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PENNSYLVANIA PUBLIC UTILITY COMMISSION

Petition of the Borough of Driftwood for a Declaratory Order that the Provision of Water Service to Isolated Customers Adjoining its Boundaries Does Not Constitute the Provision of Public Utility Service Under 66 Pa.C.S. § 102

[47 Pa.B. 3678]
[Saturday, July 1, 2017]

Public Meeting held
June 14, 2017

Commissioners Present: Gladys M. Brown, Chairperson; Andrew G. Place, Vice Chairperson; John F. Coleman, Jr.; Robert F. Powelson; David W. Sweet

Petition of the Borough of Driftwood for a Declaratory Order that the Provision of Water Service to Isolated Customers Adjoining its Boundaries Does Not Constitute the Provision of Public Utility Service Under
66 Pa.C.S. § 102; P-2016-2533069

Order

By the Commission:

 On March 7, 2016, the Borough of Driftwood (the Borough or Driftwood), filed the above-captioned petition (Petition) for a declaratory order. In accordance with 52 Pa. Code § 5.42, the Borough served a copy of its Petition on the Office of Consumer Advocate (OCA), the Bureau of Investigation and Enforcement (I&E), the Office of Small Business Advocate (OSBA) and each of the 40 customers located outside of the Borough's municipal limits. On March 30, 2016, the OCA filed an Answer to Driftwood's Petition. On March 23, 2017, the Borough filed a Supplement to Petition in Response to the Answer of the OCA.

Background

 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 Borough seeks a determination that the provision of water service by the Borough to 40 extraterritorial customers does not make the water service subject to the Commission's jurisdiction. The Borough asserts that the service to these ''limited'' 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 Borough states that Driftwood provides water service to 121 total customers. The Borough, which can be described as being extremely small, has 39 full-time residents/customers and 42 seasonal customers concentrated in approximately 2.5 square miles.¹ Additionally, the Borough provides water service to 40 customers in Gibson Township, outside of the Borough's municipal limits, but in close proximity to Borough boundaries and water mains. The 40 customers that are the subject of this Petition receive water service at the same rates and terms of service as all customers located inside of the Borough.

 According to the Petition, the 40 residents/customers in Gibson Township who are connected to Borough lines are generally located in the area of Route 555, which transverses the Borough. These connections were made prior to 1972, and it is unknown as to why the connections were originally permitted. However, it is the opinion of the Borough that these customers were permitted to connect simply because they were in close proximity to existing Borough water lines and such connections were deemed to be essential.²

 In its Answer, the OCA submits that the Petition should be denied or alternatively, referred to the Office of Administrative Law Judge for hearings to develop additional facts that are not presented in the Petition. In support, the OCA states that the extraterritorial customers are entitled to the protections afforded by the Public Utility Code and Commission regulations. Finally, the OCA asserts that the extraterritorial customers would be ''without recourse'' as to future rate increases by the Borough if the Commission were to grant the Borough's Petition.

 In response to the OCA Answer, Driftwood filed a Supplemental Petition providing additional details and protections for extraterritorial customers. As stated previously, water service is currently provided by the Borough to 40 extraterritorial customers in Gibson Township.³ The only water system in close proximity to these extraterritorial customers in Gibson Township is the Emporium Water Company; however, Emporium is located eighteen (18) miles from rural Gibson Township. Because of the distance and mountainous topography of the geographic area, Emporium has shown no interest in providing service to the Borough's customers in Gibson Township.⁴

 Finally, on December 14, 2015, the Borough, by virtue of Ordinance No. 113, passed a Resolution, specifically prescribing: (1) that the customers in Gibson Township shall be subject to the same rates as those charged to customers within the Borough; (2) that the Borough will restrict extraterritorial service to the 40 customers located in Gibson Township; (3) that any customer residing in Gibson Township will be afforded the same due process rights as Driftwood Borough customers under the principles and safeguards of the PA Local Agency Law, 2 Pa.C.S.A §§ 105 et. seq.; (4) that any disgruntled customer will be able to request a local agency/administrative hearing before Borough Council to challenge a rate increase; and (5) that any disgruntled customer will be able to challenge an adverse decision by Borough Council in the local Court of Common Pleas. Supplemental Petition at 4 and 5.

 Driftwood has requested by this Petition a declaration that the Borough 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 extraterritorial customers continue to receive water service under terms that are acceptable to the Commission and the customers.

Discussion

 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.

 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); Petition of Cochranton Borough, Docket No. P-2008-2035741 (2009) and Petition of the City of Titusville, Docket No. P-2013-2376600 (2014), wherein the Commission concluded that service to a limited 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, Cochranton Borough, and Titusville, 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).

 Subsequently, 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 committed 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, Titusville and Pilot Travel Center to the facts of the case sub judice, we find that the limited extraterritorial service is not subject to Commission jurisdiction. The extraterritorial service provided by Driftwood is provided to a limited number of customers and is not available to the general public. Moreover, by virtue of the aforementioned Ordinance No. 113, the Borough has committed that it will continue to provide service to the 40 extraterritorial customers in Gibson Township and that it is not soliciting additional customers outside of the Borough. Thus, the Borough 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 Borough's Petition, the service by Driftwood to the 40 extraterritorial customers who are located in close proximity to the Borough's water mains does not constitute the provision of water service to or for the public.

 Finally, while we appreciate the concerns of the OCA that are raised in its Answer, OCA does not identify any contested facts that are material to the resolution of the issue presented. We note that an express condition of this exemption from Commission regulation is that the Borough apply the same rates outside as well as within the Borough's municipal limits and that the Borough does not add any additional customers beyond those referenced in this Petition; Therefore,

 It Is Ordered That:

 1. The Petition for Declaratory Order filed by the Borough of Driftwood on March 7, 2016, at Docket No. P-2016-2533069 is hereby granted.

 2. The provision of water service by the Borough of Driftwood to the 40 customers located outside of the Borough 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 Order shall be served upon the Borough of Driftwood, Gibson Township and each of the individuals and offices listed in Driftwood's certificate of service.

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

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

ROSEMARY CHIAVETTA, 
Secretary

[Pa.B. Doc. No. 17-1111. Filed for public inspection June 30, 2017, 9:00 a.m.]

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¹  As of the census of 2010, there were 67 people, 35 households, and 19 families residing in the Borough. The median income for a household in the Borough was $45,417, and the median income for a family was $50,536.

²  Prior to 1973, the Borough's water system and assets were owned by shareholders under the name of Driftwood Water Company. On or about February 19, 1973, the Borough of Driftwood purchased the Driftwood Water Company. Petition at 1.

³  The remaining residents of Gibson Township are serviced by private wells. The Borough notes that all Driftwood customers have the option to disconnect from the system and utilize an alternative water source (e.g. private well). Supplemental Petition at 3.

⁴  The Borough notes in its Supplemental Petition that all Driftwood customers are charged $35.00 per month for unlimited water use (the Borough provides unmetered water service). According to the Borough, these rates are substantially less than the metered rates charged by the Commission-regulated Emporium Water Company. Supplemental Petition at 3.

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