limits.⁶ Moreover, the City is not holding itself out as providing service to the public. See Bethlehem Steel Corp. v. Pa. Public Utility Commission, 713 A.2d 1110 (Pa. 1998). Based upon the facts as stated in the City's Petition, the service by Titusville to the 101customers in Oil Creek and Cherrytree Townships who are located in close proximity to the City's water mains does not constitute the provision of water service to or for the public.

 Finally, we note that an express condition of this exemption is that the City apply the same rates outside as well as within the City's corporate limits and that the City does not add any additional customers outside of Titusville's corporate limits. Absent any contrary responses from concerned parties, the Commission herein concludes that the extraterritorial service provided by Titusville is not subject to the jurisdiction of this Commission; Therefore,

 It Is Ordered That:

 1. The Petition for Declaratory Order filed by the City of Titusville on July 29, 2013, at Docket No. P-2013-2376600 is hereby granted.

 2. The provision of water service by the City of Titusville to the 101 customers located outside of the City's boundaries is deemed to be non-jurisdictional because it is not service ''to or for the public'' within the intendment of Section 102 of the Public Utility Code, 66 Pa.C.S. § 102.

 3. A copy of this Tentative Order shall be served upon the City of Titusville and each of the individuals and offices listed in Titusville's certificate of service.

 4. The Secretary shall certify this Tentative Order and deposit it with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin.

 5. The City of Titusville is directed to cause to be published in a newspaper of general circulation in the Titusville area notice of this Tentative Order.

 6. If no objection to this Tentative Order is filed with the Commission within 20 days of the publication date in the Pennsylvania Bulletin, this Tentative Order shall become final.

ROSEMARY CHIAVETTA, 
Secretary

[Pa.B. Doc. No. 14-1021. Filed for public inspection May 9, 2014, 9:00 a.m.]

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¹  Due to the restructuring at the Commission, OTS is now part of the Commission's Bureau of Investigation and Enforcement (hereinafter ''I & E'').

²  Titusville is a third class City under Pennsylvania classifications and is located in the southeast corner of Crawford County, Pennsylvania. The City was founded by Jonathan Titus in 1796 and incorporated as a City in 1866. Under Section 102 of the Public Utility Code, the City is a municipal corporation.

³  The Titusville Municipal Authority was created in 1955 as a financing authority as opposed to a bona fide operating municipal authority, which would be exempt from Commission regulation. However, over the years, the Authority discontinued meeting on a regular basis and in 2013, Titusville City Council voted to disband the Authority.

⁴  Titusville has indicated that the rates, terms and conditions of service for the 101 customers outside of the City are identical to the rates, terms and conditions of service of customers inside of the City. Specifically, by way of an email dated February 19, 2014, the City has indicated that Titusville customers, both inside and outside of the City, pay a base rate of $5.89, a readiness to serve charge of $6.00, and a water usage rate of $1.45 per thousand gallons.

⁵ By email dated February 19, 2014, Titusville confirmed that the ordinance remains in full force and effect.

⁶  At various points around the City's boundaries, there are tracts of vacant land that could be developed for housing or commercial use. If that occurs, the City has indicated that it will not allow any connections to its mains. Similarly, there are occupied structures situated close to, but beyond, the City's boundaries that are not, but could be connected. They are served by their own wells. Again, the City has indicated that they will not allow these individuals to connect to the City's mains. Petition at 2 and 3.

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